16. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Partnership’s Senior Notes are guaranteed by StoneMor Operating LLC and its wholly-owned subsidiaries, other than the co-issuer, as described below. The guarantees are full, unconditional, joint and several. The Partnership, or the “Parent”, and its wholly-owned subsidiary Cornerstone Family Services of West Virginia Subsidiary Inc., are the co-issuers of the Senior Notes. The Partnership’s unaudited consolidated financial statements as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015 include the accounts of cemeteries operated under long-term lease, operating or management agreements. For the purposes of this note, these entities are deemed non-guarantor subsidiaries, as they are not wholly-owned by the Partnership. The Partnership’s unaudited consolidated financial statements also contain merchandise and perpetual care trusts that are also deemed non-guarantor subsidiaries for the purposes of this note.

The following unaudited supplemental condensed consolidating financial information reflects the Partnership’s standalone accounts, the combined accounts of the subsidiary co-issuer, the combined accounts of the guarantor subsidiaries, the combined accounts of the non-guarantor subsidiaries, the consolidating adjustments and eliminations and the Partnership’s consolidated accounts as of and for the three and six months ended June 30, 2016 and 2015. For the purpose of the following financial information, the Partnership’s investments in its subsidiaries and the guarantor subsidiaries’ investments in their respective subsidiaries are presented in accordance with the equity method of accounting (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS


June 30, 2016	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	6,382	$	3,054	$	—		$	9,436
Other current assets		—		5,276		82,814		15,001		—			103,091

Total current assets		—		5,276		89,196		18,055		—			112,527
Long-term accounts receivable		—		2,821		81,134		11,166		—			95,121
Cemetery property and equipment		—		1,020		416,052		31,577		—			448,649
Merchandise trusts		—		—		—		494,596		—			494,596
Perpetual care trusts		—		—		—		321,700		—			321,700
Deferred selling and obtaining costs		—		5,967		96,730		15,713		—			118,410
Goodwill and intangible assets		—		—		78,331		58,339		—			136,670
Other assets		—		—		16,151		2,371		—			18,522
Investments in and amounts due from affiliates eliminated upon consolidation		263,879		175,341		465,794		—		(905,014	)		—

Total assets	$	263,879	$	190,425	$	1,243,388	$	953,517	$	(905,014	)	$	1,746,195

Liabilities and Equity
Current liabilities	$	—	$	36	$	39,636	$	834	$	—		$	40,506
Long-term debt, net of deferred financing costs		67,975		104,425		105,454		—		—			277,854
Deferred revenues		—		41,456		740,550		86,188		—			868,194
Perpetual care trust corpus		—		—		—		321,700		—			321,700
Other long-term liabilities		—		—		32,158		9,879		—			42,037
Due to affiliates		—		—		172,400		477,824		(650,224	)		—

Total liabilities		67,975		145,917		1,090,198		896,425		(650,224	)		1,550,291

Partners’ capital		195,904		44,508		153,190		57,092		(254,790	)		195,904

Total liabilities and partners’ capital	$	263,879	$	190,425	$	1,243,388	$	953,517	$	(905,014	)	$	1,746,195


December 31, 2015	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	11,869	$	3,284	$	—		$	15,153
Other current assets		—		4,858		78,464		12,701		—			96,023

Total current assets		—		4,858		90,333		15,985		—			111,176
Long-term accounts receivable		—		2,888		80,969		11,310		—			95,167
Cemetery property and equipment		—		1,084		418,400		31,100		—			450,584
Merchandise trusts		—		—		—		464,676		—			464,676
Perpetual care trusts		—		—		—		307,804		—			307,804
Deferred selling and obtaining costs		—		5,967		91,275		14,300		—			111,542
Goodwill and intangible assets		—		—		78,223		58,837		—			137,060
Other assets		—		—		14,153		2,195		—			16,348
Investments in and amounts due from affiliates eliminated upon consolidation		249,436		165,639		436,811		—		(851,886	)		—

Total assets	$	249,436	$	180,436	$	1,210,164	$	906,207	$	(851,886	)	$	1,694,357

Liabilities and Equity
Current liabilities	$	—	$	12	$	33,083	$	837	$	—		$	33,932
Long-term debt, net of deferred financing costs		67,890		104,295		144,214		—		—			316,399
Deferred revenues		—		40,467		697,516		77,438		—			815,421
Perpetual care trust corpus		—		—		—		307,804		—			307,804
Other long-term liabilities		—		—		29,761		9,494		—			39,255
Due to affiliates		—		—		172,185		454,605		(626,790	)		—

Total liabilities		67,890		144,774		1,076,759		850,178		(626,790	)		1,512,811

Partners’ capital		181,546		35,662		133,405		56,029		(225,096	)		181,546

Total liabilities and partners’ capital	$	249,436	$	180,436	$	1,210,164	$	906,207	$	(851,886	)	$	1,694,357

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS


Three months ended June 30, 2016	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	1,653		$	66,407		$	12,590		$	(2,368	)	$	78,282
Total cost and expenses		—			(2,575	)		(67,877	)		(12,451	)		2,368			(80,535	)
Other income (loss)		—						(191	)		—			—			(191	)
Net loss from equity investment in subsidiaries		(7,292	)		(8,816	)		—			—			16,108			—
Interest expense		(1,359	)		(2,087	)		(2,066	)		(195	)		—			(5,707	)

Net income (loss) before income taxes		(8,651	)		(11,825	)		(3,727	)		(56	)		16,108			(8,151	)

Income tax benefit (expense)		—			—			(500	)		—			—			(500	)

Net income (loss)	$	(8,651	)	$	(11,825	)	$	(4,227	)	$	(56	)	$	16,108		$	(8,651	)


Three months ended June 30, 2015	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	1,505		$	73,659		$	12,822		$	(3,473	)	$	84,513
Total cost and expenses		—			(2,865	)		(70,398	)		(13,305	)		3,473			(83,095	)
Net loss from equity investment in subsidiaries		(3,285	)		(4,637	)		—			—			7,922			—
Interest expense		(1,359	)		(2,087	)		(2,144	)		(180	)		—			(5,770	)

Net income (loss) before income taxes		(4,644	)		(8,084	)		1,117			(663	)		7,922			(4,352	)

Income tax benefit (expense)		—			—			(292	)		—			—			(292	)

Net income (loss)	$	(4,644	)	$	(8,084	)	$	825		$	(663	)	$	7,922		$	(4,644	)


Six months ended June 30, 2016	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	2,886		$	130,701		$	26,356		$	(4,732	)	$	155,211
Total cost and expenses		—			(5,092	)		(133,648	)		(23,999	)		4,732			(158,007	)
Other income (loss)		—			—			(1,073	)		—			—			(1,073	)
Net loss from equity investment in subsidiaries		(13,409	)		(16,455	)		—			—			29,864			—
Interest expense		(2,717	)		(4,174	)		(4,220	)		(386	)		—			(11,497	)

Net income (loss) before income taxes		(16,126	)		(22,835	)		(8,240	)		1,971			29,864			(15,366	)

Income tax benefit (expense)		—			—			(760	)		—			—			(760	)

Net income (loss)	$	(16,126	)	$	(22,835	)	$	(9,000	)	$	1,971		$	29,864		$	(16,126	)


Six months ended June 30, 2015	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	2,785		$	134,945		$	23,670		$	(6,394	)	$	155,006
Total cost and expenses		—			(5,276	)		(133,114	)		(24,617	)		6,394			(156,613	)
Net loss from equity investment in subsidiaries		(10,437	)		(11,385	)		—			—			21,822			—
Interest expense		(2,717	)		(4,174	)		(3,985	)		(357	)		—			(11,233	)

Net income (loss) before income taxes		(13,154	)		(18,050	)		(2,154	)		(1,304	)		21,822			(12,840	)

Income tax benefit (expense)		—			—			(314	)		—			—			(314	)

Net income (loss)	$	(13,154	)	$	(18,050	)	$	(2,468	)	$	(1,304	)	$	21,822		$	(13,154	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


Six months ended June 30, 2016	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	2,624		$	61		$	13,804		$	1,485		$	(9,515	)	$	8,459
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures		—			(61	)		(5,380	)		(1,715	)		—			(7,156	)
Payments to affiliates		(32,458	)		—			—			—			32,458			—

Net cash used in investing activities		(32,458	)		(61	)		(5,380	)		(1,715	)		32,458			(7,156	)

Cash Flows From Financing Activities:
Cash distributions		(44,703	)		—			—			—			—			(44,703	)
Payments from affiliates		—			—			22,943			—			(22,943	)		—
Net borrowings and repayments of debt		—			—			(36,503	)		—			—			(36,503	)
Proceeds from issuance of common units		74,537			—			—			—			—			74,537
Other financing activities		—			—			(351	)		—			—			(351	)

Net cash provided by (used in) financing activities		29,834			—			(13,911	)		—			(22,943	)		(7,020	)

Net increase (decrease) in cash and cash equivalents		—			—			(5,487	)		(230	)		—			(5,717	)
Cash and cash equivalents - Beginning of period		—			—			11,869			3,284			—			15,153

Cash and cash equivalents - End of period	$	—		$	—		$	6,382		$	3,054		$	—		$	9,436


Six months ended June 30, 2015	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	36,297		$	151		$	9,324		$	1,391		$	(43,188	)	$	3,975
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures		—			(151	)		(5,472	)		(1,627	)		—			(7,250	)

Net cash used in investing activities		—			(151	)		(5,472	)		(1,627	)		—			(7,250	)

Cash Flows From Financing Activities:
Cash distributions		(36,297	)		—			—			—			—			(36,297	)
Payments to affiliates		—			—			(43,188	)		—			43,188			—
Net borrowings and repayments of debt		—			—			42,608			—			—			42,608
Other financing activities		—			—			(34	)		—			—			(34	)

Net cash provided by (used in) financing activities		(36,297	)		—			(614	)		—			43,188			6,277

Net increase (decrease) in cash and cash equivalents		—			—			3,238			(236	)		—			3,002
Cash and cash equivalents - Beginning of period		—			—			7,059			3,342			—			10,401

Cash and cash equivalents - End of period	$	—		$	—		$	10,297		$	3,106		$	—		$	13,403