CONSOLIDATING FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2012

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

CONSOLIDATING FINANCIAL STATEMENTS

NOTE 19– CONSOLIDATING FINANCIAL STATEMENTS

As of December 31, 2012, we had outstanding (i) $200 million 7.5% Senior Notes due 2020, (ii) $575 million 6.75% Senior Notes due 2022 and (iii) $400 million 5.875% Senior Notes due 2024, which we collectively refer to as the Senior Notes.  The Senior Notes are fully and unconditionally guaranteed, jointly and severally, by each of our subsidiaries that guarantee other indebtedness of Omega or any of the subsidiary guarantors.  Any subsidiary that we properly designate as an “unrestricted subsidiary” under the indentures governing the Senior Notes will not provide guarantees of the Senior Notes.  As of and prior to March 31, 2010, the non-subsidiary guarantors were minor and insignificant.  On June 29, 2010, we designated as “unrestricted subsidiaries” the 39 subsidiaries we acquired from CapitalSource subject to HUD indebtedness.  During the fourth quarter of 2011, we designated as “unrestricted subsidiaries” 20 subsidiaries we acquired subject to HUD indebtedness.  During the fourth quarter of 2012, we designated as “unrestricted subsidiaries” eight subsidiaries we acquired subject to HUD indebtedness.

On July 17, 2012, our Board of Directors approved removing the unrestricted subsidiary designation from five subsidiaries due to the retirement of the HUD related mortgages.  The total assets related to these five “unrestricted subsidiaries” at June 30, 2012 was approximately $47.9 million.  As a result, the December 31, 2011 consolidating balance sheet reflects the removal of the restriction from these five subsidiaries.

For the years ended December 31, 2012 and 2011, the operating cash flow of the non-guarantor subsidiaries approximated net income of the non-guarantor subsidiaries, adjusted for depreciation and amortization expense.  For the years ended December 31, 2012 and 2011, the non-guarantor subsidiaries have not engaged in investing or financing activities other than routine principal payments on its HUD mortgage debt of $4.0 million and $2.6 million, respectively.  All of the subsidiary and non-subsidiary guarantors of our outstanding senior notes are 100 percent owned by Omega.

The following summarized condensed consolidating financial information segregates the financial information of the non-guarantor subsidiaries from the financial information of Omega Healthcare Investors, Inc. and the subsidiary guarantors under the Senior Notes.  The results and financial position of acquired entities are included from the dates of their respective acquisitions.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEET

(in thousands, except per share amounts)

	December 31, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,466,866		$	571,687		$	—		$	3,038,553
Less accumulated depreciation		(535,223	)		(45,150	)		—			(580,373	)
Real estate properties – net		1,931,643			526,537			—			2,458,180
Mortgage notes receivable – net		238,621			—			—			238,621
		2,170,264			526,537			—			2,696,801
Other investments – net		47,339			—			—			47,339
		2,217,603			526,537			—			2,744,140
Assets held for sale – net		1,020			—			—			1,020
Total investments		2,218,623			526,537			—			2,745,160
Cash and cash equivalents		1,711			—			—			1,711
Restricted cash		7,078			29,582			—			36,660
Accounts receivable – net		118,473			6,707			—			125,180
Investment in affiliates		163,610			—			(163,610	)		—
Other assets		38,224			35,070			—			73,294
Total assets	$	2,547,719		$	597,896			(163,610	)	$	2,982,005
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	258,000		$	—		$	—		$	258,000
Secured borrowings		—			366,538			—			366,538
Unsecured borrowings – net		1,179,345			21,049			—			1,200,394
Accrued expenses and other liabilities		99,045			46,699			—			145,744
Intercompany payable		—			143,158			(143,158	)		—
Total liabilities		1,536,390			577,444			(143,158	)		1,970,676
Stockholders’ equity:
Common stock		11,239			—			—			11,239
Common stock – additional paid-in-capital		1,664,855			—			—			1,664,855
Cumulative net earnings		754,128			20,452			(20,452	)		754,128
Cumulative dividends paid		(1,418,893	)		—			—			(1,418,893	)
Total stockholders’ equity		1,011,329			20,452			(20,452	)		1,011,329
Total liabilities and stockholders’ equity	$	2,547,719		$	597,896		$	(163,610	)	$	2,982,005

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEET

(in thousands, except per share amounts)

	December 31, 2011
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,095,441		$	441,598		$	—		$	2,537,039
Less accumulated depreciation		(446,581	)		(23,839	)		—			(470,420	)
Real estate properties – net		1,648,860			417,759			—			2,066,619
Mortgage notes receivable – net		238,675			—			—			238,675
		1,887,535			417,759			—			2,305,294
Other investments – net		52,957			—			—			52,957
		1,940,492			417,759			—			2,358,251
Assets held for sale – net		2,461			—			—			2,461
Total investments		1,942,953			417,759			—			2,360,712
Cash and cash equivalents		351			—			—			351
Restricted cash		6,511			27,601			—			34,112
Accounts receivable – net		97,407			3,257			—			100,664
Investment in affiliates		119,564			—			(119,564	)		—
Other assets		32,798			28,675			—			61,473
Total assets	$	2,199,584		$	477,292			(119,564	)	$	2,557,312
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	272,500		$	—		$	—		$	272,500
Secured borrowings		13,652			289,958			—			303,610
Unsecured borrowings – net		954,071			21,219			—			975,290
Accrued expenses and other liabilities		80,877			46,551			—			127,428
Intercompany payable		—			109,907			(109,907	)		—
Total liabilities		1,321,100			467,635			(109,907	)		1,678,828
Stockholders’ equity:
Common stock		10,341			—			—			10,341
Common stock – additional paid-in-capital		1,471,381			—			—			1,471,381
Cumulative net earnings		633,430			9,657			(9,657	)		633,430
Cumulative dividends paid		(1,236,668	)		—			—			(1,236,668	)
Total stockholders’ equity		878,484			9,657			(9,657	)		878,484
Total liabilities and stockholders’ equity	$	2,199,584		$	477,292		$	(119,564	)	$	2,557,312

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENT OF OPERATIONS

(in thousands, except per share amounts)

	Year Ended December 31, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
Revenue
Rental income	$	266,213		$	48,379		$	-		$	314,592
Mortgage interest income		30,446			-			-			30,446
Other investment income – net		4,760			-			-			4,760
Miscellaneous		662			-			-			662
Total operating revenues		302,081			48,379			-			350,460
Expenses
Depreciation and amortization		91,672			21,311			-			112,983
General and administrative		20,913			417			-			21,330
Acquisition costs		909			-			-			909
Impairment loss on real estate properties		272			-			-			272
Total operating expenses		113,766			21,728			-			135,494
Income before other income and expense		188,315			26,651			-			214,966
Other income (expense):
Interest income		2			27			-			29
Interest expense		(79,644	)		(15,883	)		-			(95,527	)
Interest – amortization of deferred financing costs		(2,649	)		-			-			(2,649	)
Interest – refinancing costs		(7,920	)		-			-			(7,920	)
Equity in earnings		10,795			-			(10,795	)		-
Total other expense		(79,416	)		(15,856	)		(10,795	)		(106,067	)
Income before gain on assets sold		108,899			10,795			(10,795	)		108,899
Gain on assets sold - net		11,799			-			-			11,799
Net income available to common stockholders	$	120,698		$	10,795		$	(10,795	)	$	120,698

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENT OF OPERATIONS

(in thousands, except per share amounts)

	Year Ended December 31, 2011
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
Revenue
Rental income	$	239,077		$	34,440		$	-		$	273,517
Mortgage interest income		16,274			-			-			16,274
Other investment income – net		2,070			-			-			2,070
Miscellaneous		343			-			-			343
Total operating revenues		257,764			34,440			-			292,204
Expenses
Depreciation and amortization		84,568			15,769			-			100,337
General and administrative		19,138			294			-			19,432
Acquisition costs		1,204			-			-			1,204
Impairment loss on real estate properties		26,344			-			-			26,344
Provisions for uncollectible accounts receivable		6,439			-			-			6,439
Nursing home expenses of owned and operated assets		653			-			-			653
Total operating expenses		138,346			16,063			-			154,409
Income before other income and expense		119,418			18,377			-			137,795
Other income (expense):
Interest income		15			25			-			40
Interest expense		(69,881	)		(11,273	)		-			(81,154	)
Interest – amortization of deferred financing costs		(2,674	)		-			-			(2,674	)
Interest – refinancing costs		(3,071	)		-			-			(3,071	)
Equity in earnings		7,129			-			(7,129	)		-
Total other expense		(68,482	)		(11,248	)		(7,129	)		(86,859	)
Income before gain on assets sold		50,936			7,129			(7,129	)		50,936
Gain on assets sold - net		1,670			-			-			1,670
Net income		52,606			7,129			(7,129	)		52,606
Preferred stock dividends		(1,691	)		-			-			(1,691	)
Preferred stock redemption		(3,456	)		-			-			(3,456	)
Net income available to common stockholders	$	47,459		$	7,129		$	(7,129	)	$	47,459

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENT OF OPERATIONS

(in thousands, except per share amounts)

	Year Ended December 31, 2010
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated
Revenue
Rental income	$	215,992		$	16,780		$	-		$	232,772
Mortgage interest income		10,391			-			-			10,391
Other investment income – net		3,936			-			-			3,936
Miscellaneous		3,886			-			-			3,886
Nursing home revenues of owned and operated assets		7,336			-			-			7,336
Total operating revenues		241,541			16,780			-			258,321
Expenses
Depreciation and amortization		76,553			8,070			-			84,623
General and administrative		14,744			310			-			15,054
Acquisition costs		1,554			-			-			1,554
Impairment loss on real estate properties		155			-			-			155
Nursing home expenses of owned and operated assets		7,998			-			-			7,998
Total operating expenses		101,004			8,380			-			109,384
Income before other income and expense		140,537			8,400			-			148,937
Other income (expense):
Interest income		86			19			-			105
Interest expense		(61,449	)		(5,891	)		-			(67,340	)
Interest – amortization of deferred financing costs		(3,780	)		-			-			(3,780	)
Interest – refinancing costs		(19,482	)		-			-			(19,482	)
Equity in earnings		2,528			-			(2,528	)		-
Total other expense		(82,097	)		(5,872	)		(2,528	)		(90,497	)
Income before gain (loss) on assets sold		58,440			2,528			(2,528	)		58,440
Loss on assets sold – net		(4	)		-			-			(4	)
Net income		58,436			2,528			(2,528	)		58,436
Preferred stock dividends		(9,086	)		-			-			(9,086	)
Net income available to common	$	49,350		$	2,528		$	(2,528	)	$	49,350