Stonemor Partners Case

Rebecca Lamb Jessica Avalos Leah Anderson
Stonemor Partners LP Stonemor Partners' primary sources of liquidity is cash flow from operations and amounts available under their Credit Facility. In the past the company been able to increase their liquidity through long-term bank borrowings and the issuance of additional common units and other partnership securities, including debt, subject to the restrictions in their Credit Facility and under their senior secured notes. The cash that was generated from their operations borrowing from their Credit Facility would be sufficient for the company meet the capital requirements for the future. Cash flows provided by operating activities were $31.9 million during 2012,
an increase of $26.4 million, compared to cash provided by operating activities of $5.5 million during the same period the previous year. The increase was to increased pre-need cemetery sales. Net cash used in investing activities was $39.9 million during 2012, an increase of $10.7 million, compared to $29.2 million during 2011. Cash flows used for investing activities during 2012 primarily were $28.0 million for the acquisition of 5 cemetery properties and 17 funeral homes and $11.9 million for other capital expenditures compared to $16.1 million utilized for the acquisition of 17 cemetery properties and 12 funeral homes and $13.2 million for other capital expenditures in 2011. Net cash provided by financing activities was $3.9 million during 2012, a decrease of $24.3 million, compared to $28.2 million net cash provided by financing activities during 2011. Cash flows provided by financing activities during 2012 primarily were $54.0 million of net borrowing of long-term debt, offset by cash distributions to unit holders of $47.5 million and costs of financing activities of $2.4 million. In the profitability table show that the GAAP results changed by $4,006 between 2012 and 2011. The GAAP results changed by 40.7% between 2012 and 2011. Stonemor CEO has created the Forward-Looking statement to predict where their company will be in the future.
These statements are made because the company can not predict any risks and uncertainties they may come across that can potentially cause to differ materially. These statements include but are not limited to: uncertainties associated with future revenue and revenue growth; the effect of the current economic downturn; the impact of their significant leverage on their operating plans; their ability to service their debt pay distributions; the decline in the fair value of certain equity and debt securities held in their trusts; their ability to attract, train, and retain an adequate number of sales people; uncertainties associated with the volume and timing of pre-need sales of cemetery services and products; increased use of cremation; changes in the death rate; changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies; their ability to successfully implement a strategic plan relating to achieving operating improvements, strong cash flows and further deleveraging; their ability to successfully compete in the cemetery and funeral home industry; uncertainties associated with the integration or anticipated benefits of our recent acquisitions or any future acquisitions; their ability to complete and fund additional acquisitions; their ability to maintain effective disclosure controls and procedures and internal
control over financial reporting; the effects of cyber security attacks due to the company's significant reliance on information technology; uncertainties relating to the financial condition of third-party insurance companies that fund the company's pre-need funeral contracts; and various other uncertainties associated with the death care industry and their operations in particular Stonemor was formed as a Delaware limited partnership in April 2004 to own and operate the businesses previously owned and operated by Cornerstone Family Services, Inc. The current operations are cemeteries and Funeral homes. As of December 2012 Stonemor is operating 276 cemeteries in 27 states and Puerto Rico. Stonemor owns 258 of the 276 cemeteries and manage or operate the remaining 18 under management or operating agreements. Stonemor additionally owns and operates 86 funeral homes in 18 states and Puerto Rico. Stonemor employs 824 full-time commissioned sales people and 134 full-time sales support and telemarketing employees. They have 8 regional sales vice presidents and also 2 divisional vice presidents of sales who all report to one Chef Operating Officer. Stonemor Partners LP is currently the second largest owner and operator of cemeteries in the US. Some of the services that Stonemor Partners offers are installation of burial vaults, installation of caskets, installation of other cemetery merchandise, and other service items. Some of the products that Stonemor Partners offers are burial vaults, caskets, grave markers and grave bases, and memorials. These services, along with cremation are time of death and prior to death. Some other products would include burial lots, lawn crypts, mausoleum crypts, cremation niches, and perpetual care rights. The primary funeral home products for Stonemor Partners are caskets and related items. Their funeral home services include consultation, the removal and preparation of remains, and the use of funeral home facilities for visitation and prayer services. Their operations include sales of cemetery interment rights, merchandise and services and the performance of cemetery maintenance and other services. Some of the operations that Stonemor offers are performed by subsidiaries, they are organized as C corporations. Stonemor continues to be conducted in part by corporate subsidiaries. Under the subsidiary companies they are operators of the cemetery. The revenues are earned through sales of merchandise, services, and interment rights and incur expenses related to such sales and the maintenance and upkeep of these cemeteries. The research and development activities and future programs Stonemor Partners LP are considering include compensation programs created by the board and compensation committee.
These programs include short-term elements, such as annual base salary and annual incentive cash bonus and also equity based awards, which are longer term elements. Officers will also receive health, disability and life insurance benefits and automobile allowances and they are also entitled to a defer portion of their compensation pursuant to the company's 401k retirement plan. According to the report, these programs are designed to bring in and retain high quality executive officers so that they can be motivated to achieve the company's business goals and maximize the value of their unitholders' investment by aligning the interests of their executive officers with the interests of the company's unitholders. The business goals for these compensation programs include an increase in revenue, profits and cash distributions from existing operations, facilitate the growth of the business through acquisitions, promote a cohesive team effort and provide a workplace environment that fosters compliance with the laws and regulations applicable to the business. The elements to further the business goals of the compensation program don't have a special formula for allocating between long or short-term compensations, cash or non-cash or different forms of non-cash compensation. These are determined by the board
and compensation committee in discretion. The base salary is the guaranteed element of compensation which reflects the subjective assessment of the compensation committee and board. Experience, complexity, financial capabilities, business goals and size are all taken into consideration when appointing the base salary. Some other programs that are listed is the Annual Cash Incentive Program and the Long-Term Incentive Plan. The Annual Cash Incentive Program is basically designed to motivate the executives to achieve short-term earnings, growth and cash distribution goals by exceeding a pre-determined level of earnings before depreciation, interest, taxes and amortization. Long-Term Incentive Plan motivates their executives to remain employed for a sufficient amount of time to achieve the longer-term business goals and increase unit-holder value. These programs are also under discretion as far as the grant of awards are concerned.