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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________

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 June 30, 2004
or
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 1-11316

OMEGA HEALTHCARE
INVESTORS, INC.
(Exact name of Registrant as specified in its charter)

   Maryland                   38-3041398
(State of Incorporation)               (I.R.S. Employer Identification No.)

9690 Deereco Road, Suite 100, Timonium, MD 21093
(Address of principal executive offices)

(410) 427-1700
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
           Yes X                No ___

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of  August 3, 2004.

Common Stock, $.10 par value           46,572.987
       (Class)                    (Number of shares)


 
     
 
 

OMEGA HEALTHCARE INVESTORS, INC.
FORM 10-Q
June 30, 2004

TABLE OF CONTENTS
 
 
Page No.
PART I
Financial Information
 
 
 
 
Item 1.
Financial Statements:
 
 
Consolidated Balance Sheets
 
 
June 30, 2004 (unaudited) and December 31, 2003
2
 
 
 
 
Consolidated Statements of Operations (unaudited)
 
 
Three and six months ended June 30, 2004 and 2003
3
 
 
 
 
Consolidated Statements of Cash Flows (unaudited)
 
 
Six months ended June 30, 2004 and 2003
4
 
 
 
 
Notes to Consolidated Financial Statements
 
 
June 30, 2004 (unaudited)
5
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition
 
 
and Results of Operations
17
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
35
 
 
 
Item 4.
Controls and Procedures
35
 
 
 
PART II
Other Information
 
 
 
 
Item 1.
Legal Proceedings
36
 
 
 
Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities   
36
 
 
 
Item 4.
Submission of Matters to a Vote of Security Holders
37
 
 
 
Item 6.
Exhibits and Reports on Form 8-K
38
 
 
 




     

PART 1 – FINANCIAL INFORMATION

Item 1.   Financial Statements
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  
June 30,
December 31,
 
  
2004
2003
   
 
  
(Unaudited)
(See note)
ASSETS
  
 
 
Real estate properties
    
 
    
 
  
Land and buildings at cost
  
$
727,998
  
$
692,454
  
Less accumulated depreciation
    
(144,569
)
  
(134,477
)
   
 
 
   Real estate properties – net
    
583,429
    
557,977
  
Mortgage notes receivable – net
    
114,233
    
119,815
  
   
 
 
 
    
697,662
    
677,792
  
Other investments – net
    
36,392
    
29,787
  
   
 
 
Total investments
    
734,054
    
707,579
  
 
    
 
    
 
  
Cash and cash equivalents
    
2,662
    
3,094
  
Accounts receivable – net
    
3,063
    
1,893
  
Interest rate cap
    
—
    
5,537
  
Other assets
    
11,827
    
8,562
  
Operating assets for owned properties
    
649
    
2,289
  
   
 
 
Total assets
  
$
752,255
  
$
728,954
  
   
 
 
 
    
 
    
 
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
 
    
 
  
Revolving lines of credit
  
$
35,000
  
$
177,074
  
Unsecured borrowings
    
300,000
    
100,000
  
Other long–term borrowings
    
3,520
    
3,520
  
Accrued expenses and other liabilities
    
20,363
    
8,194
  
Operating liabilities for owned properties
    
4,538
    
3,931
  
   
 
 
Total liabilities
    
363,421
    
292,719
  
   
 
 
 
    
 
    
 
  
Stockholders’ equity:
    
 
    
 
  
Preferred stock
    
168,488
    
212,342
  
Common stock and additional paid-in-capital
    
549,059
    
485,196
  
Cumulative net earnings
    
169,915
    
174,275
  
Cumulative dividends paid
    
(455,841
)
  
(431,123
)
Cumulative dividends – redemption
    
(41,054
)
  
—
  
Accumulated other comprehensive loss
    
(1,733
)
  
(4,455
)
   
 
 
Total stockholders’ equity
    
388,834
    
436,235
  
   
 
 
Total liabilities and stockholders’ equity
  
$
752,255
  
$
728,954
  
   
 
 

Note – The balance sheet at December 31, 2003 has been derived from the 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 consolidated financial statements.
     

 
     
 
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share amounts)

 
  
 
 
 
 
 
  
Three Months Ended
Six Months Ended
 
  
June 30,
June 30,
   
 
  
2004
2003
2004
2003
   
 
 
 
 
Revenues
    
 
    
 
    
 
    
 
  
Rental income    
  
$
18,170
 
$
15,898
 
$
35,293
 
$
32,317
  
Mortgage interest income    
    
3,336
   
3,489
   
6,703
   
7,881
 
Other investment income – net    
    
548
   
756
   
1,189
   
1,746
 
Miscellaneous    
    
291
   
302
   
421
   
569
 
Nursing home revenues of owned and operated assets    
    
-
    
1,044
   
-
    
2,379
 
   
 
 
 
 
Total operating revenues
    
22,345
   
21,489
   
43,606
   
44,892
 
Expenses
    
 
    
 
    
 
    
 
  
Depreciation and amortization    
    
5,385
   
5,277
   
10,608
   
10,483
 
General and administrative    
    
1,401
   
1,622
   
2,914
   
3,251
 
Legal    
   
382
    
784
    
872
    
1,342
  
Nursing home expenses of owned and operated assets    
    
-
    
1,035
   
-
    
3,509
 
   
 
 
 
 
Total operating expenses
    
7,168
    
8,718
    
14,394
    
18,585
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Income before other income and expense    
    
15,177
    
12,771
    
29,212
    
26,307
  
Other income (expense):
    
 
    
 
    
 
    
 
  
Interest and other investment income    
    
77
    
88
   
96
   
142
 
Interest    
    
(5,753
)
  
(4,315
)
  
(10,446
)
  
(8,735
)
Interest – amortization of deferred financing costs    
    
(427
)
  
(482
)
  
(881
)
  
(1,174
)
Interest – refinancing costs    
    
-
    
(2,586
)
  
(19,106
)
  
(2,586
)
Owned and operated professional liability claims    
    
(3,000
)
  
-
    
(3,000
)
  
-
  
Litigation settlements    
    
-
    
-
    
-
    
2,187
  
Provision for impairment    
    
-
    
-
    
-
    
(4,618
)
Adjustment of derivative to fair value    
    
-
    
-
    
256
    
-
 
   
 
 
 
 
Total other (expense) income    
    
(9,103
)
  
(7,295
)
  
(33,081
)
  
(14,784
)
 
    
 
    
 
    
 
    
 
  
Income (loss) before gain on assets sold
    
6,074
    
5,476
    
(3,869
)
  
11,523
  
Gain from assets sold – net     
    
-
    
1,338
    
-
    
1,338
 
   
 
 
 
 
Income (loss) from continuing operations    
    
6,074
    
6,814
    
(3,869
)
  
12,861
  
(Loss) gain from discontinued operations    
    
(137
)
  
15
    
(491
)
  
(47
)
   
 
 
 
 
Net income (loss)    
    
5,937
    
6,829
    
(4,360
)
  
12,814
  
Preferred stock dividends