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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, 2016
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.)	

3600 Horizon Boulevard
Trevose, Pennsylvania	 	19053	
(Address of principal executive offices)	 	(Zip Code)	
(215) 826-2800
(Registrant’s telephone number, including area code)
311 Veterans Highway, Suite B, Levittown, PA 19056
(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	 	x	  	Accelerated filer	 	¨	
				
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, 2016 was 35,077,494.
 Index – Form 10-Q

 	 	 	  	Page	 	
Part I	 	Financial Information	  				
			
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	  	 	34	  	
			
Item 4.	 	Controls and Procedures	  	 	35	  	
			
Part II	 	Other Information	  				
			
Item 6.	 	Exhibits	  	 	36	  	
			
	 	Signatures	  	 	37	  	

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 Part I – Financial Information
 
 ITEM 1.	FINANCIAL STATEMENTS	
STONEMOR PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

 	  	March 31, 2016	 	 	December 31, 2015	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	13,486	  	 	$	15,153	  	
Accounts receivable, net of allowance	  	 	69,718	  	 	 	68,415	  	
Prepaid expenses	  	 	3,955	  	 	 	5,367	  	
Other current assets	  	 	22,602	  	 	 	18,863	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	109,761	  	 	 	107,798	  	
Long-term accounts receivable, net of allowance	  	 	95,091	  	 	 	95,167	  	
Cemetery property	  	 	342,244	  	 	 	342,639	  	
Property and equipment, net of accumulated depreciation	  	 	104,507	  	 	 	104,330	  	
Merchandise trusts, restricted, at fair value	  	 	480,008	  	 	 	464,676	  	
Perpetual care trusts, restricted, at fair value	  	 	310,207	  	 	 	307,804	  	
Deferred selling and obtaining costs	  	 	114,921	  	 	 	111,542	  	
Deferred tax assets	  	 	40	  	 	 	40	  	
Goodwill	  	 	69,851	  	 	 	69,851	  	
Intangible assets	  	 	66,654	  	 	 	67,209	  	
Other assets	  	 	15,204	  	 	 	15,069	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	1,708,488	  	 	$	1,686,125	  	
	  	 	 	 	 	 	 	 	
Liabilities and Partners’ Capital	  				 				
Current liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	35,212	  	 	$	31,875	  	
Accrued interest	  	 	5,023	  	 	 	1,503	  	
Current portion, long-term debt	  	 	1,459	  	 	 	2,440	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	41,694	  	 	 	35,818	  	
Long-term debt, net of deferred financing costs	  	 	318,136	  	 	 	316,399	  	
Deferred revenues, net	  	 	659,730	  	 	 	637,536	  	
Deferred tax liabilities	  	 	17,850	  	 	 	17,833	  	
Merchandise liability	  	 	171,967	  	 	 	173,097	  	
Perpetual care trust corpus	  	 	310,207	  	 	 	307,804	  	
Other long-term liabilities	  	 	15,271	  	 	 	13,960	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,534,855	  	 	 	1,502,447	  	
	  	 	 	 	 	 	 	 	
Commitments and contingencies	  				 				
Partners’ Capital	  				 				
General partner interest	  	 	(11,495	) 	 	 	(10,038	) 	
Common limited partners’ interests	  	 	185,128	  	 	 	193,716	  	
	  	 	 	 	 	 	 	 	
Total partners’ capital	  	 	173,633	  	 	 	183,678	  	
	  	 	 	 	 	 	 	 	
Total liabilities and partners’ capital	  	$	1,708,488	  	 	$	1,686,125	  	
	  	 	 	 	 	 	 	 	
See Accompanying Notes to the Unaudited Consolidated Financial Statements.
 
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STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)

 	  	Three months ended March 31,	 	
 	  	2016	 	 	2015	 	
Revenues:	  				 				
Cemetery:	  				 				
Merchandise	  	$	30,975	  	 	$	26,937	  	
Services	  	 	12,832	  	 	 	13,910	  	
Investment and other	  	 	14,452	  	 	 	11,310	  	
Funeral home:	  				 				
Merchandise	  	 	7,456	  	 	 	7,075	  	
Services	  	 	8,867	  	 	 	8,185	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	74,582	  	 	 	67,417	  	
	  	 	 	 	 	 	 	 	
Costs and Expenses:	  				 				
Cost of goods sold	  	 	8,557	  	 	 	7,083	  	
Cemetery expense	  	 	15,856	  	 	 	16,265	  	
Selling expense	  	 	14,576	  	 	 	13,910	  	
General and administrative expense	  	 	9,204	  	 	 	9,329	  	
Corporate overhead	  	 	10,311	  	 	 	9,083	  	
Depreciation and amortization	  	 	3,065	  	 	 	2,952	  	
Funeral home expenses:	  				 				
Merchandise	  	 	2,149	  	 	 	2,376	  	
Services	  	 	6,451	  	 	 	5,593	  	
Other	  	 	5,140	  	 	 	4,181	  	
	  	 	 	 	 	 	 	 	
Total cost and expenses	  	 	75,309	  	 	 	70,772	  	
	  	 	 	 	 	 	 	 	
Operating loss	  	 	(727	) 	 	 	(3,355	) 	
Other gains (losses), net	  	 	(882	) 	 	 	—  	  	
Interest expense	  	 	(5,790	) 	 	 	(5,463	) 	
	  	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(7,399	) 	 	 	(8,818	) 	
Income tax benefit (expense)	  	 	(260	) 	 	 	(65	) 	
	  	 	 	 	 	 	 	 	
Net loss	  	$	(7,659	) 	 	$	(8,883	) 	
	  	 	 	 	 	 	 	 	
General partner’s interest	  	$	(93	) 	 	$	(120	) 	
Limited partners’ interest	  	$	(7,566	) 	 	$	(8,763	) 	
Net loss per limited partner unit (basic and diluted)	  	$	(0.23	) 	 	$	(0.30	) 	
Weighted average number of limited partners’ units outstanding (basic and diluted)	  	 	32,539	  	 	 	29,230	  	
See Accompanying Notes to the Unaudited Consolidated Financial Statements.
 
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STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
(dollars in thousands)
(unaudited)

 	  	Partners’ Capital	 	
 	  	Outstanding
Common Units	 	  	Common
Limited Partners	 	 	General
Partner	 	 	Total	 	
December 31, 2015	  	 	32,108,782	  	  	$	193,716	  	 	$	(10,038	) 	 	$	183,678	  	
Issuance of common units	  	 	727,474	  	  	 	20,083	  	 	 	—  	  	 	 	20,083	  	
Common unit awards under incentive plans	  	 	9,293	  	  	 	407	  	 	 	—  	  	 	 	407	  	
Net loss	  	 	—  	  	  	 	(7,566	) 	 	 	(93	) 	 	 	(7,659	) 	
Cash distributions	  	 	—  	  	  	 	(20,023	) 	 	 	(1,364	) 	 	 	(21,387	) 	
Unit distributions paid in kind	  	 	55,737	  	  	 	(1,489	) 	 	 	—  	  	 	 	(1,489	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
March 31, 2016	  	 	32,901,286	  	  	$	185,128	  	 	$	(11,495	) 	 	$	173,633	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
See Accompanying Notes to the Unaudited Consolidated Financial Statements.
 
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STONEMOR PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 	  	Three months ended March 31,	 	
 	  	2016	 	 	2015	 	
Cash Flows From Operating Activities:	  				 				
Net loss	  	$	(7,659	) 	 	$	(8,883	) 	
Adjustments to reconcile net loss to net cash provided by operating activities:	  				 				
Cost of lots sold	  	 	2,006	  	 	 	2,048	  	
Depreciation and amortization	  	 	3,065	  	 	 	2,952	  	
Non-cash compensation expense	  	 	407	  	 	 	272	  	
Non-cash interest expense	  	 	757	  	 	 	734	  	
Other gains (losses), net	  	 	882	  	 	 	—  	  	
Changes in assets and liabilities:	  				 				
Accounts receivable, net of allowance	  	 	(1,227	) 	 	 	(4,477	) 	
Merchandise trust fund	  	 	(11,613	) 	 	 	(10,231	) 	
Other assets	  	 	(2,649	) 	 	 	1,161	  	
Deferred selling and obtaining costs	  	 	(3,379	) 	 	 	(5,109	) 	
Deferred revenue	  	 	18,475	  	 	 	24,842	  	
Deferred taxes (net)	  	 	17	  	 	 	(135	) 	
Payables and other liabilities	  	 	6,152	  	 	 	2,679	  	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	5,234	  	 	 	5,853	  	
	  	 	 	 	 	 	 	 	
Cash Flows From Investing Activities:	  				 				
Cash paid for capital expenditures	  	 	(4,560	) 	 	 	(2,815	) 	
Proceeds from asset sales	  	 	138	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(4,422	) 	 	 	(2,815	) 	
	  	 	 	 	 	 	 	 	
Cash Flows From Financing Activities:	  				 				
Cash distributions	  	 	(21,387	) 	 	 	(17,948	) 	
Proceeds from borrowings	  	 	10,500	  	 	 	20,335	  	
Repayments of debt	  	 	(10,355	) 	 	 	(9,395	) 	
Proceeds from issuance of common units	  	 	18,763	  	 	 	—  	  	
Cost of financing activities	  	 	—  	  	 	 	(34	) 	
	  	 	 	 	 	 	 	 	
Net cash used in financing activities	  	 	(2,479	) 	 	 	(7,042	) 	
	  	 	 	 	 	 	 	 	
Net decrease in cash and cash equivalents	  	 	(1,667	) 	 	 	(4,004	) 	
Cash and cash equivalents—Beginning of period	  	 	15,153	  	 	 	10,401	  	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents—End of period	  	$	13,486	  	 	$	6,397	  	
	  	 	 	 	 	 	 	 	
Supplemental disclosure of cash flow information:	  				 				
Cash paid during the period for interest	  	$	1,513	  	 	$	1,176	  	
Cash paid during the period for income taxes	  	$	376	  	 	$	66	  	
Non-cash investing and financing activities:	  				 				
Acquisition of assets by financing	  	$	56	  	 	$	137	  	
See Accompanying Notes to the Unaudited Consolidated Financial Statements.
 
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STONEMOR PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016
(Unaudited)
1. GENERAL
Nature of Operations
StoneMor Partners L.P. (the “Partnership”) is a provider of funeral and cemetery products and services in the death care industry in the United States. As of March 31, 2016, the Partnership operated 307 cemeteries in 27 states and Puerto Rico, of which 276 are owned and 31 are operated under lease, management or operating agreements. The Partnership also owned and operated 104 funeral homes in 19 states and Puerto Rico.
Basis of Presentation
The accompanying consolidated financial statements, which are unaudited except for the balance sheet at December 31, 2015, which is derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States (“GAAP”) for interim reporting. They do not include all disclosures normally made in financial statements contained in Form 10-K. In management’s opinion, all adjustments necessary for a fair presentation of the Partnership’s financial position, results of operations and cash flows for the periods disclosed have been made. These interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto presented in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year presentation. The results of operations for the three months ended March 31, 2016 may not necessarily be indicative of the results of operations for the full year ending December 31, 2016.
The Partnership has revised its presentation of Goodwill and Intangible assets, now presenting each separately on the unaudited consolidated balance sheet. The comparative balance sheet was adjusted to conform to this revised presentation.
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of each of the Partnership’s wholly-owned subsidiaries. These statements also include the accounts of the merchandise and perpetual care trusts in which the Partnership has a variable interest and is the primary beneficiary. The Partnership operates 31 cemeteries under long-term lease, operating or management contracts. The operations of 16 of these managed cemeteries have been consolidated.
The Partnership operates 15 cemeteries under long-term leases and other agreements that do not qualify as acquisitions for accounting purposes. As a result, the Partnership did not consolidate all of the existing assets and liabilities related to these cemeteries. The Partnership has consolidated the existing assets and liabilities of the merchandise and perpetual care trusts associated with these cemeteries as variable interest entities since the Partnership controls and receives the benefits and absorbs any losses from operating these trusts. Under the long-term leases, and other agreements associated with these properties, which are subject to certain termination provisions, the Partnership is the exclusive operator of these cemeteries and earns revenues related to sales of merchandise, services, and interment rights, and incurs expenses related to such sales, including the maintenance and upkeep of these cemeteries. Upon termination of these contracts, the Partnership will retain all of the benefits and related contractual obligations incurred from sales generated during the contract period. The Partnership 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 (“FASB”) 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.
 
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During the third quarter of 2015, Update No. 2015-14, “Revenue from Contracts with Customers (Topic 606)” was released, deferring the effective date of the amendments to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted, only as of an annual reporting period beginning after December 15, 2016. During the first quarter of 2016, Update No. 2016-08, “Revenue from Contracts with Customers (Topic 606)” was released, which clarifies the implementation guidance on principal versus agent considerations. During the second quarter of 2016, Update No. 2016-10, “Revenue from Contracts with Customers (Topic 606)” was released, which clarifies the implementation guidance on identifying performance obligations. The Partnership will adopt the requirements of these updates upon the effective date of January 1, 2018, and is evaluating the potential impact of the adoption on its financial position, results of operations or related disclosures.
In the first quarter of 2016, the FASB issued Update No. 2016-01, “Financial Instruments (Subtopic 825-10)” (“ASU 2016-01”). The core principle of ASU 2016-01 is that equity investments should be measured at fair value with changes in the fair value recognized through net income. The amendment is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted for the key aspects of the amendment. The Partnership will adopt the requirements of ASU 2016-01 upon its effective date of January 1, 2018, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
In the first quarter of 2016, the FASB issued Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The core principle of ASU 2016-02 is that all leases create an asset and a liability for lessees and recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. The amendment is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Partnership plans to adopt the requirements of ASU 2016-02 upon its effective date of January 1, 2019, and is evaluating the potential impact of the adoption on its financial position, results of operations and related disclosures.
Use of Estimates
The preparation of the Partnership’s unaudited consolidated financial statements in conformity with GAAP 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 consolidated financial statements, as well as the reported amounts of revenue and expense during the reporting periods. The Partnership’s unaudited consolidated financial statements are based on a number of significant estimates, including revenue and expense accruals, depreciation and amortization, merchandise trusts and perpetual care trusts asset valuation, 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. As a result, actual results could differ from those estimates.
Net Income (Loss) per Common Unit
Basic net income (loss) attributable to common limited partners per unit is computed by dividing net income (loss) attributable to common limited partners, which is determined after the deduction of the general partner’s interest, by the weighted average number of common limited partner units outstanding during the period. Net income (loss) attributable to common limited partners is determined by deducting net income attributable to participating securities, if applicable and net income (loss) attributable to the general partner’s units. The general partner’s interest in net income (loss) is calculated on a quarterly basis based upon its units and incentive distributions to be distributed for the quarter, with a priority allocation of net income to the general partner’s incentive distributions, if any, in accordance with the partnership agreement, and the remaining net income (loss) allocated with respect to the general partner’s and limited partners’ ownership interests.
The Partnership presents net income (loss) per unit under the two-class method for master limited partnerships, which considers whether the incentive distributions of a master limited partnership represent a participating security when considered in the calculation of earnings per unit under the two-class method. The two-class method considers whether the partnership agreement contains any contractual limitations concerning distributions to the incentive distribution rights that would impact the amount of earnings to allocate to the incentive distribution rights for each reporting period. If distributions are contractually limited to the incentive distribution rights’ share of currently designated available cash for distributions as defined under the partnership agreement, undistributed earnings in excess of available cash should not be allocated to the incentive distribution rights. Under the two-class method, management of the Partnership believes the partnership agreement contractually limits cash distributions to available cash; therefore, undistributed earnings are not allocated to the incentive distribution rights.
 
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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per unit pursuant to the two-class method. Phantom unit awards, which consist of common units issuable under the terms of its long-term incentive plan (see Note 12), contain non-forfeitable rights to distribution equivalents of the Partnership. The participation rights would result in a non-contingent transfer of value each time the Partnership declares a distribution or distribution equivalent right during the award’s vesting period. However, unless the contractual terms of the participating securities require the holders to share in the losses of the entity, net loss is not allocated to the participating securities. As such, the net income utilized in the calculation of net income (loss) per unit must be after the allocation of only net income to the phantom units on a pro-rata basis.
The following is a reconciliation of net income (loss) allocated to the common limited partners for purposes of calculating net income (loss) attributable to common limited partners per unit (in thousands, except unit data):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Net loss	  	$	(7,659	) 	  	$	(8,883	) 	
Less: General partner’s interest	  	 	(93	) 	  	 	(120	) 	
	  	 	 	 	  	 	 	 	
Net loss attributable to common limited partners	  	$	(7,566	) 	  	$	(8,763	) 	
	  	 	 	 	  	 	 	 	
Diluted net income (loss) attributable to common limited partners per unit is calculated by dividing net income (loss) attributable to common limited partners, less income allocable to participating securities, by the sum of the weighted average number of common limited partner units outstanding and the dilutive effect of unit option awards, as calculated by the treasury stock or if converted methods, as applicable. Unit options consist of common units issuable upon payment of an exercise price by the participant under the terms of the Partnership’s long-term incentive plan (see Note 12).
The following table sets forth the reconciliation of the Partnership’s weighted average number of common limited partner units used to compute basic net income (loss) attributable to common limited partners per unit with those used to compute diluted net income (loss) attributable to common limited partners per unit (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Weighted average number of common limited partner units—basic	  	 	32,539	  	  	 	29,230	  	
Add effect of dilutive incentive awards (1)	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	
Weighted average number of common limited partner units—diluted	  	 	32,539	  	  	 	29,230	  	

(1)	The diluted weighted average number of limited partners’ units outstanding presented on the consolidated statement of operations does not include 292,670 units and 185,194 units for the three months ended March 31, 2016 and March 31, 2015, respectively, as their effects would be anti-dilutive.	
2. ACQUISITIONS
2015 Acquisitions
During the year ended December 31, 2015, the Partnership acquired the following properties and related assets, net of certain assumed liabilities:
 
 	•	 	One funeral home for cash consideration of $0.9 million on July 21, 2015;	
 
 	•	 	Three funeral homes and one cemetery for cash consideration of $5.7 million on August 6, 2015;	
 
 	•	 	Two cemeteries for cash consideration of $1.5 million on August 20, 2015;	
 
 	•	 	One funeral home for cash consideration of $5.0 million on August 31, 2015, and an additional $1.0 million paid in five annual installments beginning on the 1 st anniversary of the closing date; and	
 
 	•	 	One cemetery and two funeral homes for cash consideration of $5.7 million on December 1, 2015.	
The Partnership accounted for these transactions under the acquisition method of accounting. Accordingly, the Partnership evaluated the identifiable assets acquired and liabilities assumed at their respective acquisition date fair values. All other costs incurred associated with the acquisition of the assets noted were expensed as incurred. The
 
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following table presents the Partnership’s values assigned to the assets acquired and liabilities assumed in the acquisitions, based on their estimated fair values at the dates of the acquisition, which may be prospectively adjusted as additional information is received (in thousands):

Assets:	  				
Accounts receivable	  	$	2,761	  	
Cemetery and funeral home property	  	 	7,018	  	
Property and equipment	  	 	5,941	  	
Inventory	  	 	53	  	
Merchandise trusts, restricted	  	 	15,075	  	
Perpetual care trusts, restricted	  	 	4,134	  	
Intangible assets	  	 	406	  	
	  	 	 	 	
Total assets	  	 	35,388	  	
	  	 	 	 	
Liabilities:	  				
Deferred margin	  	 	6,618	  	
Merchandise liabilities	  	 	14,414	  	
Perpetual care trust corpus	  	 	4,134	  	
Other liabilities	  	 	21	  	
	  	 	 	 	
Total liabilities	  	 	25,187	  	
	  	 	 	 	
Fair value of net assets acquired	  	 	10,201	  	
	  	 	 	 	
Consideration paid—cash	  	 	18,800	  	
Deferred cash consideration	  	 	876	  	
	  	 	 	 	
Total consideration paid	  	 	19,676	  	
	  	 	 	 	
Gain on bargain purchase	  	$	1,540	  	
	  	 	 	 	
Goodwill from purchase	  	$	11,015	  	
	  	 	 	 	
The Partnership recorded goodwill of $1.1 million and $9.9 million in the Cemetery and Funeral Home reporting units, respectively, with regard to the properties acquired during the year ended December 31, 2015.
The following data presents pro forma revenues, net income (loss) and basic and diluted net income (loss) per unit for the Partnership as if the acquisitions consummated during the year ended December 31, 2015 had occurred as of January 1, 2015. The Partnership prepared these pro forma unaudited financial results for comparative purposes only; they may not be indicative of the results that would have occurred if the acquisitions consummated during the year ended December 31, 2015 had occurred as of January 1, 2015 or the results that will be attained in future periods (in thousands, except per unit data):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Revenue	  	$	74,582	  	  	$	69,217	  	
Net loss	  	 	(7,659	) 	  	 	(8,774	) 	
Net loss per limited partner unit (basic and diluted)	  	$	(.23	) 	  	$	(.30	) 	
The properties acquired in 2015 have contributed $2.3 million of revenue and $0.4 million of operating profit for the three months ended March 31, 2016.
 
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3. ACCOUNTS RECEIVABLE, NET OF ALLOWANCE
Accounts receivable, net of allowance, consists of the following at the dates indicated (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
Customer receivables	  	$	209,974	  	  	$	207,645	  	
Unearned finance income	  	 	(20,144	) 	  	 	(20,078	) 	
Allowance for contract cancellations	  	 	(25,021	) 	  	 	(23,985	) 	
	  	 	 	 	  	 	 	 	
Accounts receivable, net of allowance	  	 	164,809	  	  	 	163,582	  	
Less: current portion, net of allowance	  	 	69,718	  	  	 	68,415	  	
	  	 	 	 	  	 	 	 	
Long-term portion, net of allowance	  	$	95,091	  	  	$	95,167	  	
	  	 	 	 	  	 	 	 	
Activity in the allowance for contract cancellations is as follows (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Balance, beginning of period	  	$	23,985	  	  	$	22,138	  	
Provision for cancellations	  	 	6,073	  	  	 	6,072	  	
Charge-offs, net	  	 	(5,037	) 	  	 	(4,995	) 	
	  	 	 	 	  	 	 	 	
Balance, end of period	  	$	25,021	  	  	$	23,215	  	
	  	 	 	 	  	 	 	 	
4. CEMETERY PROPERTY
Cemetery property consists of the following at the dates indicated (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
Developed land	  	$	83,357	  	  	$	83,834	  	
Undeveloped land	  	 	169,867	  	  	 	169,482	  	
Mausoleum crypts and lawn crypts	  	 	77,403	  	  	 	77,526	  	
Other land	  	 	11,617	  	  	 	11,797	  	
	  	 	 	 	  	 	 	 	
Cemetery property	  	$	342,244	  	  	$	342,639	  	
	  	 	 	 	  	 	 	 	
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at the dates indicated (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
Building and improvements	  	$	120,328	  	  	$	117,034	  	
Furniture and equipment	  	 	52,973	  	  	 	54,346	  	
	  	 	 	 	  	 	 	 	
Property and equipment, gross	  	 	173,301	  	  	 	171,380	  	
Less: accumulated depreciation	  	 	(68,794	) 	  	 	(67,050	) 	
	  	 	 	 	  	 	 	 	
Property and equipment, net of accumulated depreciation	  	$	104,507	  	  	$	104,330	  	
	  	 	 	 	  	 	 	 	
Depreciation expense was $2.5 million and $2.4 million for the three months ended March 31, 2016 and 2015, respectively.
6. MERCHANDISE TRUSTS
At March 31, 2016 and December 31, 2015, the Partnership’s merchandise trusts consisted of investments in debt and equity marketable securities and cash equivalents, both directly as well as through mutual and investment funds. Certain assets acquired in connection with the Partnership’s 2015 acquisitions (see Note 2) are based upon preliminary estimated values assigned to the assets by the Partnership at the date of acquisition, and will be adjusted when additional information is received.
 
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All of these investments are classified as Available for Sale and accordingly, all of the assets are carried at fair value. All of these investments are considered either Level 1 or Level 2 assets pursuant to the three-level hierarchy (see Note 14). There were no Level 3 assets.
The merchandise trusts are variable interest entities (VIE) for which the Partnership is the primary beneficiary. The assets held in the merchandise trusts are required to be used to purchase the merchandise and provide the services to which they relate. If the value of these assets falls below the cost of purchasing such merchandise and providing such services, the Partnership may be required to fund this shortfall.
The Partnership included $8.2 million of investments held in trust by the West Virginia Funeral Directors Association at March 31, 2016 and December 31, 2015 in its merchandise trust assets. As required by law, the Partnership 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 recognized at their account value, which approximates fair value.
A reconciliation of the Partnership’s merchandise trust activities for the three months ended March 31, 2016 is presented below (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Balance, beginning of period	  	$	464,676	  	  	$	484,820	  	
Contributions	  	 	13,305	  	  	 	16,540	  	
Distributions	  	 	(7,797	) 	  	 	(11,537	) 	
Interest and dividends	  	 	5,773	  	  	 	3,874	  	
Capital gain distributions	  	 	219	  	  	 	—  	  	
Realized gains and losses	  	 	1,270	  	  	 	5,702	  	
Taxes	  	 	(37	) 	  	 	(15	) 	
Fees	  	 	(383	) 	  	 	(737	) 	
Unrealized change in fair value	  	 	2,982	  	  	 	(10,640	) 	
	  	 	 	 	  	 	 	 	
Balance, end of period	  	$	480,008	  	  	$	488,007	  	
	  	 	 	 	  	 	 	 	
During the three months ended March 31, 2016, purchases and sales of securities available for sale included in trust investments were approximately $6.4 million and $12.6 million, respectively.
 
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The cost and market value associated with the assets held in the merchandise trusts as of March 31, 2016 and December 31, 2015 were as follows (in thousands):

 	  	 	  	 	 	  	Gross	 	  	Gross	 	 	 	 	
 	  	Fair Value	  	 	 	  	Unrealized	 	  	Unrealized	 	 	Fair	 	
March 31, 2016	  	Hierarchy Level	  	Cost	 	  	Gains	 	  	Losses	 	 	Value	 	
Short-term investments	  	1	  	$	54,308	  	  	$	—  	  	  	$	—  	  	 	$	54,308	  	
Fixed maturities:	  		  				  				  				 				
U.S. governmental securities	  	2	  	 	97	  	  	 	8	  	  	 	(1	) 	 	 	104	  	
Corporate debt securities	  	2	  	 	9,963	  	  	 	35	  	  	 	(758	) 	 	 	9,240	  	
Other debt securities	  	2	  	 	7,150	  	  	 	22	  	  	 	—  	  	 	 	7,172	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total fixed maturities	  		  	 	17,210	  	  	 	65	  	  	 	(759	) 	 	 	16,516	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Mutual funds—debt securities	  	1	  	 	235,915	  	  	 	2,339	  	  	 	(8,818	) 	 	 	229,436	  	
Mutual funds—equity securities	  	1	  	 	139,336	  	  	 	1,650	  	  	 	(12,062	) 	 	 	128,924	  	
Equity securities	  	1	  	 	41,571	  	  	 	1,087	  	  	 	(4,852	) 	 	 	37,806	  	
Other invested assets	  	2	  	 	2,063	  	  	 	2	  	  	 	(355	) 	 	 	1,710	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total managed investments	  		  	$	490,403	  	  	$	5,143	  	  	$	(26,846	) 	 	$	468,700	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Assets acquired via acquisition	  		  	 	3,075	  	  	 	—  	  	  	 	—  	  	 	 	3,075	  	
West Virginia Trust Receivable	  		  	 	8,233	  	  	 	—  	  	  	 	—  	  	 	 	8,233	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  		  	$	501,711	  	  	$	5,143	  	  	$	(26,846	) 	 	$	480,008	  	

 	  	Fair Value	  	 	 	  	Gross
Unrealized	 	  	Gross
Unrealized	 	 	Fair	 	
December 31, 2015	  	Hierarchy Level	  	Cost	 	  	Gains	 	  	Losses	 	 	Value	 	
Short-term investments	  	1	  	$	35,150	  	  	$	—  	  	  	$	—  	  	 	$	35,150	  	
Fixed maturities:	  		  				  				  				 				
U.S. governmental securities	  	2	  	 	98	  	  	 	6	  	  	 	(3	) 	 	 	101	  	
Corporate debt securities	  	2	  	 	11,922	  	  	 	8	  	  	 	(546	) 	 	 	11,384	  	
Other debt securities	  	2	  	 	7,150	  	  	 	11	  	  	 	(7	) 	 	 	7,154	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total fixed maturities	  		  	 	19,170	  	  	 	25	  	  	 	(556	) 	 	 	18,639	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Mutual funds—debt securities	  	1	  	 	232,096	  	  	 	86	  	  	 	(10,713	) 	 	 	221,469	  	
Mutual funds—equity securities	  	1	  	 	139,341	  	  	 	69	  	  	 	(12,249	) 	 	 	127,161	  	
Equity securities	  	1	  	 	49,563	  	  	 	1,127	  	  	 	(2,474	) 	 	 	48,216	  	
Other invested assets	  	2	  	 	1,681	  	  	 	—  	  	  	 	—  	  	 	 	1,681	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total managed investments	  		  	$	477,001	  	  	$	1,307	  	  	$	(25,992	) 	 	$	452,316	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Assets acquired via acquisition	  		  	 	4,185	  	  	 	—  	  	  	 	—  	  	 	 	4,185	  	
West Virginia Trust Receivable	  		  	 	8,175	  	  	 	—  	  	  	 	—  	  	 	 	8,175	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  		  	$	489,361	  	  	$	1,307	  	  	$	(25,992	) 	 	$	464,676	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The contractual maturities of debt securities as of March 31, 2016 were as follows below:

 	  	Less than
1 year	 	  	1 year through
5 years	 	  	6 years through
10 years	 	  	More than
10 years	 	
U.S. governmental securities	  	$	10	  	  	$	12	  	  	$	82	  	  	$	—  	  	
Corporate debt securities	  	 	—  	  	  	 	7,008	  	  	 	2,232	  	  	 	—  	  	
Other debt securities	  	 	3,680	  	  	 	3,492	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	$	3,690	  	  	$	10,512	  	  	$	2,314	  	  	$	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Temporary Declines in Fair Value
The Partnership evaluates declines in fair value below cost for each asset held in the merchandise trusts on a quarterly basis.
 
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An aging of unrealized losses on the Partnership’s investments in debt and equity securities within the merchandise trusts as of March 31, 2016 and December 31, 2015 is presented below (in thousands):

 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	
 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	
March 31, 2016	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	
Fixed maturities:	  				  				  				  				  				  				
U.S. governmental securities	  	$	7	  	  	$	—  	  	  	$	26	  	  	$	1	  	  	$	33	  	  	$	1	  	
Corporate debt securities	  	 	6,671	  	  	 	587	  	  	 	1,525	  	  	 	171	  	  	 	8,196	  	  	 	758	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	 	6,678	  	  	 	587	  	  	 	1,551	  	  	 	172	  	  	 	8,229	  	  	 	759	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds—debt securities	  	 	116,564	  	  	 	5,634	  	  	 	39,450	  	  	 	3,184	  	  	 	156,014	  	  	 	8,818	  	
Mutual funds—equity securities	  	 	79,319	  	  	 	10,473	  	  	 	6,721	  	  	 	1,589	  	  	 	86,040	  	  	 	12,062	  	
Equity securities	  	 	27,142	  	  	 	4,328	  	  	 	1,722	  	  	 	524	  	  	 	28,864	  	  	 	4,852	  	
Other invested assets	  	 	—  	  	  	 	—  	  	  	 	22	  	  	 	355	  	  	 	22	  	  	 	355	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	229,703	  	  	$	21,022	  	  	$	49,466	  	  	$	5,824	  	  	$	279,169	  	  	$	26,846	  	

																									
 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	
 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	
December 31, 2015	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	
Fixed maturities:	  				  				  				  				  				  				
U.S. governmental securities	  	$	—  	  	  	$	—  	  	  	$	33	  	  	$	3	  	  	$	33	  	  	$	3	  	
Corporate debt securities	  	 	7,247	  	  	 	411	  	  	 	1,513	  	  	 	135	  	  	 	8,760	  	  	 	546	  	
Other debt securities	  	 	2,883	  	  	 	7	  	  	 	—  	  	  	 	—  	  	  	 	2,883	  	  	 	7	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	 	10,130	  	  	 	418	  	  	 	1,546	  	  	 	138	  	  	 	11,676	  	  	 	556	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds—debt securities	  	 	121,777	  	  	 	6,938	  	  	 	36,682	  	  	 	3,775	  	  	 	158,459	  	  	 	10,713	  	
Mutual funds—equity securities	  	 	58,467	  	  	 	10,994	  	  	 	5,465	  	  	 	1,255	  	  	 	63,932	  	  	 	12,249	  	
Equity securities	  	 	21,480	  	  	 	2,275	  	  	 	649	  	  	 	199	  	  	 	22,129	  	  	 	2,474	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	211,854	  	  	$	20,625	  	  	$	44,342	  	  	$	5,367	  	  	$	256,196	  	  	$	25,992	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
For all securities in an unrealized loss position, the Partnership evaluated the severity of the impairment and length of time that a security has been in a loss position and concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Partnership is not aware of any circumstances that would prevent the future market value recovery for these securities.
Other-Than-Temporary Impairment of Trust Assets
The Partnership assesses its merchandise trust assets for other-than-temporary declines in fair value on a quarterly basis. During the three months ended March 31, 2016, the Partnership determined that there were no other than temporary impairments to the investment portfolio in the merchandise trusts. During the three months ended March 31, 2015, the Partnership 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 Partnership 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.
7. PERPETUAL CARE TRUSTS
At March 31, 2016 and December 31, 2015, the Partnership’s perpetual care trusts consisted of investments in debt and equity marketable securities and cash equivalents, both directly as well as through mutual and investment funds. Certain assets acquired in connection with the Partnership’s 2015 acquisitions (see Note 2) are based upon preliminary estimated values assigned to the assets by the Partnership at the date of acquisition, and will be adjusted when additional information is received.
All of these investments are classified as Available for Sale and accordingly, all of the assets are carried at fair value. All of these investments are considered either Level 1 or Level 2 assets pursuant to the three-level hierarchy (see Note 14). There were no Level 3 assets. The perpetual care trusts are VIEs for which the Partnership is the primary beneficiary.
 
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A reconciliation of the Partnership’s perpetual care trust activities for the years ended March 31, 2016 is presented below (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Balance, beginning of period	  	$	307,804	  	  	$	345,105	  	
Contributions	  	 	2,474	  	  	 	6,478	  	
Distributions	  	 	(3,723	) 	  	 	(2,793	) 	
Interest and dividends	  	 	4,149	  	  	 	3,649	  	
Capital gain distributions	  	 	81	  	  	 	—  	  	
Realized gains and losses	  	 	74	  	  	 	15,699	  	
Taxes	  	 	(97	) 	  	 	(134	) 	
Fees	  	 	(287	) 	  	 	(534	) 	
Unrealized change in fair value	  	 	(268	) 	  	 	(22,287	) 	
	  	 	 	 	  	 	 	 	
Balance, end of period	  	$	310,207	  	  	$	345,183	  	
	  	 	 	 	  	 	 	 	
During the three months ended March 31, 2016, purchases and sales of securities available for sale included in trust investments were approximately $5.5 million and $0.3 million, respectively.
The cost and market value associated with the assets held in the perpetual care trusts as of March 31, 2016 and December 31, 2015 were as follows (in thousands):

 	  	 	  	 	 	  	Gross	 	  	Gross	 	 	 	 	
 	  	Fair Value	  	 	 	  	Unrealized	 	  	Unrealized	 	 	Fair	 	
March 31, 2016	  	Hierarchy Level	  	Cost	 	  	Gains	 	  	Losses	 	 	Value	 	
Short-term investments	  	1	  	$	34,322	  	  	$	—  	  	  	$	—  	  	 	$	34,322	  	
Fixed maturities:	  		  				  				  				 				
U.S. governmental securities	  	2	  	 	190	  	  	 	16	  	  	 	(1	) 	 	 	205	  	
Corporate debt securities	  	2	  	 	22,635	  	  	 	134	  	  	 	(1,311	) 	 	 	21,458	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total fixed maturities	  		  	 	22,825	  	  	 	150	  	  	 	(1,312	) 	 	 	21,663	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Mutual funds—debt securities	  	1	  	 	190,212	  	  	 	1,804	  	  	 	(6,713	) 	 	 	185,303	  	
Mutual funds—equity securities	  	1	  	 	68,471	  	  	 	1,457	  	  	 	(4,338	) 	 	 	65,590	  	
Equity securities	  	1	  	 	2,185	  	  	 	577	  	  	 	(8	) 	 	 	2,754	  	
Other invested assets	  	2	  	 	10	  	  	 	4	  	  	 	—  	  	 	 	14	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total managed investments	  		  	$	318,025	  	  	$	3,992	  	  	$	(12,371	) 	 	$	309,646	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Assets acquired via acquisition	  		  	 	561	  	  	 	—  	  	  	 	—  	  	 	 	561	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  		  	$	318,586	  	  	$	3,992	  	  	$	(12,371	) 	 	$	310,207	  	

December 31, 2015	  	Fair Value
Hierarchy Level	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Gross
Unrealized
Losses	 	 	Fair Value	 	
Short-term investments	  	1	  	$	36,618	  	  	$	—  	  	  	$	—  	  	 	$	36,618	  	
Fixed maturities:	  		  				  				  				 				
U.S. governmental securities	  	2	  	 	126	  	  	 	14	  	  	 	—  	  	 	 	140	  	
Corporate debt securities	  	2	  	 	22,837	  	  	 	57	  	  	 	(845	) 	 	 	22,049	  	
Other debt securities	  	2	  	 	36	  	  	 	—  	  	  	 	(1	) 	 	 	35	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total fixed maturities	  		  	 	22,999	  	  	 	71	  	  	 	(846	) 	 	 	22,224	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Mutual funds—debt securities	  	1	  	 	184,866	  	  	 	35	  	  	 	(7,180	) 	 	 	177,721	  	
Mutual funds—equity securities	  	1	  	 	68,079	  	  	 	1,054	  	  	 	(1,713	) 	 	 	67,420	  	
Equity securities	  	1	  	 	2,319	  	  	 	636	  	  	 	(7	) 	 	 	2,948	  	
Other invested assets	  	2	  	 	473	  	  	 	1	  	  	 	(162	) 	 	 	312	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total managed investments	  		  	$	315,354	  	  	$	1,797	  	  	$	(9,908	) 	 	$	307,243	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Assets acquired via acquisition	  		  	 	561	  	  	 	—  	  	  	 	—  	  	 	 	561	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total	  		  	$	315,915	  	  	$	1,797	  	  	$	(9,908	) 	 	$	307,804	  	

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The contractual maturities of debt securities as of March 31, 2016 were as follows below:

 	  	Less than
1 year	 	  	1 year through
5 years	 	  	6 years through
10 years	 	  	More than
10 years	 	
U.S. governmental securities	  	$	112	  	  	$	—  	  	  	$	39	  	  	$	54	  	
Corporate debt securities	  	 	148	  	  	 	16,914	  	  	 	4,396	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	$	260	  	  	$	16,914	  	  	$	4,435	  	  	$	54	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Temporary Declines in Fair Value
The Partnership 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 Partnership’s investments in debt and equity securities within the perpetual care trusts as of March 31, 2016 and December 31, 2015 is presented below (in thousands):

 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	
 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	
March 31, 2016	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	
Fixed maturities:	  				  				  				  				  				  				
U.S. governmental securities	  	$	—  	  	  	$	—  	  	  	$	26	  	  	$	1	  	  	$	26	  	  	$	1	  	
Corporate debt securities	  	 	13,119	  	  	 	956	  	  	 	3,288	  	  	 	355	  	  	 	16,407	  	  	 	1,311	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	 	13,119	  	  	 	956	  	  	 	3,314	  	  	 	356	  	  	 	16,433	  	  	 	1,312	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds—debt securities	  	 	77,522	  	  	 	4,128	  	  	 	52,063	  	  	 	2,585	  	  	 	129,585	  	  	 	6,713	  	
Mutual funds—equity securities	  	 	41,149	  	  	 	3,751	  	  	 	3,478	  	  	 	587	  	  	 	44,627	  	  	 	4,338	  	
Equity securities	  	 	492	  	  	 	8	  	  	 	—  	  	  	 	—  	  	  	 	492	  	  	 	8	  	
Other invested assets	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	132,282	  	  	$	8,843	  	  	$	58,855	  	  	$	3,528	  	  	$	191,137	  	  	$	12,371	  	

																									
 	  	Less than 12 months	 	  	12 Months or more	 	  	Total	 	
 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	  	Fair	 	  	Unrealized	 	
December 31, 2015	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	  	Value	 	  	Losses	 	
Fixed maturities:	  				  				  				  				  				  				
U.S. governmental securities	  	$	—  	  	  	$	—  	  	  	$	112	  	  	$	—  	  	  	$	112	  	  	$	—  	  	
Corporate debt securities	  	 	12,482	  	  	 	535	  	  	 	4,505	  	  	 	310	  	  	 	16,987	  	  	 	845	  	
Other debt securities	  	 	35	  	  	 	1	  	  	 	—  	  	  	 	—  	  	  	 	35	  	  	 	1	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturities	  	 	12,517	  	  	 	536	  	  	 	4,617	  	  	 	310	  	  	 	17,134	  	  	 	846	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Mutual funds—debt securities	  	 	81,215	  	  	 	4,263	  	  	 	50,774	  	  	 	2,917	  	  	 	131,989	  	  	 	7,180	  	
Mutual funds—equity securities	  	 	16,514	  	  	 	1,363	  	  	 	4,308	  	  	 	350	  	  	 	20,822	  	  	 	1,713	  	
Equity securities	  	 	488	  	  	 	6	  	  	 	1,137	  	  	 	1	  	  	 	1,625	  	  	 	7	  	
Other invested assets	  	 	—  	  	  	 	—  	  	  	 	315	  	  	 	162	  	  	 	315	  	  	 	162	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	110,734	  	  	$	6,168	  	  	$	61,151	  	  	$	3,740	  	  	$	171,885	  	  	$	9,908	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
For all securities in an unrealized loss position, the Partnership evaluated the severity of the impairment and length of time that a security has been in a loss position and concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Partnership is not aware of any circumstances that would prevent the future market value recovery for these securities.
Other-Than-Temporary Impairment of Trust Assets
The Partnership assesses its perpetual care trust assets for other-than-temporary declines in fair value on a quarterly basis. During the three months ended March 31, 2016 and 2015, the Partnership determined that there were no other than temporary impairments to the investment portfolio in the perpetual care trusts.
 
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8. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Partnership has recorded goodwill of approximately $69.9 million as of March 31, 2016 and December 31, 2015. This amount represents the excess of the purchase price over the fair value of identifiable net assets acquired.
The Partnership tests goodwill for impairment at each year end by comparing its reporting units’ estimated fair values to carrying values. There were no goodwill impairments recognized by the Partnership during the periods presented. Management will continue to evaluate goodwill at least annually or when impairment indicators arise.
Intangible Assets
The Partnership has intangible assets with finite lives recognized in connection with acquisitions and long-term lease, management and operating agreements. The Partnership amortizes these intangible assets over their estimated useful lives.
The following table reflects the components of intangible assets as of March 31, 2016 and December 31, 2015 (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
 	  	Gross Carrying	 	  	Accumulated	 	 	Net Intangible	 	  	Gross Carrying	 	  	Accumulated	 	 	Net Intangible	 	
 	  	Amount	 	  	Amortization	 	 	Asset	 	  	Amount	 	  	Amortization	 	 	Asset	 	
Lease and management agreements	  	$	59,758	  	  	$	(1,826	) 	 	$	57,932	  	  	$	59,758	  	  	$	(1,577	) 	 	$	58,181	  	
Underlying contract value	  	 	6,239	  	  	 	(1,053	) 	 	 	5,186	  	  	 	6,239	  	  	 	(1,014	) 	 	 	5,225	  	
Non-compete agreements	  	 	5,486	  	  	 	(3,197	) 	 	 	2,289	  	  	 	5,656	  	  	 	(3,112	) 	 	 	2,544	  	
Other intangible assets	  	 	1,439	  	  	 	(192	) 	 	 	1,247	  	  	 	1,439	  	  	 	(180	) 	 	 	1,259	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total intangible assets	  	$	72,922	  	  	$	(6,268	) 	 	$	66,654	  	  	$	73,092	  	  	$	(5,883	) 	 	$	67,209	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Amortization expense for intangible assets was $0.6 million for both the three months ended March 31, 2016 and 2015. The following is estimated amortization expense related to intangible assets with finite lives for the periods noted below (in thousands):

2016 (remainder)	  	$	1,625	  	
2017	  	$	1,956	  	
2018	  	$	1,708	  	
2019	  	$	1,440	  	
2020	  	$	1,266	  	
9. LONG-TERM DEBT
Total debt consists of the following at the dates indicated (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
Credit Facility:	  				  				
Working Capital Draws	  	$	106,500	  	  	$	105,000	  	
Acquisition Draws	  	 	44,500	  	  	 	44,500	  	
7.875% Senior Notes, due June 2021	  	 	172,292	  	  	 	172,186	  	
Notes payable—acquisition debt	  	 	642	  	  	 	687	  	
Notes payable—acquisition non-competes	  	 	1,356	  	  	 	1,629	  	
Insurance and vehicle financing	  	 	1,386	  	  	 	2,336	  	
Less deferred financing costs, net of accumulated amortization	  	 	(7,081	) 	  	 	(7,499	) 	
	  	 	 	 	  	 	 	 	
Total debt	  	 	319,595	  	  	 	318,839	  	
Less current maturities	  	 	(1,459	) 	  	 	(2,440	) 	
	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	318,136	  	  	$	316,399	  	
	  	 	 	 	  	 	 	 	
Credit Facility
The Partnership is a party to the Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) which provides for a single revolving credit facility of $180.0 million (the “Credit Facility”) maturing on December 19, 2019. Additionally the Credit Agreement provides for an uncommitted ability to increase the Credit
 
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Facility by an additional $70.0 million. The Partnership’s obligations under the Credit Facility are secured by substantially all of the assets of the Partnership, excluding those held in trust. Borrowings under the Credit Facility are classified as either acquisition draws or working capital draws. Acquisition draws may be utilized to finance permitted acquisitions, the purchase and construction of mausoleums and related costs or the net amount of merchandise trust deposits. Working capital draws may be utilized to finance working capital requirements, capital expenditures and for other general corporate purposes. The amount of the Credit Facility that is available for working capital draws is subject to a borrowing formula equal to 85% of eligible accounts receivable, as defined within the Credit Agreement. At March 31, 2016, the amount available under the Credit Facility for working capital advances under this limit was $140.1 million, of which $106.5 million was outstanding at March 31, 2016.
Each individual acquisition draw is subject to equal quarterly amortization of the principal amount, with annual principal payments comprised of ten percent of the related advance amount, commencing on the second anniversary of such advance, with the remaining principal due on December 19, 2019, subject to certain mandatory prepayment requirements. Up to $10.0 million of the Credit Facility may be in the form of standby letters of credit, of which there were none outstanding at March 31, 2016 and December 31, 2015.
Borrowings under the Credit Facility bear interest, at the Partnership’s election, at either an adjusted LIBOR rate plus an applicable margin between 2.25% and 4.00% per annum or the base rate (which is the higher of the bank’s prime rate, the Federal funds rate plus 0.5% or one-month LIBOR plus 1.00%) plus an applicable margin between 1.25% and 3.00% per annum. The Partnership is also required to pay a fee on the unused portion of the Credit Facility at a rate between 0.375% and 0.8% per annum, which is included within interest expense on the Partnership’s consolidated statements of operations. On March 31, 2016, the weighted average interest rate on outstanding borrowings under the Credit Facility was 3.9%.
The Credit Agreement contains customary covenants that limit the Partnership’s ability to incur additional indebtedness, grant liens, make loans or investments, make cash distributions if a default exists or would result from the distribution, merger or consolidation with other persons, or engage in certain asset dispositions including the sale of all or substantially all of its assets. The Partnership was in compliance with these covenants as of March 31, 2016. The Credit Agreement also requires the Partnership to maintain:
 
 	•	 	Consolidated EBITDA (as defined in the Credit Agreement), calculated over a period of four consecutive fiscal quarters, to be no less than the sum of (i) $80.0 million plus (ii) 80% of the aggregate Consolidated EBITDA for each permitted acquisition completed after June 30, 2014;	
 
 	•	 	the ratio of Consolidated EBITDA (as defined in the Credit Agreement) to Consolidated Debt Service (as defined in the Credit Agreement), calculated over a period of four fiscal quarters, or the Consolidated Debt Service Coverage Ratio, of not less than 2.50 to 1.00 for any period; and	
 
 	•	 	the ratio of Consolidated Funded Indebtedness (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement), calculated over a period of four fiscal quarters, or the Consolidated Leverage Ratio, of not greater than 4.00 to 1.00 for any period.	
On March 31, 2016, the Partnership’s Consolidated Leverage Ratio and the Consolidated Debt Service Coverage Ratio were 3.30 and 4.53, respectively.
Senior Notes
On May 28, 2013, the Partnership issued $175.0 million aggregate principal amount of 7.875% Senior Notes due 2021 (the “Senior Notes”). The Partnership pays 7.875% interest per annum on the principal amount of the Senior Notes, payable in cash semi-annually in arrears on June 1 and December 1 of each year. The net proceeds from the offering were used to retire a $150.0 million aggregate principal amount of 10.25% Senior Notes due 2017 and the remaining proceeds were used for general corporate purposes. The Senior Notes were issued at 97.832% of par resulting in gross proceeds of $171.2 million with an original issue discount of approximately $3.8 million. The Partnership incurred debt issuance costs and fees of approximately $4.6 million. These costs and fees are deferred and will be amortized over the life of the Senior Notes. The Senior Notes mature on June 1, 2021.
At any time prior to June 1, 2016, the Partnership may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of certain equity offerings at the redemption price of 107.875%, plus accrued and unpaid interest, if any, to the redemption date, provided that (i) at least 65% of the aggregate principal amount of the Senior Notes remain outstanding and (ii) the redemption occurs within 180 days of the closing date of such equity
 
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offering. At any time on or after June 1, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount) set forth below, together with accrued and unpaid interest, if any, to the redemption date, if redeemed during the 12-month period beginning June 1 of the years indicated:

Year	  	Percentage	 	
2016	  	 	105.906	% 	
2017	  	 	103.938	% 	
2018	  	 	101.969	% 	
2019 and thereafter	  	 	100.000	% 	
In addition, at any time prior to June 1, 2016, the Partnership may also redeem all or any portion of the Senior Notes, at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed, plus the Applicable Premium (as defined in the Indenture), including accrued and unpaid interest. Subject to certain exceptions, upon the occurrence of a Change of Control (as defined in the Indenture), each holder of the Senior Notes will have the right to require the Partnership to purchase that holder’s Senior Notes for a cash price equal to 101% of the principal amounts to be purchased, plus accrued and unpaid interest.
The Senior Notes are jointly and severally guaranteed by certain of our subsidiaries. The Indenture governing the Senior Notes contains covenants, including limitations of the Partnership’s ability to incur additional indebtedness and liens, make certain dividends, distributions, redemptions or investments, enter into certain transactions with affiliates, make certain asset sales, and engage in certain mergers, consolidations or sales of all or substantially all of the Partnership’s assets. As of March 31, 2016, the Partnership was in compliance with these covenants.
10. INCOME TAXES
The Partnership is not subject to U.S. federal and most state income taxes. The partners of the Partnership are liable for income tax in regard to their distributive share of the Partnership’s taxable income. Such taxable income may vary substantially from net income reported in the accompanying unaudited consolidated financial statements. Certain corporate subsidiaries are subject to federal and state income tax. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Partnership records a valuation allowance against its deferred tax assets if it deems that it is more likely than not that some portion or all of the recorded deferred tax assets will not be realizable in future periods.
As of March 31, 2016, the Partnership had available approximately less than $0.1 million of alternative minimum tax credit carryforwards, which are available indefinitely, and $261.8 million of federal net operating loss carryforwards, which will begin to expire in 2017 and $321.8 million in state net operating loss carryforwards, a portion of which expires annually.
In assessing the realizability of deferred tax assets, management considers whether its more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. As of March 31, 2016, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Partnership will realize the benefits of these deductible differences. The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.
In accordance with applicable accounting standards, the Partnership recognizes only the impact of income tax positions that, based upon their merits, are more likely than not to be sustained upon audit by a taxing authority. To evaluate its current tax positions in order to identify any material uncertain tax positions, the Partnership developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules and the significance of each position. It is the Partnership’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. At March 31, 2016 and December 31, 2015, the Partnership had no material uncertain tax positions.
 
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The Partnership is not currently under examination by any federal or state jurisdictions. The federal statute of limitations and certain state statutes of limitations are open from 2012 forward.
11. DEFERRED REVENUES, NET
The Partnership defers revenues and all direct costs associated with the sale of pre-need cemetery merchandise and services until the merchandise is delivered or the services are performed. The Partnership recognizes deferred merchandise and service revenues as deferred revenues, net, within long-term liabilities on its consolidated balance sheet. The Partnership recognizes deferred direct costs associated with pre-need cemetery merchandise and service revenues as deferred selling and obtaining costs within long-term assets on its consolidated balance sheet. The Partnership also defers the costs to obtain new pre-need cemetery and new prearranged funeral business as well as the investment earnings on the prearranged services and merchandise trusts.
At March 31, 2016 and December 31, 2015, deferred revenues, net, consisted of the following (in thousands):

 	  	March 31, 2016	 	  	December 31, 2015	 	
Deferred revenue	  	$	548,515	  	  	$	531,905	  	
Deferred merchandise trust revenue	  	 	85,664	  	  	 	80,294	  	
Deferred merchandise trust unrealized gains (losses)	  	 	(21,703	) 	  	 	(24,685	) 	
Deferred pre-acquisition margin	  	 	141,584	  	  	 	142,672	  	
Deferred cost of goods sold	  	 	(94,330	) 	  	 	(92,650	) 	
	  	 	 	 	  	 	 	 	
Deferred revenues, net	  	$	659,730	  	  	$	637,536	  	
	  	 	 	 	  	 	 	 	
Deferred selling and obtaining costs	  	$	114,921	  	  	$	111,542	  	
12. LONG-TERM INCENTIVE PLANS
2014 Long-Term Incentive Plan
During the year ended December 31, 2014, the General Partner’s Board of Directors (the “Board”) and the Partnership’s unitholders approved a 2014 Long-Term Incentive Plan (“2014 LTIP”). The compensation committee of the Board (the “Compensation Committee”) administers the 2014 LTIP. The 2014 LTIP permits the grant of awards, which may be in the form of phantom units, restricted units, unit appreciation rights (“UAR”), or unit options, including performance factors for each, covering an aggregate of 1,500,000 common units, a number that the Board may increase by up to 100,000 common units per year. At March 31, 2016, the estimated number of common units to be issued upon vesting and exercise of outstanding rights under this plan was 105,167, including management’s estimated amounts for awards with performance factors. A cumulative number of 14,455 common units have been issued, leaving 1,380,378 common units available for future grants under the plan, assuming no increases by the Board.
Phantom Unit Awards
Phantom units represent rights to receive a common unit or an amount of cash, or a combination of either, based upon the value of a common unit. Phantom units become payable, in cash or common units, at the Partnership’s election, upon the separation of directors and executives from service or upon the occurrence of certain other events specified in the underlying agreements. Phantom units are subject to terms and conditions determined by the Compensation Committee, which may include vesting restrictions. In tandem with phantom unit grants, the compensation committee may grant distribution equivalent rights (“DERs”), which are the right to receive an amount in cash or common units equal to the cash distributions made by the Partnership with respect to common unit during the period that the underlying phantom unit is outstanding. All phantom units outstanding under the 2014 LTIP at March 31, 2016 contain tandem DERs.
 
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The following table sets forth the 2014 LTIP phantom unit award activity for the three months ended March 31, 2016 and 2015, respectively:

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Outstanding, beginning of period	  	 	102,661	  	  	 	2,189	  	
Granted (1)	  	 	2,506	  	  	 	2,052	  	
	  	 	 	 	  	 	 	 	
Outstanding, end of period (2)	  	 	105,167	  	  	 	4,241	  	

(1)	The weighted-average grant date fair value for the unit awards on the date of grant was $25.88 and $28.69 for three months ended March 31, 2016 and 2015, respectively. The intrinsic value of unit awards vested during both the three months ended March 31, 2016 and 2015 was $0.1 million.	
(2)	Based on the closing price of the common units on March 31, 2016, the estimated intrinsic value of the outstanding unit awards was $2.6 million at March 31, 2016.	
2004 Long-Term Incentive Plan
The Compensation Committee administers the Partnership’s 2004 Long-Term Incentive Plan (“2004 LTIP”). The 2004 LTIP permitted the grant of awards, which may be in the form of phantom units, restricted units, or unit appreciation rights (“UAR”). At March 31, 2016, the estimated number of common units to be issued upon vesting and exercise of outstanding rights under this plan was 189,155, based upon the closing price of our common units at March 31, 2016. A cumulative number of 626,188 common units have been issued under the 2004 LTIP. There were no awards available for grant under the 2004 LTIP at March 31, 2016 because the plan expired in 2014.
Phantom Unit Awards
Phantom units were credited to participants’ mandatory deferred compensation accounts in connection with DERs accruing on phantom units received under the 2004 LTIP. These DERs continue to accrue until the underlying securities are issued. The following table sets forth the 2004 LTIP activity related to DERs credited as phantom units to the participant’s accounts for the three months ended March 31, 2016 and 2015 respectively:

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Outstanding, beginning of period	  	 	184,457	  	  	 	169,122	  	
Granted (1)	  	 	4,491	  	  	 	3,671	  	
	  	 	 	 	  	 	 	 	
Outstanding, end of period (2)	  	 	188,948	  	  	 	172,793	  	

(1)	The weighted-average fair value for the phantom units credited was $26.25 and $28.02 for the three months ended March 31, 2016 and 2015 respectively. The intrinsic value of phantom unit awards vested during both the three months ended March 31, 2016 and 2015 was $0.1 million.	
(2)	Based on the closing price of the common units on March 31, 2016, the estimated intrinsic value of the outstanding unit awards was $4.6 million at March 31, 2016.	
Total compensation expense for phantom units credited under both the 2004 and 2014 plans was approximately $0.2 million and $0.3 million for the three months ended March 31, 2016 and 2015, respectively.
 
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Unit Appreciation Rights Awards
UAR awards represent a right to receive an amount equal to the closing price of the Partnership’s common units on the date preceding the exercise date less the exercise price of the UARs, to the extent the closing price of the Partnership’s common units on the date preceding the exercise date is in excess of the exercise price. This amount is then divided by the closing pricing of the Partnership’s common units on the date preceding the exercise date to determine the number of common units to be issued to the participant. UAR awards granted through March 31, 2016 have a five-year contractual term beginning on the grant date and vest ratably over a period of 48 months beginning on the grant date. Of the UAR awards outstanding at March 31, 2016, 18,563 awards will vest within the following twelve months. The following table sets forth the UAR award activity for the three months ended March 31, 2016 and 2015 respectively:

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Outstanding, beginning of period	  	 	66,793	  	  	 	123,000	  	
Exercised	  	 	—  	  	  	 	(10,654	) 	
	  	 	 	 	  	 	 	 	
Outstanding, end of period (1)	  	 	66,793	  	  	 	112,346	  	
	  	 	 	 	  	 	 	 	
Exercisable, end of period	  	 	39,062	  	  	 	53,969	  	

(1)	Based on the closing price of the common units on March 31, 2016 the estimated intrinsic value of the outstanding UARs was less than $0.1 million. The weighted average remaining contractual life for outstanding UAR awards at March 31, 2016 was 2.3 years.	
At March 31, 2016, the Partnership had approximately $0.1 million of unrecognized compensation expense related to unvested UAR awards that will be recognized through the year ended December 31, 2018. The Partnership recognized total compensation expense for UAR awards of less than $0.1 million for both the three months ended March 31, 2016 and 2015. The Partnership issued 1,148 common units due to exercised UAR awards for the three months ended March 31, 2015. There were no UAR exercises during the three months ended March 31, 2016.
13. COMMITMENTS AND CONTINGENCIES
Legal
The Partnership 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 its financial position or results of operations.
Other
During the first quarter of 2016, the Partnership moved its corporate headquarters to Trevose, Pennsylvania. Due to the relocation, a cease-use expense of $0.5 million was recorded during the period below “Operating income” on the unaudited consolidated statement of operations. This charge represents the net recognition of the discounted liability for future rent payments due under the lease on the previous headquarters, net of estimated sublease collections and deferred rent and lease incentives pertaining to the previous corporate office location.
In connection with the Partnership’s 2014 lease and management agreements with the Archdiocese of Philadelphia, it has committed to pay aggregate fixed rent of $36.0 million in the following amounts:

Lease Years 1-5	  	None	
Lease Years 6-20	  	$1,000,000 per Lease Year	
Lease Years 21-25	  	$1,200,000 per Lease Year	
Lease Years 26-35	  	$1,500,000 per Lease Year	
Lease Years 36-60	  	None	
The fixed rent for lease years 6 through 11 shall be deferred. If the Archdiocese terminates the agreements pursuant to a lease year 11 termination or the Partnership terminates the agreements as a result of a default by the Archdiocese, prior to the end of lease year 11, the deferred fixed rent shall be retained by the Partnership. If the agreements are not terminated, the deferred fixed rent shall become due and payable 30 days after the end of lease year 11.
 
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14. FAIR VALUE OF FINANCIAL INSTRUMENTS
Management has established a hierarchy to measure the Partnership’s financial instruments at fair value, which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources; whereas, unobservable inputs reflect the Partnership’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value:
Level 1 – Unadjusted quoted market prices in active markets for identical, unrestricted assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the same contractual term of the asset or liability.
Level 3 – Unobservable inputs that the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.
The Partnership’s current assets and liabilities on its consolidated balance sheets are considered to be financial instruments, and their estimated fair values approximate their carrying values due to their short-term nature and thus are categorized as Level 1. The Partnership’s merchandise and perpetual care trusts consist of investments in debt and equity marketable securities and cash equivalents, are carried at fair value, and are considered either Level 1 or Level 2 (see Note 6 and 7).
The Partnership’s other financial instruments as of March 31, 2016 and December 31, 2015 consist of its Senior Notes and outstanding borrowings under its revolving credit facility (see Note 9). The estimated fair values of the Partnership’s Senior Notes as of March 31, 2016 and December 31, 2015 were $177.2 million and $179.9 million, respectively, based on trades made on those dates, compared with the carrying amounts of $172.3 million and $172.2 million, respectively. As of March 31, 2016 and December 31, 2015, the carrying values of outstanding borrowings under the Partnership’s revolving credit facility (see Note 9), which bears interest at variable interest rates with maturities of 90 days or less, approximated their estimated fair values. The Senior Notes are valued using Level 2 inputs.
15. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The Partnership’s Senior Notes are guaranteed by StoneMor Operating LLC and its wholly-owned subsidiaries, other than the co-issuer, as described below. The guarantees are full, unconditional, joint and several. The Partnership, or the “Parent”, and its wholly-owned subsidiary Cornerstone Family Services of West Virginia Subsidiary Inc., are the co-issuers of the Senior Notes. The Partnership’s unaudited consolidated financial statements as of and for the three months ended March 31, 2016 and 2015 include the accounts of cemeteries operated under long-term lease, operating or management agreements. For the purposes of this note, these entities are deemed non-guarantor subsidiaries as they are not wholly-owned by the Partnership. The Partnership’s unaudited consolidated financial statements also contain merchandise and perpetual care trusts that are also deemed non-guarantor subsidiaries for the purposes of this note.
The following unaudited supplemental condensed consolidating financial information reflects the Partnership’s standalone accounts, the combined accounts of the subsidiary co-issuer, the combined accounts of the guarantor subsidiaries, the combined accounts of the non-guarantor subsidiaries, the consolidating adjustments and eliminations and the Partnership’s consolidated accounts as of and for the three months ended March 31, 2016 and 2015. For the purpose of the following financial information, the Partnership’s investments in its subsidiaries and the guarantor subsidiaries’ investments in their respective subsidiaries are presented in accordance with the equity method of accounting (in thousands):
 
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CONDENSED CONSOLIDATING BALANCE SHEETS
 	 	
 	  	 	 	  	Subsidiary	 	  	Guarantor	 	  	Non-Guarantor	 	  	 	 	 	 	 	
March 31, 2016	  	Parent	 	  	Issuer	 	  	Subsidiaries	 	  	Subsidiaries	 	  	Eliminations	 	 	Consolidated	 	
Assets	  				  				  				  				  				 				
Current assets:	  				  				  				  				  				 				
Cash and cash equivalents	  	$	—  	  	  	$	—  	  	  	$	9,935	  	  	$	3,551	  	  	$	—  	  	 	$	13,486	  	
Other current assets	  	 	—  	  	  	 	4,946	  	  	 	76,935	  	  	 	14,394	  	  	 	—  	  	 	 	96,275	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	—  	  	  	 	4,946	  	  	 	86,870	  	  	 	17,945	  	  	 	—  	  	 	 	109,761	  	
Long-term accounts receivable	  	 	—  	  	  	 	2,836	  	  	 	80,696	  	  	 	11,559	  	  	 	—  	  	 	 	95,091	  	
Cemetery property and equipment	  	 	—  	  	  	 	1,030	  	  	 	414,565	  	  	 	31,156	  	  	 	—  	  	 	 	446,751	  	
Merchandise trusts	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	480,008	  	  	 	—  	  	 	 	480,008	  	
Perpetual care trusts	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	310,207	  	  	 	—  	  	 	 	310,207	  	
Deferred selling and obtaining costs	  	 	—  	  	  	 	5,967	  	  	 	93,893	  	  	 	15,061	  	  	 	—  	  	 	 	114,921	  	
Goodwill and intangible assets	  	 	—  	  	  	 	—  	  	  	 	77,917	  	  	 	58,588	  	  	 	—  	  	 	 	136,505	  	
Other assets	  	 	—  	  	  	 	—  	  	  	 	13,062	  	  	 	2,182	  	  	 	—  	  	 	 	15,244	  	
Investments in and amounts due from affiliates eliminated upon consolidation	  	 	241,565	  	  	 	149,926	  	  	 	441,455	  	  	 	—  	  	  	 	(832,946	) 	 	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total assets	  	$	241,565	  	  	$	164,705	  	  	$	1,208,458	  	  	$	926,706	  	  	$	(832,946	) 	 	$	1,708,488	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Liabilities and Equity	  				  				  				  				  				 				
Current liabilities	  	$	—  	  	  	$	24	  	  	$	40,974	  	  	$	696	  	  	$	—  	  	 	$	41,694	  	
Long-term debt, net of deferred financing costs	  	 	67,932	  	  	 	104,360	  	  	 	145,844	  	  	 	—  	  	  	 	—  	  	 	 	318,136	  	
Deferred revenues, net	  	 	—  	  	  	 	27,897	  	  	 	557,831	  	  	 	74,002	  	  	 	—  	  	 	 	659,730	  	
Merchandise liability	  	 	—  	  	  	 	5,420	  	  	 	155,195	  	  	 	11,352	  	  	 	—  	  	 	 	171,967	  	
Perpetual care trust corpus	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	310,207	  	  	 	—  	  	 	 	310,207	  	
Other long-term liabilities	  	 	—  	  	  	 	—  	  	  	 	23,436	  	  	 	9,685	  	  	 	—  	  	 	 	33,121	  	
Due to affiliates	  	 	—  	  	  	 	—  	  	  	 	174,315	  	  	 	457,994	  	  	 	(632,309	) 	 	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	67,932	  	  	 	137,701	  	  	 	1,097,595	  	  	 	863,936	  	  	 	(632,309	) 	 	 	1,534,855	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Partners’ capital	  	 	173,633	  	  	 	27,004	  	  	 	110,863	  	  	 	62,770	  	  	 	(200,637	) 	 	 	173,633	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and partners’ capital	  	$	241,565	  	  	$	164,705	  	  	$	1,208,458	  	  	$	926,706	  	  	$	(832,946	) 	 	$	1,708,488	  	

																									
 	  	 	 	  	Subsidiary	 	  	Guarantor	 	  	Non-Guarantor	 	  	 	 	 	 	 	
December 31, 2015	  	Parent	 	  	Issuer	 	  	Subsidiaries	 	  	Subsidiaries	 	  	Eliminations	 	 	Consolidated	 	
Assets	  				  				  				  				  				 				
Current assets:	  				  				  				  				  				 				
Cash and cash equivalents	  	$	—  	  	  	$	—  	  	  	$	11,869	  	  	$	3,284	  	  	$	—  	  	 	$	15,153	  	
Other current assets	  	 	—  	  	  	 	4,797	  	  	 	75,337	  	  	 	12,511	  	  	 	—  	  	 	 	92,645	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	—  	  	  	 	4,797	  	  	 	87,206	  	  	 	15,795	  	  	 	—  	  	 	 	107,798	  	
Long-term accounts receivable	  	 	—  	  	  	 	2,888	  	  	 	80,969	  	  	 	11,310	  	  	 	—  	  	 	 	95,167	  	
Cemetery property and equipment	  	 	—  	  	  	 	1,084	  	  	 	414,785	  	  	 	31,100	  	  	 	—  	  	 	 	446,969	  	
Merchandise trusts	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	464,676	  	  	 	—  	  	 	 	464,676	  	
Perpetual care trusts	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	307,804	  	  	 	—  	  	 	 	307,804	  	
Deferred selling and obtaining costs	  	 	—  	  	  	 	5,967	  	  	 	91,275	  	  	 	14,300	  	  	 	—  	  	 	 	111,542	  	
Goodwill and intangible assets	  	 	—  	  	  	 	—  	  	  	 	78,223	  	  	 	58,837	  	  	 	—  	  	 	 	137,060	  	
Other assets	  	 	—  	  	  	 	—  	  	  	 	12,913	  	  	 	2,196	  	  	 	—  	  	 	 	15,109	  	
Investments in and amounts due from affiliates eliminated upon consolidation	  	 	251,678	  	  	 	162,011	  	  	 	428,704	  	  	 	—  	  	  	 	(842,393	) 	 	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total assets	  	$	251,678	  	  	$	176,747	  	  	$	1,194,075	  	  	$	906,018	  	  	$	(842,393	) 	 	$	1,686,125	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Liabilities and Equity	  				  				  				  				  				 				
Current liabilities	  	$	—  	  	  	$	12	  	  	$	34,969	  	  	$	837	  	  	$	—  	  	 	$	35,818	  	
Long-term debt, net of deferred financing costs	  	 	68,000	  	  	 	104,200	  	  	 	144,199	  	  	 	—  	  	  	 	—  	  	 	 	316,399	  	
Deferred revenues, net	  	 	—  	  	  	 	27,528	  	  	 	539,878	  	  	 	70,130	  	  	 	—  	  	 	 	637,536	  	
Merchandise liability	  	 	—  	  	  	 	5,599	  	  	 	156,838	  	  	 	10,660	  	  	 	—  	  	 	 	173,097	  	
Perpetual care trust corpus	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	307,804	  	  	 	—  	  	 	 	307,804	  	
Other long-term liabilities	  	 	—  	  	  	 	—  	  	  	 	22,299	  	  	 	9,494	  	  	 	—  	  	 	 	31,793	  	
Due to affiliates	  	 	—  	  	  	 	—  	  	  	 	173,575	  	  	 	445,732	  	  	 	(619,307	) 	 	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	68,000	  	  	 	137,339	  	  	 	1,071,758	  	  	 	844,657	  	  	 	(619,307	) 	 	 	1,502,447	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Partners’ capital	  	 	183,678	  	  	 	39,408	  	  	 	122,317	  	  	 	61,361	  	  	 	(223,086	) 	 	 	183,678	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and partners’ capital	  	$	251,678	  	  	$	176,747	  	  	$	1,194,075	  	  	$	906,018	  	  	$	(842,393	) 	 	$	1,686,125	  	

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CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
 	 	
 	  	 	 	 	Subsidiary	 	 	Guarantor	 	 	Non-Guarantor	 	 	 	 	 	 	 	
Three months ended March 31, 2016	  	Parent	 	 	Issuer	 	 	Subsidiaries	 	 	Subsidiaries	 	 	Eliminations	 	 	Consolidated	 	
Total revenues	  	$	—  	  	 	$	1,198	  	 	$	62,077	  	 	$	13,671	  	 	$	(2,364	) 	 	$	74,582	  	
Total cost and expenses	  	 	—  	  	 	 	(2,551	) 	 	 	(63,504	) 	 	 	(11,618	) 	 	 	2,364	  	 	 	(75,309	) 	
Other income (loss)	  	 	—  	  	 	 	—  	  	 	 	(882	) 	 	 	—  	  	 	 	—  	  	 	 	(882	) 	
Net loss from equity investment in subsidiaries	  	 	(6,301	) 	 	 	(6,798	) 	 	 	—  	  	 	 	—  	  	 	 	13,099	  	 	 	—  	  	
Interest expense	  	 	(1,358	) 	 	 	(2,087	) 	 	 	(2,154	) 	 	 	(191	) 	 	 	—  	  	 	 	(5,790	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) before income taxes	  	 	(7,659	) 	 	 	(10,238	) 	 	 	(4,463	) 	 	 	1,862	  	 	 	13,099	  	 	 	(7,399	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax benefit (expense)	  	 	—  	  	 	 	—  	  	 	 	(260	) 	 	 	—  	  	 	 	—  	  	 	 	(260	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	(7,659	) 	 	$	(10,238	) 	 	$	(4,723	) 	 	$	1,862	  	 	$	13,099	  	 	$	(7,659	) 	

																									
 	  	 	 	 	Subsidiary	 	 	Guarantor	 	 	Non-Guarantor	 	 	 	 	 	 	 	
Three months ended March 31, 2015	  	Parent	 	 	Issuer	 	 	Subsidiaries	 	 	Subsidiaries	 	 	Eliminations	 	 	Consolidated	 	
Total revenues	  	$	—  	  	 	$	1,273	  	 	$	58,403	  	 	$	10,662	  	 	$	(2,921	) 	 	$	67,417	  	
Total cost and expenses	  	 	—  	  	 	 	(2,425	) 	 	 	(60,043	) 	 	 	(11,225	) 	 	 	2,921	  	 	 	(70,772	) 	
Net loss from equity investment in subsidiaries	  	 	(7,525	) 	 	 	(6,604	) 	 	 	—  	  	 	 	—  	  	 	 	14,129	  	 	 	—  	  	
Interest expense	  	 	(1,358	) 	 	 	(2,087	) 	 	 	(1,841	) 	 	 	(177	) 	 	 	—  	  	 	 	(5,463	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) before income taxes	  	 	(8,883	) 	 	 	(9,843	) 	 	 	(3,481	) 	 	 	(740	) 	 	 	14,129	  	 	 	(8,818	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax benefit (expense)	  	 	—  	  	 	 	—  	  	 	 	(65	) 	 	 	—  	  	 	 	—  	  	 	 	(65	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	(8,883	) 	 	$	(9,843	) 	 	$	(3,546	) 	 	$	(740	) 	 	$	14,129	  	 	$	(8,883	) 	

																									
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
 	 	
 	  	 	 	 	Subsidiary	 	 	Guarantor	 	 	Non-Guarantor	 	 	 	 	 	 	 	
Three months ended March 31, 2016	  	Parent	 	 	Issuer	 	 	Subsidiaries	 	 	Subsidiaries	 	 	Eliminations	 	 	Consolidated	 	
Net cash provided by (used in) operating activities	  	$	2,624	  	 	$	5	  	 	$	7,764	  	 	$	910	  	 	$	(6,069	) 	 	$	5,234	  	
Cash Flows From Investing Activities:	  				 				 				 				 				 				
Cash paid for acquisitions and capital expenditures	  	 	—  	  	 	 	(5	) 	 	 	(3,774	) 	 	 	(643	) 	 	 	—  	  	 	 	(4,422	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	—  	  	 	 	(5	) 	 	 	(3,774	) 	 	 	(643	) 	 	 	—  	  	 	 	(4,422	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows From Financing Activities:	  				 				 				 				 				 				
Cash distributions	  	 	(21,387	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(21,387	) 	
Payments to affiliates	  	 	—  	  	 	 	—  	  	 	 	(6,069	) 	 	 	—  	  	 	 	6,069	  	 	 	—  	  	
Net borrowings and repayments of debt	  	 	—  	  	 	 	—  	  	 	 	145	  	 	 	—  	  	 	 	—  	  	 	 	145	  	
Proceeds from issuance of common units	  	 	18,763	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	18,763	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	(2,624	) 	 	 	—  	  	 	 	(5,924	) 	 	 	—  	  	 	 	6,069	  	 	 	(2,479	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	 	—  	  	 	 	—  	  	 	 	(1,934	) 	 	 	267	  	 	 	—  	  	 	 	(1,667	) 	
Cash and cash equivalents—Beginning of period	  	 	—  	  	 	 	—  	  	 	 	11,869	  	 	 	3,284	  	 	 	—  	  	 	 	15,153	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents—End of period	  	$	—  	  	 	$	—  	  	 	$	9,935	  	 	$	3,551	  	 	$	—  	  	 	$	13,486	  	

																									
 	  	 	 	 	Subsidiary	 	 	Guarantor	 	 	Non-Guarantor	 	 	 	 	 	 	 	
Three months ended March 31, 2015	  	Parent	 	 	Issuer	 	 	Subsidiaries	 	 	Subsidiaries	 	 	Eliminations	 	 	Consolidated	 	
Net cash provided by (used in) operating activities	  	$	17,948	  	 	$	104	  	 	$	8,699	  	 	$	495	  	 	$	(21,393	) 	 	$	5,853	  	
Cash Flows From Investing Activities:	  				 				 				 				 				 				
Cash paid for acquisitions and capital expenditures	  	 	—  	  	 	 	(104	) 	 	 	(2,158	) 	 	 	(553	) 	 	 	—  	  	 	 	(2,815	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	—  	  	 	 	(104	) 	 	 	(2,158	) 	 	 	(553	) 	 	 	—  	  	 	 	(2,815	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows From Financing Activities:	  				 				 				 				 				 				
Cash distributions	  	 	(17,948	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(17,948	) 	
Payments to affiliates	  	 	—  	  	 	 	—  	  	 	 	(21,393	) 	 	 	—  	  	 	 	21,393	  	 	 	—  	  	
Net borrowings and repayments of debt	  	 	—  	  	 	 	—  	  	 	 	10,940	  	 	 	—  	  	 	 	—  	  	 	 	10,940	  	
Other financing activities	  	 	—  	  	 	 	—  	  	 	 	(34	) 	 	 	—  	  	 	 	—  	  	 	 	(34	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	(17,948	) 	 	 	—  	  	 	 	(10,487	) 	 	 	—  	  	 	 	21,393	  	 	 	(7,042	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	 	—  	  	 	 	—  	  	 	 	(3,946	) 	 	 	(58	) 	 	 	—  	  	 	 	(4,004	) 	
Cash and cash equivalents—Beginning of period	  	 	—  	  	 	 	—  	  	 	 	7,059	  	 	 	3,342	  	 	 	—  	  	 	 	10,401	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents—End of period	  	$	—  	  	 	$	—  	  	 	$	3,113	  	 	$	3,284	  	 	$	—  	  	 	$	6,397	  	

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16. ISSUANCES OF LIMITED PARTNER UNITS
On November 19, 2015, the Partnership entered into an equity distribution agreement (“ATM Equity Program”) with a group of banks (the “Agents”) whereby it may sell, from time to time, common units representing limited partner interests having an aggregate offering price of up to $100,000,000. During the three months ended March 31, 2016, the Partnership issued 727,474 common units under the ATM Equity Program for net proceeds of $18.8 million.
Pursuant to a Common Unit Purchase Agreement, dated May 19, 2014, by and between the Partnership and American Cemeteries Infrastructure Investors, LLC, a Delaware limited liability company (“ACII”), the Partnership issued 55,737 PIK Units to ACII in lieu of cash distributions of $1.5 million, during the three months ended March 31, 2016.
17. SEGMENT INFORMATION
The Partnership’s operations include two reportable operating segments, Cemetery Operations and Funeral Homes. These operating segments reflect the way the Partnership manages its operations and makes business decisions as of March 31, 2016 and represent a change from the comparable period presented. Prior period information was revised to the current year presentation. Operating segment data for the periods indicated were as follows (in thousands):
 
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 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Cemetery Operations:	  				  				
Revenues	  	$	58,259	  	  	$	52,157	  	
Operating costs and expenses	  	 	(48,193	) 	  	 	(46,587	) 	
Depreciation and amortization	  	 	(1,970	) 	  	 	(1,906	) 	
	  	 	 	 	  	 	 	 	
Segment income	  	$	8,096	  	  	$	3,664	  	
	  	 	 	 	  	 	 	 	
Funeral Homes:	  				  				
Revenues	  	$	16,323	  	  	$	15,260	  	
Operating costs and expenses	  	 	(13,740	) 	  	 	(12,150	) 	
Depreciation and amortization	  	 	(877	) 	  	 	(799	) 	
	  	 	 	 	  	 	 	 	
Segment income	  	$	1,706	  	  	$	2,311	  	
	  	 	 	 	  	 	 	 	
Reconciliation of segment income to net loss:	  				  				
Cemeteries	  	$	8,096	  	  	$	3,664	  	
Funeral homes	  	 	1,706	  	  	 	2,311	  	
	  	 	 	 	  	 	 	 	
Total segment income	  	 	9,802	  	  	 	5,975	  	
	  	 	 	 	  	 	 	 	
Corporate overhead	  	 	(10,311	) 	  	 	(9,083	) 	
Corporate depreciation and amortization	  	 	(218	) 	  	 	(247	) 	
Other gains (losses), net	  	 	(882	) 	  	 	—  	  	
Interest expense	  	 	(5,790	) 	  	 	(5,463	) 	
Income tax benefit (expense)	  	 	(260	) 	  	 	(65	) 	
	  	 	 	 	  	 	 	 	
Net loss	  	$	(7,659	) 	  	$	(8,883	) 	
	  	 	 	 	  	 	 	 	
Capital expenditures:	  				  				
Cemeteries	  	$	1,941	  	  	$	2,566	  	
Funeral homes	  	 	451	  	  	 	175	  	
Corporate	  	 	2,168	  	  	 	74	  	
	  	 	 	 	  	 	 	 	
Total capital expenditures	  	$	4,560	  	  	$	2,815	  	

 	  	March 31, 2016	 	  	December 31, 2015	 	
Balance sheet information:	  				  				
Assets:	  				  				
Cemetery Operations	  	$	1,492,486	  	  	$	1,473,694	  	
Funeral Homes	  	 	194,456	  	  	 	190,443	  	
Corporate	  	 	21,546	  	  	 	21,988	  	
	  	 	 	 	  	 	 	 	
Total assets	  	$	1,708,488	  	  	$	1,686,125	  	
	  	 	 	 	  	 	 	 	
Goodwill:	  				  				
Cemetery Operations	  	$	25,320	  	  	$	25,320	  	
Funeral Homes	  	 	44,531	  	  	 	44,531	  	
	  	 	 	 	  	 	 	 	
Total goodwill	  	$	69,851	  	  	$	69,851	  	
	  	 	 	 	  	 	 	 	
18. SUBSEQUENT EVENTS
On April 20, 2016, the Partnership completed a follow-on public offering of 2,000,000 common units at a public offering price of $23.65 per unit. Net proceeds of the offering, after deducting underwriting discounts and offering expenses, were approximately $44.7 million. Additionally, the underwriters exercised their option to purchase an additional 300,000 common units, resulting in net proceeds of $6.8 million, after deducting discounts and offering expenses. The proceeds from the issuances were used to pay down outstanding indebtedness under the Credit Facility.
On April 26, 2016, the Partnership announced a quarterly cash distribution of $0.66 per common unit pertaining to the results for the first quarter of 2016. The distribution is scheduled to be paid May 13, 2016 to common unit holders of record as of the close of business on May 6, 2016.
Subsequent to March 31, 2016, the Partnership issued 176,208 common units under the ATM Equity Program for net proceeds of approximately $4.2 million.
 
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 ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
Certain statements contained in this Form 10-Q, including, but not limited to, information regarding our operating activities, the plans and objectives of our management, and assumptions regarding our future performance and plans are forward-looking statements. When used in this Form 10-Q, the words “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the results stated or implied in this Form 10-Q.
Our major risk is related to uncertainties associated with the cash flow from pre-need and at-need sales, trusts and financings, which may impact StoneMor’s ability to meet its financial projections, its ability to service its debt and pay distributions, and its ability to increase its 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 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 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.
Our risks and uncertainties are more particularly described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015. Readers are cautioned not to place undue reliance on forward looking statements included in this Form 10-Q, which speak only as of the date hereof. Except as required by applicable laws, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
BUSINESS OVERVIEW
We are a publicly-traded Delaware master-limited partnership (“MLP”) and provider of funeral and cemetery products and services in the death care industry in the United States. As of March 31, 2016, we operated 307 cemeteries in 27 states and Puerto Rico, of which 276 are owned and 31 are operated under lease, management or operating agreements. We also owned and operated 104 funeral homes in 19 states and Puerto Rico.
FINANCIAL PRESENTATION
Our consolidated balance sheets at March 31, 2016 and December 31, 2015, and the consolidated statements of operations for the three months ended March 31, 2016 and 2015 include our accounts and our wholly-owned subsidiaries. Accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the amounts reported in the consolidated balance sheets and related consolidated statements of operations. Actual balances and results could be different from those estimates. All intercompany transactions and balances have been eliminated in the consolidation of the financial statements.
SUBSEQUENT EVENTS
On April 20, 2016, we completed a follow-on public offering of 2,000,000 common units at a public offering price of $23.65 per unit. Net proceeds of the offering, after deducting underwriting discounts and offering expenses, were approximately $44.7 million. Additionally, the underwriters exercised their option to purchase an additional 300,000 common units, resulting in net proceeds of $6.8 million, after deducting discounts and offering expenses. The proceeds from the issuances were used to pay down outstanding indebtedness under the Credit Facility.
On April 26, 2016, we announced a quarterly cash distribution of $0.66 per common unit pertaining to the results for the first quarter of 2016. The distribution is scheduled to be paid May 13, 2016 to common unit holders of record as of the close of business on May 6, 2016.
Subsequent to March 31, 2016, we issued 176,208 common units under an equity distribution agreement (“ATM Equity Program”) for net proceeds of approximately $4.2 million.
REVENUE RECOGNITION
Cemetery Operations
Our cemetery revenues are principally derived from sales of interment rights, merchandise and services. These sales occur both at the time of death, which we refer to as at-need, and prior to the time of death, which we refer to as pre-need. Pre-need sales are typically sold on an installment plan. At-need cemetery sales and pre-need merchandise and services sales are recognized as revenue when the merchandise is delivered or the service is performed. For pre-need sales of interment rights, we recognize the associated revenue when we have collected 10% of the sales price from the customer. We consider our cemetery merchandise delivered to our customer when it is either installed or ready to be installed and delivered to a third-party storage facility until it is needed, with ownership transferred to the customer at that time. Pre-need sales that have not yet been recognized as revenue are recognized as deferred revenues, net, a liability on our consolidated balance sheet. Direct costs associated with pre-need sales that are recognized as deferred revenues, such as sales commissions and cost of goods sold, are recognized as deferred selling and obtaining costs, an asset on our consolidated balance sheet, until the merchandise is delivered or the services are performed.
 
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Funeral Home Operations
Our funeral home revenues are principally derived from at-need and pre-need sales of merchandise and services. Pre-need sales are typically sold on an installment plan. Both at-need and pre-need funeral home sales are recognized as revenue when the merchandise is delivered or the service is performed. Pre-need sales that have not yet been recognized as revenue are recognized as deferred revenues, a liability on our consolidated balance sheet. Direct costs associated with pre-need sales that are recognized as deferred revenues, such as sales commissions and cost of goods sold, are recognized as deferred selling and obtaining costs, an asset on our consolidated balance sheet, until the merchandise is delivered or the services are performed. Our funeral home operations also include revenues related to the sale of term and final expense whole life insurance. As an agent for these insurance sales, we earn and recognize commission-related revenue streams from the sales of these policies.
Trust Investment Income
Sales of cemetery and funeral home merchandise and services are subject to state law. Under these laws, which vary by state, a portion of the cash proceeds received from the sale of interment rights and pre-need sales of cemetery and funeral home merchandise and services are required to be deposited into trusts. For sales of interment rights, a portion of the cash proceeds received are required to be deposited into a perpetual care trust. While the principal balance of the perpetual care trust must remain in the trust in perpetuity, we recognize investment income on such assets as revenue, excluding realized gains and losses from the sale of trust assets. For sales of cemetery and funeral home merchandise and services, a portion of the cash proceeds received are required to be deposited into a merchandise trust until the merchandise is delivered or the services are performed, at which time the funds deposited, along with the associated investment income, may be withdrawn. Investment income from assets held in the merchandise trust is recognized as revenues when withdrawn. Amounts deposited into trusts are invested by third-party investment managers who are selected by the Trust Committee of the board of directors of our general partner. These investment managers are required to invest our trust funds in accordance with applicable state law and internal investment guidelines adopted by the Trust Committee. Our investment managers are monitored by investment advisors selected by the Trust Committee who advise the committee on the determination of asset allocations, evaluate the investment managers and provide detailed monthly reports on the performance of each merchandise and perpetual care trust.
GENERAL TRENDS AND OUTLOOK
We expect our business to be affected by key trends in the deathcare industry, based upon assumptions made by us and information currently available. Deathcare industry factors affecting our financial position and results of operations include, but are not limited to, demographic trends in terms of population growth and average age, which impacts death rates and number of deaths, increasing cremation trends, and increasing memorialization trends. In addition, we are subject to fluctuations in the fair value of equity and fixed-maturity debt securities held in our trusts. These values can be negatively impacted by contractions in the credit market and overall downturns in economic activity. Our ability to make payments on our debt and our ability to make cash distributions to our unitholders depends on our success at managing these industry trends. To the extent our underlying assumptions about or interpretations of available information prove to be incorrect, our actual results may vary materially from our expected results.
RESULTS OF OPERATIONS
Cemetery Operations
Overview
We are currently the second largest owner and operator of cemeteries in the United States. As of March 31, 2016, we operated 307 cemeteries in 27 states and Puerto Rico. We own 276 of these cemeteries and we manage or operate the remaining 31 under lease, operating or management agreements. Revenues from cemetery operations accounted for approximately 78.1% of our total revenues during the three months ended March 31, 2016.
 
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Operating Results
The following table presents operating results for our cemetery operations for the respective reporting periods (in thousands):

 	  	Three months ended
March 31,	 	
 	  	2016	 	  	2015	 	
Merchandise	  	$	30,975	  	  	$	26,937	  	
Services	  	 	12,832	  	  	 	13,910	  	
Interest income	  	 	2,229	  	  	 	2,200	  	
Investment and other	  	 	12,223	  	  	 	9,110	  	
	  	 	 	 	  	 	 	 	
Total revenue	  	 	58,259	  	  	 	52,157	  	
	  	 	 	 	  	 	 	 	
Cost of goods sold	  	 	8,557	  	  	 	7,083	  	
Cemetery expense	  	 	15,856	  	  	 	16,265	  	
Selling expense	  	 	14,576	  	  	 	13,910	  	
General and administrative expense	  	 	9,204	  	  	 	9,329	  	
	  	 	 	 	  	 	 	 	
Total cost and expenses	  	 	48,193	  	  	 	46,587	  	
	  	 	 	 	  	 	 	 	
Operating income	  	$	10,066	  	  	$	5,570	  	
	  	 	 	 	  	 	 	 	
Cemetery merchandise revenues were $31.0 million for the three months ended March 31, 2016, an increase of $4.1 million from $26.9 million for the three months ended March 31, 2015. The increase is principally due to a $3.5 million increase in recognized sales of markers and mausoleums. Cemetery services revenues were $12.8 million for the three months ended March 31, 2016, a decrease of $1.1 million from $13.9 million for the three months ended March 31, 2015. This decrease was primarily due to a reduction in opening and closing service revenues. Investment and other income was $12.2 million for the three months ended March 31, 2016, an increase of $3.1 million from $9.1 million for the three months ended March 31, 2015. This increase was primarily due to a $1.1 million increase in trust income due to higher invested capital amounts and increased income withdrawals from our merchandise trusts and a $1.6 million increase in large land sales. Interest income remained consistent at $2.2 million for both the three months ended March 31, 2016 and 2015.
Cost of goods sold was $8.6 million for the three months ended March 31, 2016, an increase of $1.5 million from $7.1 million for the three months ended March 31, 2015. This increase consisted principally of a $0.2 million increase in perpetual care costs and a $1.3 million increase in merchandise costs, due to an increase in burial right values, and changes in the value and mix of products.
Cemetery expenses were $15.9 million for the three months ended March 31, 2016, a decrease of $0.4 million from $16.3 million for the three months ended March 31, 2015. This decrease was principally due to a $0.7 million decrease in personnel costs, partially offset by a $0.2 million increase in repairs and maintenance expenses.
Selling expenses were $14.6 million for the three months ended March 31, 2016, an increase of $0.7 million from $13.9 million for the three months ended March 31, 2015. This increase was primarily due to a $0.6 million increase in personnel costs.
General and administrative expenses were $9.2 million for the three months ended March 31, 2016, relatively consistent with $9.3 million for the three months ended March 31, 2015.
Funeral Home Operations
Overview
As of three months ended March 31, 2016, we owned and operated 104 funeral homes. These properties are located in 19 states and Puerto Rico. Revenues from funeral home operations accounted for approximately 21.9% of our total revenues during three months ended March 31, 2016.
 
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Operating Results
The following table presents operating results for our funeral home operations for the respective reporting periods (in thousands):

 	  	Three months ended
March 31,	 	
 	  	2016	 	  	2015	 	
Merchandise	  	$	7,456	  	  	$	7,075	  	
Services	  	 	8,867	  	  	 	8,185	  	
	  	 	 	 	  	 	 	 	
Total revenue	  	 	16,323	  	  	 	15,260	  	
	  	 	 	 	  	 	 	 	
Merchandise	  	 	2,149	  	  	 	2,376	  	
Service	  	 	6,451	  	  	 	5,593	  	
Other	  	 	5,140	  	  	 	4,181	  	
	  	 	 	 	  	 	 	 	
Total expenses	  	 	13,740	  	  	 	12,150	  	
	  	 	 	 	  	 	 	 	
Operating income	  	$	2,583	  	  	$	3,110	  	
	  	 	 	 	  	 	 	 	
Funeral home merchandise revenues were $7.5 million for the three months ended March 31, 2016, an increase of $0.4 million from $7.1 million for the three months ended March 31, 2015. Funeral home service revenues were $8.9 million for the three months ended March 31, 2016, a $0.7 million increase from $8.2 million for the three months ended March 31, 2015. Both increases were principally due to increases in casket and service revenues, respectively, compared to the prior period.
Funeral home expenses were $13.7 million for the three months ended March 31, 2016, an increase of $1.5 million from $12.2 million for the three months ended March 31, 2015. This increase principally consists of a $0.9 million increase in personnel costs, a $0.3 million increase in costs associated with insurance-related sales, and a $0.2 million increase in facility costs.
Corporate Overhead
Corporate overhead was $10.3 million for the three months ended March 31, 2016, an increase of $1.2 million from $9.1 million for the three months ended March 31, 2015. This increase was principally due to an increase in acquisition-related costs. These costs may vary from period to period depending on the amount of acquisition activity that takes place.
Depreciation and Amortization
Depreciation and amortization expense was consistent with the prior period, with $3.1 million for the three months ended March 31, 2016, an increase of $0.1 million from $3.0 million for the three months ended March 31, 2015.
Other Gains and Losses
For the three months ended March 31, 2016, other gains and losses included a cease-use expense of $0.5 million that was recorded due to the relocation of corporate headquarters to Trevose, Pennsylvania. We also sold a funeral home building and related real property for a net loss of $0.4 million.
Interest Expense
Interest expense was $5.8 million for the three months ended March 31, 2016, an increase of $0.3 million from $5.5 million for the three months ended March 31, 2015. This increase was principally due to an increase in interest expense on amounts outstanding under the credit facility, which had higher average amounts outstanding during the current period than the comparable period.
Income Tax Benefit (Expense)
Income tax expense was $0.3 million for the three months ended March 31, 2016, an increase of $0.2 million from $0.1 million for the three months ended March 31, 2015. Our effective tax rate differs from our statutory tax rate primarily because our legal entity structure includes different tax filing entities, including a significant number of partnerships that are not subject to paying tax.
 
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Supplemental Data
The following table presents supplemental operating data for the periods presented (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Interments performed	  	 	13,633	  	  	 	14,612	  	
Interment rights sold (1)	  				  				
Lots	  	 	6,606	  	  	 	7,050	  	
Mausoleum crypts (including pre-construction)	  	 	470	  	  	 	618	  	
Niches	  	 	352	  	  	 	369	  	
	  	 	 	 	  	 	 	 	
Net interment rights sold (1)	  	 	7,428	  	  	 	8,037	  	
	  	 	 	 	  	 	 	 	
Number of cemetery contracts written	  	 	26,031	  	  	 	27,399	  	
Aggregate contract amount (in thousands, excluding interest)	  	$	59,549	  	  	$	61,869	  	
Average amount per contract	  	$	2,288	  	  	$	2,258	  	
Number of pre-need cemetery contracts written	  	 	11,376	  	  	 	12,083	  	
Aggregate pre-need contract amount (in thousands, excluding interest)	  	$	33,816	  	  	$	35,893	  	
Average amount per pre-need contract	  	$	2,973	  	  	$	2,971	  	
Number of at-need cemetery contracts written	  	 	14,655	  	  	 	15,316	  	
Aggregate at-need contract amount (in thousands, excluding interest)	  	$	25,733	  	  	$	25,976	  	
Average amount per at-need contract	  	$	1,756	  	  	$	1,696	  	

(1)	Net of cancellations. Sales of double-depth burial lots are counted as two sales.	
LIQUIDITY AND CAPITAL RESOURCES
General
Our primary sources of liquidity are cash generated from operations, borrowings under our revolving credit facility and capital raised through the issuance of additional limited partner units. Our primary cash requirements, in addition to normal operating expenses, are for debt service, capital expenditures and cash distributions. In general, we expect to fund:
 
 	•	 	cash distributions and maintenance capital expenditures through available cash and cash flows from operating activities;	
 
 	•	 	expansion capital expenditures and working capital deficits through cash generated from operations and additional borrowings; and	
 
 	•	 	debt service obligations through additional borrowings or by the issuance of additional limited partner units or asset sales.	
We rely on cash flow from operations, borrowings under our credit facility and the issuance of additional limited partner units to execute our growth strategy and meet our financial commitments and other short-term financial needs. We cannot be certain that additional capital will be available to us to the extent required and on acceptable terms.
We believe that we will have sufficient liquid assets, cash from operations and borrowing capacity to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures for at least the next twelve-month period. However, we are subject to business, operational and other risks that could adversely affect our cash flow. We may supplement our cash generation with proceeds from financing activities, including borrowings under our credit facility and other borrowings, the issuance of additional limited partner units, and the sale of assets and other transactions.
 
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Cash Flows—Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015
Net cash flows provided by operating activities were $5.2 million during the three months ended March 31, 2016, a decrease of $0.7 million from $5.9 million during the three months ended March 31, 2015. The $0.7 million unfavorable movement in net cash provided by operating activities resulted from a $3.0 million unfavorable movement in working capital and a $2.3 million favorable movement in net income excluding non-cash items. The unfavorable movement in working capital was principally due to timing differences, greater net-contributions to our merchandise trusts and the satisfaction of performance obligations. The favorable movement in net income excluding non-cash items was due principally to our cemetery operations.
Net cash used in investing activities was $4.4 million during the three months ended March 31, 2016, an increase of $1.6 million from $2.8 million during the three months ended March 31, 2015. Net cash used in investing activities during the three months ended March 31, 2016 consisted of $4.5 million for capital expenditures, partially offset by proceeds from asset sales of $0.1 million. Net cash used in investing activities during the three months ended March 31, 2015 principally consisted of $2.8 million for capital expenditures.
Net cash flows used in financing activities were $2.5 million for the three months ended March 31, 2016 compared with $7.0 million for the three months ended March 31, 2015. Cash flows used in financing activities during the three months ended March 31, 2016 consisted primarily of cash distributions to unit holders of $21.4 million, partially offset by $18.8 million of net proceeds from the issuance of common units and $0.1 million of net borrowings. Cash flows used in financing activities during the three months ended March 31, 2015 consisted primarily of cash distributions to unit holders of $17.9 million, partially offset by $10.9 million of net borrowings.
Capital Expenditures
Our capital requirements consist primarily of:
 
 	•	 	Expansion capital expenditures – we consider expansion capital expenditures to be capital expenditures that expand the capacity of our existing operations; and	
 
 	•	 	Maintenance capital expenditures – we consider maintenance capital expenditures to be any capital expenditures that are not expansion capital expenditures – generally, this will include expenditures to maintain our facilities.	
The following table summarizes maintenance and expansion capital expenditures, excluding amounts paid for acquisitions, for the periods presented (in thousands):

 	  	Three months ended March 31,	 	
 	  	2016	 	  	2015	 	
Maintenance capital expenditures	  	$	3,004	  	  	$	1,314	  	
Expansion capital expenditures	  	 	1,556	  	  	 	1,501	  	
	  	 	 	 	  	 	 	 	
Total capital expenditures	  	$	4,560	  	  	$	2,815	  	
	  	 	 	 	  	 	 	 	
Issuance of Common Units
During the three months ended March 31, 2016, we issued 727,474 common units under the ATM program for net proceeds of $18.8 million.
Long-Term Debt
Credit Facility
We are a party to the Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”), which provides for a single revolving credit facility of $180.0 million (the “Credit Facility”) maturing on December 19, 2019. Additionally, the Credit Agreement provides for an uncommitted ability to increase the Credit Facility by an additional $70.0 million. Our obligations under the Credit Facility are secured by substantially all of our assets, excluding those held in trust. Borrowings under the Credit Facility are classified as either acquisition draws or working capital draws.
 
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Acquisition draws may be utilized to finance permitted acquisitions, the purchase and construction of mausoleums and related costs or the net amount of merchandise trust deposits. Working capital draws may be utilized to finance working capital requirements, capital expenditures and for other general corporate purposes. The amount of the Credit Facility that is available for working capital draws is subject to a borrowing formula equal to 85% of eligible accounts receivable, as defined within the Credit Agreement. At March 31, 2016, the amount available under the Credit Facility for working capital advances under this limit was $140.1 million, of which $106.5 million was outstanding at March 31, 2016.
Each individual acquisition draw is subject to equal quarterly amortization of the principal amount, with annual principal payments comprised of ten percent of the related advance amount, commencing on the second anniversary of such advance, with the remaining principal due on December 19, 2019, subject to certain mandatory prepayment requirements. Up to $10.0 million of the Credit Facility may be in the form of standby letters of credit, of which there were none outstanding at March 31, 2016 and December 31, 2015.
Borrowings under the Credit Facility bear interest, at our election, at either an adjusted LIBOR rate plus an applicable margin between 2.25% and 4.00% per annum or the base rate (which is the higher of the bank’s prime rate, the Federal funds rate plus 0.5% or one-month LIBOR plus 1.00%) plus an applicable margin between 1.25% and 3.00% per annum. We are also required to pay a fee on the unused portion of the Credit Facility at a rate between 0.375% and 0.8% per annum, which is included within interest expense on our consolidated statements of operations. At March 31, 2016, the weighted average interest rate on outstanding borrowings under the Credit Facility was 3.9%.
The Credit Agreement contains customary covenants that limit our ability to incur additional indebtedness, grant liens, make loans or investments, make cash distributions if a default exists or would result from the distribution, merger or consolidation with other persons, or engage in certain asset dispositions including the sale of all or substantially all of its assets. We were in compliance with these covenants as of March 31, 2016. The Credit Agreement also requires us to maintain:
 
 	•	 	Consolidated EBITDA (as defined in the Credit Agreement), calculated over a period of four consecutive fiscal quarters, to be no less than the sum of (i) $80.0 million plus (ii) 80% of the aggregate Consolidated EBITDA for each permitted acquisition completed after June 30, 2014;	
 
 	•	 	the ratio of Consolidated EBITDA (as defined in the Credit Agreement) to Consolidated Debt Service (as defined in the Credit Agreement), calculated over a period of four fiscal quarters, or the Consolidated Debt Service Coverage Ratio, of not less than 2.50 to 1.00 for any period; and	
 
 	•	 	the ratio of Consolidated Funded Indebtedness (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement), calculated over a period of four fiscal quarters, or the Consolidated Leverage Ratio, of not greater than 4.00 to 1.00 for any period.	
Senior Notes
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. 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. We incurred debt issuance costs and fees of approximately $4.6 million. These costs and fees are deferred and will be amortized over the life of these notes. The Senior Notes mature on June 1, 2021.
At any time prior to June 1, 2016, we may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of certain equity offerings at the redemption price of 107.875%, plus accrued and unpaid interest, if any, to the redemption date, provided that (i) at least 65% of the aggregate principal amount of the Senior Notes remain outstanding and (ii) the redemption occurs within 180 days of the closing date of such equity offering. At any time on or after June 1, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount) set forth below, together with accrued and unpaid interest, if any, to the redemption date, if redeemed during the 12-month period beginning June 1 of the years indicated:
 
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Year	  	Percentage	 	
2016	  	 	105.906	% 	
2017	  	 	103.938	% 	
2018	  	 	101.969	% 	
2019 and thereafter	  	 	100.000	% 	
In addition, at any time prior to June 1, 2016, we may also redeem all or any portion of the Senior Notes at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed, plus the Applicable Premium (as defined in the Indenture), including accrued and unpaid interest. Subject to certain exceptions, upon the occurrence of a Change of Control (as defined in the Indenture), each holder of the Senior Notes will have the right to require us to purchase that holder’s Senior Notes for a cash price equal to 101% of the principal amounts to be purchased, plus accrued and unpaid interest.
The Senior Notes are jointly and severally guaranteed by certain of our material subsidiaries. The Indenture governing the Senior Notes contains covenants, including limitations of our ability to incur certain additional indebtedness and liens, make certain dividends, distributions, redemptions or investments, enter into certain transactions with affiliates, make certain asset sales, and engage in certain mergers, consolidations or sales of all or substantially all of our assets, among other items. As of March 31, 2016, we were in compliance with these covenants.
Cash Distribution Policy
Our partnership agreement requires that we distribute 100% of available cash to our common unitholders and general partner within 45 days following the end of each calendar quarter in accordance with their respective percentage interests. Available cash consists generally of all of our cash receipts, less cash disbursements. Our general partner is granted discretion under the partnership agreement to establish, maintain and adjust reserves for future operating expenses, debt service, maintenance capital expenditures and distributions for the next four quarters. These reserves are not restricted by magnitude, but only by type of future cash requirements with which they can be associated.
Available cash is distributed to the common limited partners and the general partner in accordance with their ownership interests, subject to the general partner’s incentive distribution rights if quarterly cash distributions per limited partner unit exceed specified targets. Incentive distribution rights are generally defined as all cash distributions paid to our general partner that are in excess of its general partner ownership interest. The incentive distribution rights will entitle our general partner to receive the following increasing percentage of cash distributed by us as it reaches certain target distribution levels:
 
 	•	 	13.0% of all cash distributed in any quarter after each common unit has received $0.5125 for that quarter;	
 
 	•	 	23.0% of all cash distributed in any quarter after each common unit has received $0.5875 for that quarter; and	
 
 	•	 	48.0% of all cash distributed in any quarter after each common unit has received $0.7125 for that quarter.	
Agreements with the Archdiocese of Philadelphia
In accordance with the lease and management agreements with the Archdiocese of Philadelphia, we have agreed pay to the Archdiocese aggregate fixed rent of $36.0 million in the following amounts:

Lease Years 1-5	  	None	
Lease Years 6-20	  	$1,000,000 per Lease Year	
Lease Years 21-25	  	$1,200,000 per Lease Year	
Lease Years 26-35	  	$1,500,000 per Lease Year	
Lease Years 36-60	  	None	
The fixed rent for lease years 6 through 11 shall be deferred. If the Archdiocese terminates the agreements pursuant to a lease year 11 termination or we terminate the agreements as a result of a default by the Archdiocese, prior to the end of lease year 11, the deferred fixed rent shall be retained by us. If the agreements are not terminated, the deferred fixed rent shall become due and payable 30 days after the end of lease year 11.
 
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires making estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of actual revenue and expenses during the reporting period. Although we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, actual results may differ from the estimates on which our financial statements are prepared at any given point of time. Changes in these estimates could materially affect our financial position, results of operations or cash flows. Significant items that are subject to such estimates and assumptions include revenue and expense accruals, fair value of merchandise and perpetual care trusts assets, merchandise liability balance and the allocation of purchase price to the fair value of assets acquired. A discussion of our significant accounting policies we have adopted and followed in the preparation of our consolidated financial statements was included in our Annual Report on Form 10-K for the year ended December 31, 2015, and we summarize our significant accounting policies within our consolidated financial statements included in Note 1 under “Item 1” of this Form 10-Q.
 
 ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market” risk refers to the risk of gains or losses arising from changes in interest rates and prices of marketable securities. The disclosures are not meant to be precise indicators of expected future gains or losses, but rather indicators of reasonably possible gains or losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk-sensitive instruments were entered into for purposes other than trading.
INTEREST-BEARING INVESTMENTS
Our fixed-income securities subject to market risk consist primarily of certain investments in our merchandise trusts and perpetual care trusts. As of March 31, 2016, the fair value of fixed-income securities in our merchandise trusts and perpetual care trusts represented 3.4% and 7.0%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair value of these fixed-income securities was $16.5 million and $21.7 million in the merchandise trusts and perpetual care trusts, respectively, as of March 31, 2016. Holding all other variables constant, a hypothetical 1% change in variable interest rates on these fixed-income securities would change the fair market value of the assets in our merchandise trusts and perpetual care trusts each by approximately $0.2 million, based on discounted expected future cash flows. If these securities are held to maturity, no change in fair market value will be realized. Our money market and other short-term investments subject to market risk consist primarily of certain investments in our merchandise trusts and perpetual care trusts. As of March 31, 2016, the fair value of money market and short-term investments in our merchandise trusts and perpetual care trusts represented 11.3% and 11.1%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair value of these money market and short-term investments was $54.3 million and $34.3 million in the merchandise trusts and perpetual care trusts, respectively, as of March 31, 2016. Holding all other variables constant, a hypothetical 1% change in variable interest rates on these money market and short-term investments would change the fair market value of the assets in our merchandise trusts and perpetual care trusts by approximately $0.5 million and $0.3 million respectively, based on discounted expected future cash flows.
MARKETABLE EQUITY SECURITIES
Our marketable equity securities subject to market risk consist primarily of certain investments held in our merchandise trusts and perpetual care trusts. These assets consist of investments in both individual equity securities as well as closed and open-ended mutual funds. As of March 31, 2016, the fair value of marketable equity securities in our merchandise trusts and perpetual care trusts represented 7.9% and 0.9%, respectively, of the fair value of total trust assets. The aggregate of the quoted fair market value of these marketable equity securities was $37.8 million and $2.8 million in our merchandise trusts and perpetual care trusts, respectively, as of March 31, 2016, based on final quoted sales prices. Holding all other variables constant, a hypothetical 10% change in variable interest rates of the equity securities would change the fair market value of the assets in our merchandise trusts and perpetual care trusts each by approximately $3.8 million and $0.3 million, based on discounted expected future cash flows. As of March 31, 2016, the fair value of marketable closed and open-ended mutual funds in our merchandise trusts represented 74.7% of the fair value of total trust assets, 64% of which pertained to fixed-income mutual funds. As of March 31, 2016, the fair value of closed and open-ended mutual funds in our perpetual care trusts represented 80.9% of total trust assets, 73.9% of which pertained to fixed-income mutual funds. The aggregate of the quoted fair market value of these closed and open-ended mutual funds was $358.4 million and $250.9 million, respectively, in the merchandise trusts and perpetual care trusts as of March 31, 2016, based on final quoted sales prices, of which $229.4 million and $185.3 million, respectively,
 
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pertained to fixed-income mutual funds. Holding all other variables constant, a hypothetical 10% change in the average market prices of the closed and open-ended mutual funds would change the fair market value of the assets in our merchandise trusts and perpetual care trusts each by approximately $35.8 million and $25.1 million, based on discounted expected future cash flows.
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, 2016, we had $151.0 million of borrowings outstanding under our Credit Facility, which generally bears interest at a variable rate. Holding all other variables constant, a hypothetical 1% change in variable interest rates would change our consolidated interest expense for the three month period ending March 31, 2016 by approximately $1.5 million.
 
 ITEM 4.	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.
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.
There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
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 Item 6. Exhibits
Exhibits are listed in the Exhibit Index, which is incorporated herein by reference.
 
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 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 9, 2016	 	/s/ Lawrence Miller	
	 	Lawrence Miller	
	 	Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)	
		
May 9, 2016	 	/s/ Sean P. McGrath	
	 	Sean P. McGrath	
	 	Chief Financial Officer (Principal Financial Officer)	
 
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EXHIBIT INDEX

Exhibit
Number	  	Description	
		
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 Sean P. McGrath, 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 Sean P. McGrath, 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, 2016, and December 31, 2015; (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015; (iii) Unaudited Condensed Consolidated Statement of Partners’ Capital (Deficit); (iv) Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2016 and 2015; 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.	
 
38

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 9, 2016	 		 	By:	 	/s/ Lawrence Miller	
	 		 		 	Lawrence Miller	
	 		 		 	President and Chief Executive Officer	
	 		 		 	(Principal Executive Officer)	

CERTIFICATION
Exhibit 31.2
I, Sean P. McGrath, 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 9, 2016	 		 	By:	 	/s/ Sean P. McGrath	
	 		 		 	Sean P. McGrath	
	 		 		 	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, 2016 (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 9, 2016	
		
(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, 2016 (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/ Sean P. McGrath	  		
Chief Financial Officer	  	Date: May 9, 2016	
		
(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.