Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

StoneMor Partners L.P. Announces Improved 2008 Year End Results

Levittown, PA, March 31, 2009 – StoneMor Partners L.P. (NASDAQ: STON) is pleased to announce increases in revenues, operating cash flows, distributable free cash flows, adjusted operating profits, operating profits and net income for the year ended December 31, 2008, as compared to the year ended December 31, 2007, as noted in the table below:


	Three months ended December 31,					Year ended December 31,
	2007			2008		2007		2008
	(In thousands)
Total revenues	$	38,734		$	46,315	$	145,314	$	183,448
Operating cash flow		4,196			2,049		18,973		21,144
Distributable free cash flow (a)		4,803			3,971		20,610		29,511
Adjusted operating profit (a)		6,563			6,504		26,597		33,692
Operating profit		1,507			4,236		12,643		17,350
Net income (loss)	$	(1,219	)	$	1,531	$	2,786	$	4,556

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

The improvements in our operating measures demonstrate our success in executing our operating strategy of achieving growth through accretive acquisitions, improving upon these properties with our pre-need sales program, and installing and servicing the products we sell as soon as possible.

Revenues

Revenues increased by $38.1 million, or 26.2%, to $183.4 million in 2008, as compared to $145.3 million during 2007. Revenues increased by $7.6 million, or 19.6%, to $46.3 million in the fourth quarter of 2008, as compared to $38.7 million during the same period last year.

GAAP accounting requires that we defer the value of contracts written and investment income earned from trusts until such time as the underlying merchandise is delivered or service is performed. Accordingly, periodic changes in GAAP revenue are not necessarily indicative of changes in either the volume or pricing on contracts originated during the period, but rather changes in the timing of when merchandise is delivered or services are performed.

From a business perspective, we believe that the value of contracts written provides for an extremely important measure of economic value added during any period and is the production measure that we use internally to evaluate performance. We believe that it is critical that our unit-holders are provided with this information.

The following table reconciles total revenues to the value of funeral home revenues, cemetery contracts written plus interest income earned from pre-need installment contracts and investment income earned from trusts for 2007 and 2008:


	Three months ended December 31,					Increase			Increase
	2007		2008			(Decrease) ($)			(Decrease) (%)
	(In thousands)
Total cemetery revenues	$	35,758	$	39,964		$	4,206		11.8	%
Total funeral home revenues		2,976		6,351			3,375		113.4	%


Total revenues		38,734		46,315			7,581		19.6	%


Add:

Increase in deferred sales revenue		2,115		5,260		$	3,144		148.7	%
Increase (decrease) in deferred investment income		3,578		(936	)		(4,515	)	n/a


Total value of funeral home revenues, cemetery contracts written, interest income and investment income earned		44,427		50,638		$	6,211		14.0	%


Components:

Pre-need value of cemetery contracts written		16,220		21,814		$	5,595		34.5	%
At-need value of cemetery contracts written and other revenues		12,676		15,445			2,769		21.8	%
Funeral home revenues		2,976		6,351			3,375		113.4	%
Interest income earned		1,067		1,038			(29	)	-2.7	%
Investment income earned on trust assets		11,488		5,989			(5,499	)	-47.9	%

Total	$	44,427	$	50,638		$	6,211		14.0	%


	Year ended December 31,					Increase			Increase
	2007		2008			(Decrease) ($)			(Decrease) (%)
	(In thousands)
Total cemetery revenues	$	134,532	$	159,485		$	24,952		18.5	%
Total funeral home revenues		10,782		23,963			13,181		122.3	%


Total revenues		145,314		183,448			38,133		26.2	%


Add:

Increase in deferred sales revenue		8,680		22,482		$	13,801		159.0	%
Increase (decrease) in deferred investment income		8,748		3,236			(5,511	)	-63.0	%


Total value of funeral home revenues, cemetery contracts written, interest income and investment income earned		162,743		209,166			46,423		28.5	%


Components:

Pre-need value of cemetery contracts written		71,428		91,053			19,626		27.5	%
At-need value of cemetery contracts written and other revenues		46,448		65,247			18,799		40.5	%
Funeral home revenues		10,782		23,963			13,181		122.3	%
Interest income earned		4,710		5,384			674		14.3	%
Investment income earned on trust assets		29,375		23,518			(5,857	)	-19.9	%

	$	162,743	$	209,166		$	46,423		28.5	%

While cemetery revenues increased by $4.2 million, or 11.8%, and $25.0 million, or 18.5%, for the three months and year ended December 31, 2008 compared to 2007, the increase in the actual value of cemetery contracts written exceeded these percentage increases. The actual value of pre-need contracts written increased by $5.6 million, or 34.5%, and $19.6 million, or 27.5%, while the actual value of at-need contracts written and other revenues increased by $2.8 million, or 21.8% and $18.8 million, or 40.5% for the three months and year ended December 31, 2008. These increases are primarily related to the acquisitions the company made in the fourth quarter of 2007. Although all sales revenue measures increased, the Company did notice during November and December some softening in pre-need sales in certain areas of the country. This softening, which is probably a result of the current economic condition, resulted in reduced grave marker and mausoleum sales in these areas. While the Company had expected this trend to continue into 2009, it has experienced an increase in the total value of contracts written during the months of January through March 2009 compared to 2008 somewhat offset by a decrease in the death rate during the 2009 first quarter. This makes us cautiously optimistic about 2009.

The substantial buildup of deferred cemetery revenues that occurred in 2008 ($25.7 million) will eventually be reflected in our income statement as we meet the criteria for revenue recognition in the future.

The decrease in investment income earned on trust assets for both the full year and fourth quarter 2008 as compared to 2007 is primarily due to significant capital gains realized in 2007 and not realized in 2008. This is discussed in the adjusted operating profit section below.

Operating Cash Flow

Operating cash flows increased by $2.2 million, or 11.4%, to $21.1 million in 2008, as compared to $18.9 million during 2007. Operating cash flows decreased by $2.2 million, or 51.1%, to $2.0 million in the fourth quarter of 2008, as compared to $4.2 million during the same period last year.

The percentage increase in year over year operating cash flows is consistent with the increase in adjusted operating profit and is reflective of the increase in the total value of contracts written outpacing the associated increase in expenses incurred combined with no significant change in collection patterns.

The fourth quarter decrease in operating cash flows for 2008 compared to 2007 was primarily caused by timing in the receipt of trust investment income, the lack of capital gains on trust assets and the softening of pre-need cemetery sales experienced during November and December of 2008.

Distributable Free Cash Flow

We define Distributable Free Cash Flow as net cash provided by operating activities before changes in 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. Distributable free cash flows increased by $8.9 million, or 43.2%, to $29.5 million in 2008, as compared to $20.6 million during 2007 but decreased by approximately 17.3% during the fourth quarter. This decrease in mainly attributable to the reasons discussed above.

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 three months ended December 31, 2008 and 2007 follows:


	Three months ended December 31,						Year ended December 31,
	2007			2008			2007			2008
	(In thousands)
Net cash provided by operating activities	$	4,196		$	2,049		$	18,973		$	21,144
Maintenance capital expenditures		(933	)		(1,096	)		(2,153	)		(3,666	)
Working capital borrowings to fund pre-need growth		1,000			2,879			2,420			9,579
Annual expenses paid, less quarterly reserves		540			139			1,370			2,454

Distributable free cash flow (a)	$	4,803		$	3,971		$	20,610		$	29,511

Distributions paid during the period	$	4,752		$	6,762		$	18,724		$	25,658

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

Annual expenses paid, less quarterly reserves as shown in the chart above reflects an attempt to normalize certain items where more than one quarter’s expense was included in the current quarter. We usually pay bonuses and taxes once a year and we have attempted to show the effect of these items on the fourth quarter and annual cash flows. No bonuses were paid in 2008.

During the fourth quarter of 2008 we determined that Distributable Free Cash Flow reported for the nine months ended September 30, 2008 had been slightly understated. Accordingly, the annual Distributable Free Cash Flow shown herein is approximately $0.3 million greater than the sum of the quarterly amounts shown in all 2008 press releases.

Distributable Free Cash Flow is a non-GAAP financial measure, as defined by the Securities and Exchange Commission. Please see the discussion of non-GAAP financial measures within this press release.

Adjusted Operating Profit

We define adjusted operating profit as operating profit before the change in deferred revenues and deferred selling and obtaining costs (excluding adjustments to deferred revenues related to the mark to market adjustment of merchandise trust assets).

Adjusted operating profit provides for a production-based view of our business insomuch that the revenues relate to the value of contracts entered into and current revenue streams on our trust funds. This is the measure we use in evaluating our business. Operating profit (the GAAP financial measure shown in our financial statements) provides for a delivery-based view of our business insomuch that revenues are recognized as we deliver products and services to our customers.

We believe that adjusted operating profit provides an effective view of the economic value added in any given period.

The table below reconciles operating profit (the GAAP financial measure the company believes is most directly comparable to adjusted operating profit) to adjusted operating profit.


	Three months ended December 31,						Year ended December 31,
	2007			2008			2007			2008
	(In thousands)
Operating profit	$	1,507		$	4,236		$	12,643		$	17,350

Increase (decrease) in applicable deferred revenues		5,556			3,566			16,312			22,301

(Increase) decrease in deferred selling and obtaining costs	$	(500	)	$	(1,298	)	$	(2,358	)	$	(5,959	)


Adjusted operating profit	$	6,563		$	6,504		$	26,597		$	33,692

Adjusted operating profit increased by $7.1 million, or 27.4%, to $33.7 million in 2008, as compared to $26.6 million during 2007. Adjusted operating profit decreased by $0.1 million, or 0.9%, to $6.5 million in the fourth quarter of 2008, as compared to $6.6 million during the same period last year.

The increase in adjusted operating profit for the year ended December 31, 2008, as compared to 2007 was primarily caused by a:

•

$39.2 million increase in the value of pre-need and at-need contracts written;

•

$13.2 million increase in funeral home revenues;

•

$0.7 million increase in interest income on pre-need sales contracts.

These positive developments were offset by a:

•

$5.9 million reduction in investment income earned on trust assets; this was primarily due to 2007 realized gains on asset sales;

•

$0.8 million reduction in other cemetery revenues.

•

$10.6 million increase in funeral home expenses;

•

$28.7 million increase in cemetery operating expense.

The slight change in adjusted operating profit for the 4^th quarter of 2008 as compared to 2007 was primarily caused by a:

•

$9.5 million increase in the value of pre-need and at-need contracts written.

•

$3.4 million increase in funeral home revenues.

These positive developments were offset by a:

•

$5.5 million decrease in investment income on trust assets, which was primarily due to 2007 realized gains on the sale of trust assets. There were no realized gains in the fourth quarter of 2008.

•

$1.2 million decrease in other cemetery revenues.

•

$2.7 million increase in funeral home expenses;

•

a $3.5 million increase in cemetery operating expense.

Adjusted Operating Profit is a non-GAAP financial measure, as defined by the Securities and Exchange Commission. Please see the discussion of non-GAAP financial measures within this press release.

Operating Profit

Operating profit increased by $4.7 million, or 37.2%, to $17.3 million in 2008, as compared to $12.6 million during 2008. Operating profit increased by $2.7 million, or 181.1%, to $4.2 million as compared to $1.5 million during the same period last year.

The 2008 improvement was in large part due to a reduction in share-based compensation ($2.5 million). Not including this change, operating profit improved by approximately $2.2 million for the year.

The difference in operating profit and adjusted operating profit is caused by periodic changes in deferred revenues net of their associated deferred expenses. A substantial portion of our 2008 sales increases are still deferred and not as of yet recognized in operating profit. In time, these deferred revenues will be recognized in operating profit as we meet the revenue recognition criteria, which is generally the delivery of merchandise or performance of services.

Net Income (Loss)

Net income increased by $1.8 million, or 64.3%, to $4.6 million in 2008, as compared to $2.8 million during 2008. Net income was $1.5 million in the fourth quarter of 2008, as compared to a $1.2 million net loss during the same period last year.

The increase in 2008 net income was primarily caused by the aforementioned $4.7 million operating profit along with a $0.2 million reduction in refinancing expenses and $0.5 million decrease in tax expense offset by a $3.7 million increase in interest expense.

The $2.7 million improvement in the 4^th quarter 2008 was primarily caused by the aforementioned $2.7 million increase in operating profit and $0.6 million decrease in tax expense offset by a $0.6 million increase in interest expense.

Backlog

At December 31, 2008 our backlog was $217.8 million. Backlog is a measurement of the future operating profit benefit that will be derived from customer contracts that have been executed for which we have not as of yet met the GAAP-based revenue recognition criteria and is equal to:

•

deferred revenue net of deferred revenue on unrealized investment gains or losses;

•

less deferred selling and obtaining costs.

We believe there are no material costs or significant uncertainties remaining to be determined or accrued for us to be able to realize the cash benefit of this future operating profit.

Current Market Conditions and Economic Developments

During the months of November and December, the Company experienced a reduction in the value of contracts written, which we believed resulted from the current economic condition. While this trend seems to have reversed itself in January through March 2009, the Company has taken a proactive approach and implemented expense reduction initiatives.

Our overall business model is strong and is expected to remain strong. This business model is constructed so that revenues are generated from pre-need sales of cemetery merchandise and services, at-need sales of cemetery merchandise and services, and funeral home merchandise and services.

We would not expect the current projected economic downturn to have any material effect on either our at-need sales of cemetery merchandise and services or funeral home merchandise and services. These revenue streams accounted for 48.1% of total revenue in 2008 compared to 38.2% in 2007.

A critical issue for us has been the recent decline in the fair value of equity and (to a lesser degree) fixed maturity debt securities.

We have a substantial portfolio of invested assets in both our Merchandise Trust and the Perpetual Care Trust. Both trusts have a mix of cash and cash equivalents, fixed maturity debt securities and equity securities. Based on the nature of our business, we primarily invest these funds for income generation rather than for capital appreciation. As such, we are able to hold securities for long periods of time and our cash flow is generally not impacted by market fluctuations. Generally, all of the securities in our trust funds have paid their current distributions and have indicated their intention to continue to do so.

We have completed substantial evaluations of our invested assets and have determined that those assets that are other-than-temporarily impaired, and recorded as a reduction in deferred revenues on the balance sheet, do not represent a significant portion of our asset base.

Operating Initiatives

So that we may help protect our cash balances, we have recently instituted our 2009 Expense Reduction Initiative, as previously mentioned. This initiative is a proactive measure designed to reduce our overall expense base in 2009 by approximately $5 million.

We have carefully designed this plan so that there is no negative impact on our ability to market and sell our merchandise and services or service the needs of our customer base.

Amongst the more material components of the 2009 Expense Reduction Initiative are the following:

•

reductions in personnel costs by implementing targeted cutbacks in full-time equivalent employee counts;

•

reductions in various sales incentive programs;

•

reductions in various commissions and overrides;

•

reductions in advertising expenses;

•

reductions in certain corporate overhead items.

Maturation of Debt

Our Series A Notes ($80 million in principal) mature and become due on September 20, 2009.

On February 25, 2009, we, along with certain of our affiliates, entered into a commitment letter dated February 24, 2009 (the “Commitment Letter”) with Bank of America and certain of its affiliates. Pursuant to the Commitment Letter, Bank of America agreed to act as the sole administrative agent for up to a $90 million increase in our current lines of credit (the “Increase”), consisting of (i) up to an additional $80 million in our acquisition line of credit and (ii) an additional $10 million in our revolving line of credit.

Through March 26, 2009, a syndicate of lenders has committed sufficient funds so that along with the current availability under our current acquisition facility we will be able to pay down the principal on our Series A Notes when they become due. If we use our acquisition facility, we will have limited availability to continue our acquisition program. We plan to continue expanding our refinancing efforts as the credit market improves.

Investors’ Conference Call

An investors’ conference call to review the 2008 results (which will be released before this call) will be held on Tuesday, March 31, 2009, at 11:00 a.m. 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 April 14, 2009. The reservation number for the audio replay is as follows: 21419309. 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 232 cemeteries and 60 funeral homes in 26 states and Puerto Rico. StoneMor is the only publicly traded deathcare company structured as a partnership. StoneMor’s cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise.

For additional information about StoneMor Partners L.P., please visit StoneMor’s website, and the Investor Relations section, at http://stonemor.com.

Forward-Looking Statements

Certain statements contained in this press release, including, but not limited to, information regarding the status and progress of the company’s operating activities, the plans and objectives of the company’s management, assumptions regarding the company’s 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(i) of the Securities Act of 1933 and Section 21E(i) 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 effect of the current economic downturn; the impact of the company’s significant leverage on its operating plans; the ability of the company to service its debt; the decline in the fair value of certain equity and debt securities held in the company’s merchandise trust; the company’s 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 political or regulatory environments, including potential changes in tax accounting and trusting policies; the company’s 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 the acquisition of assets in September 2006; and various other uncertainties associated with the deathcare industry and the company’s 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 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.

Non-GAAP Financial Measures

Adjusted Operating Profit

We present Adjusted Operating Profit because management believes it provides for a useful measure of economic value added by presenting an effective matching of the value of current and future revenue sources generated within a given period to the cost of producing such revenue and managing our day to day operations within that same period. It is a significant measure that we believe is an indicator of eventual profit generated within a given period of time.

Adjusted Operating Profit is a non-GAAP financial measure that may not be consistent with other similar non-GAAP financial measures presented by other publicly traded companies.

Distributable Free Cash Flow

We present Distributable Free Cash Flow because management believes this information is a useful adjunct to Net Cash Provided by (Used in) Operating Activities under GAAP. Distributable Free Cash Flow is a significant liquidity metric that we believe is an indicator of our ability to generate cash flow during any quarter at a level sufficient to pay the 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.

StoneMor Partners L.P.

Consolidated Balance Sheets

(in thousands)


	December 31, 2007		December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	13,800	$	7,068
Accounts receivable, net of allowance		32,063		33,090
Prepaid expenses		2,707		3,422
Other current assets		5,193		5,633

Total current assets		53,763		49,213

Long-term accounts receivable - net of allowance		40,081		42,309
Cemetery property		187,552		228,499
Property and equipment, net of accumulated depreciation		53,929		49,615
Merchandise trusts, restricted, at fair value		228,615		161,605
Perpetual care trusts, restricted, at fair value		208,579		152,797
Deferred financing costs - net of accumulated amortization		3,317		2,425
Deferred selling and obtaining costs		35,836		41,795
Deferred tax assets		—		138
Other assets		85		1,000

Total assets	$	811,757	$	729,396


Liabilities and partners’ capital
Current liabilities
Accounts payable and accrued liabilities	$	19,075	$	16,858
Accrued interest		677		659
Current portion, long-term debt		386		80,478

Total current liabilities		20,138		97,995

Other long-term liabilities		—		1,837
Long-term debt		145,778		80,456
Deferred cemetery revenues, net		220,942		193,017
Deferred tax liabilities		—		7,928
Merchandise liability		79,574		75,977

Total liabilities		466,432		457,210


Commitments and contingencies
Non-controlling interest in perpetual care trusts		208,579		152,797

Partners’ capital
General partner		2,737		2,271
Limited partners:
Common		118,598		111,052
Subordinated		15,411		6,066

Total partners’ capital		136,746		119,389


Total liabilities and partners’ capital	$	811,757	$	729,396

See accompanying notes to the Consolidated Financial Statements in Form 10-K Report for the year ended December 31, 2008.

StoneMor Partners L.P.

Consolidated Statement of Operations

(in thousands, except unit data)

(unaudited)


	Three months ended December 31,						Year ended December 31,
	2007			2008			2007		2008
Revenues:
Cemetery
Merchandise	$	17,171		$	21,762		$	74,509	$	90,968
Services		7,024			8,828			28,547		36,894
Investment and other		11,563			9,374			31,476		31,623
Funeral home
Merchandise		1,213			2,483			4,655		9,249
Services		1,763			3,868			6,127		14,714

Total revenues		38,734			46,315			145,314		183,448


Costs and Expenses:
Cost of goods sold (exclusive of depreciation shown separately below):
Perpetual care		868			1,085			3,553		4,326
Merchandise		4,316			4,793			16,118		18,556
Cemetery expense		8,174			10,284			30,767		41,651
Selling expense		7,385			9,006			29,245		34,806
General and administrative expense		4,222			5,359			15,684		21,372
Corporate overhead (including $628 and $373 in unit-based compensation for the three months ended December 31, 2007 and 2008 and $4,741 and $2,262 for the year ended December 31, 2007 and 2008)		8,937			4,850			24,991		21,293
Depreciation and amortization		991			1,635			3,891		5,029
Funeral home expense
Merchandise		377			979			1,575		3,684
Services		1,141			2,277			4,198		9,073
Other		816			1,811			2,649		6,308

Total cost and expenses		37,227			42,079			132,671		166,098


Operating profit		1,507			4,236			12,643		17,350

Expenses related to refinancing		—			—			157		—
Interest expense		2,634			3,193			9,075		12,714


Income before income taxes		(1,127	)		1,043			3,411		4,636

Income taxes
State		14			(175	)		398		304
Federal		78			(313	)		227		(224	)

Total income taxes		92			(488	)		625		80


Net income (loss)	$	(1,219	)	$	1,531		$	2,786	$	4,556


General partner’s interest in net income (loss) for the period	$	(25	)	$	11		$	56	$	91

Limited partners’ interest in net income (loss) for the period
Common	$	(571	)	$	443		$	1,512	$	3,325
Subordinated	$	(622	)	$	93		$	1,218	$	1,140

Net income (loss) per limited partner unit (basic and diluted)	$	(.13	)	$	.05		$	.30	$	.38

Weighted average number of limited partners’ units outstanding (basic and diluted)		9,321			11,801			9,107		11,809

See accompanying notes to the Consolidated Financial Statements in Form 10-K Report for the year ended December 31, 2008.

StoneMor Partners L.P.

Consolidated Statement of Cash Flows

(in thousands)

(unaudited)


	Three months ended December 31,						Year ended December 31,
	2007			2008			2007			2008
OPERATING ACTIVITIES:
Net income (loss)	$	(1,219	)	$	1,531		$	2,786		$	4,556
Adjustments to reconcile net income to net cash provided by operating activity:
Cost of lots sold		846			326			4,382			5,306
Depreciation and amortization		991			1,635			3,891			5,029
Stock-based compensation		628			373			4,741			2,262
Changes in assets and liabilities that provided (used) cash:		—			—
Accounts receivable		510			(1,678	)		(2,430	)		(6,678	)
Allowance for doubtful accounts		(794	)		(1,192	)		10			513
Merchandise trust fund		(5,085	)		(519	)		(5,223	)		(453	)
Prepaid expenses		892			421			196			963
Other current assets		(409	)		(576	)		(1,053	)		(900	)
Other assets		299			27			159			(696	)
Accounts payable and accrued and other liabilities		7,672			3,416			5,179			717
Deferred selling and obtaining costs		(500	)		(1,298	)		(2,162	)		(5,959	)
Deferred cemetery revenue		5,203			3,714			15,668			22,414
Deferred taxes (net)		—			(564	)		—			(564	)
Merchandise liability		(4,838	)		(3,567	)		(7,171	)		(5,366	)

Net cash provided by operating activities		4,196			2,049			18,973			21,144

INVESTING ACTIVITIES:
Cost associated with potential acquisitions		(907	)		498			(2,230	)		(1,579	)
Additions to cemetery property		(913	)		(1,108	)		(2,589	)		(4,376	)
Purchase of subsidiaries, net of common units issued		(76,406	)		(3,395	)		(78,907	)		(5,621	)
Acquisition unit-price guarantee		—			(661	)		—			(661	)
Additions to property and equipment		(1,828	)		(1,096	)		(3,051	)		(4,809	)

Net cash used in investing activities		(80,054	)		(5,762	)		(86,777	)		(17,046	)

FINANCING ACTIVITIES:
Cash distribution		(4,752	)		(6,762	)		(18,724	)		(25,658	)
Additional borrowings on long-term debt		30,753			12,879			76,674			33,188
Repayments of long-term debt		(291	)		(8,709	)		(34,000	)		(18,446	)
Sale of partner units		50,788			18			50,788			86
Cost of financing activities		(68	)		—			(3,048	)		—

Net cash used in financing activities		76,430			(2,574	)		71,690			(10,830	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		572			(6,287	)		3,886			(6,732	)
CASH AND CASH EQUIVALENTS - Beginning of period		13,228			13,355			9,914			13,800

CASH AND CASH EQUIVALENTS - End of period	$	13,800		$	7,068		$	13,800		$	7,068


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	1,805		$	3,372		$	8,526		$	12,732

Cash paid during the period for income taxes	$	227		$	1,510		$	3,484		$	4,820

NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of limited partner units to fund cemetery acquisitions	$	—		$	—		$	—		$	500

See accompanying notes to the Consolidated Financial Statements on Form 10-K Report for the year ended December 31, 2008.