SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

3 Months Ended

12 Months Ended

Mar. 31, 2020

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

15. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company’s Senior Secured Notes are guaranteed by the Company’s 100% owned subsidiaries, other than the co-issuers (except as to each other’s obligations thereunder), as described in Note 9 Long-Term Debt. The guarantees are full, unconditional, joint and several. The Partnership and CFS West Virginia are the co-issuers of the Senior Secured Notes.

In accordance with the disclosures made in Note 1General, StoneMor Inc. is the “Parent” for the audited consolidated balance sheet presented as of December 31, 2019 and the unaudited condensed consolidated financial statements presented as of and for the three months ended March 31, 2020, while the Partnership is the “Parent” for the unaudited condensed consolidated financial statements presented for the three months ended March 31, 2019. The Company’s audited consolidated balance sheet as of December 31, 2019 and its unaudited condensed consolidated financial statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 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 Company. The Company’s 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 Company’s standalone accounts, the standalone accounts of the co-issuers, the combined accounts of the guarantor subsidiaries, the combined accounts of the non-guarantor subsidiaries, the consolidating adjustments and eliminations and the Company’s consolidated accounts as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019. For the purpose of the following financial information, the Company’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):

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

March 31, 2020	Parent			Partnership			CFS West Virginia			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents, excluding restricted cash	$	—		$	—		$	—		$	25,621	$	1,445		$	—		$	27,066
Restricted cash		—			—			—			20,400		—			—			20,400
Assets held for sale		—			—			—			77,850		—			—			77,850
Other current assets		—			—			3,565			60,619		11,574			—			75,758
Total current assets		—			—			3,565			184,490		13,019			—			201,074
Long-term accounts receivable		—			—			2,345			59,074		10,055			—			71,474
Cemetery and funeral home property and equipment		—			—			531			364,534		32,035			—			397,100
Merchandise trusts		—			—			—			—		437,638			—			437,638
Perpetual care trusts		—			—			—			—		284,832			—			284,832
Deferred selling and obtaining costs		—			—			5,704			89,682		18,225			—			113,611
Intangible assets		—			—			—			98		55,844			—			55,942
Other assets		—			—			—			24,141		2,607			—			26,748
Investments in and amounts due from affiliates eliminated upon consolidation		—			279,834			—			576,588		—			(856,422	)		—
Total assets	$	—		$	279,834		$	12,145		$	1,298,607	$	854,255		$	(856,422	)	$	1,588,419
Liabilities and Owners’ Equity
Current liabilities		—			—			180			102,968		1,486			—			104,634
Long-term debt, net of deferred financing costs		—			279,834			61,470			139		—			—			341,443
Deferred revenues		—			—			31,431			727,227		108,749			—			867,407
Perpetual care trust corpus		—			—			—			—		284,832			—			284,832
Other long-term liabilities		—			—			—			66,670		16,545			—			83,215
Investments in and amounts due to affiliates eliminated upon consolidation		93,112			93,112			177,069			341,304		494,246			(1,198,843	)		—
Total liabilities		93,112			372,946			270,150			1,238,308		905,858			(1,198,843	)		1,681,531
Owners’ equity		(93,112	)		(93,112	)		(258,005	)		60,299		(51,603	)		342,421			(93,112	)
Total liabilities and owners’ equity	$	—		$	279,834		$	12,145		$	1,298,607	$	854,255		$	(856,422	)	$	1,588,419

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS (Continued)

December 31, 2019	Parent			Partnership			CFS West Virginia			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents, excluding restricted cash	$	—		$	—		$	—		$	33,553	$	1,314		$	—		$	34,867
Restricted cash		—			—			—			21,900		—			—			21,900
Assets held for sale		—			—			—			23,858		—			—			23,858
Other current assets		—			—			3,497			62,686		11,531			—			77,714
Total current assets		—			—			3,497			141,997		12,845			—			158,339
Long-term accounts receivable		—			—			2,557			63,124		9,868			—			75,549
Cemetery and funeral home property and equipment		—			—			609			391,626		31,770			—			424,005
Merchandise trusts		—			—			—			—		517,192			—			517,192
Perpetual care trusts		—			—			—			—		343,619			—			343,619
Deferred selling and obtaining costs		—			—			5,654			91,243		18,047			—			114,944
Intangible assets		—			—			—			136		56,110			—			56,246
Other assets		—			—			—			26,907		2,567			—			29,474
Investments in and amounts due from affiliates eliminated upon consolidation		—			301,531			—			648,359		—			(949,890	)		—
Total assets	$	—		$	301,531		$	12,317		$	1,363,392	$	992,018		$	(949,890	)	$	1,719,368
Liabilities and Owners’ Equity
Current liabilities	$	—		$	—		$	161		$	74,674	$	1,466		$	—		$	76,301
Long-term debt, net of deferred financing costs		—			301,531			66,239			193		—			—			367,963
Deferred revenues		—			—			33,349			802,528		113,498			—			949,375
Perpetual care trust corpus		—			—			—			—		343,619			—			343,619
Liabilities held for sale, net of current portion
Other long-term liabilities		—			—			—			68,227		16,373			—			84,600
Investments in and amounts due to affiliates eliminated upon consolidation		102,490			102,490			183,611			367,770		567,666			(1,324,027	)		—
Total liabilities		102,490			404,021			283,360			1,313,392		1,042,622			(1,324,027	)		1,821,858
Owners’ equity		(102,490	)		(102,490	)		(271,043	)		50,000		(50,604	)		374,137			(102,490	)
Total liabilities and owners’ equity	$	—		$	301,531		$	12,317		$	1,363,392	$	992,018		$	(949,890	)	$	1,719,368

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2020	Parent		Partnership			CFS West Virginia			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—	$	—		$	1,194		$	59,698		$	13,069		$	(2,716	)	$	71,245
Total costs and expenses		—		—			(3,169	)		(58,984	)		(13,319	)		2,716			(72,756	)
Gain on sale of businesses		—		—			—			24,086			—			—			24,086
Net income from equity investment in subsidiaries		9,003		17,701			12,585			—			—			(39,289	)		—
Interest expense		—		(8,698	)		(1,911	)		(1,382	)		(293	)		—			(12,284	)
Income (loss) from operations before income taxes		9,003		9,003			8,699			23,418			(543	)		(39,289	)		10,291
Income tax expense		—		—			—			(1,288	)		—			—			(1,288	)
Net income (loss)	$	9,003	$	9,003		$	8,699		$	22,130		$	(543	)	$	(39,289	)	$	9,003
Three Months Ended March 31, 2019			Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues			$	—		$	1,564		$	59,752		$	11,132		$	(979	)	$	71,469
Total costs and expenses				—			(4,520	)		(65,935	)		(11,356	)		979			(80,832	)
Net loss from equity investment in subsidiaries				(21,176	)		(18,925	)		—			—			40,101			—
Interest expense				(1,358	)		(2,087	)		(9,456	)		(270	)		—			(13,171	)
Income (loss) from operations before income taxes				(22,534	)		(23,968	)		(15,639	)		(494	)		40,101			(22,534	)
Income tax expense				—			—			—			—			—			—
Net income (loss)			$	(22,534	)	$	(23,968	)	$	(15,639	)	$	(494	)	$	40,101		$	(22,534	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2020	Parent		Partnership		CFS West Virginia			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash used in (provided by) operating activities	$	—	$	—	$	12		$	4,465		$	893		$	(10,608	)	$	(5,238	)
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales		—		—		—			26,796			(679	)		—			26,117
Payments to affiliates		—		—		—			—			—			—			—
Net cash provided by investing activities		—		—		—			26,796			(679	)		—			26,117
Cash Flows From Financing Activities:
Cash distributions		—		—		—			—			—			—			—
Payments from affiliates		—		—		—			(10,608	)		—			10,608			—
Net borrowings and repayments of debt		—		—		(12	)		(29,872	)		(83	)		—			(29,967	)
Other financing activities		—		—		—			(213	)		—			—			(213	)
Net cash used in financing activities		—		—		(12	)		(40,693	)		(83	)		10,608			(30,180	)
Net (decrease) increase in cash and cash equivalents and restricted cash		—		—		—			(9,432	)		131			—			(9,301	)
Cash and cash equivalents and restricted cash—Beginning of period		—		—		—			55,453			1,314			—			56,767
Cash and cash equivalents and restricted cash—End of period	$	—	$	—	$	—		$	46,021		$	1,445		$	—		$	47,466

Three Months Ended March 31, 2019	Parent		Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash used in (provided by) operating activities	$	—	$	119		$	(9,509	)	$	(268	)	$	(3,445	)	$	(13,103	)
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales		—		(106	)		(1,717	)		(80	)		—			(1,903	)
Net cash used investing activities		—		(106	)		(1,717	)		(80	)		—			(1,903	)
Cash Flows From Financing Activities:
Cash distributions		—		—			—			—			—			—
Payments to affiliates		—		—			(3,445	)		—			3,445			—
Net borrowings and repayments of debt		—		(13	)		24,030			(74	)		—			23,943
Other financing activities		—		—			(2,636	)		—			—			(2,636	)
Net cash (used in) provided by financing activities		—		(13	)		17,949			(74	)		3,445			21,307
Net increase (decrease) in cash and cash equivalents and restricted cash		—		—			6,723			(422	)		—			6,301
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	$	—	$	—		$	23,021		$	1,427		$	—		$	24,448

19. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company’s Senior Secured Notes are guaranteed by the Company’s 100% owned subsidiaries, other than the co-issuers, (except as to each other’s obligations thereunder), as described in Note 10 Long-Term Debt. The guarantees are full, unconditional, joint and several. The Partnership and Cornerstone Family Services of West Virginia Subsidiary Inc. (“CFS West Virginia”) are the co-issuers of the Senior Secured Notes. As of December 31, 2019, StoneMor Inc. is also a guarantor of the Senior Secured Notes.

In accordance with the disclosures made in Note 1 General, Basis of Presentation and Principles of Consolidation of this Annual Report, StoneMor Inc. is the “Parent” for the consolidated financial statements presented as of and for the year ended December 31, 2019, while the Partnership is the “Parent” for the consolidated financial statements presented as of and for the year ended December 31, 2018. The Company’s consolidated financial statements as of December 31, 2019 and 2018 and for the years ended December 31, 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 Company. The Company’s 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 Company’s standalone accounts, the combined accounts of the co-issuers, the combined accounts of the guarantor subsidiaries, the combined accounts of the non-guarantor subsidiaries, the consolidating adjustments and eliminations and the Company’s consolidated accounts as of December 31, 2019 and 2018 and for the years ended December 31, 2019 and 2018. For the purpose of the following financial information, the Company’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

December 31, 2019	Parent			Partnership			CFS West Virginia			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents, excluding restricted cash	$	—		$	—		$	—		$	33,553	$	1,314					$	34,867
Restricted cash		—			—			—			21,900		—						21,900
Assets held for sale		—			—			—			23,858		—						23,858
Other current assets		—			—			3,497			62,686		11,531						77,714
Total current assets		—			—			3,497			141,997		12,845			—			158,339
Long-term accounts receivable		—			—			2,557			63,124		9,868						75,549
Cemetery and funeral home property and equipment		—			—			609			391,626		31,770						424,005
Merchandise trusts		—			—			—			—		517,192						517,192
Perpetual care trusts		—			—			—			—		343,619						343,619
Deferred selling and obtaining costs		—			—			5,654			91,243		18,047						114,944
Intangible assets		—			—			—			136		56,110						56,246
Other assets		—			—			—			26,907		2,567						29,474
Investments in and amounts due from affiliates eliminated upon consolidation		—			301,531			—			648,359		—			(949,890	)		—
Total assets	$	—		$	301,531		$	12,317		$	1,363,392	$	992,018		$	(949,890	)	$	1,719,368
Liabilities and Owners’ Equity
Current liabilities		—			—			161			74,674		1,466						76,301
Long-term debt, net of deferred financing costs		—			301,531			66,239			193		—						367,963
Deferred revenues		—			—			33,349			802,528		113,498						949,375
Perpetual care trust corpus		—			—			—			—		343,619						343,619
Other long-term liabilities		—			—			—			68,227		16,373						84,600
Investments in and amounts due to affiliates eliminated upon consolidation		102,490			102,490			183,611			367,770		567,666			(1,324,027	)		—
Total liabilities		102,490			404,021			283,360			1,313,392		1,042,622			(1,324,027	)		1,821,858
Owners’ equity		(102,490	)		(102,490	)		(271,043	)		50,000		(50,604	)		374,137			(102,490	)
Total liabilities and owners’ equity	$	—		$	301,531		$	12,317		$	1,363,392	$	992,018		$	(949,890	)	$	1,719,368

CONDENSED CONSOLIDATING BALANCE SHEET (continued)

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
Assets held for sale		—			—			757		—			—			757
Other current assets		—			3,718			64,167		11,527			—			79,412
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			409,497		33,550			—			443,853
Merchandise trusts		—			—			—		488,248			—			488,248
Perpetual care trusts		—			—			—		330,562			—			330,562
Deferred selling and obtaining costs		—			5,511			89,689		18,444			—			113,644
Goodwill and intangible assets		—			—			25,676		60,607			—			86,283
Other assets		—			—			19,401		2,926			—			22,327
Investments in and amounts due from affiliates eliminated upon consolidation		57,835			(4,626	)		539,997		—			(593,206	)		—
Total assets	$	57,835		$	8,527		$	1,237,190	$	960,035		$	(593,206	)	$	1,670,381
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			775,657		111,802			—			919,606
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			1,189,674		1,002,537			(717,156	)		1,680,999
Redeemable convertible preferred units		—			—			—		—			—			—
Partners’ capital (deficit)		(10,618	)		(128,964	)		47,516		(42,502	)		123,950			(10,618	)
Total liabilities, redeemable convertible preferred units and partners’ capital (deficit)	$	57,835		$	8,527		$	1,237,190	$	960,035		$	(593,206	)	$	1,670,381

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Year Ended December 31, 2019	Parent			Partnership			CFS West Virginia			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	—		$	5,041		$	242,339		$	49,068		$	(6,926	)	$	289,522
Total costs and expenses		—			—			(15,181	)		(285,292	)		(54,610	)		6,926			(348,157	)
Other losses, net		—			—			(46	)		(5,761	)		(2,299	)		—			(8,106	)
Net loss from equity investment in subsidiaries		(151,942	)		(125,840	)		(120,653	)		—			—			398,435			—
Interest expense		—			(25,164	)		(10,505	)		(11,726	)		(1,124	)		—			(48,519	)
Loss on debt extinguishment		—			(938	)		(1,441	)		(6,099	)		—			—			(8,478	)
Income (loss) from operations before income taxes		(151,942	)		(151,942	)		(142,785	)		(66,539	)		(8,965	)		398,435			(123,738	)
Income tax expense		—			—			—			(28,204	)		—			—			(28,204	)
Net income (loss)	$	(151,942	)	$	(151,942	)	$	(142,785	)	$	(94,743	)	$	(8,965	)	$	398,435		$	(151,942	)

Year Ended December 31, 2018	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Total revenues	$	—		$	6,382		$	266,550		$	52,271		$	(9,077	)	$	316,126
Total costs and expenses		—			(13,666	)		(285,578	)		(58,349	)		9,077			(348,516	)
Other loss		—			(445	)		(9,510	)		(1,549	)		—			(11,504	)
Net loss from equity investment in subsidiaries		(63,084	)		(54,573	)		—			—			117,657			—
Interest expense		(5,434	)		(8,348	)		(15,787	)		(1,033	)		—			(30,602	)
Income (loss) from continuing operations before income taxes		(68,518	)		(70,650	)		(44,325	)		(8,660	)		117,657			(74,496	)
Income tax benefit		—			—			1,797			—			—			1,797
Net income (loss)	$	(68,518	)	$	(70,650	)	$	(42,528	)	$	(8,660	)	$	117,657		$	(72,699	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended December 31, 2019	Parent		Partnership			CFS West Virginia			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	—	$	—		$	280		$	(1,662	)	$	(935	)	$	(35,669	)	$	(37,986	)
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales		—		—			(232	)		(644	)		713			—			(163	)
Payments to affiliates		—		(390,238	)		(73,087	)		—			—			463,325			—
Net cash used in investing activities		—		(390,238	)		(73,319	)		(644	)		713			463,325			(163	)
Cash Flows From Financing Activities:
Payments from affiliates		—		—			—			427,656			—			(427,656	)		—
Proceeds from issuance of redeemable convertible preferred units, net		—		57,500			—			—			—			—			57,500
Net borrowings and repayments of debt		—		332,738			73,039			(367,746	)		(313	)		—			37,718
Other financing activities		—		—			—			(18,449	)		—			—			(18,449	)
Net cash used in financing activities		—		390,238			73,039			41,461			(313	)		(427,656	)		76,769
Net increase (decrease) in cash and cash equivalents and restricted cash		—		—			—			39,155			(535	)		—			38,620
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	$	—	$	—		$	—		$	55,453		$	1,314		$	—		$	56,767

Year Ended December 31, 2018	Parent		Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	—	$	370		$	39,942		$	(73	)	$	(13,782	)	$	26,457
Cash Flows From Investing Activities:
Cash paid for acquisitions and capital expenditures, net of proceeds from divestitures and asset sales		—		(370	)		(11,510	)		(683	)		—			(12,563	)
Net cash used in investing activities		—		(370	)		(11,510	)		(683	)		—			(12,563	)
Cash Flows From Financing Activities:
Cash distributions		—		—			—			—			—			—
Payments to affiliates		—		—			(13,782	)		—			13,782			—
Proceeds from issuance of redeemable convertible preferred units, net		—		—			—			—			—			—
Net borrowings and repayments of debt		—		—			1,387			—			—			1,387
Other financing activities		—		—			(3,955	)		—			—			(3,955	)
Net cash used in financing activities		—		—			(16,350	)		—			13,782			(2,568	)
Net decrease in cash and cash equivalents		—		—			12,082			(756	)		—			11,326
Cash and cash equivalents—Beginning of period		—		—			4,216			2,605			—			6,821
Cash and cash equivalents—End of period	$	—	$	—		$	16,298		$	1,849		$	—		$	18,147