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1. | GENERAL |
A. | The Partnership understated recognized revenues from the satisfaction of cemetery and funeral home performance obligations in its condensed consolidated statement of operations. The understatement was primarily due to lags in or omissions of the data entry of a contract servicing event. The adjustments to correct these accounting errors resulted in a net increase of $2.2 million in revenues for the three months ended September 30, 2016, of which $1.9 million related to merchandise revenues, and a net increase of $4.1 million in revenues for the nine months ended September 30, 2016, of which $3.5 million related to merchandise revenues. |
B. | In conjunction with the foregoing revenue recognition errors, on its condensed consolidated balance sheet, the Partnership had historically (i) deferred incorrect and imprecise amounts of investment revenues and expenses related to its merchandise trusts, (ii) reserved incorrect amounts for future cancellations related to its cemetery and funeral home performance obligations, and (iii) deferred incorrect amounts of selling costs. The correction of these accounting errors resulted in a net increase in "Selling expense" of $0.5 million for the three months ended September 30, 2016. The correction of these accounting errors resulted in a net increase in “Cemetery investment and other revenues” of $0.1 million for the nine months ended September 30, 2016 due to changes in the inputs used to calculate trust income recognition. This also resulted in a decrease in “Cemetery merchandise revenues” of $0.1 million for the nine months ended September 30, 2016 due to an increase in cancellation reserve expense and an increase in “Selling expense” of $0.9 million for that period. |
C. | Certain components of “Other current assets” and “Accounts payable and accrued liabilities” on its condensed consolidated balance sheet were determined to be inappropriate in the Partnership’s review of accounting policies during its ongoing remediation. The Partnership had historically presented intercompany deposits due to its merchandise and perpetual care trust funds within “Other current assets” and presented intercompany payables to its merchandise and perpetual care trusts in “Accounts payable and accrued liabilities”. The Partnership has determined the intercompany payables and liabilities to its consolidated trust funds should be eliminated. The correction of the error resulted in a reclassification of $1.7 million in the condensed consolidated statements of cash flows between "Other assets" and "Payables and other liabilities" for the nine months ended September 30, 2016. |
D. | Specific to the Partnership’s disclosure in Note 11, Supplemental Condensed Consolidating Financial Information, (“Note 11”) the Partnership recorded incorrect amounts for its individual cemetery and funeral home location-level equity and intercompany balances at its formation and in subsequent acquisitions. Additionally, the Partnership presented certain managed locations as guarantor subsidiaries instead of non-guarantor subsidiaries in Note 11. Note that this error had no impact to amounts presented on the face of the condensed consolidated financial statements. |
E. | The Partnership incorrectly presented the changes in “Accounts receivable, net of allowance” net of the income statement “Provision for cancellations” and omitted certain disclosures regarding the components of the changes in “Accounts receivable, net of allowance” and “Deferred revenues” in its condensed consolidated statement of cash flows. Additionally, specific to the Partnership’s related disclosure in Note 2, Accounts Receivable, Net of Allowance, the Partnership presented activity in the allowance for cancellations that related to deferred revenues on a gross basis instead of on a net basis. The correction of the error resulted in a reclassification of $9.7 million in the condensed consolidated statement of cash flows between "Provision for cancellations" and "Accounts receivable, net of allowance" for the nine months ended September 30, 2016. |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | As Filed | Restatement Adjustments | As Restated | |||||||||||||||||||
Cemetery revenues: | |||||||||||||||||||||||||
Merchandise | A, B | $ | 36,314 | $ | 1,815 | $ | 38,129 | $ | 106,937 | $ | 3,302 | $ | 110,239 | ||||||||||||
Services | A | 13,928 | 332 | 14,260 | 41,067 | 645 | 41,712 | ||||||||||||||||||
Investment and other | B | 14,302 | 38 | 14,340 | 40,689 | 116 | 40,805 | ||||||||||||||||||
Funeral home revenues: | |||||||||||||||||||||||||
Merchandise | A | 6,656 | 52 | 6,708 | 20,681 | 113 | 20,794 | ||||||||||||||||||
Total revenues | 78,536 | 2,237 | 80,773 | 233,747 | 4,176 | 237,923 | |||||||||||||||||||
Selling expense | B | 15,931 | 535 | 16,466 | 46,898 | 876 | 47,774 | ||||||||||||||||||
Funeral home expenses: | |||||||||||||||||||||||||
Services | B | 6,070 | 6 | 6,076 | 18,672 | 15 | 18,687 | ||||||||||||||||||
Total costs and expenses | 83,910 | 541 | 84,451 | 241,917 | 891 | 242,808 | |||||||||||||||||||
Net loss | (11,644 | ) | 1,695 | (9,949 | ) | (27,770 | ) | 3,284 | (24,486 | ) | |||||||||||||||
General partner's interest for the period | (130 | ) | 19 | (111 | ) | 2,043 | 38 | 2,081 | |||||||||||||||||
Limited partners' interest for the period | (11,514 | ) | 1,676 | (9,838 | ) | (29,813 | ) | 3,246 | (26,567 | ) | |||||||||||||||
Net loss per limited partner unit (basic and diluted) | $ | (0.32 | ) | $ | 0.04 | $ | (0.28 | ) | $ | (0.87 | ) | $ | 0.10 | $ | (0.77 | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) | Nine Months Ended September 30, 2016 | ||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | ||||||||||
Net loss | $ | (27,770 | ) | $ | 3,284 | $ | (24,486 | ) | |||||
Provision for cancellations | E | — | 9,732 | 9,732 | |||||||||
Changes in assets and liabilities: | |||||||||||||
Accounts receivable, net of allowance | E | (9,167 | ) | (9,732 | ) | (18,899 | ) | ||||||
Other assets | B, C | (6,270 | ) | 1,721 | (4,549 | ) | |||||||
Deferred selling and obtaining costs | B | (10,716 | ) | 897 | (9,819 | ) | |||||||
Deferred revenues | A, B | 53,996 | (4,175 | ) | 49,821 | ||||||||
Payables and other liabilities | C | 11,034 | (1,727 | ) | 9,307 | ||||||||
Net cash provided by operating activities | $ | 18,487 | $ | — | $ | 18,487 |
• | management, having the authority to approve the action, commits to a plan to sell the entity; |
• | the entity is available for immediate sale in its present condition; |
• | an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; |
• | the sale is probable and transfer is expected to be completed within one year; |
• | the entity is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and |
• | actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
September 30, 2017 | |||
Cemetery property | $ | 281 | |
Buildings and improvements | 718 | ||
Funeral home land | 170 | ||
Assets held for sale | $ | 1,169 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(As restated - see above) | (As restated - see above) | ||||||||||||||
Net loss | $ | (9,576 | ) | $ | (9,949 | ) | $ | (29,719 | ) | $ | (24,486 | ) | |||
Less: Incentive distribution right (“IDR”) payments to general partner | — | — | — | 2,387 | |||||||||||
Net loss to allocate to general and common limited partners | (9,576 | ) | (9,949 | ) | (29,719 | ) | (26,873 | ) | |||||||
Less: General partner’s interest excluding IDRs | (99 | ) | (111 | ) | (309 | ) | (306 | ) | |||||||
Net loss attributable to common limited partners | $ | (9,477 | ) | $ | (9,838 | ) | $ | (29,410 | ) | $ | (26,567 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average number of common limited partner units - basic and diluted (1) | 37,958 | 35,470 | 37,945 | 34,287 |
(1) | The diluted weighted average number of limited partners’ units outstanding presented on the condensed consolidated statement of operations does not include 335 thousand units and 383 thousand units for the three months ended September 30, 2017 and 2016, respectively, and 328 thousand units and 375 thousand units for the nine months ended September 30, 2017 and 2016, respectively, as their effects would be anti-dilutive. |
• | In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard improves the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. |
• | In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard clarifies identifying performance obligations and the licensing implementation guidance. |
• | In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard provides additional guidance on (a) the objective of the collectability criterion, (b) the presentation of sales tax collected from customers, (c) the measurement date of non-cash consideration received, (d) practical expedients in respect of contract modifications and completed contracts at transition and (e) disclosure of the effects of the accounting change in the period of adoption. |
• | In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance, including the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. |
• | In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, which provides additional clarification and implementation guidance on ASU 2014-09 and is effective consistent with the adoption schedule for ASU 2014-09. |
• | Establishing an ASC 606 steering committee comprised of various functions across the Partnership; |
• | Performing the detailed review of customer contracts in scope of ASU 2014-09; |
• | Assessing the potential impact that the guidance will have on our current accounting policies and practices; and |
• | Evaluating the changes, if any, to our business processes, systems and controls necessary to support recognition and disclosure under the new guidance. |
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2. | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE |
September 30, 2017 | December 31, 2016 | ||||||
Customer receivables | $ | 223,861 | $ | 223,326 | |||
Unearned finance income | (20,490 | ) | (21,034 | ) | |||
Allowance for contract cancellations | (25,219 | ) | (26,153 | ) | |||
Accounts receivable, net of allowance | 178,152 | 176,139 | |||||
Less: Current portion, net of allowance | 77,058 | 77,253 | |||||
Long-term portion, net of allowance | $ | 101,094 | $ | 98,886 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(As restated - see Note 1) | |||||||
Balance, beginning of period | $ | 26,153 | $ | 23,985 | |||
Provision for cancellations | 5,123 | 9,732 | |||||
Cancellations | (6,057 | ) | (5,515 | ) | |||
Balance, end of period | $ | 25,219 | $ | 28,202 |
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3. | CEMETERY PROPERTY |
September 30, 2017 | December 31, 2016 | ||||||
Cemetery land | $ | 256,120 | $ | 257,914 | |||
Mausoleum crypts and lawn crypts | 78,088 | 79,401 | |||||
Cemetery property | $ | 334,208 | $ | 337,315 |
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4. | PROPERTY AND EQUIPMENT |
September 30, 2017 | December 31, 2016 | ||||||
Buildings and improvements | $ | 124,551 | $ | 125,442 | |||
Furniture and equipment | 57,170 | 56,408 | |||||
Funeral home land | 14,235 | 11,527 | |||||
Property and equipment, gross | 195,956 | 193,377 | |||||
Less: Accumulated depreciation | (80,840 | ) | (75,096 | ) | |||
Property and equipment, net of accumulated depreciation | $ | 115,116 | $ | 118,281 |
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5. | MERCHANDISE TRUSTS |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 507,079 | $ | 464,676 | |||
Contributions | 44,497 | 49,841 | |||||
Distributions | (65,723 | ) | (49,168 | ) | |||
Interest and dividends | 18,252 | 17,657 | |||||
Capital gain distributions | 927 | 264 | |||||
Realized gains and losses | 14,192 | 3,727 | |||||
Other than temporary impairment | — | (7,278 | ) | ||||
Taxes | (1,306 | ) | (1,721 | ) | |||
Fees | (1,855 | ) | (2,234 | ) | |||
Unrealized change in fair value | (3,882 | ) | 28,840 | ||||
Balance, end of period | $ | 512,181 | $ | 504,604 |
September 30, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 10,874 | $ | — | $ | — | $ | 10,874 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 206 | 1 | (64 | ) | 143 | |||||||||||
Corporate debt securities | 2 | 2,308 | 141 | (188 | ) | 2,261 | |||||||||||
Total fixed maturities | 2,514 | 142 | (252 | ) | 2,404 | ||||||||||||
Mutual funds - debt securities | 1 | 249,209 | 4,153 | (426 | ) | 252,936 | |||||||||||
Mutual funds - equity securities | 1 | 81,029 | 3,412 | (5,001 | ) | 79,440 | |||||||||||
Other investment funds (1) | 131,010 | 169 | (353 | ) | 130,826 | ||||||||||||
Equity securities | 1 | 15,712 | 2,720 | (445 | ) | 17,987 | |||||||||||
Other invested assets | 2 | 8,797 | — | — | 8,797 | ||||||||||||
Total investments | $ | 499,145 | $ | 10,596 | $ | (6,477 | ) | $ | 503,264 | ||||||||
West Virginia Trust Receivable | 8,917 | — | — | 8,917 | |||||||||||||
Total | $ | 508,062 | $ | 10,596 | $ | (6,477 | ) | $ | 512,181 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days, and private credit funds, which have lockup periods of seven years with two potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2017, there were $32.4 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 17,317 | $ | — | $ | — | $ | 17,317 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 172 | 2 | (44 | ) | 130 | |||||||||||
Corporate debt securities | 2 | 6,311 | 269 | (202 | ) | 6,378 | |||||||||||
Total fixed maturities | 6,483 | 271 | (246 | ) | 6,508 | ||||||||||||
Mutual funds - debt securities | 1 | 236,159 | 1,580 | (96 | ) | 237,643 | |||||||||||
Mutual funds - equity securities | 1 | 126,215 | 3,361 | (533 | ) | 129,043 | |||||||||||
Other investment funds (1) | 60,017 | 603 | (387 | ) | 60,233 | ||||||||||||
Equity securities | 1 | 35,079 | 3,640 | (192 | ) | 38,527 | |||||||||||
Other invested assets | 2 | 9,239 | — | — | 9,239 | ||||||||||||
Total investments | $ | 490,509 | $ | 9,455 | (1,454 | ) | $ | 498,510 | |||||||||
West Virginia Trust Receivable | 8,569 | — | — | 8,569 | |||||||||||||
Total | $ | 499,078 | $ | 9,455 | $ | (1,454 | ) | $ | 507,079 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days. |
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | — | $ | 88 | $ | 55 | $ | — | |||||||
Corporate debt securities | 172 | 1,835 | 242 | 12 | |||||||||||
Total fixed maturities | $ | 172 | $ | 1,923 | $ | 297 | $ | 12 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
September 30, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 123 | $ | 64 | $ | 123 | $ | 64 | |||||||||||
Corporate debt securities | 68 | 1 | 454 | 187 | 522 | 188 | |||||||||||||||||
Total fixed maturities | 68 | 1 | 577 | 251 | 645 | 252 | |||||||||||||||||
Mutual funds - debt securities | 27,882 | 142 | 1,911 | 284 | 29,793 | 426 | |||||||||||||||||
Mutual funds - equity securities | 50,406 | 5,001 | — | — | 50,406 | 5,001 | |||||||||||||||||
Other investment funds | 60,896 | 353 | — | — | 60,896 | 353 | |||||||||||||||||
Equity securities | 3,460 | 418 | 467 | 27 | 3,927 | 445 | |||||||||||||||||
Total | $ | 142,712 | $ | 5,915 | $ | 2,955 | $ | 562 | $ | 145,667 | $ | 6,477 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 87 | $ | 44 | $ | 87 | $ | 44 | |||||||||||
Corporate debt securities | 556 | 6 | 871 | 196 | 1,427 | 202 | |||||||||||||||||
Total fixed maturities | 556 | 6 | 958 | 240 | 1,514 | 246 | |||||||||||||||||
Mutual funds - debt securities | 6,040 | 61 | 754 | 35 | 6,794 | 96 | |||||||||||||||||
Mutual funds - equity securities | 7,475 | 357 | 2,578 | 176 | 10,053 | 533 | |||||||||||||||||
Other investment funds | 37,357 | 387 | — | — | 37,357 | 387 | |||||||||||||||||
Equity securities | 1,292 | 89 | 413 | 103 | 1,705 | 192 | |||||||||||||||||
Total | $ | 52,720 | $ | 900 | $ | 4,703 | $ | 554 | $ | 57,423 | $ | 1,454 |
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6. | PERPETUAL CARE TRUSTS |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 333,780 | $ | 307,804 | |||
Contributions | 7,156 | 13,111 | |||||
Distributions | (13,449 | ) | (10,923 | ) | |||
Interest and dividends | 12,935 | 13,609 | |||||
Capital gain distributions | 403 | 477 | |||||
Realized gains and losses | 1,371 | (413 | ) | ||||
Other than temporary impairment | — | (466 | ) | ||||
Taxes | (420 | ) | (566 | ) | |||
Fees | (1,095 | ) | (2,189 | ) | |||
Unrealized change in fair value | (2,070 | ) | 14,479 | ||||
Balance, end of period | $ | 338,611 | $ | 334,923 |
September 30, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 9,195 | $ | — | $ | — | $ | 9,195 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 560 | 5 | (40 | ) | 525 | |||||||||||
Corporate debt securities | 2 | 5,778 | 166 | (147 | ) | 5,797 | |||||||||||
Total fixed maturities | 6,338 | 171 | (187 | ) | 6,322 | ||||||||||||
Mutual funds - debt securities | 1 | 156,057 | 3,318 | (482 | ) | 158,893 | |||||||||||
Mutual funds - equity securities | 1 | 32,573 | 1,374 | (1,470 | ) | 32,477 | |||||||||||
Other investment funds (1) | 107,563 | 2,697 | (1,065 | ) | 109,195 | ||||||||||||
Equity securities | 1 | 22,389 | 1,701 | (1,707 | ) | 22,383 | |||||||||||
Other invested assets | 2 | 146 | — | — | 146 | ||||||||||||
Total investments | $ | 334,261 | $ | 9,261 | $ | (4,911 | ) | $ | 338,611 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from five to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2017, there were $78.2 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 16,113 | $ | — | $ | — | $ | 16,113 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 483 | 14 | (23 | ) | 474 | |||||||||||
Corporate debt securities | 2 | 12,598 | 380 | (152 | ) | 12,826 | |||||||||||
Total fixed maturities | 13,081 | 394 | (175 | ) | 13,300 | ||||||||||||
Mutual funds - debt securities | 1 | 127,033 | 1,187 | (669 | ) | 127,551 | |||||||||||
Mutual funds - equity securities | 1 | 30,708 | 1,940 | (26 | ) | 32,622 | |||||||||||
Other investment funds (1) | 119,196 | 2,672 | (622 | ) | 121,246 | ||||||||||||
Equity securities | 1 | 20,978 | 2,150 | (432 | ) | 22,696 | |||||||||||
Other invested assets | 2 | 252 | — | — | 252 | ||||||||||||
Total investments | $ | 327,361 | $ | 8,343 | $ | (1,924 | ) | $ | 333,780 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from six to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of December 31, 2016, there were $45.1 million in unfunded commitments to the private credit funds, which are callable at any time. |
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | 52 | $ | 267 | $ | 166 | $ | 40 | |||||||
Corporate debt securities | 843 | 4,514 | 340 | 100 | |||||||||||
Total fixed maturities | $ | 895 | $ | 4,781 | $ | 506 | $ | 140 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
September 30, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 456 | $ | 40 | $ | 456 | $ | 40 | |||||||||||
Corporate debt securities | 659 | 12 | 1,640 | 135 | 2,299 | 147 | |||||||||||||||||
Total fixed maturities | 659 | 12 | 2,096 | 175 | 2,755 | 187 | |||||||||||||||||
Mutual funds - debt securities | 15,678 | 235 | 8,408 | 247 | 24,086 | 482 | |||||||||||||||||
Mutual funds - equity securities | 15,381 | 1,458 | 41 | 12 | 15,422 | 1,470 | |||||||||||||||||
Other investment funds | 56,165 | 1,065 | — | — | 56,165 | 1,065 | |||||||||||||||||
Equity securities | 9,238 | 1,686 | 37 | 21 | 9,275 | 1,707 | |||||||||||||||||
Total | $ | 97,121 | $ | 4,456 | $ | 10,582 | $ | 455 | $ | 107,703 | $ | 4,911 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 283 | $ | 23 | $ | 283 | $ | 23 | |||||||||||
Corporate debt securities | 747 | 10 | 2,980 | 142 | 3,727 | 152 | |||||||||||||||||
Total fixed maturities | 747 | 10 | 3,263 | 165 | 4,010 | 175 | |||||||||||||||||
Mutual funds - debt securities | 24,026 | 620 | 1,908 | 49 | 25,934 | 669 | |||||||||||||||||
Mutual funds - equity securities | 3,836 | 16 | 452 | 10 | 4,288 | 26 | |||||||||||||||||
Other investment funds | 37,577 | 622 | — | — | 37,577 | 622 | |||||||||||||||||
Equity securities | 4,532 | 409 | 145 | 23 | 4,677 | 432 | |||||||||||||||||
Total | $ | 70,718 | $ | 1,677 | $ | 5,768 | $ | 247 | $ | 76,486 | $ | 1,924 |
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7. | LONG-TERM DEBT |
September 30, 2017 | December 31, 2016 | ||||||
Credit facility | $ | 142,925 | $ | 137,125 | |||
7.875% Senior Notes, due June 2021 | 172,975 | 172,623 | |||||
Notes payable - acquisition debt | 354 | 502 | |||||
Notes payable - acquisition non-competes | 395 | 928 | |||||
Insurance and vehicle financing | 1,488 | 1,807 | |||||
Less deferred financing costs, net of accumulated amortization | (10,451 | ) | (10,859 | ) | |||
Total debt | 307,686 | 302,126 | |||||
Less current maturities | (1,114 | ) | (1,775 | ) | |||
Total long-term debt | $ | 306,572 | $ | 300,351 |
• | the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, or the Consolidated Leverage Ratio, as of the last day of any fiscal quarter, commencing on September 30, 2016, determined for the period of four consecutive fiscal quarters ending on such date (the “Measurement Period”), to be greater than 4.50 to 1.0 for the periods ended September 30, 2017 and December 31, 2017, 4.25 to 1.0 for periods ending in 2018 and 4.00 to 1.0 for periods thereafter, which may be increased after January 1, 2019 to 4.50 to 1.0 (in case of a Designated Acquisition made subsequent to the last day of the immediately preceding fiscal quarter) as of the last day of the fiscal quarter in which such Designated Acquisition occurs and as of the last day of the immediately succeeding fiscal quarter; |
• | the ratio of Consolidated EBITDA to Consolidated Debt Service, or the Consolidated Debt Service Coverage Ratio, as of the last day of any fiscal quarter, commencing on September 30, 2016 to be less than 2.50 to 1.0 for any Measurement Period; and |
• | the ratio of Consolidated EBITDA (reduced by the amount of capital expenditures not financed with debt other than Revolving Commitments, taxes and restricted payments including distributions paid in cash) to Consolidated Fixed Charges, as of the last day of any fiscal quarter, commencing on December 31, 2017, to be less than 1.20 to 1.0 for any Measurement Period. |
Year | Percentage |
2017 | 103.938% |
2018 | 101.969% |
2019 and thereafter | 100.000% |
|
8. | DEFERRED REVENUES |
September 30, 2017 | December 31, 2016 | ||||||
Deferred contract revenues | $ | 799,552 | $ | 782,120 | |||
Deferred merchandise trust revenue | 100,185 | 76,512 | |||||
Deferred merchandise trust unrealized gains | 4,116 | 8,001 | |||||
Deferred revenues | $ | 903,853 | $ | 866,633 | |||
Deferred selling and obtaining costs | $ | 124,137 | $ | 116,890 |
|
9. | COMMITMENTS AND CONTINGENCIES |
• | Anderson v. StoneMor Partners, LP, et al., No. 2:16-cv-06111, filed on November 21, 2016, in the United States District Court for the Eastern District of Pennsylvania. The plaintiffs in this case (as well as Klein v. StoneMor Partners, LP, et al., No. 2:16-cv-06275, filed in the United States District Court for the Eastern District of Pennsylvania on December 2, 2016, which has been consolidated with this case) brought an action on behalf of a putative class of the holders of Partnership units and allege that the Partnership made misrepresentations to investors in violation of Section 10(b) of the Securities Exchange Act of 1934 by, among other things and in general, failing to clearly disclose the use of proceeds from debt and equity offerings by making allegedly false or misleading statements concerning (a) the Partnership’s strength or health in connection with a particular quarter’s distribution announcement, (b) the connection between operations and distributions and (c) the Partnership’s use of cash from equity offerings and its credit facility. Lead plaintiffs have been appointed in this case, and filed a Consolidated Amended Class Action Complaint on April 24, 2017. Defendants filed a motion to dismiss that Consolidated Amended Complaint on June 8, 2017. See Note 15 for a discussion of the status of this motion. Plaintiffs seek damages from the Partnership and certain of its officers and directors on behalf of the class of Partnership unitholders, as well as costs and attorneys’ fees. |
• | Bunim v. Miller, et al., No. 2:17-cv-00519-ER, pending in the United States District Court for the Eastern District of Pennsylvania, and filed on February 6, 2017. The plaintiff in this case brought, derivatively on behalf of the Partnership, claims that StoneMor GP’s officers and directors aided and abetted in breaches of StoneMor GP’s purported fiduciary duties by, among other things and in general, allegedly making misrepresentations through the use of non-GAAP accounting standards in its public filings, by allegedly failing to clearly disclose the use of proceeds from debt and equity offerings, and by allegedly approving unsustainable distributions. The plaintiff also claims that these actions and misrepresentations give rise to causes of action for gross mismanagement, unjust enrichment, and (in connection with a purportedly misleading proxy statement filed in 2014) violations of Section 14(a) of the Securities Exchange Act of 1934. The derivative plaintiff seeks an award of damages, attorneys’ fees and costs in favor of the Partnership as nominal plaintiff, as well as general compliance and governance changes. This case has been stayed, by the agreement of the parties, pending final resolution of the motion to dismiss filed in the Anderson case, provided that either side may terminate the stay on 30 days' notice. See Note 15 for a discussion of the status of this motion. |
• | Muth v. StoneMor G.P. LLC, et al., December Term, 2016, No. 01196 and Binder v. StoneMor G.P. LLC, et al., January Term, 2017, No. 04872, both pending in the Court of Common Pleas for Philadelphia County, Pennsylvania, and filed on December 20, 2016 and February 3, 2017, respectively. In these cases, the plaintiffs brought, derivatively on behalf of the Partnership, claims that StoneMor GP’s officers and directors aided and abetted in breaches of StoneMor GP’s purported fiduciary duties by, among other things and in general, allegedly making misrepresentations through the use of non-GAAP accounting standards in its public filings and by failing to clearly disclose the use of proceeds from debt and equity offerings, as well as approving unsustainable distributions. The plaintiffs also claim that these actions and misrepresentations give rise to a cause of action for unjust enrichment. The derivative plaintiffs seek an award of damages, attorneys’ fees and costs in favor of the Partnership as nominal plaintiff, as well as alterations to the procedures for electing members to the board of StoneMor GP, and other compliance and governance changes. These cases have been consolidated and stayed, by the agreement of the parties, pending final resolution of the motion to dismiss filed in the Anderson case, provided that either side may terminate the stay on 30 days' notice. See Note 15 for a discussion of the status of this motion. |
Lease Years 1-5 (May 28, 2014 - May 31, 2019) | None |
Lease Years 6-20 (June 1, 2019 - May 31, 2034) | $1,000,000 per Lease Year |
Lease Years 21-25 (June 1, 2034 - May 31, 2039) | $1,200,000 per Lease Year |
Lease Years 26-35 (June 1, 2039 - May 31, 2049) | $1,500,000 per Lease Year |
Lease Years 36-60 (June 1, 2049 - May 31, 2074) | None |
|
10. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
|
11. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 5,614 | $ | 2,846 | $ | — | $ | 8,460 | |||||||||||
Assets held for sale | — | — | 1,169 | — | — | 1,169 | |||||||||||||||||
Other current assets | — | 3,877 | 88,438 | 17,216 | — | 109,531 | |||||||||||||||||
Total current assets | — | 3,877 | 95,221 | 20,062 | — | 119,160 | |||||||||||||||||
Long-term accounts receivable | — | 2,062 | 85,867 | 13,165 | — | 101,094 | |||||||||||||||||
Cemetery property and equipment | — | 790 | 413,445 | 35,089 | — | 449,324 | |||||||||||||||||
Merchandise trusts | — | — | — | 512,181 | — | 512,181 | |||||||||||||||||
Perpetual care trusts | — | — | — | 338,611 | — | 338,611 | |||||||||||||||||
Deferred selling and obtaining costs | — | 6,055 | 96,891 | 21,191 | — | 124,137 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,129 | 62,047 | — | 134,176 | |||||||||||||||||
Other assets | — | — | 17,873 | 2,798 | — | 20,671 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 204,948 | 122,924 | 559,338 | — | (887,210 | ) | — | ||||||||||||||||
Total assets | $ | 204,948 | $ | 135,708 | $ | 1,340,764 | $ | 1,005,144 | $ | (887,210 | ) | $ | 1,799,354 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 113 | $ | 52,046 | $ | 1,271 | $ | — | $ | 53,430 | |||||||||||
Long-term debt, net of deferred financing costs | 68,202 | 104,774 | 133,596 | — | — | 306,572 | |||||||||||||||||
Deferred revenues | — | 33,588 | 766,644 | 103,621 | — | 903,853 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 338,611 | — | 338,611 | |||||||||||||||||
Other long-term liabilities | — | — | 46,252 | 13,890 | — | 60,142 | |||||||||||||||||
Due to affiliates | — | — | 172,976 | 574,984 | (747,960 | ) | — | ||||||||||||||||
Total liabilities | 68,202 | 138,475 | 1,171,514 | 1,032,377 | (747,960 | ) | 1,662,608 | ||||||||||||||||
Partners' capital | 136,746 | (2,767 | ) | 169,250 | (27,233 | ) | (139,250 | ) | 136,746 | ||||||||||||||
Total liabilities and partners' capital | $ | 204,948 | $ | 135,708 | $ | 1,340,764 | $ | 1,005,144 | $ | (887,210 | ) | $ | 1,799,354 |
December 31, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 9,145 | $ | 3,425 | $ | — | $ | 12,570 | |||||||||||
Other current assets | — | 4,567 | 83,765 | 17,919 | — | 106,251 | |||||||||||||||||
Total current assets | — | 4,567 | 92,910 | 21,344 | — | 118,821 | |||||||||||||||||
Long-term accounts receivable | — | 1,725 | 83,993 | 13,168 | — | 98,886 | |||||||||||||||||
Cemetery property and equipment | — | 930 | 420,077 | 34,589 | — | 455,596 | |||||||||||||||||
Merchandise trusts | — | — | — | 507,079 | — | 507,079 | |||||||||||||||||
Perpetual care trusts | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Deferred selling and obtaining costs | — | 5,668 | 91,252 | 19,970 | — | 116,890 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,963 | 62,911 | — | 135,874 | |||||||||||||||||
Other assets | — | — | 17,244 | 2,843 | — | 20,087 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 258,417 | 182,060 | 557,455 | — | (997,932 | ) | — | ||||||||||||||||
Total assets | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 320 | $ | 38,336 | $ | 237 | $ | — | $ | 38,893 | |||||||||||
Long-term debt, net of deferred financing costs | 68,063 | 104,560 | 127,728 | — | — | 300,351 | |||||||||||||||||
Deferred revenues | — | 30,321 | 738,184 | 98,128 | — | 866,633 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Other long-term liabilities | — | — | 45,802 | 11,200 | — | 57,002 | |||||||||||||||||
Due to affiliates | — | — | 172,623 | 581,427 | (754,050 | ) | — | ||||||||||||||||
Total liabilities | 68,063 | 135,201 | 1,122,673 | 1,024,772 | (754,050 | ) | 1,596,659 | ||||||||||||||||
Partners’ capital | 190,354 | 59,749 | 213,221 | (29,088 | ) | (243,882 | ) | 190,354 | |||||||||||||||
Total liabilities and partners’ capital | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 |
Three Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Total revenues | $ | — | $ | 1,842 | $ | 69,423 | $ | 14,648 | $ | (1,879 | ) | $ | 84,034 | ||||||||||
Total costs and expenses | — | (2,883 | ) | (71,234 | ) | (14,144 | ) | 1,879 | (86,382 | ) | |||||||||||||
Other gains, net | — | — | 338 | — | — | 338 | |||||||||||||||||
Net loss from equity investment in subsidiaries | (8,218 | ) | (8,674 | ) | — | — | 16,892 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (3,264 | ) | (235 | ) | — | (6,944 | ) | ||||||||||||
Net income (loss) before income taxes | (9,576 | ) | (11,802 | ) | (4,737 | ) | 269 | 16,892 | (8,954 | ) | |||||||||||||
Income tax expense | — | — | (622 | ) | — | — | (622 | ) | |||||||||||||||
Net income (loss) | $ | (9,576 | ) | $ | (11,802 | ) | $ | (5,359 | ) | $ | 269 | $ | 16,892 | $ | (9,576 | ) | |||||||
Three Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Total revenues | $ | — | $ | 2,312 | $ | 69,293 | $ | 13,624 | $ | (4,456 | ) | $ | 80,773 | ||||||||||
Total costs and expenses | — | (3,098 | ) | (69,725 | ) | (16,084 | ) | 4,456 | (84,451 | ) | |||||||||||||
Other losses, net | — | — | (506 | ) | — | — | (506 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (8,591 | ) | (7,658 | ) | — | — | 16,249 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (2,295 | ) | (194 | ) | — | (5,934 | ) | ||||||||||||
Net loss before income taxes | (9,949 | ) | (10,531 | ) | (3,233 | ) | (2,654 | ) | 16,249 | (10,118 | ) | ||||||||||||
Income tax benefit | — | — | 169 | — | — | 169 | |||||||||||||||||
Net loss | $ | (9,949 | ) | $ | (10,531 | ) | $ | (3,064 | ) | $ | (2,654 | ) | $ | 16,249 | $ | (9,949 | ) |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the three months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $1.4 million increase in non-guarantor revenues and a $1.4 million increase in non-guarantor costs and expenses and corresponding reductions to guarantor revenues and costs and expenses for the three months ended September 30, 2016. |
Nine Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Total revenues | $ | — | $ | 5,381 | $ | 209,331 | $ | 44,785 | $ | (6,565 | ) | $ | 252,932 | ||||||||||
Total costs and expenses | — | (10,090 | ) | (214,855 | ) | (41,062 | ) | 6,565 | (259,442 | ) | |||||||||||||
Other losses, net | — | — | (733 | ) | — | — | (733 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (25,644 | ) | (27,135 | ) | — | — | 52,779 | — | |||||||||||||||
Interest expense | (4,075 | ) | (6,261 | ) | (9,366 | ) | (689 | ) | — | (20,391 | ) | ||||||||||||
Net income (loss) before income taxes | (29,719 | ) | (38,105 | ) | (15,623 | ) | 3,034 | 52,779 | (27,634 | ) | |||||||||||||
Income tax expense | — | — | (2,085 | ) | — | — | (2,085 | ) | |||||||||||||||
Net income (loss) | $ | (29,719 | ) | $ | (38,105 | ) | $ | (17,708 | ) | $ | 3,034 | $ | 52,779 | $ | (29,719 | ) | |||||||
Nine Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Total revenues | $ | — | $ | 5,279 | $ | 199,458 | $ | 42,374 | $ | (9,188 | ) | $ | 237,923 | ||||||||||
Total costs and expenses | — | (8,212 | ) | (201,512 | ) | (42,272 | ) | 9,188 | (242,808 | ) | |||||||||||||
Other losses, net | — | — | (1,579 | ) | — | — | (1,579 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (20,411 | ) | (21,639 | ) | — | — | 42,050 | — | |||||||||||||||
Interest expense | (4,075 | ) | (6,261 | ) | (6,515 | ) | (580 | ) | — | (17,431 | ) | ||||||||||||
Net loss before income taxes | (24,486 | ) | (30,833 | ) | (10,148 | ) | (478 | ) | 42,050 | (23,895 | ) | ||||||||||||
Income tax benefit | — | — | (591 | ) | — | — | (591 | ) | |||||||||||||||
Net loss | $ | (24,486 | ) | $ | (30,833 | ) | $ | (10,739 | ) | $ | (478 | ) | $ | 42,050 | $ | (24,486 | ) |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the nine months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $3.6 million increase in non-guarantor revenues and a $3.4 million increase in non-guarantor costs and expenses and corresponding reductions to guarantor revenues and costs and expenses for the nine months ended September 30, 2016. |
Nine Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Net cash provided by operating activities | $ | 24,545 | $ | 57 | $ | 34,863 | $ | 117 | $ | (34,881 | ) | $ | 24,701 | ||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales | — | (57 | ) | (6,105 | ) | (696 | ) | — | (6,858 | ) | |||||||||||||
Net cash used in investing activities | — | (57 | ) | (6,105 | ) | (696 | ) | — | (6,858 | ) | |||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (24,545 | ) | — | — | — | — | (24,545 | ) | |||||||||||||||
Payments to affiliates | — | — | (34,881 | ) | — | 34,881 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 4,165 | — | — | 4,165 | |||||||||||||||||
Other financing activities | — | — | (1,573 | ) | — | — | (1,573 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | (24,545 | ) | — | (32,289 | ) | — | 34,881 | (21,953 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | (3,531 | ) | (579 | ) | — | (4,110 | ) | ||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 9,145 | 3,425 | — | 12,570 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 5,614 | $ | 2,846 | $ | — | $ | 8,460 | |||||||||||
Nine Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Net cash provided by operating activities | $ | 2,624 | $ | 86 | $ | 26,260 | $ | 2,477 | $ | (12,960 | ) | $ | 18,487 | ||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures, net of proceeds from asset sales | — | (86 | ) | (15,819 | ) | (2,404 | ) | — | (18,309 | ) | |||||||||||||
Payments to affiliates | (9,097 | ) | — | — | — | 9,097 | — | ||||||||||||||||
Net cash used in investing activities | (9,097 | ) | (86 | ) | (15,819 | ) | (2,404 | ) | 9,097 | (18,309 | ) | ||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (68,062 | ) | — | — | — | — | (68,062 | ) | |||||||||||||||
Payments to affiliates | — | — | (3,863 | ) | — | 3,863 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 168 | — | — | 168 | |||||||||||||||||
Proceeds from issuance of common units | 74,535 | — | — | — | — | 74,535 | |||||||||||||||||
Other financing activities | — | — | (6,362 | ) | — | — | (6,362 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | 6,473 | — | (10,057 | ) | — | 3,863 | 279 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | 384 | 73 | — | 457 | |||||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 11,801 | 3,352 | — | 15,153 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 12,185 | $ | 3,425 | $ | — | $ | 15,610 |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the nine months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $0.9 million increase in non-guarantor cash provided by operating activities, with a corresponding decrease in guarantor cash provided by operating activities for the nine months ended September 30, 2016. |
|
12. | ISSUANCES OF LIMITED PARTNERSHIP UNITS |
|
13. | SEGMENT INFORMATION |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
STATEMENT OF OPERATIONS DATA: | (As restated - see Note 1) | (As restated - see Note 1) | |||||||||||||
Cemetery Operations: | |||||||||||||||
Revenues | $ | 69,543 | $ | 66,729 | $ | 205,816 | $ | 192,756 | |||||||
Operating costs and expenses | (58,728 | ) | (57,635 | ) | (172,903 | ) | (163,243 | ) | |||||||
Depreciation and amortization | (2,175 | ) | (2,058 | ) | (6,734 | ) | (6,042 | ) | |||||||
Segment income | $ | 8,640 | $ | 7,036 | $ | 26,179 | $ | 23,471 | |||||||
Funeral Home Operations: | |||||||||||||||
Revenues | $ | 14,491 | $ | 14,044 | $ | 47,116 | $ | 45,167 | |||||||
Operating costs and expenses | (12,581 | ) | (13,831 | ) | (37,449 | ) | (40,312 | ) | |||||||
Depreciation and amortization | (753 | ) | (692 | ) | (2,369 | ) | (2,427 | ) | |||||||
Segment income (loss) | $ | 1,157 | $ | (479 | ) | $ | 7,298 | $ | 2,428 | ||||||
Reconciliation of segment income to net loss: | |||||||||||||||
Cemetery Operations | $ | 8,640 | $ | 7,036 | $ | 26,179 | $ | 23,471 | |||||||
Funeral Home Operations | 1,157 | (479 | ) | 7,298 | 2,428 | ||||||||||
Total segment income | 9,797 | 6,557 | 33,477 | 25,899 | |||||||||||
Corporate overhead | (11,887 | ) | (10,058 | ) | (39,058 | ) | (30,106 | ) | |||||||
Corporate depreciation and amortization | (258 | ) | (177 | ) | (929 | ) | (678 | ) | |||||||
Other gains (losses), net | 338 | (506 | ) | (733 | ) | (1,579 | ) | ||||||||
Interest expense | (6,944 | ) | (5,934 | ) | (20,391 | ) | (17,431 | ) | |||||||
Income tax benefit (expense) | (622 | ) | 169 | (2,085 | ) | (591 | ) | ||||||||
Net loss | $ | (9,576 | ) | $ | (9,949 | ) | $ | (29,719 | ) | $ | (24,486 | ) | |||
CASH FLOW DATA: | |||||||||||||||
Capital expenditures: | |||||||||||||||
Cemetery Operations | $ | 4,525 | $ | 1,696 | $ | 7,501 | $ | 6,328 | |||||||
Funeral Home Operations | 76 | 305 | 203 | 800 | |||||||||||
Corporate | 48 | 150 | 256 | 2,527 | |||||||||||
Total capital expenditures | $ | 4,649 | $ | 2,151 | $ | 7,960 | $ | 9,655 | |||||||
BALANCE SHEET DATA: | September 30, 2017 | December 31, 2016 | |||||||||||||
Assets: | |||||||||||||||
Cemetery Operations | $ | 1,585,369 | $ | 1,573,494 | |||||||||||
Funeral Home Operations | 200,626 | 198,200 | |||||||||||||
Corporate | 13,359 | 15,319 | |||||||||||||
Total assets | $ | 1,799,354 | $ | 1,787,013 | |||||||||||
Goodwill: | |||||||||||||||
Cemetery Operations | $ | 24,862 | $ | 24,862 | |||||||||||
Funeral Home Operations | 45,574 | 45,574 | |||||||||||||
Total goodwill | $ | 70,436 | $ | 70,436 |
|
14. | SUPPLEMENTAL CONDENSED CONSOLIDATING CASH FLOW INFORMATION |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Pre-need/at-need contract originations (sales on credit) | $ | (78,419 | ) | $ | (88,502 | ) | |
Cash receipts from sales on credit (post-origination) | 69,843 | 69,603 | |||||
Changes in Accounts receivable, net of allowance | $ | (8,576 | ) | $ | (18,899 | ) | |
Deferrals: | |||||||
Cash receipts from customer deposits at origination, net of refunds | $ | 113,177 | $ | 114,215 | |||
Withdrawals of realized income from merchandise trusts during the period | 10,592 | 10,114 | |||||
Pre-need/at-need contract originations (sales on credit) | 78,419 | 88,502 | |||||
Undistributed merchandise trust investment earnings (losses), net | (32,299 | ) | 8,034 | ||||
Recognition: | |||||||
Merchandise trust investment income, net withdrawn as of end of period | (7,851 | ) | (4,203 | ) | |||
Recognized maturities of customer contracts collected as of end of period | (148,630 | ) | (138,999 | ) | |||
Recognized maturities of customer contracts uncollected as of end of period | (25,527 | ) | (27,842 | ) | |||
Changes in Deferred revenues | $ | (12,119 | ) | $ | 49,821 |
|
15. | SUBSEQUENT EVENTS |
|
A. | The Partnership understated recognized revenues from the satisfaction of cemetery and funeral home performance obligations in its condensed consolidated statement of operations. The understatement was primarily due to lags in or omissions of the data entry of a contract servicing event. The adjustments to correct these accounting errors resulted in a net increase of $2.2 million in revenues for the three months ended September 30, 2016, of which $1.9 million related to merchandise revenues, and a net increase of $4.1 million in revenues for the nine months ended September 30, 2016, of which $3.5 million related to merchandise revenues. |
B. | In conjunction with the foregoing revenue recognition errors, on its condensed consolidated balance sheet, the Partnership had historically (i) deferred incorrect and imprecise amounts of investment revenues and expenses related to its merchandise trusts, (ii) reserved incorrect amounts for future cancellations related to its cemetery and funeral home performance obligations, and (iii) deferred incorrect amounts of selling costs. The correction of these accounting errors resulted in a net increase in "Selling expense" of $0.5 million for the three months ended September 30, 2016. The correction of these accounting errors resulted in a net increase in “Cemetery investment and other revenues” of $0.1 million for the nine months ended September 30, 2016 due to changes in the inputs used to calculate trust income recognition. This also resulted in a decrease in “Cemetery merchandise revenues” of $0.1 million for the nine months ended September 30, 2016 due to an increase in cancellation reserve expense and an increase in “Selling expense” of $0.9 million for that period. |
C. | Certain components of “Other current assets” and “Accounts payable and accrued liabilities” on its condensed consolidated balance sheet were determined to be inappropriate in the Partnership’s review of accounting policies during its ongoing remediation. The Partnership had historically presented intercompany deposits due to its merchandise and perpetual care trust funds within “Other current assets” and presented intercompany payables to its merchandise and perpetual care trusts in “Accounts payable and accrued liabilities”. The Partnership has determined the intercompany payables and liabilities to its consolidated trust funds should be eliminated. The correction of the error resulted in a reclassification of $1.7 million in the condensed consolidated statements of cash flows between "Other assets" and "Payables and other liabilities" for the nine months ended September 30, 2016. |
D. | Specific to the Partnership’s disclosure in Note 11, Supplemental Condensed Consolidating Financial Information, (“Note 11”) the Partnership recorded incorrect amounts for its individual cemetery and funeral home location-level equity and intercompany balances at its formation and in subsequent acquisitions. Additionally, the Partnership presented certain managed locations as guarantor subsidiaries instead of non-guarantor subsidiaries in Note 11. Note that this error had no impact to amounts presented on the face of the condensed consolidated financial statements. |
E. | The Partnership incorrectly presented the changes in “Accounts receivable, net of allowance” net of the income statement “Provision for cancellations” and omitted certain disclosures regarding the components of the changes in “Accounts receivable, net of allowance” and “Deferred revenues” in its condensed consolidated statement of cash flows. Additionally, specific to the Partnership’s related disclosure in Note 2, Accounts Receivable, Net of Allowance, the Partnership presented activity in the allowance for cancellations that related to deferred revenues on a gross basis instead of on a net basis. The correction of the error resulted in a reclassification of $9.7 million in the condensed consolidated statement of cash flows between "Provision for cancellations" and "Accounts receivable, net of allowance" for the nine months ended September 30, 2016. |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | As Filed | Restatement Adjustments | As Restated | |||||||||||||||||||
Cemetery revenues: | |||||||||||||||||||||||||
Merchandise | A, B | $ | 36,314 | $ | 1,815 | $ | 38,129 | $ | 106,937 | $ | 3,302 | $ | 110,239 | ||||||||||||
Services | A | 13,928 | 332 | 14,260 | 41,067 | 645 | 41,712 | ||||||||||||||||||
Investment and other | B | 14,302 | 38 | 14,340 | 40,689 | 116 | 40,805 | ||||||||||||||||||
Funeral home revenues: | |||||||||||||||||||||||||
Merchandise | A | 6,656 | 52 | 6,708 | 20,681 | 113 | 20,794 | ||||||||||||||||||
Total revenues | 78,536 | 2,237 | 80,773 | 233,747 | 4,176 | 237,923 | |||||||||||||||||||
Selling expense | B | 15,931 | 535 | 16,466 | 46,898 | 876 | 47,774 | ||||||||||||||||||
Funeral home expenses: | |||||||||||||||||||||||||
Services | B | 6,070 | 6 | 6,076 | 18,672 | 15 | 18,687 | ||||||||||||||||||
Total costs and expenses | 83,910 | 541 | 84,451 | 241,917 | 891 | 242,808 | |||||||||||||||||||
Net loss | (11,644 | ) | 1,695 | (9,949 | ) | (27,770 | ) | 3,284 | (24,486 | ) | |||||||||||||||
General partner's interest for the period | (130 | ) | 19 | (111 | ) | 2,043 | 38 | 2,081 | |||||||||||||||||
Limited partners' interest for the period | (11,514 | ) | 1,676 | (9,838 | ) | (29,813 | ) | 3,246 | (26,567 | ) | |||||||||||||||
Net loss per limited partner unit (basic and diluted) | $ | (0.32 | ) | $ | 0.04 | $ | (0.28 | ) | $ | (0.87 | ) | $ | 0.10 | $ | (0.77 | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) | Nine Months Ended September 30, 2016 | ||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | ||||||||||
Net loss | $ | (27,770 | ) | $ | 3,284 | $ | (24,486 | ) | |||||
Provision for cancellations | E | — | 9,732 | 9,732 | |||||||||
Changes in assets and liabilities: | |||||||||||||
Accounts receivable, net of allowance | E | (9,167 | ) | (9,732 | ) | (18,899 | ) | ||||||
Other assets | B, C | (6,270 | ) | 1,721 | (4,549 | ) | |||||||
Deferred selling and obtaining costs | B | (10,716 | ) | 897 | (9,819 | ) | |||||||
Deferred revenues | A, B | 53,996 | (4,175 | ) | 49,821 | ||||||||
Payables and other liabilities | C | 11,034 | (1,727 | ) | 9,307 | ||||||||
Net cash provided by operating activities | $ | 18,487 | $ | — | $ | 18,487 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(As restated - see above) | (As restated - see above) | ||||||||||||||
Net loss | $ | (9,576 | ) | $ | (9,949 | ) | $ | (29,719 | ) | $ | (24,486 | ) | |||
Less: Incentive distribution right (“IDR”) payments to general partner | — | — | — | 2,387 | |||||||||||
Net loss to allocate to general and common limited partners | (9,576 | ) | (9,949 | ) | (29,719 | ) | (26,873 | ) | |||||||
Less: General partner’s interest excluding IDRs | (99 | ) | (111 | ) | (309 | ) | (306 | ) | |||||||
Net loss attributable to common limited partners | $ | (9,477 | ) | $ | (9,838 | ) | $ | (29,410 | ) | $ | (26,567 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average number of common limited partner units - basic and diluted (1) | 37,958 | 35,470 | 37,945 | 34,287 |
(1) | The diluted weighted average number of limited partners’ units outstanding presented on the condensed consolidated statement of operations does not include 335 thousand units and 383 thousand units for the three months ended September 30, 2017 and 2016, respectively, and 328 thousand units and 375 thousand units for the nine months ended September 30, 2017 and 2016, respectively, as their effects would be anti-dilutive. |
• | In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This standard improves the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. |
• | In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This standard clarifies identifying performance obligations and the licensing implementation guidance. |
• | In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This standard provides additional guidance on (a) the objective of the collectability criterion, (b) the presentation of sales tax collected from customers, (c) the measurement date of non-cash consideration received, (d) practical expedients in respect of contract modifications and completed contracts at transition and (e) disclosure of the effects of the accounting change in the period of adoption. |
• | In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance, including the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. |
• | In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, which provides additional clarification and implementation guidance on ASU 2014-09 and is effective consistent with the adoption schedule for ASU 2014-09. |
• | Establishing an ASC 606 steering committee comprised of various functions across the Partnership; |
• | Performing the detailed review of customer contracts in scope of ASU 2014-09; |
• | Assessing the potential impact that the guidance will have on our current accounting policies and practices; and |
• | Evaluating the changes, if any, to our business processes, systems and controls necessary to support recognition and disclosure under the new guidance. |
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | As Filed | Restatement Adjustments | As Restated | |||||||||||||||||||
Cemetery revenues: | |||||||||||||||||||||||||
Merchandise | A, B | $ | 36,314 | $ | 1,815 | $ | 38,129 | $ | 106,937 | $ | 3,302 | $ | 110,239 | ||||||||||||
Services | A | 13,928 | 332 | 14,260 | 41,067 | 645 | 41,712 | ||||||||||||||||||
Investment and other | B | 14,302 | 38 | 14,340 | 40,689 | 116 | 40,805 | ||||||||||||||||||
Funeral home revenues: | |||||||||||||||||||||||||
Merchandise | A | 6,656 | 52 | 6,708 | 20,681 | 113 | 20,794 | ||||||||||||||||||
Total revenues | 78,536 | 2,237 | 80,773 | 233,747 | 4,176 | 237,923 | |||||||||||||||||||
Selling expense | B | 15,931 | 535 | 16,466 | 46,898 | 876 | 47,774 | ||||||||||||||||||
Funeral home expenses: | |||||||||||||||||||||||||
Services | B | 6,070 | 6 | 6,076 | 18,672 | 15 | 18,687 | ||||||||||||||||||
Total costs and expenses | 83,910 | 541 | 84,451 | 241,917 | 891 | 242,808 | |||||||||||||||||||
Net loss | (11,644 | ) | 1,695 | (9,949 | ) | (27,770 | ) | 3,284 | (24,486 | ) | |||||||||||||||
General partner's interest for the period | (130 | ) | 19 | (111 | ) | 2,043 | 38 | 2,081 | |||||||||||||||||
Limited partners' interest for the period | (11,514 | ) | 1,676 | (9,838 | ) | (29,813 | ) | 3,246 | (26,567 | ) | |||||||||||||||
Net loss per limited partner unit (basic and diluted) | $ | (0.32 | ) | $ | 0.04 | $ | (0.28 | ) | $ | (0.87 | ) | $ | 0.10 | $ | (0.77 | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) | Nine Months Ended September 30, 2016 | ||||||||||||
Reference | As Filed | Restatement Adjustments | As Restated | ||||||||||
Net loss | $ | (27,770 | ) | $ | 3,284 | $ | (24,486 | ) | |||||
Provision for cancellations | E | — | 9,732 | 9,732 | |||||||||
Changes in assets and liabilities: | |||||||||||||
Accounts receivable, net of allowance | E | (9,167 | ) | (9,732 | ) | (18,899 | ) | ||||||
Other assets | B, C | (6,270 | ) | 1,721 | (4,549 | ) | |||||||
Deferred selling and obtaining costs | B | (10,716 | ) | 897 | (9,819 | ) | |||||||
Deferred revenues | A, B | 53,996 | (4,175 | ) | 49,821 | ||||||||
Payables and other liabilities | C | 11,034 | (1,727 | ) | 9,307 | ||||||||
Net cash provided by operating activities | $ | 18,487 | $ | — | $ | 18,487 |
September 30, 2017 | |||
Cemetery property | $ | 281 | |
Buildings and improvements | 718 | ||
Funeral home land | 170 | ||
Assets held for sale | $ | 1,169 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(As restated - see above) | (As restated - see above) | ||||||||||||||
Net loss | $ | (9,576 | ) | $ | (9,949 | ) | $ | (29,719 | ) | $ | (24,486 | ) | |||
Less: Incentive distribution right (“IDR”) payments to general partner | — | — | — | 2,387 | |||||||||||
Net loss to allocate to general and common limited partners | (9,576 | ) | (9,949 | ) | (29,719 | ) | (26,873 | ) | |||||||
Less: General partner’s interest excluding IDRs | (99 | ) | (111 | ) | (309 | ) | (306 | ) | |||||||
Net loss attributable to common limited partners | $ | (9,477 | ) | $ | (9,838 | ) | $ | (29,410 | ) | $ | (26,567 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average number of common limited partner units - basic and diluted (1) | 37,958 | 35,470 | 37,945 | 34,287 |
(1) | The diluted weighted average number of limited partners’ units outstanding presented on the condensed consolidated statement of operations does not include 335 thousand units and 383 thousand units for the three months ended September 30, 2017 and 2016, respectively, and 328 thousand units and 375 thousand units for the nine months ended September 30, 2017 and 2016, respectively, as their effects would be anti-dilutive. |
|
September 30, 2017 | December 31, 2016 | ||||||
Customer receivables | $ | 223,861 | $ | 223,326 | |||
Unearned finance income | (20,490 | ) | (21,034 | ) | |||
Allowance for contract cancellations | (25,219 | ) | (26,153 | ) | |||
Accounts receivable, net of allowance | 178,152 | 176,139 | |||||
Less: Current portion, net of allowance | 77,058 | 77,253 | |||||
Long-term portion, net of allowance | $ | 101,094 | $ | 98,886 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(As restated - see Note 1) | |||||||
Balance, beginning of period | $ | 26,153 | $ | 23,985 | |||
Provision for cancellations | 5,123 | 9,732 | |||||
Cancellations | (6,057 | ) | (5,515 | ) | |||
Balance, end of period | $ | 25,219 | $ | 28,202 |
|
September 30, 2017 | December 31, 2016 | ||||||
Buildings and improvements | $ | 124,551 | $ | 125,442 | |||
Furniture and equipment | 57,170 | 56,408 | |||||
Funeral home land | 14,235 | 11,527 | |||||
Property and equipment, gross | 195,956 | 193,377 | |||||
Less: Accumulated depreciation | (80,840 | ) | (75,096 | ) | |||
Property and equipment, net of accumulated depreciation | $ | 115,116 | $ | 118,281 |
September 30, 2017 | December 31, 2016 | ||||||
Cemetery land | $ | 256,120 | $ | 257,914 | |||
Mausoleum crypts and lawn crypts | 78,088 | 79,401 | |||||
Cemetery property | $ | 334,208 | $ | 337,315 |
|
September 30, 2017 | December 31, 2016 | ||||||
Buildings and improvements | $ | 124,551 | $ | 125,442 | |||
Furniture and equipment | 57,170 | 56,408 | |||||
Funeral home land | 14,235 | 11,527 | |||||
Property and equipment, gross | 195,956 | 193,377 | |||||
Less: Accumulated depreciation | (80,840 | ) | (75,096 | ) | |||
Property and equipment, net of accumulated depreciation | $ | 115,116 | $ | 118,281 |
|
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 507,079 | $ | 464,676 | |||
Contributions | 44,497 | 49,841 | |||||
Distributions | (65,723 | ) | (49,168 | ) | |||
Interest and dividends | 18,252 | 17,657 | |||||
Capital gain distributions | 927 | 264 | |||||
Realized gains and losses | 14,192 | 3,727 | |||||
Other than temporary impairment | — | (7,278 | ) | ||||
Taxes | (1,306 | ) | (1,721 | ) | |||
Fees | (1,855 | ) | (2,234 | ) | |||
Unrealized change in fair value | (3,882 | ) | 28,840 | ||||
Balance, end of period | $ | 512,181 | $ | 504,604 |
September 30, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 10,874 | $ | — | $ | — | $ | 10,874 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 206 | 1 | (64 | ) | 143 | |||||||||||
Corporate debt securities | 2 | 2,308 | 141 | (188 | ) | 2,261 | |||||||||||
Total fixed maturities | 2,514 | 142 | (252 | ) | 2,404 | ||||||||||||
Mutual funds - debt securities | 1 | 249,209 | 4,153 | (426 | ) | 252,936 | |||||||||||
Mutual funds - equity securities | 1 | 81,029 | 3,412 | (5,001 | ) | 79,440 | |||||||||||
Other investment funds (1) | 131,010 | 169 | (353 | ) | 130,826 | ||||||||||||
Equity securities | 1 | 15,712 | 2,720 | (445 | ) | 17,987 | |||||||||||
Other invested assets | 2 | 8,797 | — | — | 8,797 | ||||||||||||
Total investments | $ | 499,145 | $ | 10,596 | $ | (6,477 | ) | $ | 503,264 | ||||||||
West Virginia Trust Receivable | 8,917 | — | — | 8,917 | |||||||||||||
Total | $ | 508,062 | $ | 10,596 | $ | (6,477 | ) | $ | 512,181 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days, and private credit funds, which have lockup periods of seven years with two potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2017, there were $32.4 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 17,317 | $ | — | $ | — | $ | 17,317 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 172 | 2 | (44 | ) | 130 | |||||||||||
Corporate debt securities | 2 | 6,311 | 269 | (202 | ) | 6,378 | |||||||||||
Total fixed maturities | 6,483 | 271 | (246 | ) | 6,508 | ||||||||||||
Mutual funds - debt securities | 1 | 236,159 | 1,580 | (96 | ) | 237,643 | |||||||||||
Mutual funds - equity securities | 1 | 126,215 | 3,361 | (533 | ) | 129,043 | |||||||||||
Other investment funds (1) | 60,017 | 603 | (387 | ) | 60,233 | ||||||||||||
Equity securities | 1 | 35,079 | 3,640 | (192 | ) | 38,527 | |||||||||||
Other invested assets | 2 | 9,239 | — | — | 9,239 | ||||||||||||
Total investments | $ | 490,509 | $ | 9,455 | (1,454 | ) | $ | 498,510 | |||||||||
West Virginia Trust Receivable | 8,569 | — | — | 8,569 | |||||||||||||
Total | $ | 499,078 | $ | 9,455 | $ | (1,454 | ) | $ | 507,079 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have redemption periods ranging from 30 to 90 days. |
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | — | $ | 88 | $ | 55 | $ | — | |||||||
Corporate debt securities | 172 | 1,835 | 242 | 12 | |||||||||||
Total fixed maturities | $ | 172 | $ | 1,923 | $ | 297 | $ | 12 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
September 30, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 123 | $ | 64 | $ | 123 | $ | 64 | |||||||||||
Corporate debt securities | 68 | 1 | 454 | 187 | 522 | 188 | |||||||||||||||||
Total fixed maturities | 68 | 1 | 577 | 251 | 645 | 252 | |||||||||||||||||
Mutual funds - debt securities | 27,882 | 142 | 1,911 | 284 | 29,793 | 426 | |||||||||||||||||
Mutual funds - equity securities | 50,406 | 5,001 | — | — | 50,406 | 5,001 | |||||||||||||||||
Other investment funds | 60,896 | 353 | — | — | 60,896 | 353 | |||||||||||||||||
Equity securities | 3,460 | 418 | 467 | 27 | 3,927 | 445 | |||||||||||||||||
Total | $ | 142,712 | $ | 5,915 | $ | 2,955 | $ | 562 | $ | 145,667 | $ | 6,477 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 87 | $ | 44 | $ | 87 | $ | 44 | |||||||||||
Corporate debt securities | 556 | 6 | 871 | 196 | 1,427 | 202 | |||||||||||||||||
Total fixed maturities | 556 | 6 | 958 | 240 | 1,514 | 246 | |||||||||||||||||
Mutual funds - debt securities | 6,040 | 61 | 754 | 35 | 6,794 | 96 | |||||||||||||||||
Mutual funds - equity securities | 7,475 | 357 | 2,578 | 176 | 10,053 | 533 | |||||||||||||||||
Other investment funds | 37,357 | 387 | — | — | 37,357 | 387 | |||||||||||||||||
Equity securities | 1,292 | 89 | 413 | 103 | 1,705 | 192 | |||||||||||||||||
Total | $ | 52,720 | $ | 900 | $ | 4,703 | $ | 554 | $ | 57,423 | $ | 1,454 |
|
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 333,780 | $ | 307,804 | |||
Contributions | 7,156 | 13,111 | |||||
Distributions | (13,449 | ) | (10,923 | ) | |||
Interest and dividends | 12,935 | 13,609 | |||||
Capital gain distributions | 403 | 477 | |||||
Realized gains and losses | 1,371 | (413 | ) | ||||
Other than temporary impairment | — | (466 | ) | ||||
Taxes | (420 | ) | (566 | ) | |||
Fees | (1,095 | ) | (2,189 | ) | |||
Unrealized change in fair value | (2,070 | ) | 14,479 | ||||
Balance, end of period | $ | 338,611 | $ | 334,923 |
September 30, 2017 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 9,195 | $ | — | $ | — | $ | 9,195 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 560 | 5 | (40 | ) | 525 | |||||||||||
Corporate debt securities | 2 | 5,778 | 166 | (147 | ) | 5,797 | |||||||||||
Total fixed maturities | 6,338 | 171 | (187 | ) | 6,322 | ||||||||||||
Mutual funds - debt securities | 1 | 156,057 | 3,318 | (482 | ) | 158,893 | |||||||||||
Mutual funds - equity securities | 1 | 32,573 | 1,374 | (1,470 | ) | 32,477 | |||||||||||
Other investment funds (1) | 107,563 | 2,697 | (1,065 | ) | 109,195 | ||||||||||||
Equity securities | 1 | 22,389 | 1,701 | (1,707 | ) | 22,383 | |||||||||||
Other invested assets | 2 | 146 | — | — | 146 | ||||||||||||
Total investments | $ | 334,261 | $ | 9,261 | $ | (4,911 | ) | $ | 338,611 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from five to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2017, there were $78.2 million in unfunded commitments to the private credit funds, which are callable at any time. |
December 31, 2016 | Fair Value Hierarchy Level | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Short-term investments | 1 | $ | 16,113 | $ | — | $ | — | $ | 16,113 | ||||||||
Fixed maturities: | |||||||||||||||||
U.S. governmental securities | 2 | 483 | 14 | (23 | ) | 474 | |||||||||||
Corporate debt securities | 2 | 12,598 | 380 | (152 | ) | 12,826 | |||||||||||
Total fixed maturities | 13,081 | 394 | (175 | ) | 13,300 | ||||||||||||
Mutual funds - debt securities | 1 | 127,033 | 1,187 | (669 | ) | 127,551 | |||||||||||
Mutual funds - equity securities | 1 | 30,708 | 1,940 | (26 | ) | 32,622 | |||||||||||
Other investment funds (1) | 119,196 | 2,672 | (622 | ) | 121,246 | ||||||||||||
Equity securities | 1 | 20,978 | 2,150 | (432 | ) | 22,696 | |||||||||||
Other invested assets | 2 | 252 | — | — | 252 | ||||||||||||
Total investments | $ | 327,361 | $ | 8,343 | $ | (1,924 | ) | $ | 333,780 |
(1) | Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 30 to 90 days, and private credit funds, which have lockup periods ranging from six to ten years with three potential one year extensions at the discretion of the funds’ general partners. As of December 31, 2016, there were $45.1 million in unfunded commitments to the private credit funds, which are callable at any time. |
Less than 1 year | 1 year through 5 years | 6 years through 10 years | More than 10 years | ||||||||||||
U.S. governmental securities | $ | 52 | $ | 267 | $ | 166 | $ | 40 | |||||||
Corporate debt securities | 843 | 4,514 | 340 | 100 | |||||||||||
Total fixed maturities | $ | 895 | $ | 4,781 | $ | 506 | $ | 140 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
September 30, 2017 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 456 | $ | 40 | $ | 456 | $ | 40 | |||||||||||
Corporate debt securities | 659 | 12 | 1,640 | 135 | 2,299 | 147 | |||||||||||||||||
Total fixed maturities | 659 | 12 | 2,096 | 175 | 2,755 | 187 | |||||||||||||||||
Mutual funds - debt securities | 15,678 | 235 | 8,408 | 247 | 24,086 | 482 | |||||||||||||||||
Mutual funds - equity securities | 15,381 | 1,458 | 41 | 12 | 15,422 | 1,470 | |||||||||||||||||
Other investment funds | 56,165 | 1,065 | — | — | 56,165 | 1,065 | |||||||||||||||||
Equity securities | 9,238 | 1,686 | 37 | 21 | 9,275 | 1,707 | |||||||||||||||||
Total | $ | 97,121 | $ | 4,456 | $ | 10,582 | $ | 455 | $ | 107,703 | $ | 4,911 | |||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||
U.S. governmental securities | $ | — | $ | — | $ | 283 | $ | 23 | $ | 283 | $ | 23 | |||||||||||
Corporate debt securities | 747 | 10 | 2,980 | 142 | 3,727 | 152 | |||||||||||||||||
Total fixed maturities | 747 | 10 | 3,263 | 165 | 4,010 | 175 | |||||||||||||||||
Mutual funds - debt securities | 24,026 | 620 | 1,908 | 49 | 25,934 | 669 | |||||||||||||||||
Mutual funds - equity securities | 3,836 | 16 | 452 | 10 | 4,288 | 26 | |||||||||||||||||
Other investment funds | 37,577 | 622 | — | — | 37,577 | 622 | |||||||||||||||||
Equity securities | 4,532 | 409 | 145 | 23 | 4,677 | 432 | |||||||||||||||||
Total | $ | 70,718 | $ | 1,677 | $ | 5,768 | $ | 247 | $ | 76,486 | $ | 1,924 |
|
September 30, 2017 | December 31, 2016 | ||||||
Credit facility | $ | 142,925 | $ | 137,125 | |||
7.875% Senior Notes, due June 2021 | 172,975 | 172,623 | |||||
Notes payable - acquisition debt | 354 | 502 | |||||
Notes payable - acquisition non-competes | 395 | 928 | |||||
Insurance and vehicle financing | 1,488 | 1,807 | |||||
Less deferred financing costs, net of accumulated amortization | (10,451 | ) | (10,859 | ) | |||
Total debt | 307,686 | 302,126 | |||||
Less current maturities | (1,114 | ) | (1,775 | ) | |||
Total long-term debt | $ | 306,572 | $ | 300,351 |
Year | Percentage |
2017 | 103.938% |
2018 | 101.969% |
2019 and thereafter | 100.000% |
|
September 30, 2017 | December 31, 2016 | ||||||
Deferred contract revenues | $ | 799,552 | $ | 782,120 | |||
Deferred merchandise trust revenue | 100,185 | 76,512 | |||||
Deferred merchandise trust unrealized gains | 4,116 | 8,001 | |||||
Deferred revenues | $ | 903,853 | $ | 866,633 | |||
Deferred selling and obtaining costs | $ | 124,137 | $ | 116,890 |
|
Lease Years 1-5 (May 28, 2014 - May 31, 2019) | None |
Lease Years 6-20 (June 1, 2019 - May 31, 2034) | $1,000,000 per Lease Year |
Lease Years 21-25 (June 1, 2034 - May 31, 2039) | $1,200,000 per Lease Year |
Lease Years 26-35 (June 1, 2039 - May 31, 2049) | $1,500,000 per Lease Year |
Lease Years 36-60 (June 1, 2049 - May 31, 2074) | None |
|
September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 5,614 | $ | 2,846 | $ | — | $ | 8,460 | |||||||||||
Assets held for sale | — | — | 1,169 | — | — | 1,169 | |||||||||||||||||
Other current assets | — | 3,877 | 88,438 | 17,216 | — | 109,531 | |||||||||||||||||
Total current assets | — | 3,877 | 95,221 | 20,062 | — | 119,160 | |||||||||||||||||
Long-term accounts receivable | — | 2,062 | 85,867 | 13,165 | — | 101,094 | |||||||||||||||||
Cemetery property and equipment | — | 790 | 413,445 | 35,089 | — | 449,324 | |||||||||||||||||
Merchandise trusts | — | — | — | 512,181 | — | 512,181 | |||||||||||||||||
Perpetual care trusts | — | — | — | 338,611 | — | 338,611 | |||||||||||||||||
Deferred selling and obtaining costs | — | 6,055 | 96,891 | 21,191 | — | 124,137 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,129 | 62,047 | — | 134,176 | |||||||||||||||||
Other assets | — | — | 17,873 | 2,798 | — | 20,671 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 204,948 | 122,924 | 559,338 | — | (887,210 | ) | — | ||||||||||||||||
Total assets | $ | 204,948 | $ | 135,708 | $ | 1,340,764 | $ | 1,005,144 | $ | (887,210 | ) | $ | 1,799,354 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 113 | $ | 52,046 | $ | 1,271 | $ | — | $ | 53,430 | |||||||||||
Long-term debt, net of deferred financing costs | 68,202 | 104,774 | 133,596 | — | — | 306,572 | |||||||||||||||||
Deferred revenues | — | 33,588 | 766,644 | 103,621 | — | 903,853 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 338,611 | — | 338,611 | |||||||||||||||||
Other long-term liabilities | — | — | 46,252 | 13,890 | — | 60,142 | |||||||||||||||||
Due to affiliates | — | — | 172,976 | 574,984 | (747,960 | ) | — | ||||||||||||||||
Total liabilities | 68,202 | 138,475 | 1,171,514 | 1,032,377 | (747,960 | ) | 1,662,608 | ||||||||||||||||
Partners' capital | 136,746 | (2,767 | ) | 169,250 | (27,233 | ) | (139,250 | ) | 136,746 | ||||||||||||||
Total liabilities and partners' capital | $ | 204,948 | $ | 135,708 | $ | 1,340,764 | $ | 1,005,144 | $ | (887,210 | ) | $ | 1,799,354 |
December 31, 2016 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 9,145 | $ | 3,425 | $ | — | $ | 12,570 | |||||||||||
Other current assets | — | 4,567 | 83,765 | 17,919 | — | 106,251 | |||||||||||||||||
Total current assets | — | 4,567 | 92,910 | 21,344 | — | 118,821 | |||||||||||||||||
Long-term accounts receivable | — | 1,725 | 83,993 | 13,168 | — | 98,886 | |||||||||||||||||
Cemetery property and equipment | — | 930 | 420,077 | 34,589 | — | 455,596 | |||||||||||||||||
Merchandise trusts | — | — | — | 507,079 | — | 507,079 | |||||||||||||||||
Perpetual care trusts | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Deferred selling and obtaining costs | — | 5,668 | 91,252 | 19,970 | — | 116,890 | |||||||||||||||||
Goodwill and intangible assets | — | — | 72,963 | 62,911 | — | 135,874 | |||||||||||||||||
Other assets | — | — | 17,244 | 2,843 | — | 20,087 | |||||||||||||||||
Investments in and amounts due from affiliates eliminated upon consolidation | 258,417 | 182,060 | 557,455 | — | (997,932 | ) | — | ||||||||||||||||
Total assets | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities | $ | — | $ | 320 | $ | 38,336 | $ | 237 | $ | — | $ | 38,893 | |||||||||||
Long-term debt, net of deferred financing costs | 68,063 | 104,560 | 127,728 | — | — | 300,351 | |||||||||||||||||
Deferred revenues | — | 30,321 | 738,184 | 98,128 | — | 866,633 | |||||||||||||||||
Perpetual care trust corpus | — | — | — | 333,780 | — | 333,780 | |||||||||||||||||
Other long-term liabilities | — | — | 45,802 | 11,200 | — | 57,002 | |||||||||||||||||
Due to affiliates | — | — | 172,623 | 581,427 | (754,050 | ) | — | ||||||||||||||||
Total liabilities | 68,063 | 135,201 | 1,122,673 | 1,024,772 | (754,050 | ) | 1,596,659 | ||||||||||||||||
Partners’ capital | 190,354 | 59,749 | 213,221 | (29,088 | ) | (243,882 | ) | 190,354 | |||||||||||||||
Total liabilities and partners’ capital | $ | 258,417 | $ | 194,950 | $ | 1,335,894 | $ | 995,684 | $ | (997,932 | ) | $ | 1,787,013 |
Three Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Total revenues | $ | — | $ | 1,842 | $ | 69,423 | $ | 14,648 | $ | (1,879 | ) | $ | 84,034 | ||||||||||
Total costs and expenses | — | (2,883 | ) | (71,234 | ) | (14,144 | ) | 1,879 | (86,382 | ) | |||||||||||||
Other gains, net | — | — | 338 | — | — | 338 | |||||||||||||||||
Net loss from equity investment in subsidiaries | (8,218 | ) | (8,674 | ) | — | — | 16,892 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (3,264 | ) | (235 | ) | — | (6,944 | ) | ||||||||||||
Net income (loss) before income taxes | (9,576 | ) | (11,802 | ) | (4,737 | ) | 269 | 16,892 | (8,954 | ) | |||||||||||||
Income tax expense | — | — | (622 | ) | — | — | (622 | ) | |||||||||||||||
Net income (loss) | $ | (9,576 | ) | $ | (11,802 | ) | $ | (5,359 | ) | $ | 269 | $ | 16,892 | $ | (9,576 | ) | |||||||
Three Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Total revenues | $ | — | $ | 2,312 | $ | 69,293 | $ | 13,624 | $ | (4,456 | ) | $ | 80,773 | ||||||||||
Total costs and expenses | — | (3,098 | ) | (69,725 | ) | (16,084 | ) | 4,456 | (84,451 | ) | |||||||||||||
Other losses, net | — | — | (506 | ) | — | — | (506 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (8,591 | ) | (7,658 | ) | — | — | 16,249 | — | |||||||||||||||
Interest expense | (1,358 | ) | (2,087 | ) | (2,295 | ) | (194 | ) | — | (5,934 | ) | ||||||||||||
Net loss before income taxes | (9,949 | ) | (10,531 | ) | (3,233 | ) | (2,654 | ) | 16,249 | (10,118 | ) | ||||||||||||
Income tax benefit | — | — | 169 | — | — | 169 | |||||||||||||||||
Net loss | $ | (9,949 | ) | $ | (10,531 | ) | $ | (3,064 | ) | $ | (2,654 | ) | $ | 16,249 | $ | (9,949 | ) |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the three months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $1.4 million increase in non-guarantor revenues and a $1.4 million increase in non-guarantor costs and expenses and corresponding reductions to guarantor revenues and costs and expenses for the three months ended September 30, 2016. |
Nine Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Total revenues | $ | — | $ | 5,381 | $ | 209,331 | $ | 44,785 | $ | (6,565 | ) | $ | 252,932 | ||||||||||
Total costs and expenses | — | (10,090 | ) | (214,855 | ) | (41,062 | ) | 6,565 | (259,442 | ) | |||||||||||||
Other losses, net | — | — | (733 | ) | — | — | (733 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (25,644 | ) | (27,135 | ) | — | — | 52,779 | — | |||||||||||||||
Interest expense | (4,075 | ) | (6,261 | ) | (9,366 | ) | (689 | ) | — | (20,391 | ) | ||||||||||||
Net income (loss) before income taxes | (29,719 | ) | (38,105 | ) | (15,623 | ) | 3,034 | 52,779 | (27,634 | ) | |||||||||||||
Income tax expense | — | — | (2,085 | ) | — | — | (2,085 | ) | |||||||||||||||
Net income (loss) | $ | (29,719 | ) | $ | (38,105 | ) | $ | (17,708 | ) | $ | 3,034 | $ | 52,779 | $ | (29,719 | ) | |||||||
Nine Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Total revenues | $ | — | $ | 5,279 | $ | 199,458 | $ | 42,374 | $ | (9,188 | ) | $ | 237,923 | ||||||||||
Total costs and expenses | — | (8,212 | ) | (201,512 | ) | (42,272 | ) | 9,188 | (242,808 | ) | |||||||||||||
Other losses, net | — | — | (1,579 | ) | — | — | (1,579 | ) | |||||||||||||||
Net loss from equity investment in subsidiaries | (20,411 | ) | (21,639 | ) | — | — | 42,050 | — | |||||||||||||||
Interest expense | (4,075 | ) | (6,261 | ) | (6,515 | ) | (580 | ) | — | (17,431 | ) | ||||||||||||
Net loss before income taxes | (24,486 | ) | (30,833 | ) | (10,148 | ) | (478 | ) | 42,050 | (23,895 | ) | ||||||||||||
Income tax benefit | — | — | (591 | ) | — | — | (591 | ) | |||||||||||||||
Net loss | $ | (24,486 | ) | $ | (30,833 | ) | $ | (10,739 | ) | $ | (478 | ) | $ | 42,050 | $ | (24,486 | ) |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the nine months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $3.6 million increase in non-guarantor revenues and a $3.4 million increase in non-guarantor costs and expenses and corresponding reductions to guarantor revenues and costs and expenses for the nine months ended September 30, 2016. |
Nine Months Ended September 30, 2017 | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
Net cash provided by operating activities | $ | 24,545 | $ | 57 | $ | 34,863 | $ | 117 | $ | (34,881 | ) | $ | 24,701 | ||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales | — | (57 | ) | (6,105 | ) | (696 | ) | — | (6,858 | ) | |||||||||||||
Net cash used in investing activities | — | (57 | ) | (6,105 | ) | (696 | ) | — | (6,858 | ) | |||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (24,545 | ) | — | — | — | — | (24,545 | ) | |||||||||||||||
Payments to affiliates | — | — | (34,881 | ) | — | 34,881 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 4,165 | — | — | 4,165 | |||||||||||||||||
Other financing activities | — | — | (1,573 | ) | — | — | (1,573 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | (24,545 | ) | — | (32,289 | ) | — | 34,881 | (21,953 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | (3,531 | ) | (579 | ) | — | (4,110 | ) | ||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 9,145 | 3,425 | — | 12,570 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 5,614 | $ | 2,846 | $ | — | $ | 8,460 | |||||||||||
Nine Months Ended September 30, 2016 (As restated, see A) | Parent | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||
B | B | ||||||||||||||||||||||
Net cash provided by operating activities | $ | 2,624 | $ | 86 | $ | 26,260 | $ | 2,477 | $ | (12,960 | ) | $ | 18,487 | ||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||||||
Cash paid for acquisitions and capital expenditures, net of proceeds from asset sales | — | (86 | ) | (15,819 | ) | (2,404 | ) | — | (18,309 | ) | |||||||||||||
Payments to affiliates | (9,097 | ) | — | — | — | 9,097 | — | ||||||||||||||||
Net cash used in investing activities | (9,097 | ) | (86 | ) | (15,819 | ) | (2,404 | ) | 9,097 | (18,309 | ) | ||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||||||
Cash distributions | (68,062 | ) | — | — | — | — | (68,062 | ) | |||||||||||||||
Payments to affiliates | — | — | (3,863 | ) | — | 3,863 | — | ||||||||||||||||
Net borrowings and repayments of debt | — | — | 168 | — | — | 168 | |||||||||||||||||
Proceeds from issuance of common units | 74,535 | — | — | — | — | 74,535 | |||||||||||||||||
Other financing activities | — | — | (6,362 | ) | — | — | (6,362 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | 6,473 | — | (10,057 | ) | — | 3,863 | 279 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | 384 | 73 | — | 457 | |||||||||||||||||
Cash and cash equivalents - Beginning of period | — | — | 11,801 | 3,352 | — | 15,153 | |||||||||||||||||
Cash and cash equivalents - End of period | $ | — | $ | — | $ | 12,185 | $ | 3,425 | $ | — | $ | 15,610 |
A. | See Note 1 for a summary of those accounting adjustments and the impact on the unaudited condensed consolidated financial statements for the nine months ended September 30, 2016. |
B. | The Partnership incorrectly presented the accounts of certain cemeteries owned by other entities but which we operate under long-term lease, operating or management agreements, as guarantor subsidiaries instead of non-guarantor subsidiaries. The adjustments to correctly present these cemeteries as non-guarantor subsidiaries resulted in a $0.9 million increase in non-guarantor cash provided by operating activities, with a corresponding decrease in guarantor cash provided by operating activities for the nine months ended September 30, 2016. |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
STATEMENT OF OPERATIONS DATA: | (As restated - see Note 1) | (As restated - see Note 1) | |||||||||||||
Cemetery Operations: | |||||||||||||||
Revenues | $ | 69,543 | $ | 66,729 | $ | 205,816 | $ | 192,756 | |||||||
Operating costs and expenses | (58,728 | ) | (57,635 | ) | (172,903 | ) | (163,243 | ) | |||||||
Depreciation and amortization | (2,175 | ) | (2,058 | ) | (6,734 | ) | (6,042 | ) | |||||||
Segment income | $ | 8,640 | $ | 7,036 | $ | 26,179 | $ | 23,471 | |||||||
Funeral Home Operations: | |||||||||||||||
Revenues | $ | 14,491 | $ | 14,044 | $ | 47,116 | $ | 45,167 | |||||||
Operating costs and expenses | (12,581 | ) | (13,831 | ) | (37,449 | ) | (40,312 | ) | |||||||
Depreciation and amortization | (753 | ) | (692 | ) | (2,369 | ) | (2,427 | ) | |||||||
Segment income (loss) | $ | 1,157 | $ | (479 | ) | $ | 7,298 | $ | 2,428 | ||||||
Reconciliation of segment income to net loss: | |||||||||||||||
Cemetery Operations | $ | 8,640 | $ | 7,036 | $ | 26,179 | $ | 23,471 | |||||||
Funeral Home Operations | 1,157 | (479 | ) | 7,298 | 2,428 | ||||||||||
Total segment income | 9,797 | 6,557 | 33,477 | 25,899 | |||||||||||
Corporate overhead | (11,887 | ) | (10,058 | ) | (39,058 | ) | (30,106 | ) | |||||||
Corporate depreciation and amortization | (258 | ) | (177 | ) | (929 | ) | (678 | ) | |||||||
Other gains (losses), net | 338 | (506 | ) | (733 | ) | (1,579 | ) | ||||||||
Interest expense | (6,944 | ) | (5,934 | ) | (20,391 | ) | (17,431 | ) | |||||||
Income tax benefit (expense) | (622 | ) | 169 | (2,085 | ) | (591 | ) | ||||||||
Net loss | $ | (9,576 | ) | $ | (9,949 | ) | $ | (29,719 | ) | $ | (24,486 | ) | |||
CASH FLOW DATA: | |||||||||||||||
Capital expenditures: | |||||||||||||||
Cemetery Operations | $ | 4,525 | $ | 1,696 | $ | 7,501 | $ | 6,328 | |||||||
Funeral Home Operations | 76 | 305 | 203 | 800 | |||||||||||
Corporate | 48 | 150 | 256 | 2,527 | |||||||||||
Total capital expenditures | $ | 4,649 | $ | 2,151 | $ | 7,960 | $ | 9,655 | |||||||
BALANCE SHEET DATA: | September 30, 2017 | December 31, 2016 | |||||||||||||
Assets: | |||||||||||||||
Cemetery Operations | $ | 1,585,369 | $ | 1,573,494 | |||||||||||
Funeral Home Operations | 200,626 | 198,200 | |||||||||||||
Corporate | 13,359 | 15,319 | |||||||||||||
Total assets | $ | 1,799,354 | $ | 1,787,013 | |||||||||||
Goodwill: | |||||||||||||||
Cemetery Operations | $ | 24,862 | $ | 24,862 | |||||||||||
Funeral Home Operations | 45,574 | 45,574 | |||||||||||||
Total goodwill | $ | 70,436 | $ | 70,436 |
|
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Pre-need/at-need contract originations (sales on credit) | $ | (78,419 | ) | $ | (88,502 | ) | |
Cash receipts from sales on credit (post-origination) | 69,843 | 69,603 | |||||
Changes in Accounts receivable, net of allowance | $ | (8,576 | ) | $ | (18,899 | ) | |
Deferrals: | |||||||
Cash receipts from customer deposits at origination, net of refunds | $ | 113,177 | $ | 114,215 | |||
Withdrawals of realized income from merchandise trusts during the period | 10,592 | 10,114 | |||||
Pre-need/at-need contract originations (sales on credit) | 78,419 | 88,502 | |||||
Undistributed merchandise trust investment earnings (losses), net | (32,299 | ) | 8,034 | ||||
Recognition: | |||||||
Merchandise trust investment income, net withdrawn as of end of period | (7,851 | ) | (4,203 | ) | |||
Recognized maturities of customer contracts collected as of end of period | (148,630 | ) | (138,999 | ) | |||
Recognized maturities of customer contracts uncollected as of end of period | (25,527 | ) | (27,842 | ) | |||
Changes in Deferred revenues | $ | (12,119 | ) | $ | 49,821 |
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