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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-11316
OMEGA HEALTHCARE
INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(State of Incorporation)
38-3041398
(I.R.S. Employer Identification No.)
900 VICTORS WAY, SUITE 350, ANN ARBOR, MI 48108
(Address of principal executive offices)
(734) 887-0200
(Telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of March 31, 1999
COMMON STOCK, $.10 PAR VALUE
(Class)
19,823,405
(Number of shares)
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OMEGA HEALTHCARE INVESTORS, INC
FORM 10-Q
MARCH 31, 1999
INDEX
PAGE NO.
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PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets
March 31, 1999 (unaudited) and December 31, 1998.......... 2
Statements of Operations (unaudited) --
Three-month periods ended March 31, 1999 and 1998......... 3
Statement of Cash Flows (unaudited) --
Three-month periods ended March 31, 1999 and 1998......... 4
Notes to Financial Statements
March 31, 1999 (unaudited)................................ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 11
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PART 1 -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
(UNAUDITED) (SEE NOTE)
ASSETS
Real estate properties
Land and buildings at cost................................ $ 677,300 $ 643,378
Less accumulated depreciation............................. (58,540) (56,385)
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Real estate properties -- net.......................... 618,760 586,993
Mortgage notes receivable................................. 333,744 340,455
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952,504 927,448
Investment in Omega Worldwide, Inc.......................... 6,961 6,226
Investments in Principal Healthcare Finance Ltd............. 1,629 1,629
Other investments........................................... 51,737 33,898
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1,012,831 969,201
Assets held for sale........................................ 31,566 35,289
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Total Investments (Cost of $1,102,937 at March 31, 1999
and $1,060,875 at December 31, 1998)................... 1,044,397 1,004,490
Cash and short-term investments............................. 1,563 1,877
Goodwill and non-compete agreements -- net.................. 4,008 4,422
Other assets................................................ 15,867 21,856
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Total Assets........................................... $1,065,835 $1,032,645
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Acquisition line of credit.................................. $ 176,155 $ 123,000
Unsecured borrowings........................................ 311,570 311,570
Secured borrowings.......................................... 21,707 21,784
Subordinated convertible debentures......................... 48,405 48,405
Accrued expenses and other liabilities...................... 12,137 22,124
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Total Liabilities...................................... 569,974 526,883
Preferred Stock............................................. 107,500 107,500
Common stock and additional paid-in capital................. 447,821 454,445
Cumulative net earnings..................................... 225,259 212,434
Cumulative dividends paid................................... (282,463) (266,054)
Stock option loans.......................................... (2,845) (2,863)
Unamortized restricted stock awards......................... (907) (461)
Accumulated other comprehensive income...................... 1,496 761
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Total Shareholders' Equity............................. 495,861 505,762
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$1,065,835 $1,032,645
========== ==========
NOTE -- The balance sheet at December 31, 1998, has been derived from audited
consolidated financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See notes to condensed consolidated financial statements.
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OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
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1999 1998
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Revenues
Rental income............................................. $18,128 $17,281
Mortgage interest income.................................. 10,217 7,205
Other investment income................................... 1,662 1,635
Miscellaneous............................................. 16 147
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30,023 26,268
Expenses
Depreciation and amortization............................. 5,595 5,127
Interest.................................................. 10,106 7,629
General and administrative................................ 1,497 1,365
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17,198 14,121
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Net Earnings Before Preferred Stock Dividends............... 12,825 12,147
Preferred Stock Dividends................................... (2,408) (1,330)
Net Earnings Available to Common Shareholders............... $10,417 $10,817
======= =======
Net Earnings per common share:
Basic..................................................... $0.52 $0.55
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Diluted................................................... $0.52 $0.55
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Dividends paid per common share............................. $0.70 $0.670
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Average Shares Outstanding, Basic........................... 19,899 19,609
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Average Shares Outstanding, Diluted......................... 19,901 19,709
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Other comprehensive income, net of taxes:
Unrealized Gain (Loss) on Omega Worldwide, Inc............ $735 $0
Total comprehensive income.................................. $13,560 $12,147
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See notes to condensed consolidated financial statements.
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OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
THREE MONTHS ENDED
JUNE 30,
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1999 1998
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Operating activities
Net earnings.............................................. $ 12,825 $ 12,147
Adjustment to reconcile net earnings to cash provided by
operating activities:
Depreciation and amortization.......................... 6,255 5,127
Income realized on assets held for sale................ 659 0
Other non-cash charges................................. 339 112
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Funds from operations available for distribution and
investment............................................. 20,078 17,386
Net change in operating assets and liabilities............ (4,729) (10,300)
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Net cash provided by operating activities................... 15,349 7,086
Cash flows from financing activities Proceeds of acquisition
line of credit............................................ 53,155 131,533
Payments of long-term borrowings.......................... (76) (52)
Receipts from Dividend Reinvestment Plan.................. 260 69
Dividends paid............................................ (16,409) (14,100)
Purchase of 312,100 shares of common stock for
retirement............................................. (8,740) 0
Other..................................................... 1,283 620
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Net cash provided by financing activities................... 29,473 118,070
Cash flows from investing activities
Acquisition of real estate................................ (33,921) (98,027)
Placement of mortgage loans............................... (16,891) (12,000)
Proceeds from assets held for sale........................ 2,914 0
Fundings of other investments -- net...................... (2,532) (11,673)
Temporary advances to Principal Healthcare Finance
Limited................................................ 0 (3,333)
Collection of mortgage principal.......................... 5,776 1,732
Other..................................................... (482) 403
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Net cash used in investing activities....................... (45,136) (122,898)
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(Decrease) Increase in cash and short-term investments...... $ (314) $ 2,258
========= =========
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OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements for
Omega Healthcare Investors, Inc. (the "Company"), have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March 31, 1999, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1998.
NOTE B -- FIRST QUARTER REAL ESTATE INVESTMENTS
During the first quarter of 1999, a $16.2 million Purchase/Leaseback was
completed with TLC Health Care, Inc. The four facilities, located in Illinois,
Missouri, and Ohio, have 417 beds and were leased to affiliates of TLC. The
initial annual yield on the investment is 10.0%, with a term of 14 years.
Additionally, a $9.6 million mortgage was placed on two facilities with 203 beds
owned by TLC Health Care, Inc. The initial annual yield is 10.0%.
Also during the first quarter, a mortgage and two additional
Purchase/Leaseback transactions were completed, totaling $22.8 million. The $7.2
million mortgage is secured by one facility with 246 beds and is priced at
425-525 basis points over LIBOR. The purchase/leaseback transactions include
four facilities with 395 beds. Both are priced with an initial yield of 10.0%
and an initial lease term of 14 years.
As of January 31, 1999 the bankruptcy court confirmed a plan of
reorganization of RainTree Healthcare Corporation, formerly known as Unison
Healthcare Corporation. Pursuant to the plan, the Company agreed to terminate
its lease with RainTree as to six facilities located in Indiana. In exchange for
terminating the lease, the Company received $1 million in cash and a $3 million
secured note. In addition, the Company completed a foreclosure of three
facilities in Texas which were secured by a mortgage. These facilities, with a
cost of $9.6 million after application of proceeds from reorganization, have
been reclassified to purchase/leaseback. An additional investment of $3.7
million was made with RainTree in January, with the total investment generating
an initial yield of 12.56%. All amounts owed to the Company for rent, interest
and late charges were collected from RainTree.
NOTE C -- ASSET CONCENTRATIONS
As of March 31, 1999, 94.7% of the cost of the Company's real estate
investments are related to long-term care facilities, 2.3% to rehabilitation
hospitals, and 3.0% to medical office facilities. The Company's healthcare
facilities are located in 30 states and are operated by 33 independent
healthcare operating companies. Approximately 70.5% of the Company's investments
are operated by seven public companies, including Sun Healthcare Group, Inc.
(25.8%), Integrated Health Services, Inc. (15.4%), Advocat Inc. (11.0%),
RainTree Healthcare Corporation (f.k.a. Unison Healthcare Corporation) (7.3%);
Mariner Post-Acute Network (5.8%), and two other public companies (5.2%). Of the
remaining operators, none operate investments in facilities representing more
than 6.7% of the total investments. The three largest states in which
investments are located are Florida (14.6%), Texas (7.3%) and California (6.8%).
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Most healthcare operators are now subject to a new prospective payment
system as a result of the Balanced Budget Act of 1997. This system in intended
to reduce payments by Medicare for patient services and ancillary services.
During the past 90 days unexpected adverse financial results have been reported
by several public nursing home companies, including several who are tenants of
the Company. The reports generally focus on the annualized impact of changes in
payment methods and reduced ancillary revenues for therapy businesses. As of
March 31, 1999 and through the date of this report, all of the Company's public
operators are current in their rent and interest payments to the Company.
NOTE D -- OTHER PORTFOLIO MATTERS
In the ordinary course of its business activities, the Company periodically
evaluates investment opportunities and extends credit to customers. It also is
regularly engaged in lease and loan extensions and modifications and believes
its management has the experience and expertise to deal with such issues as may
arise from time to time.
ASSETS HELD FOR SALE
During 1998 management was authorized to initiate a plan to dispose of
certain properties judged to have limited potential and to redeploy the
proceeds. As of March 31, 1999, the carrying value of assets held under plan for
disposition total $31.6 million. During the three-month 1999 period, the Company
realized disposition proceeds of $2.9 million and net revenues of approximately
$650,000. The net revenues from properties were netted against the held for sale
asset and excluded from the operations of the Company.
NOTE E -- PREFERRED STOCK
On April 28, 1998, the Company received gross proceeds of $50 million
resulting from the issuance of 2 million shares of 8.625% Series B Cumulative
Preferred Stock ("Preferred Stock") at $25 per share. Dividends on the Preferred
Stock are cumulative from the date of original issue and are payable quarterly
commencing on August 15, 1998. On April 7, 1997, the Company received gross
proceeds of $57.5 million from the issuance of 2.3 million shares of 9.25%
Series A Cumulative Preferred Stock ("Preferred Stock") at $25 per share.
Dividends on the Series A Preferred Stock are cumulative from the date of
original issue and are payable quarterly.
NOTE F -- NET EARNINGS PER SHARE
Net earnings per share is computed based on the weighted average number of
common shares outstanding during the respective periods. Diluted earnings per
share amounts reflect the dilutive effect of stock options (2,701 shares and
99,683 shares for 1999 and 1998, respectively). The assumed conversion of
convertible debentures is antidilutive.
NOTE G -- STOCK REPURCHASE
The Company purchased 312,100 shares of common stock for retirement in the
first quarter for $8.7 million.
NOTE H -- OMEGA WORLDWIDE, INC.
As of March 31, 1999, the Company holds a $6,961,000 investment in Omega
Worldwide, Inc. ("Worldwide"), represented by 1,163,000 shares of common stock
and 260,000 shares of Preferred stock. The Company has guaranteed repayment of
$25 million of Worldwide permitted borrowings pursuant to a revolving credit
facility in exchange for a 1% annual fee and an unused fee of 25 basis points.
Additionally, the Company has a Services Agreement with Worldwide which provides
for the allocation of indirect costs incurred by the Company to Worldwide. The
allocation of indirect costs is based on the relationship of assets under the
Company's management to the combined total of those assets and assets under
Worldwide's management. Indirect costs allocated to Worldwide for the
three-month period ending March 31, 1999 were $198,000.
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ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
"Safe Harbor" Statement Under the United States Private Securities
Litigation Reform Act of 1995. Statements contained in this document that are
not based on historical fact are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include statements regarding the Company's future development
activities, the future condition and expansion of the Company's markets, the
Company's ability to meet its liquidity requirements and the Company's growth
strategies, as well as other statements which may be identified by the use of
forward-looking terminology such as "may," "will," "expect," "estimate,"
"anticipate," or similar terms, variations of those terms or the negative of
those terms. Statements that are not historical facts contained in Management's
Discussion and Analysis are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ from projected results.
Some of the factors that could cause actual results to differ materially
include: The financial strength of the operators of the Company's facilities as
it affects their continuing ability to meet their obligations to the Company
under the terms of the Company's agreements with such operators; changes in the
reimbursement levels under the Medicare and Medicaid programs; operators'
continued eligibility to participate in the Medicare and Medicaid programs;
changes in reimbursement by other third party payors; occupancy levels at the
Company's facilities; the availability and cost of capital; the strength and
financial resources of the Company's competitors; the Company's ability to make
additional real estate investments at attractive yields; and changes in tax laws
and regulations affecting real estate investment trusts.
Following is a discussion of the consolidated results of operations,
financial position and liquidity and capital resources of the Company, which
should be read in conjunction with the consolidated financial statements and
accompanying notes.
RESULTS OF OPERATIONS
Revenues for the three-month period ending March 31, 1999 totaled $30.0
million, an increase of $3.8 million over the period ending March 31, 1998. The
1999 revenue growth stems primarily from real estate investments of
approximately $224 million during the twelve-month period ending March 31, 1999
offset by a decrease in investments in Principal Healthcare Finance Limited and
other investments of approximately $20.1 million and assets identified for
disposition. Additionally, revenue growth of approximately $0.7 million stems
from participating incremental net revenues which became effective in 1999.
Total investments of $1.10 billion as of March 31, 1999 have an average
annualized yield of approximately 11.25%.
Expenses for the three-month period ended March 31, 1999 totaled $17.2
million, an increase of $3.1 million over expenses for 1998. The provision for
depreciation and amortization for the three-month period ended March 31, 1999
totaled $5,595,000, increasing $468,000 over the same period in 1998 as a result
of additional real estate investments.
Interest expense for the three-month period ended March 31, 1999 was $10.1
million, compared with $7.6 million, for the same period in 1998. The increase
in 1999 is primarily due to higher average outstanding borrowings during the
1999 period at slightly lower rates than the same period in the prior year.
General and administrative expenses for the three-month period ended March
31, 1999 totaled approximately $1.5 million. These expenses for the three-month
period were approximately 5.0% of revenues, as compared to 5.2% of revenues for
the 1998 three-month period.
Net earnings available to common shareholders were $10,417,000 for the
three-month period, decreasing approximately $400,000 from the 1998 period. The
decrease stems from non-recognition of income from assets held for sale as
described above. As a result, net earnings per diluted common share decreased
from $0.55 to $0.52 for the three-month period.
Funds from Operations ("FFO") totaled $16,785,000 for the three-month
period ending March 31, 1999, representing an increase of approximately $728,000
over the same period in 1998. FFO is net earnings available to common
shareholders, excluding any gains or losses from debt restructuring and sales of
assets,
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plus depreciation and amortization associated with real estate investments and
charges to earnings for non-cash common stock based compensation.
No provision for Federal income taxes has been made since the Company
intends to continue to qualify as a real estate investment trust under the
provisions of Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended. Accordingly, the Company will not be subject to Federal income taxes on
amounts distributed to shareholders, provided it distributes at least 95% of its
real estate investment trust taxable income and meets certain other conditions.
LIQUIDITY AND CAPITAL RESOURCES
The Company continually seeks new investments in healthcare properties,
primarily long-term care facilities, with the objective of profitable growth and
further diversification of the investment portfolio. Permanent financing for
future investments is expected to be provided through a combination of private
and public offerings of debt and equity securities. Management believes the
Company's liquidity and various sources of available capital are adequate to
finance operations, fund future investments in additional facilities, and meet
debt service requirements.
At March 31, 1999, the Company has a strong financial position with total
assets of $1.07 billion, shareholders' equity of $495.9 million, and long-term
debt of $381.7 million, representing approximately 36% of total capitalization.
Long-term debt excludes funds borrowed under its acquisition credit agreement.
The Company anticipates maintaining a long-term debt-to-capitalization ratio of
approximately 40%. In March, 1999 the Company consummated arrangements for a
three-year $50 million secured revolving line of credit facility with a bank.
Borrowings under this facility will bear interest at 200 basis points over
LIBOR. As of the date of this report, no funds have been drawn on this line. The
Company has $250 million available under its revolving credit facilities, of
which $176 million was drawn at March 31, 1999. Net proceeds from dispositions
of assets held for sale for the remainder of 1999 are expected to reduce
borrowings on the credit facility by approximately $32 million.
In February 1997, the Company filed a Form S-4 shelf registration statement
with the Securities and Exchange Commission registering common stock totaling
$100 million to be issued in connection with future property acquisitions.
Additionally, on January 14, 1999, the Company's Form S-3 registration statement
permitting the issuance of up to $300 million related to common stock,
unspecified debt, preferred stock and convertible securities was declared
effective by the Securities and Exchange Commission.
The Company has demonstrated a strong capacity for timely access of capital
markets and has raised more than $1.2 billion in debt and equity capital since
it was organized in 1992. The Company raised more than $500 million in equity,
including $130 million from the initial public offering in 1992, $73 million
from a follow-on common stock offering in 1994, $165 million from the Health
Equity Properties acquisition in 1994 and three additional offerings, including
the offering of Series A and Series B preferred stock. Additionally, over $700
million of debt capital has been raised, some of which has been used to retire
secured borrowings with higher interest rates. In 1996, the Company completed a
placement of $95 million of 8.5% Convertible Subordinated Debentures due 2001,
and executed an agreement to increase its current bank line of credit facility
by $50 million and to extend the term of the revolving credit agreement to July
1999. In April 1997, the Company issued $57.5 million of Series A Preferred
Stock with a yield of 9.25% and in August 1997 completed a $100 million 10-year
senior note offering priced to yield 6.99%. In September 1997, the Company
completed the second amended and restated loan agreement. The new agreement
provided for total permitted borrowings of up to $200 million, reduced interest
rates on borrowings, and extended the term of the agreement to September 2000.
In April 1998, the Company issued $50 million of Series B Preferred Stock with a
yield of 8.625%. In June 1998, the Company completed a $125 million 4-year
senior note offering priced to yield 7.04%.
The Company distributes a large portion of the cash available from
operations. Cash dividends paid totaled $.70 per share for the three-month
period ending March 31, 1999 compared with $.67 per share for the same period in
1998. The current $.70 per quarter rate represents an annualized rate of $2.80
per share. The dividend payout ratio, that is the ratio of per share amounts for
dividends paid to the diluted per share amounts
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of funds from operations, was approximately 85% for the three-month period ended
March 31, 1999 compared with 82% for the same period in 1998. Approximately 50%
of incremental cash flow from operations is expected to be retained annually
through gradual reductions in the dividend payout ratio, with such funds used to
fund additional investments and provide financial flexibility.
New investments generally are funded from temporary borrowings under the
Company's acquisition credit line agreement. Interest cost incurred by the
Company on borrowings under its revolving credit line facilities will vary
depending upon fluctuations in prime and/or LIBOR rates. With respect to the
unsecured acquisition credit line, interest rates depend in part upon changes in
the Company's ratings by national agencies. Borrowings under the $200 million
facility bear interest at LIBOR plus 1.00% or, at the Company's option, at the
prime rate. The Company expects to periodically replace funds drawn on the
revolving credit facilities through fixed-rate long-term borrowings, the
placement of convertible debentures, or the issuance of additional shares of
common and/or preferred stock. Historically, the Company's strategy has been to
match the maturity of its indebtedness with the maturity of its assets and to
employ fixed-rate long-term debt to the extent practicable.
YEAR 2000 COMPLIANCE
The Year 2000 compliance issue concerns the inability of certain systems
and devices to properly use or store dates beyond December 31, 1999. This could
result in system failures, malfunctions, or miscalculations that disrupt normal
operations. This issue affects most companies and organizations to large and
small degrees, at least to the extent that potential exposures must be
evaluated.
The Company is reviewing risks with regard to the ability of the Company's
own internal operations, the impact of outside vendors' ability to operate, and
the impact of tenants' ability to operate. The Company initially focused this
review on mission-critical operations, recognizing that other potential effects
are expected to be less material. The Company believes its own internal
operations, its technology infrastructure, information systems, and software
applications are likely to be compliant or will be compliant by mid-1999 based
upon certification statements by the applicable vendors. In those cases where
there are compliance issues, these are considered to be minor in nature, and
remedies are already identified. Expenditures for such remedies will not be
material.
With respect to the Company's material outside vendors, such as its banks,
payroll processor, and telecommunications providers, the Company's assessment
will cover the compliance efforts of significant vendors, the effects of
potential non-compliance, and remedies that may mitigate or obviate such effects
as to the Company's business and operations. The Company plans to complete its
assessment of compliance by important vendors by mid-1999.
With respect to the Company's tenants and properties, the Company's
assessment will cover the tenants' compliance efforts, the possibility of any
interface difficulties or electromechanical problems relating to compliance by
material vendors, the effects of potential non-compliance, and remedies that may
mitigate or obviate such effects. The Company plans to process information from
tenant surveys beginning in 1999 and complete its assessment by mid-1999.
Because the Company's evaluation of these issues has been conducted by its
own personnel or by selected inquiries of its vendors and tenants in connection
with their routine servicing operations, the Company believes that its
expenditures for assessing Year 2000 issues, though difficult to quantify, have
not been material. In addition, the Company is not aware of any issues that will
require material expenditures by the Company in the future.
Based upon current information, the Company believes that the risk posed by
foreseeable Year 2000 related problems with its internal systems (including both
information and non-information systems) is minimal. Year 2000 related problems
with the Company's software applications and internal operational programs are
unlikely to cause more than minor disruptions in the Company's operations. Year
2000 related problems at certain of its third-party service providers, such as
its banks, payroll processor, and telecommunications provider, is marginally
greater, though, based upon current information, the Company does not believe
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any such problems would have a material effect on its operations. For example,
Year 2000 related problems at such third-party service providers could delay the
processing of financial transactions and the Company's payroll and could disrupt
the Company's internal and external communications.
The Company believes that the risk posed by Year 2000 related problems with
its tenants is marginally greater, though, based upon current information, the
Company does not believe any such problems would have a material effect on its
operations. Year 2000 related problems at certain governmental agencies and
third-party payers could delay the processing of tenant financial transactions,
though, based upon current information, the Company does not believe any such
problems would have a material long-term effect on its operations. Year 2000
related problems with the electromechanical systems at its properties are
unlikely to cause more than minor disruptions.
The Company intends to complete outstanding assessments, to implement
identified remedies, to continue to monitor Year 2000 issues, and will develop
contingency plans if, and to the extent, deemed necessary. However, based upon
current information and barring developments, the Company does not anticipate
developing any substantive contingency plans with respect to Year 2000 issues.
In addition, the Company has no plans to seek independent verification or review
of its assessments.
While the Company believes that it will be Year 2000 compliant by December
31, 1999, there can be no assurance that the Company will be successful in
identifying and assessing all compliance issues, or that the Company's efforts
to remedy all Year 2000 compliance issues will be effective such that they will
not have a material adverse effect on the Company's business or results of
operations.
The information above contains forward-looking statements, including,
without limitation, statements relating to the Company's plans, strategies,
objectives, expectations, intentions and adequate resources that are made
pursuant to "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. Readers are cautioned that forward-looking statements about the
Year 2000 should be read in conjunction with the Company's disclosures under the
heading: "Safe Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995.
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PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- The following Exhibits are filed herewith:
EXHIBIT DESCRIPTION
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10.1 Form of Loan Agreement by and among Omega Healthcare
Investors, Inc. and certain of its subsidiaries and the
Provident Bank dated March 31, 1999
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K -- NONE WERE FILED.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMEGA HEALTHCARE INVESTORS, INC.
Registrant
By: /s/ESSEL W. BAILEY, JR.
-------------------------------------------------
Essel W. Bailey, Jr.
Date: April 13, 1999 President
By: /s/DAVID A. STOVER
-------------------------------------------------
David A. Stover
Date: April 13, 1999 Chief Financial Officer
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Exhibit Index
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Exhibit No. Description
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10.1 Form of Loan Agreement by and among Omega Healthcare
Investors, Inc. and certain of its subsidiaries and the
Provident Bank dated March 31, 1999
27 Financial Data Schedule