SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

15. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Partnership’s Senior Secured Notes are guaranteed by the Partnership’s 100% owned subsidiaries, other than the co-issuer, as described in Note 8 Long-Term Debt. The guarantees are full, unconditional, joint and several. The Partnership, or the "Parent," and its 100% owned subsidiary, Cornerstone Family Services of West Virginia Subsidiary Inc., are the co-issuers of the Senior Secured Notes. The Partnership’s unaudited condensed consolidated financial statements as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018 include the accounts of cemeteries operated under long-term leases, operating agreements and management agreements. For the purposes of this note, these entities are deemed non-guarantor subsidiaries, as they are not 100% owned by the Partnership. The Partnership’s unaudited condensed consolidated financial statements also contain merchandise and perpetual care trusts that are also non-guarantor subsidiaries for the purposes of this note.

The financial information presented below 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 June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018. 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 (UNAUDITED)

June 30, 2019	Parent			Subsidiary Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents, excluding restricted cash	$	—		$	—		$	40,329	$	1,530		$	—		$	41,859
Restricted cash		—			—			20,095		—			—			20,095
Other current assets		—			3,774			70,794		11,155			—			85,723
Total current assets		—			3,774			131,218		12,685			—			147,677
Long-term accounts receivable		—			2,747			70,002		11,026			—			83,775
Cemetery and funeral home property and    equipment		—			713			407,511		32,191			—			440,415
Merchandise trusts		—			—			—		519,382			—			519,382
Perpetual care trusts		—			—			—		343,308			—			343,308
Deferred selling and obtaining costs		—			5,553			89,673		17,690			—			112,916
Goodwill and intangible assets		—			—			24,443		57,296			—			81,739
Other assets		—			—			30,960		2,643			—			33,603
Investments in and amounts due from affiliates    eliminated upon consolidation		—			—			648,063		—			(648,063	)		—
Total assets	$	—		$	12,787		$	1,401,870	$	996,221		$	(648,063	)	$	1,762,815
Liabilities, Redeemable Convertible Preferred Units and Partners’ Capital (Deficit)
Current liabilities		—			173			54,551		1,242			—			55,966
Long-term debt, net of deferred financing costs		—			—			357,575		—			—			357,575
Deferred revenues		—			32,966			798,618		112,558			—			944,142
Perpetual care trust corpus		—			—			—		343,308			—			343,308
Other long-term liabilities		—			—			49,397		15,871			—			65,268
Investments in and amounts due to affiliates    eliminated upon consolidation		3,444			224,749			—		570,605			(798,798	)		—
Total liabilities		3,444			257,888			1,260,141		1,043,584			(798,798	)		1,766,259
Redeemable convertible preferred units		57,500			—			—		—			—			57,500
Partners’ capital (deficit)		(60,944	)		(245,101	)		141,729		(47,363	)		150,735			(60,944	)
Total liabilities, redeemable convertible preferred units and partners’ capital  (deficit)	$	—		$	12,787		$	1,401,870	$	996,221		$	(648,063	)	$	1,762,815

CONSOLIDATING BALANCE SHEET

December 31, 2018	Parent			Subsidiary Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents, excluding restricted cash	$	—		$	—		$	16,298	$	1,849		$	—		$	18,147
Restricted cash		—			—			—		—			—			—
Other current assets		—			3,718			64,924		11,527			—			80,169
Total current assets		—			3,718			81,222		13,376			—			98,316
Long-term accounts receivable		—			3,118			71,708		12,322			—			87,148
Cemetery and funeral home property and    equipment		—			806			409,201		33,550			—			443,557
Merchandise trusts		—			—			—		488,248			—			488,248
Perpetual care trusts		—			—			—		330,562			—			330,562
Deferred selling and obtaining costs		—			5,511			88,705		18,444			—			112,660
Goodwill and intangible assets		—			—			25,676		60,607			—			86,283
Other assets		—			—			19,403		2,924			—			22,327
Investments in and amounts due from affiliates    eliminated upon consolidation		61,875			(586	)		539,997		—			(601,286	)		—
Total assets	$	61,875		$	12,567		$	1,235,912	$	960,033		$	(601,286	)	$	1,669,101
Liabilities, Redeemable Convertible Preferred Units and Partners’ Capital (Deficit)
Current liabilities	$	—		$	184		$	60,216	$	1,400		$	—		$	61,800
Long-term debt, net of deferred financing costs		68,453			105,160			146,635		—			—			320,248
Deferred revenues		—			32,147			770,337		111,802			—			914,286
Perpetual care trust corpus		—			—			—		330,562			—			330,562
Other long-term liabilities		—			—			33,553		15,230			—			48,783
Due to affiliates		—			—			173,613		543,543			(717,156	)		—
Total liabilities		68,453			137,491			1,184,354		1,002,537			(717,156	)		1,675,679
Redeemable convertible preferred units		—			—			—		—			—			—
Partners’ capital (deficit)		(6,578	)		(124,924	)		51,556		(42,502	)		115,870			(6,578	)
Total liabilities, redeemable convertible preferred units and partners’ capital  (deficit)	$	61,875		$	12,567		$	1,235,910	$	960,035		$	(601,286	)	$	1,669,101

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended June 30, 2019	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	1,439		$	65,749		$	13,068		$	(1,761	)	$	78,495
Total costs and expenses		—			(4,038	)		(66,980	)		(15,997	)		1,761			(85,254	)
Other loss		—			—			(1,346	)		(2,083	)		—			(3,429	)
Net loss from equity investment in    subsidiaries		(30,577	)		(22,358	)		—			—			52,935			—
Interest expense		(2,883	)		(3,822	)		(2,369	)		(272	)		—			(9,346	)
Loss on debt extinguishment		(938	)		(1,441	)		(6,099	)		—			—			(8,478	)
Income (loss) from continuing operations    before income taxes		(34,398	)		(30,220	)		(11,045	)		(5,284	)		52,935			(28,012	)
Income tax benefit		—			—			(6,386	)		—			—			(6,386	)
Net income (loss)	$	(34,398	)	$	(30,220	)	$	(17,431	)	$	(5,284	)	$	52,935		$	(34,398	)
Three Months Ended June 30, 2018	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	1,425		$	69,595		$	13,414		$	(2,863	)	$	81,571
Total costs and expenses		—			(3,776	)		(74,911	)		(14,485	)		2,863			(90,309	)
Other loss		—			—			—			—			—			—
Net loss from equity investment in    subsidiaries		(15,657	)		(12,309	)		—			—			27,966			—
Interest expense		(1,359	)		(2,087	)		(4,404	)		(257	)		—			(8,107	)
Income (loss) from continuing operations    before income taxes		(17,016	)		(16,747	)		(9,720	)		(1,328	)		27,966			(16,845	)
Income tax benefit		—			—			(172	)		—			—			(172	)
Net income (loss)	$	(17,016	)	$	(16,747	)	$	(9,892	)	$	(1,328	)	$	27,966		$	(17,017	)

Six Months Ended June 30, 2019	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	3,003		$	125,501		$	24,200		$	(2,740	)	$	149,964
Total costs and expenses		—			(8,558	)		(132,915	)		(27,353	)		2,740			(166,086	)
Other loss		—			—			(1,346	)		(2,083	)		—			(3,429	)
Net loss from equity investment in    subsidiaries		(51,753	)		(41,283	)		—			—			93,036			—
Interest expense		(4,241	)		(5,909	)		(11,825	)		(542	)		—			(22,517	)
Loss on debt extinguishment		(938	)		(1,441	)		(6,099	)					—			(8,478	)
Income (loss) from continuing operations    before income taxes		(56,932	)		(54,188	)		(26,684	)		(5,778	)		93,036			(50,546	)
Income tax benefit		—			—			(6,386	)		—			—			(6,386	)
Net income (loss)	$	(56,932	)	$	(54,188	)	$	(33,070	)	$	(5,778	)	$	93,036		$	(56,932	)
Six Months Ended June 30, 2018	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	3,050		$	135,384		$	26,274		$	(5,192	)	$	159,516
Total costs and expenses		—			(7,086	)		(145,824	)		(28,562	)		5,192			(176,280	)
Other loss		—			—			(5,205	)		—			—			(5,205	)
Net loss from equity investment in    subsidiaries		(32,222	)		(27,102	)		—			—			59,324			—
Interest expense		(2,717	)		(4,174	)		(7,820	)		(509	)		—			(15,220	)
Income (loss) from continuing operations    before income taxes		(34,939	)		(35,312	)		(23,465	)		(2,797	)		59,324			(37,189	)
Income tax benefit		—			—			2,249			—			—			2,249
Net income (loss)	$	(34,939	)	$	(35,312	)	$	(21,216	)	$	(2,797	)	$	59,324		$	(34,940	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2019	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	—		$	197		$	(21,647	)	$	28		$	(10,150	)	$	(31,572	)
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital    expenditures, net of proceeds from    divestitures and asset sales		—			(173	)		(3,216	)		(199	)		—			(3,588	)
Payments to affiliates		(57,500	)		—			—			—			57,500			—
Net cash used in investing activities		(57,500	)		(173	)		(3,216	)		(199	)		57,500			(3,588	)
Cash Flows From Financing Activities:
Cash distributions		—			—			—			—			—			—
Payments from affiliates		—			—			47,350			—			(47,350	)		—
Proceeds from issuance of redeemable convertible preferred units, net		57,500			—			—			—			—			57,500
Net borrowings and repayments of debt		—			(24	)		39,076			(148	)		—			38,904
Other financing activities		—			—			(17,437	)		—			—			(17,437	)
Net cash used in financing activities		57,500			(24	)		68,989			(148	)		(47,350	)		78,967
Net increase (decrease) in cash and cash equivalents and restricted cash		—			—			44,126			(319	)		—			43,807
Cash and cash equivalents and restricted cash—    Beginning of period		—			—			16,298			1,849			—			18,147
Cash and cash equivalents and restricted cash—    End of period	$	—		$	—		$	60,424		$	1,530		$	—		$	61,954

Six Months Ended June 30, 2018	Parent		Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	—	$	283		$	21,981		$	31		$	(6,891	)	$	15,404
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital    expenditures, net of proceeds from    divestitures and asset sales		—		(283	)		(7,691	)		(485	)		—			(8,459	)
Net cash used in investing activities		—		(283	)		(7,691	)		(485	)		—			(8,459	)
Cash Flows From Financing Activities:
Cash distributions		—		—			—			—			—			—
Payments to affiliates		—		—			(6,891	)		—			6,891			—
Proceeds from issuance of redeemable convertible preferred units, net		—		—			—			—			—			—
Net borrowings and repayments of debt		—		—			3,984			—			—			3,984
Other financing activities		—		—			(2,771	)		—			—			(2,771	)
Net cash used in financing activities		—		—			(5,678	)		—			6,891			1,213
Net decrease in cash and cash equivalents		—		—			8,612			(454	)		—			8,158
Cash and cash equivalents—Beginning of    period		—		—			4,216			2,605			—			6,821
Cash and cash equivalents—End of period	$	—	$	—		$	12,828		$	2,151		$	—		$	14,979