SOURCE: StoneMor Partners L.P.
StoneMor Partners L.P. Announces 2007 Year-End Results
LEVITTOWN, PA--(Marketwire - March 17, 2008) - StoneMor Partners L.P. (
Operationally, 2007 was an excellent year for the company. Almost every business and economic trend that is important to company management improved. However, the drop in the company's unit price since October 2007, resulting in a current distribution yield of over 11%, indicates the marketplace must feel differently. The company also completed a secondary public offering in December 2007. As a result, company management has decided to expand this press release to include a discussion of financial items and trends important to management that demonstrates the security of our current distribution and significant potential of increasing future distributions.
The following table summarizes selected comparative items relating to the company's operating performance for the periods presented.
Three Months Ended Year Ended
December 31, December 31,
----------------- -----------------
2006 2007 2006 2007
-------- -------- -------- --------
(in thousands) (in thousands)
Distributable Free Cash Flow (a) $ 4,166 $ 4,803 $ 16,259 $ 20,610
Net Cash Provided by Operating
Activities 1,896 4,196 18,339 18,973
Total Revenues 33,384 38,734 115,113 145,314
Operating Profit 2,412 1,507 11,958 12,643
Deferred Operating Profit(a) 162,625 185,106
(a) These are non-GAAP financial measures, as defined by the Securities and
Exchange Commission. Please see the reconciliation to GAAP measures
within this press release.
Revenues were up in both the fourth quarter (16%) and year (26%). In December 2007, the company completed its largest acquisition to date, which is expected to contribute to overall improvements in cash flow and operating results in the future. The financial results indicate increased revenues for both the 2007 fourth quarter and year, increased operating profits for the year, and decreased operating profits for the quarter. Cash flow from operations more than doubled for the quarter, and increased by 3% for the year. There are very specific reasons for these trends that affect operating profit:
-- During the fourth quarter of 2006, the company's Compensation
Committee approved a non-cash equity grant to management and the Board of
Directors under the company's long-term incentive plan. The 2006 charge
was $1.2 million, and the 2007 charge is $4.7 million. This grant more
closely aligns management with the goals of our unit holders. There will
be additional non-cash charges each quarter through 2009 relating to the
amortization of this grant; however, future charges will be less than those
recorded during 2007.
-- Additionally, during 2007, the company wrote off $157,000 in
refinancing expense and $571,000 for costs related to an acquisition that
was not consummated during 2007. There are no comparable 2006 charges.
Excluding just the previous three items, Operating Profit would have
increased this year by almost $4.2 million, or 33%. Since the majority of
these charges are not deductible for tax purposes, net earnings would have
shown similar improvements.
-- Even though revenue increased in both the 2007 fourth quarter and the
year (by 16% and 26%), Cemetery Expenses increased 28% for the fourth
quarter and 26% for the year; and General & Administrative Expenses
increased 19% for the fourth quarter and 22% for the year. The majority of
the increase in both categories is due to acquisitions that were
consummated in the fourth quarter of both 2006 and 2007. The revenues
generated from these acquisitions have not yet reached their full positive
impact on the financial results; however, the full level of expenses
accrued immediately. These acquisitions are operating as expected, and are
expected to achieve their full operating potential during the next few
years. As with most acquisitions, it takes a period of time before they
are fully integrated. See discussion on Segment Information.
-- Interest Expense for the 2007 fourth quarter and year is higher than
the prior year due primarily to borrowings for acquisitions consummated at
the end of 2006 and in the fourth quarter of 2007 and working capital
borrowings related to investments in the pre-need growth of the business.
Interest Expense was $518,000 higher in the fourth quarter than last year
and $1.6 million higher for the year.
-- Acquisitions played a large part in the improvement in funeral home
revenues and profitability. Funeral home revenues increased 23% during the
fourth quarter and increased by approximately 76% for the year. This is on
top of a 119% increase during 2006, when compared to 2005. We had similar
improvements in funeral home operating profits, which increased 12% during
the fourth quarter and 84% for the year.
Net Cash Provided by Operating Activities
Net Cash Provided by Operating Activities more than doubled for the fourth quarter from $1.9 million to $4.2 million, and increased slightly for the year. Although our cash flow from operations increased over 2006, the increase was mitigated by the following factors:
1. During the third quarter of 2006 (as previously reported), the company conducted a special program to increase its collections on its accounts receivable. While the company also conducted a similar program during 2007, the actual cash collected was significantly less than it was during 2006. The 2007 cash results were anticipated by the company, as this program's benefits were really one time in nature. Additionally, the 2006 acquisitions contributed to increased accounts receivable through increased pre-need sales in 2007. As a result, the change in accounts receivable, including the allowance for doubtful accounts, from 2006 to 2007 represents a cash flow reduction of $9.6 million. Again, this cash flow reduction was anticipated and planned for by the company.
2. During the month of December 2007, the company realized approximately $2 million in gains from its merchandise trust funds, the cash from which was not distributed to the company before December 31, but will be distributed in the future. This is reflected in the change in the merchandise trust fund balance, as indicated in the consolidated statement of cash flows from a negative $3.5 million in 2006 to a negative $5.2 million in 2007.
As a result of the major acquisition that the company completed in December 2007, we anticipate that accounts receivable balances will continue to increase over the next two years while the company builds its pre-need base of business. Working capital lines of credit have been established to finance the increased accounts receivable and the building of the company's pre-need business. The accounts receivable increase results from sales of pre-need cemetery property and merchandise, whereby the company finances the purchase of these products for our customers and collects the payments over an average period of 34 months. In this manner, the company has the ability to capture local market share in advance of need, which is a key goal of its operating philosophy.
Operating Statistics
The company uses its operating data as an additional method for evaluating its performance. The following approximate percentage increases relate to the quarter and year ended December 31, 2007:
Fourth
Quarter Entire Year
----------- -----------
Number of Interments +5% +13%
Number of Contracts Written +7% +15%
Average Dollar Amount per Contract +4% +3%
Number of Pre-need Contracts Written +14% +18%
Aggregate Pre-need Contract Amount +13% +20%
Aggregate At-need Contract Amount +7 +17%
The significantly positive nature of these operating statistics indicates that:
-- acquisitions are being successfully integrated;
-- the sales force is performing admirably;
-- significant future cash profit is being generated;
-- and there is a significant likelihood of future cash distribution
increases.
All improvements pertain to the same period in the prior year. Increases in number of interments and number of contracts primarily resulted from acquisitions.
Deferred Operating Profit
Deferred Operating Profit represents Deferred Cemetery Revenues, Net in the company's Balance Sheet after deducting Deferred Selling and Obtaining Costs. This calculation is important because it reflects the future operating profit benefit of contracts that have been executed, for the sale of cemetery products, where products have not yet been delivered. We believe there are no material costs or significant uncertainties remaining to be determined or accrued for the company to be able to realize the cash benefit of this future operating profit. As the delivery criteria are satisfied, this Deferred Operating Profit will be realized. The increase in Deferred Operating Profit of $22.5 million, or almost 14%, reflects the positive results being obtained from the company's pre-need sales program.
December 31,
(in thousands)
2006 2007 Change
--------- --------- ---------
Deferred Cemetery Revenues, Net $ 196,103 $ 220,942 $ 24,839
Deferred Selling and Obtaining Costs (33,478) (35,836) (2,358)
--------- --------- ---------
Deferred Operating Profit $ 162,625 $ 185,106 $ 22,481
========= ========= =========
Deferred Operating Profit is a non-GAAP financial measure, as defined by the Securities and Exchange Commission. Please see the discussion of non-GAPP financial measures within this press release.
Available Merchandise Trust Assets
December 31,
(in thousands)
2006 2007
--------- ---------
Merchandise trust balance $ 147,788 $ 228,615
Merchandise liability (45,805) (79,574)
--------- ---------
Available merchandise trust assets $ 101,983 $ 149,041
========= =========
As a result of state law requiring the company to deposit in merchandise trust funds 110% to 400% of its product costs, significant excesses of cash and marketable securities develop. Footnote 5 to the company's financial statements discusses these funds, but, generally, they are recorded at fair value, consist of cash and marketable securities, and are available to the company in accordance with the provisions of state law. The Available Merchandise Trust Assets at the current distribution rate total six years of cash distributions. There are no significant future costs to be incurred against the available trust assets. This is one of the company's assets that provides its investors security in future cash distributions.
Available Merchandise Trust Assets is a non-GAAP measure, as defined by the Securities and Exchange Commission. Please see the discussion of non-GAAP financial measures within this press release.
Segment Information
We have, for the first time, included Segment Information in our annual report and have decided to highlight this information in our press release. The following segment information reports revenues and costs and expenses for the years ended December 31, 2007 and December 31, 2006, in accordance with the way company management evaluates our business. The GAAP Adjustment column reconciles this information to Generally Accepted Accounting Principles, which is the basis on which our financial statements are prepared. The attached segment statements reflect products as revenue when contracts are written and signed, rather than using delivery criteria for product revenue recognition, which is required under Generally Accepted Accounting Principles (GAAP). All expenses are accrued against these revenues and the management operating balance sheet does not contain deferred revenues or deferred costs.
Since the company is primarily focused on pre-need selling and capturing market share, we have determined that the management method of evaluating our operating results is the best way for company management to evaluate company performance.
Total segment revenues for 2007 are $162 million, compared to $128 million for 2006, an increase of 27%. Segment operating earnings for 2007 are $30.3 million, compared to $23.5 million in 2006, an increase of 28%. Earnings before taxes for 2007 are $17.4 million, compared to $12.5 million for 2006, an increase of 39%. When the one-time items as indicated previously in this press release are excluded from 2007 results, the increase in segment earnings before taxes is 79%. The information presented in this paragraph relates to the subtotal column in the two segmented tables that follow.
These statements show the benefit of the company's focus toward pre-need sales in capturing market share and fully reflect the effort of the company's more than 500 sales employees.
The Segment Information Subtotal column is a non-GAAP financial measure that the company believes important for the previously stated reasons.
STONEMOR PARTNERS LP
FOR THE YEAR ENDED DECEMBER 31, 2007
CEMETERIES
----------------------------- FUNERAL
SOUTHEAST NORTHEAST WEST HOMES CORPORATE SUBTOTAL
--------- --------- ---------
--------- --------- --------- -------- --------- ---------
(in thousands)
REVENUES
SALES $ 51,074 $ 33,354 $ 8,729 $ - $ - $ 93,157
SERVICES AND
OTHER 23,405 28,366 7,031 - 1 58,803
FUNERAL HOME - - - 10,782 - 10,782
--------- --------- --------- -------- --------- ---------
TOTAL REVENUES 74,479 61,720 15,760 10,782 1 162,742
--------- --------- --------- -------- --------- ---------
COSTS AND
EXPENSES
COST OF SALES 11,528 7,871 1,856 - - 21,255
SELLING 16,485 10,841 2,829 - 979 31,134
CEMETERY 13,627 13,662 3,478 - - 30,767
GENERAL AND
ADMINISTRATIVE 8,011 5,947 1,726 - - 15,684
FUNERAL HOME
EXPENSE - - - 8,422 - 8,422
CORPORATE
EXPENSE - - - - 25,148 25,148
TOTAL COST &
EXPENSES 49,651 38,321 9,889 8,422 26,127 132,410
--------- --------- --------- -------- --------- ---------
OPERATING
EARNINGS 24,828 23,399 5,871 2,360 (26,126) 30,332
--------- --------- --------- -------- --------- ---------
INTEREST EXP 4,480 3,555 425 615 - 9,075
DEPRECIATION 1,276 919 62 386 1,248 3,891
--------- --------- --------- -------- --------- ---------
EARNINGS
(LOSS)
BEFORE TAXES $ 19,072 $ 18,925 $ 5,384 $ 1,359 $ (27,374) $ 17,366
========= ========= ========= ======== ========= =========
SUPPLEMENTAL
INFORMATION
TOTAL ASSETS $ 349,795 $ 267,906 $ 135,894 $ 39,301 $ 18,861 $ 811,757
========= ========= ========= ======== ========= =========
AMORTIZATION
OF CEMETERY
PROPERTY $ 3,099 $ 2,290 $ 120 $ - $ - $ 5,509
========= ========= ========= ======== ========= =========
LONG LIVED
ASSETS
ACQUIRED $ 16,009 $ 287 $ 18,732 $ 9,089 $ 1,376 $ 45,493
========= ========= ========= ======== ========= =========
STONEMOR PARTNERS LP
FOR THE YEAR ENDED DECEMBER 31, 2007
GAAP
ADJUSTMENT TOTAL
--------- ----------
REVENUES
SALES $ (9,442) $ 83,715
SERVICES AND
OTHER (7,986) 50,817
FUNERAL HOME - 10,782
--------- ----------
TOTAL REVENUES (17,428) 145,314
--------- ----------
COSTS AND
EXPENSES
COST OF SALES $ (1,584) 19,671
SELLING (1,889) 29,245
CEMETERY - 30,767
GENERAL AND
ADMINISTRATIVE - 15,684
FUNERAL HOME
EXPENSE - 8,422
CORPORATE
EXPENSE - 25,148
TOTAL COST &
EXPENSES (3,473) 128,937
--------- ----------
OPERATING
EARNINGS (13,955) 16,377
--------- ----------
INTEREST EXP - 9,075
DEPRECIATION - 3,891
--------- ----------
EARNINGS
(LOSS)
BEFORE TAXES $ (13,955) $ 3,411
========= ==========
SUPPLEMENTAL
INFORMATION
TOTAL ASSETS $ - $ 811,757
========= ==========
AMORTIZATION
OF CEMETERY
PROPERTY $ 292 $ 5,801
========= ==========
LONG LIVED
ASSETS
ACQUIRED $ - $ 45,493
========= ==========
STONEMOR PARTNERS LP
FOR THE YEAR ENDED DECEMBER 31, 2006
CEMETERIES
---------------------------- FUNERAL
SOUTHEAST NORTHEAST WEST HOMES CORPORATE SUBTOTAL
--------- --------- --------
--------- --------- -------- -------- --------- ---------
(in thousands)
REVENUES
SALES $ 43,177 $ 34,218 $ 1,021 $ - $ - $ 78,416
SERVICES AND
OTHER 19,646 23,453 548 - - 43,647
FUNERAL HOME - - - 6,118 - 6,118
--------- --------- -------- -------- --------- ---------
TOTAL REVENUES 62,823 57,671 1,569 6,118 - 128,181
--------- --------- -------- -------- --------- ---------
COSTS AND
EXPENSES
COST OF SALES 9,358 7,376 230 - - 16,964
SELLING 14,537 11,145 310 - - 25,992
CEMETERY 11,214 12,495 635 - - 24,344
GENERAL AND
ADMINISTRATIVE 6,612 5,948 241 - - 12,801
FUNERAL HOME
EXPENSE - - - 4,836 - 4,836
CORPORATE
EXPENSE - - - - 19,795 19,795
TOTAL COST &
EXPENSES 41,721 36,964 1,416 4,836 19,795 104,732
--------- --------- -------- -------- --------- ---------
OPERATING
EARNINGS 21,102 20,707 153 1,282 (19,795) 23,449
--------- --------- -------- -------- --------- ---------
INTEREST EXP 3,787 3,183 97 424 - 7,491
DEPRECIATION 1,258 1,015 1 252 975 3,501
--------- --------- -------- -------- --------- ---------
EARNINGS
(LOSS) BEFORE
TAXES $ 16,057 $ 16,509 $ 55 $ 606 $ (20,770) $ 12,457
========= ========= ======== ======== ========= =========
SUPPLEMENTAL
INFORMATION
TOTAL ASSETS $ 279,604 $ 285,978 $ 40,994 $ 10,622 $ 9,827 $ 627,025
========= ========= ======== ======== ========= =========
AMORTIZATION OF
CEMETERY
PROPERTY $ 2,856 $ 2,419 $ 14 $ - $ - $ 5,289
========= ========= ======== ======== ========= =========
LONG LIVED
ASSETS ACQUIRED $ 3,307 $ 903 $ 799 $ 2,692 $ 193 $ 7,894
========= ========= ======== ======== ========= =========
STONEMOR PARTNERS LP
FOR THE YEAR ENDED DECEMBER 31, 2006
GAAP
ADJUSTMENT TOTAL
--------- ----------
REVENUES
SALES $ (11,565) $ 66,851
SERVICES AND
OTHER (1,503) 42,144
FUNERAL HOME - 6,118
--------- ----------
TOTAL REVENUES (13,068) 115,113
--------- ----------
COSTS AND
EXPENSES
COST OF SALES $ (2,272) 14,692
SELLING (2,806) 23,186
CEMETERY - 24,344
GENERAL AND
ADMINISTRATIVE - 12,801
FUNERAL HOME
EXPENSE - 4,836
CORPORATE
EXPENSE - 19,795
TOTAL COST &
EXPENSES (5,078) 99,654
--------- ----------
OPERATING
EARNINGS (7,990) 15,459
--------- ----------
INTEREST EXP - 7,491
DEPRECIATION - 3,501
--------- ----------
EARNINGS
(LOSS) BEFORE
TAXES $ (7,990) $ 4,467
========= ==========
SUPPLEMENTAL
INFORMATION
TOTAL ASSETS $ - $ 627,025
========= ==========
AMORTIZATION OF
CEMETERY
PROPERTY $ (1) $ 5,288
========= ==========
LONG LIVED
ASSETS ACQUIRED $ - $ 7,894
========= ==========
Distributable Free Cash Flow
The company defines Distributable Free Cash Flow as net cash provided by operating activities before appropriate reserves, if any, less maintenance capital expenditures and other expenditures not related to normal operating activities, plus working capital borrowings to fund pre-need growth during the period presented. A reconciliation between net cash provided by operating activities (the GAAP financial measure the company believes is most directly comparable to distributable free cash flow) and distributable free cash flow for the quarter and year ended December 31, 2007 follows:
Three Months
Ended Year Ended
December 31, December 31,
(in thousands) 2007 2007
------------ ------------
Net cash provided by operating activities $ 4,196 $ 18,973
Maintenance capital expenditures (933) (2,153)
Working capital borrowings for pre-need growth 1,000 2,420
Annual expenses paid, less quarterly reserves 540 1,370
------------ ------------
Distributable free cash flow $ 4,803 $ 20,610
============ ============
Distributions paid during period $ 4,752 $ 18,724
============ ============
Net Cash Provided by Operating Activities both for the quarter and the year ended December 31, 2007 shows the effect of the company's investment in growing its pre-need operation and capturing market share before time of need. The company believes that capturing pre-need market share is in the best interests of all its unit holders, even though this operating philosophy requires the use of working capital borrowings to fund pre-need growth. As a result of the acquisition consummated in December 2007, the company anticipates investing an additional $15 million over the next two years in building its pre-need programs. For this reason, and since the interest expense related to these borrowings is already deducted in net cash provided by operating activities, we have changed the distributable free cash flow calculation to include working capital borrowings for pre-need growth as indicated above.
Annual expenses paid, less quarterly reserves, in the chart above reflect an attempt to normalize certain items where more than one quarter's expense is included in a particular quarter, more than one year's expense is included in the year, or a different year's cash payments are included in the current year. Included in this category are bonuses, taxes, pre-paid items, and other expenses of this nature.
Distributable Free Cash Flow is a non-GAAP financial measure, as defined by the Securities and Exchange Commission. Please see the discussion on non-GAAP financial measures within this press release.
Public Offering
On December 21, 2007, we completed a public offering of 2,650,000 common
units at a price of $20.26 per unit representing 22.2% interest in us,
making a total of 8,505,725 common units outstanding. In conjunction with
this offering, our general partner contributed $1.1 million to maintain its
2% general partner interest. Total gross proceeds from these sales were
$54.8 million, before offering costs and underwriting discounts. The net
proceeds to the Partnership, after deducting underwriting discounts, but
before paying offering costs, from these sales of common units was
$51.8 million. Concurrent with the public offering, the Partnership's
wholly owned subsidiary, StoneMor Operating LLC, and its subsidiaries
(collectively "StoneMor LLC"), all as borrowers, issued new and sold $17.5
million in aggregate principal amount of senior secured notes in a private
placement. The net proceeds of the public offering and the sale of senior
secured notes and borrowings under our acquisition line of credit were used
to purchase 45 cemeteries and 30 funeral homes from Service Corporation
International (
Acquisitions
On December 21, 2007, we entered into the Asset Purchase and Sale Agreement
with Service Corporation International (
The properties are located in Alabama (2 cemeteries and 2 funeral homes), Arkansas (2 funeral homes), California (7 cemeteries and 10 funeral homes), Florida (1 funeral home), Hawaii (1 cemetery), Iowa (1 cemetery), Illinois (5 cemeteries and 2 funeral homes), Indiana (5 cemeteries), Kentucky (1 cemetery), Missouri (2 cemeteries and 1 funeral home), North Carolina (3 cemeteries), Ohio (7 cemeteries and 1 funeral homes), Oregon (2 cemeteries and 3 funeral homes), South Carolina (2 cemeteries and 2 funeral homes), Tennessee (3 cemeteries and 4 funeral homes), Washington (2 cemeteries), West Virginia (1 funeral home), and Puerto Rico (2 cemeteries and 1 funeral home). In the aggregate, in 2006, the 45 cemeteries and 30 funeral homes annually perform approximately 8,300 interments and 3,700 calls, respectively. In 2006, these locations produced annual revenues of approximately $44.0 million.
We acquired two additional cemeteries during the third quarter of 2007 for an aggregate purchase price of approximately $2.4 million.
Investors' Conference Call
An investors' conference call to review fourth quarter and year-end 2007 results (which will be released before this call) will be held on Monday, March 17, 2008, at 11:00 AM Eastern Time. The conference call can be accessed by calling (888) 662-9069. An audio replay of the conference call will be available by calling (800) 633-8284 through 1:00 p.m. Eastern Time on March 31, 2008. The reservation number for the audio replay is as follows: 21373627. The audio replay of the conference call will also be archived on StoneMor's website at http://www.stonemor.com.
About StoneMor Partners L.P.
StoneMor Partners L.P., headquartered in Levittown, Pennsylvania, is an owner and operator of cemeteries and funeral homes in the United States, with 223 cemeteries and 57 funeral homes in 27 states plus Puerto Rico. StoneMor is the only publicly traded deathcare company structured as a partnership. StoneMor's cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise.
For additional information about StoneMor Partners L.P., please visit StoneMor's website, and the Investor Relations section, at http://www.stonemor.com.
Forward-looking Statements
Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of our operating activities, the plans and objectives of our management, assumptions regarding our future performance and plans, and any financial guidance provided, as well as certain information in other filings with the SEC and elsewhere are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "may," "will," "estimate," "continues," "anticipate," "intend," "project," "expect," "predict" and similar expressions identify these forward-looking statements. These forward-looking statements are made subject to certain risks and uncertainties that could cause actual results to differ materially from those stated, including, but not limited to, the following: uncertainties associated with future revenue and revenue growth; the impact of our significant leverage on our operating plans; the ability of us to service our debt; 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; variances in death rates; variances in the use of cremation; 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 producing operating improvement, strong cash flows and further deleveraging; uncertainties associated with the integration or the anticipated benefits of our acquisitions and various other uncertainties associated with the death care industry and our operations in particular.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q and Form 10-Q/A filed with the SEC. We assume no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.
StoneMor Partners L.P.
Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2006 2007
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,914 $ 13,800
Accounts receivable, net of allowance 22,968 32,063
Prepaid expenses 2,801 2,707
Other current assets 2,533 5,193
------------ ------------
Total current assets 38,216 53,763
LONG-TERM ACCOUNTS RECEIVABLE - net of allowance 36,878 40,081
CEMETERY PROPERTY 171,714 187,552
PROPERTY AND EQUIPMENT, net 29,027 53,929
MERCHANDISE TRUSTS, restricted, at fair value 147,788 228,615
PERPETUAL CARE TRUSTS, restricted, at fair value 168,631 208,579
DEFERRED FINANCING COSTS - net of accumulated
amortization 1,242 3,317
DEFERRED SELLING AND OBTAINING COSTS 33,478 35,836
OTHER ASSETS 51 85
------------ ------------
TOTAL ASSETS $ 627,025 $ 811,757
============ ============
LIABILITIES and PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 11,345 $ 19,075
Accrued interest 361 677
Current portion, long-term debt 1,388 386
------------ ------------
Total current liabilities 13,094 20,138
LONG-TERM DEBT 102,104 145,778
DEFERRED CEMETERY REVENUES, net 196,103 220,942
MERCHANDISE LIABILITY 45,805 79,574
------------ ------------
Total liabilities 357,106 466,432
------------ ------------
COMMITMENTS AND CONTINGENCIES
NON-CONTROLLING INTEREST IN PERPETUAL CARE TRUSTS 168,631 208,579
PARTNERS' EQUITY
General partner 1,382 2,737
Limited partners:
Common 71,700 118,598
Subordinated 28,206 15,411
------------ ------------
Total partners' equity 101,288 136,746
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 627,025 $ 811,757
============ ============
See accompanying notes to the consolidated financial statements in the
Annual Report on Form 10-K to be filed for the year ended
December 31, 2007.
StoneMor Partners L.P.
Consolidated Statement of Operations
(in thousands, except unit data)
(unaudited)
Three months ended Year ended
December 31, December 31,
------------------ -------------------
2006 2007 2006 2007
-------- -------- --------- ---------
Revenues:
Cemetery
Merchandise $ 16,761 $ 17,171 $ 58,219 $ 74,509
Services 7,031 7,024 25,555 28,547
Investment and other 7,178 11,563 25,221 31,476
Funeral home
Merchandise 1,040 1,213 2,696 4,655
Services 1,374 1,763 3,422 6,127
-------- -------- --------- ---------
Total revenues 33,384 38,734 115,113 145,314
-------- -------- --------- ---------
Costs and Expenses:
Cemetery cost of goods sold
(exclusive of depreciation shown
separately below):
Perpetual care 732 868 3,109 3,553
Merchandise and Services 3,296 4,316 11,583 16,118
Cemetery expense 6,359 8,174 24,344 30,767
Selling expense 6,497 7,385 23,186 29,245
General and administrative expense 3,546 4,222 12,801 15,684
Corporate overhead 7,789 8,937 19,795 24,991
Depreciation and amortization 913 991 3,501 3,891
Funeral home expense - -
Merchandise 415 377 1,004 1,575
Services 911 1,141 2,285 4,198
Other 514 816 1,547 2,649
-------- -------- --------- ---------
Total cost and expenses 30,972 37,227 103,155 132,671
-------- -------- --------- ---------
OPERATING PROFIT 2,412 1,507 11,958 12,643
EXPENSES RELATED TO REFINANCING - - - 157
INTEREST EXPENSE 2,116 2,634 7,491 9,075
-------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 296 (1,127) 4,467 3,411
INCOME TAXES:
State 53 14 438 398
Federal 283 78 989 227
-------- -------- --------- ---------
Total income taxes 336 92 1,427 625
-------- -------- --------- ---------
NET INCOME (LOSS) $ (40) $ (1,219) $ 3,040 $ 2,786
======== ======== ========= =========
General partners' interest in net
income for the period $ (1) $ (24) $ 60 $ 57
Limited partners' interest in net
income for the period
Common $ (20) $ (742) $ 1,549 $ 1,512
Subordinated $ (19) $ (453) $ 1,430 $ 1,218
Net income per limited partner unit
(basic and diluted) $ (.00) $ (.13) $ .34 $ .30
Weighted average number of limited
partners' units
outstanding (basic and diluted) 8,767 9,321 8,831 9,107
See accompanying notes to the consolidated financial statements in the
Annual Report on Form 10-K to be filed for the year ended
December 31, 2007.
StoneMor Partners L.P.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Three months ended Year ended
December 31, December 31,
------------------ ------------------
2006 2007 2006 2007
-------- -------- -------- --------
OPERATING ACTIVITIES:
Net income (loss) $ (40) $ (1,219) $ 3,040 $ 2,786
Adjustments to reconcile net
income to net cash provided by
operating activity:
Cost of lots sold 1,347 846 4,605 4,382
Depreciation and amortization 913 990 3,501 3,890
Stock-based compensation 1,212 628 1,212 4,741
Other non cash 77 - 453 -
Changes in assets and
liabilities that provided
(used) cash:
Accounts receivable (3,838) 510 5,990 (2,430)
Allowance for doubtful
accounts 725 (794) 1,225 10
Merchandise trust fund (2,098) (5,085) (3,517) (5,223)
Prepaid expenses 198 892 (385) 196
Other current assets (214) (409) (1,299) (1,053)
Other assets 919 300 862 160
Accounts payable and accrued
and other liabilities 4,475 7,672 2,720 5,179
Deferred selling and obtaining
costs (590) (500) (3,118) (2,162)
Deferred cemetery revenue 2,012 5,203 11,159 15,668
Merchandise liability (3,202) (4,838) (8,109) (7,171)
-------- -------- -------- --------
Net cash provided by
operating activities 1,896 4,196 18,339 18,973
-------- -------- -------- --------
INVESTING ACTIVITIES:
Cost associated with potential
acquisitions (199) (907) (219) (2,230)
Purchase of Subsidiaries, net of
common units issued (1,826) (76,406) (11,040) (78,907)
Additions to cemetery property (478) (913) (3,398) (2,589)
Divestiture of funeral home - - 2,091 -
Addtitions to property and
equipment (281) (1,828) (2,059) (3,051)
-------- -------- -------- --------
Net cash used in investing
activities (2,784) (80,054) (14,625) (86,777)
-------- -------- -------- --------
FINANCING ACTIVITIES:
Cash distribution (4,518) (4,752) (17,346) (18,724)
Additional borrowings on
long-term debt 1,298 30,753 17,522 76,674
Repayments of long-term debt (360) (291) (1,021) (34,000)
Sale of partner units - 50,788 120 50,788
Cost of financing activities - (68) - (3,048)
-------- -------- -------- --------
Net cash provided by (used
in) financing activities (3,580) 76,430 (725) 71,690
-------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (4,468) 572 2,989 3,886
CASH AND CASH EQUIVALENTS -
Beginning of period 14,382 13,228 6,925 9,914
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS - End of
period $ 9,914 $ 13,800 $ 9,914 $ 13,800
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the period for
interest $ 2,060 $ 1,805 $ 7,390 $ 8,526
======== ======== ======== ========
Cash paid during the period for
income taxes $ (527) $ 227 $ 2,508 $ 3,484
======== ======== ======== ========
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of limited partner units
to fund cemetery acquisition $ - $ - $ 5,875 $ -
======== ======== ======== ========
See accompanying notes to the consolidated financial statements in the
Annual Report on Form 10-K to be filed for the year ended
December 31, 2007.
Non-GAAP Financial Measures
Distributable Free Cash Flow
We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the minimum quarterly cash distribution to the holders of our common units and subordinated units and for other purposes, such as repaying debt and expanding through strategic investments.
Distributable Free Cash Flow is similar to quantitative standards of free cash flow used throughout the deathcare industry and to quantitative standards of distributable cash flow used throughout the investment community with respect to publicly traded partnerships, but is not intended to be a prediction of the future. However, our calculation of distributable free cash flow may not be consistent with calculations of free cash flow, distributable cash flow or other similarly titled measures of other companies. Distributable Free Cash Flow is not a measure of financial performance and should not be considered as an alternative to cash flows from operating, investing, or financing activities.
Deferred Operating Profit
We present Deferred Operating Profit because management believes it is a significant additional piece of information necessary to get a clear understanding of the financial position of the company. Both Deferred Cemetery Revenues and Deferred Selling and Obtaining costs are shown gross on the company's balance sheet; however, the net of these two numbers is important in assessing the future operating profit to be recognized without additional accrued costs since we believe that almost all costs have already been accrued against this deferred operating profit in the financial statements. This increase should not be considered as an alternative to any of the financial statements and is not a measure of financial performance and should not be considered as an alternative to cash flows from operating, investing, or financing activities.
Available Merchandise Trust Fund Assets
We present Available Merchandise Trust Fund Assets because management believes this information is useful in assessing the company's ability to pay its future distributions. As long as this calculation yields positive amounts significantly in excess of our current distributions, investors should have comfort in knowing cash and securities are available. This amount merely represents the net of two amounts separately disclosed on our balance sheet. The company believes by directing the unit holder to this type of information the unit holder will be more informed about the financial nature of the cemetery business. This calculation should not be considered as an alternative to any of the financial statements and is not a measure of financial performance and should not be considered as an alternative to cash flows from operating, investing, or financing activities.