Omega Announces Fourth Quarter 2006 Financial Results and Adjusted FFO of $0.32 Per Share for the Fourth Quarter.TIMONIUM, Md. -- Omega Healthcare Investors, Inc. (NYSE NYSE See: New York Stock Exchange :OHI OHI Other Health Insurance OHI Other Health Impaired OHI Oral Hygiene Index OHI oral hygiene instruction OHI Organizational Health Inventory (USA) OHI Oil Heat Institute OHI Ocala Heart Institute OHI Obsolete Hardware Interface ) today announced its results of operations for the quarter and fiscal year ended December 31, 2006. The Company also reported Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") available to common stockholders for the three and twelve months ended December 31, 2006 of $19.2 million or $0.32 per common share and $76.7 million or $1.31 per common share, respectively. The $19.2 million of FFO available to common stockholders for the fourth quarter includes a $3.6 million non-cash gain on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and subordinated note investments, $1.2 million of restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. related expenses, a non-cash $0.8 million provision for uncollectible accounts Uncollectible account An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay. receivable, a $0.6 million non-cash decrease in the fair value of a derivative, a $0.6 million provision for income taxes, a $0.4 million non-cash provision for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , $0.3 million of non-cash restricted stock expense and $0.1 million in non-cash accretion investment income. FFO is presented in accordance with the guidelines for the calculation and reporting of FFO issued by the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts "). Adjusted FFO was $0.32 per common share for the three months ended December 31, 2006 and $1.24 for the twelve months ended December 31, 2006. Adjusted FFO is a non-GAAP financial measure, which excludes the impact for certain non-cash items, including: restricted stock expense, changes in derivative fair values, gains on preferred stock and subordinated note investments, accretion investment income, a provision for uncollectible accounts receivable, as well as, restatement related expenses and provision for income taxes. For more information regarding FFO and adjusted FFO, see "Funds From Operations" section below. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). NET INCOME For the three-month period ended December 31, 2006, the Company reported net income of $13.4 million, net income available to common stockholders of $10.9 million, or $0.18 per diluted common share and operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $36.2 million. This compares to net income of $21.0 million, net income available to common stockholders of $18.5 million, or $0.34 per diluted common share, and operating revenues of $28.4 million for the same period in 2005. For the twelve-month period ended December 31, 2006, the Company reported net income of $55.7 million, net income available to common stockholders of $45.8 million, or $0.78 per diluted common share and operating revenues of $135.7 million. This compares to net income of $38.8 million, net income available to common stockholders of $25.4 million, or $0.49 per diluted common share, and operating revenues of $109.6 million for the same period in 2005. 2006 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS * On August 1, 2006, the Company closed on $171 million of new investments yielding 10%. * In August, the Company sold its common stock investment in Sun Healthcare Group ("Sun") for $7.6 million of cash proceeds. * On September 1, 2006, the Company closed on $25.0 million of investments yielding over 10%. * On October 20, 2006, the Company restructured its relationship with Advocat that includes a rent increase of $0.7 million annually and a term extension to September 30, 2018. * In January 2007, the Company increased the quarterly common dividend per share by $0.01 to $0.26 per share. FOURTH QUARTER 2006 RESULTS Operating Revenues and Expenses - Operating revenues for the three months ended December 31, 2006 were $36.2 million. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the three months ended December 31, 2006 totaled $13.0 million, comprised of $8.8 million of depreciation and amortization expense, $3.1 million of general and administrative expenses, a non-cash provision for uncollectible accounts receivable of $0.8 million and $0.3 million of restricted stock expense. General and administrative expenses of $3.1 million include approximately $1.2 million of professional fees related to the amendments filed on December 14, 2006 to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005 and its Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. for the three-month periods ended March 31, 2006 and June 30, 2006 (collectively, "Restatement"). For more information regarding the Restatement, see the Company's website, www.omegahealthcare.com, and click the "News Releases" or "SEC Filings" icon on the Company's home page. Other Income and Expense - Other income and expense for the three months ended December 31, 2006 was a net expense of $9.4 million and was primarily comprised of $11.9 million of interest expense, $0.4 million of non-cash interest expense, a $3.6 million gain associated with investments in a preferred stock and subordinated note and $0.6 million decrease in the fair value of a derivative. Funds From Operations - For the three months ended December 31, 2006, reportable FFO available to common stockholders was $19.2 million, or $0.32 per common share, compared to $13.2 million, or $0.24 per common share, for the same period in 2005. The $19.2 million of FFO for the quarter includes a $3.6 million non-cash gain on preferred stock and subordinated note investments, $1.2 million of restatement related expenses, a non-cash $0.8 million provision for uncollectible accounts receivable, a $0.6 million non-cash decrease in the fair value of a derivative, a $0.6 million provision for income taxes, a $0.4 million non-cash provision for impairment, $0.3 million of non-cash restricted stock expense and $0.1 million in non-cash accretion investment income. The $13.2 million of FFO for the three months ended December 31, 2005, includes $2.8 million of interest expense associated with the tender offer and purchase of approximately 79.3% of the Company's then $100 million aggregate principal amount of notes due 2007 ("2007 Notes"), a $0.6 million provision for income taxes, a $0.5 million non-cash provision for impairment charge, a $0.4 million non-cash increase in the fair value of a derivative, $0.4 million in non-cash accretion investment income, $0.3 million of non-cash restricted stock amortization, a $0.3 million lease expiration accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. and $1.6 million of net cash proceeds received from a legal settlement. When excluding the above mentioned non-cash or non-recurring items in 2006 and 2005, adjusted FFO was $19.4 million, or $0.32 per common share for the three months ended December 31, 2006, compared to $15.2 million, or $0.28 per common share, for the same period in 2005. For further information, see the attached "Funds From Operations" schedule and notes. 2006 ANNUAL RESULTS Operating Revenues and Expenses - Operating revenues for the twelve months ended December 31, 2006 were $135.7 million. Operating expenses for the twelve months ended December 31, 2006 totaled $46.6 million, comprised of $32.1 million of depreciation and amortization expense, $9.2 million of general and administrative expenses (which includes $1.2 million of restatement related expenses), a non-cash provision for uncollectible accounts receivable of $0.8 million and $4.5 million of restricted stock expense. Other Income and Expense - Other income and expense for the twelve months ended December 31, 2006 was a net expense of $31.8 million and was primarily comprised of $42.2 million of interest expense, $5.4 million of non-cash interest expense, a $2.7 million gain on the sale of Sun common stock, a $3.6 million gain associated with investments in a preferred stock and subordinated note and a $9.1 million increase in the fair value of a derivative. Funds From Operations - For the twelve months ended December 31, 2006, reportable FFO available to common stockholders was $76.7 million, or $1.31 per common share, compared to $42.7 million, or $0.82 per common share, for the same period in 2005. The $76.7 million of FFO for the year includes $4.5 million of non-cash restricted stock expense associated with the Company's issuance of restricted stock and unit grants to executive officers during 2004, $2.7 million of non-cash interest expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the write-off of deferred financing costs associated with the termination of an old credit facility, $0.8 million of non-cash interest expense associated with the tender offer and purchase of approximately 20.7% of the Company's then remaining $100 million aggregate principal amount of 2007 Notes, a $2.7 million accounting gain on the sale of an equity security, a $3.6 million non-cash gain on preferred stock and subordinated note investments, a $9.1 million non-cash increase in the fair value of a derivative, $1.3 million of non-cash accretion investment income, a $2.3 million provision for income taxes, $1.2 million of restatement related expenses, a $0.5 million non-cash provision for impairment and a non-cash $0.9 million provision for uncollectible accounts receivable. The $42.7 million of FFO for the twelve months ended December 31, 2005, includes a $9.6 million non-cash provision for impairment charges recorded throughout 2005, a $3.4 million non-cash provision for impairment on an equity security investment, $2.8 million of interest expense associated with the tender offer and purchase of approximately 79.3% of the Company's then $100 million aggregate principal amount of 2007 Notes, a $2.4 million provision for income taxes, a $2.0 million non-cash preferred stock redemption charges Redemption charge The commission a mutual fund charges an investor who is redeeming shares. For example, a 2% redemption charge (also called a back end load) on the sale of shares valued at $1000 will result in payment of $980 (or 98% of the value) to the investor. , $1.1 million of non-cash restricted stock amortization expense, a $1.1 million lease expiration accrual, a $0.1 million non-cash provision for uncollectible notes receivable, $1.6 million of non-cash accretion investment income, $1.6 million of net cash proceeds received from a legal settlement; and $4.1 million of one-time interest revenue associated with a payoff of a mortgage. When excluding the above mentioned non-cash or non-recurring items in 2006 and 2005, adjusted FFO was $73.1 million, or $1.24 per common share for the twelve months ended December 31, 2006, compared to $57.8 million, or $1.11 per common share, for the same period in 2005. For further information, see the attached "Funds From Operations" schedule and notes. PORTFOLIO DEVELOPMENTS Advocat Inc. - As previously reported, the Company restructured its relationship with Advocat on October 20, 2006 (the "Second Advocat Restructuring") by entering into a Restructuring Stock Issuance and Subscription Agreement with Advocat (the "2006 Advocat Agreement"). Pursuant to the 2006 Advocat Agreement, the Company exchanged the Advocat Series B preferred stock and subordinated note issued to the Company in November 2000 in connection with a restructuring because Advocat was in default on its obligations to the Company (the "Initial Advocat Restructuring") for 5,000 shares of Advocat's Series C non-convertible, redeemable (at the Company's option after September 30, 2010) preferred stock with a face value of approximately $4.9 million and a dividend rate of 7% payable quarterly, and a secured non-convertible subordinated note in the amount of $2.5 million maturing September 30, 2007 and bearing interest at 7% per annum Per annum Yearly. . As part of the Second Advocat Restructuring, the Company also amended its Consolidated Amended and Restated Master Lease by and between one of its subsidiaries, as lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. , and a subsidiary of Advocat, as lessee One who rents real property or Personal Property from another. A lessee of land is a tenant. Cross-references Landlord and Tenant. lessee n. the person renting property under a written lease from the owner (lessor). , to commence a new 12-year lease term through September 30, 2018 (with a renewal option for an additional 12 year term) and Advocat has agreed to increase the master lease annual rent by approximately $687,000 to approximately $14 million commencing on January 1, 2007. The Second Advocat Restructuring has been accounted for as a new lease in accordance with FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 13, Accounting for Leases ("FAS No. 13") and FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Technical Bulletin No. 88-1, Issues Relating to Accounting for Leases ("FASB TB No. 88-1"). The fair value of the assets exchanged in the restructuring (i.e., the Series B non-voting redeemable convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". and the secured convertible subordinated note, with a fair value of $14.9 million and $2.5 million, respectively, at October 20, 2006) in excess of the fair value of the assets received (the Advocat Series C non-convertible redeemable preferred stock and the secured non-convertible subordinated note, with a fair value of $4.1 million and $2.5 million, respectively, at October 20, 2006) have been recorded as a lease inducement Inducement Electra incited brother, Orestes, to kill their mother and her lover. [Gk. Myth.: Zimmerman, 92; Gk. Lit.: Electra, Orestes] Hezekiah exhorts Judah to stand fast against Assyrians. [O.T. asset of approximately $10.8 million in the fourth quarter of 2006. The $10.8 million lease inducement asset will be amortized as a reduction to rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time on a straight-line basis over the term of the new master lease. The exchange of securities also resulted in a gain in the fourth quarter of 2006 of approximately $3.0 million representing: (i) the fair value of the secured convertible subordinated note of $2.5 million, previously reserved; (ii) the realization of the gain on investments previously classified as other comprehensive income of approximately $1.1 million relating to the Series B non-voting redeemable convertible preferred stock; and (iii) a loss of approximately $0.6 million resulting from the change in the fair value of the embedded Inserted into. See embedded system. derivative from September 30, 2006 to October 20, 2006. Guardian LTC LTC abbr. lieutenant colonel Management, Inc. - On September 1, 2006, the Company completed a $25.0 million investment with subsidiaries of Guardian LTC Management, Inc. ("Guardian"), an existing operator of the Company. The transaction involved the purchase and leaseback of a skilled nursing facility skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. ("SNF SNF abbr. skilled nursing facility SNF solids-not-fat; a comment on the composition of milk. ") in Pennsylvania and the termination of a purchase option on a combination SNF and rehabilitation hospital Hospital devoted to the rehabilitation of patients with various neurologic, musculoskeletal, orthopedic and other medical conditions following stabilization of their acute medical issues. in West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. owned by the Company. The facilities were included in an existing master lease with Guardian with an increase in contractual annual rent of approximately $2.6 million in the first year and the master lease now includes 17 facilities. In addition, the master lease term was extended from October 2014 through August 2016. In accordance with FAS No. 13 and FAS TB No. 88-1, $19.2 million of the $25.0 million transaction amount will be accounted for as a lease inducement asset and is classified within accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying - net on the Company's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . The lease inducement will be amortized as a reduction to rental income on a straight-line basis over the term of the new master lease. The remaining payment to Guardian of $5.8 million will be allocated to the purchase of the Pennsylvania SNF. Sun Healthcare Group, Inc. Common Stock - On August 28, 2006, the Company sold its remaining 760,000 shares of Sun's common stock for net cash proceeds of approximately $7.6 million. The sale resulted in an accounting gain of approximately $2.7 million during the third quarter of 2006. Litchfield Investment Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control - On August 1, 2006, the Company completed a transaction with Litchfield Investment Company, LLC and its affiliates ("Litchfield") to purchase 30 SNFs and one independent living center for a total investment of approximately $171 million. The facilities total 3,847 beds and are located in the states of Colorado (5), Florida (7), Idaho (1), Louisiana (13), and Texas (5). The facilities were subject to master leases with three national healthcare providers, which are existing tenants of the Company. The tenants are Home Quality Management, Inc. ("HQM HQM highly qualified manpower HQM Hemi-Quantal Mechanics HQM Headquarters Manager HQM Habitat Quality Modifier "), Nexion Health, Inc. ("Nexion"), and Peak Medical Corporation, which was acquired by Sun in December of 2005. Simultaneously with the close of the purchase transaction, the seven HQM facilities were combined into an Amended and Restated Master Lease containing 13 facilities between the Company and HQM. In addition, the 18 Nexion facilities were combined into an Amended and Restated Master Lease containing 22 facilities between the Company and Nexion. The Company entered into a Master Lease, Assignment and Assumption Agreement with Litchfield relating to the six Sun facilities which expires on September 30, 2007. Other - As previously reported, during the three months ended March 31, 2006, Haven Eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. , LLC ("Haven"), an existing operator for the Company, entered into a $39 million first mortgage loan with General Electric Capital Corporation ("GE Loan"). Haven used the $39 million of proceeds to partially repay on a $62 million mortgage it has with the Company. Simultaneously, the Company subordinated the payment of its remaining $23 million mortgage to that of the GE Loan. In conjunction with the above transactions and the application of Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Interpretation No. 46R, Consolidation of Variable Interest Entities, or FIN 46R, the Company consolidated the financial statements and related real estate of the Haven entity into the Company's financial statements. The consolidation resulted in the following changes to the Company's consolidated balance sheet as of December 31, 2006: (1) an increase in total gross investments of $39.0 million; (2) an increase in accumulated depreciation accumulated depreciation The total amount of depreciation that has been recorded for an asset since its date of acquisition. For example, a computer with a 5-year estimated life that was purchased for $2,000 would have accumulated depreciation of $800 [( of $1.6 million; (3) an increase in other long-term borrowings of $39.0 million; and (4) a reduction of $1.5 million in cumulative net earnings for the twelve months ended December 31, 2006 due to increased depreciation expense. General Electric Capital Corporation and Haven's other creditors do not have recourse to the Company's assets. The Company's results of operations reflect the effect of the consolidation of this entity, which is accounted for similarly to the Company's other purchase-leaseback transactions. DIVIDENDS Common Dividends - On January 16, 2007, the Company's Board of Directors announced a common stock dividend of $0.26 per share, to be paid February 15, 2007 to common stockholders of record on January 31, 2007. At the date of this release, the Company had approximately 60 million outstanding common shares. Series D Preferred Dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) - On January 16, 2007, the Company's Board of Directors declared its regular quarterly dividend for the Series D preferred stock, payable February 15, 2007 to preferred stockholders of record on January 31, 2007. Series D preferred stockholders of record on January 31, 2007 will be paid dividends in the approximate amount of $0.52344 per preferred share, on February 15, 2007. The liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy preference for the Company's Series D preferred stock is $25.00 per share. Regular quarterly preferred dividends represent dividends for the period November 1, 2006 through January 31, 2007. 2007 ADJUSTED FFO GUIDANCE AFFIRMED The Company affirmed its 2007 adjusted FFO available to common stockholders guidance of between $1.32 and $1.36 per diluted share, as previously announced on December 14, 2006. The Company's adjusted FFO guidance for 2007 excludes the future impacts of acquisitions, gains and losses from the sale of assets, additional divestitures, certain one-time revenue and expense items, capital transactions and restricted stock amortization expense. A reconciliation of the adjusted FFO guidance to the Company's projected GAAP earnings is provided on a schedule attached to this press release. The Company may, from time to time, update its publicly announced adjusted FFO guidance, but it is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to do so. The Company's adjusted FFO guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve its projected results. ANNUAL MEETING The Company's 2007 Annual Meeting of Stockholders will be held on Thursday, May 24, 2007, at 10:00 a.m., local time, at the Holiday Inn Select, Baltimore-North, 2004 Greenspring Drive, Timonium, Maryland. Stockholders of record as of the close of business on April 20, 2007 will be entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive notice of and to participate at the 2007 Annual Meeting of Stockholders. CONFERENCE CALL The Company will be conducting a conference call on Tuesday, February 6, 2007, at 10 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to review the Company's 2006 fourth quarter and year end results and current developments. To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the "earnings call" icon on the Company's home page. Webcast replays of the call will be available on the Company's website for two weeks following the call. The Company is a real estate investment trust investing in and providing financing to the long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. industry. At December 31, 2006, the Company owned or held mortgages on 239 SNFs and assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. facilities with approximately 27,302 beds located in 27 states and operated by 32 third-party healthcare operating companies operating company A business that engages in transactions with outsiders. . This announcement includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) uncertainties relating to the business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets of the operators of the Company's properties, including those relating to reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. by third-party payors, regulatory matters and occupancy levels; (ii) regulatory and other changes in the healthcare sector, including without limitation, changes in Medicare reimbursement; (iii) changes in the financial position of the Company's operators; (iv) the ability of operators in bankruptcy to reject unexpired lease obligations, modify the terms of the Company's mortgages, and impede im·pede tr.v. im·ped·ed, im·ped·ing, im·pedes To retard or obstruct the progress of. See Synonyms at hinder1. [Latin imped the ability of the Company to collect unpaid rent or interest during the pendency Pend´en`cy n. 1. The quality or state of being pendent or suspended. 2. The quality or state of being undecided, or in continuance; suspense; as, the pendency of a suit s>. of a bankruptcy proceeding and retain security deposits for the debtor's obligations; (v) the availability and cost of capital; (vi) competition in the financing of healthcare facilities; and (vii) the Company's ability to maintain its status as a real estate investment trust and to reach a closing agreement with the Internal Revenue Service with respect to the related party tenant issues described in our Form 10-K/A filed with the Securities and Exchange Commission on December 14, 2006 ("Form 10-K/A"), (viii) the impact of the material weakness identified in the management's report on internal control over financial reporting included in our Form 10-K/A, including expenses that may be incurred in efforts to remediate re·me·di·a·tion n. The act or process of correcting a fault or deficiency: remediation of a learning disability. re·me such weakness and potential additional costs in preparing and finalizing financial statements in view of such material weakness; and (ix) other factors identified in the Company's filings with the Securities and Exchange Commission. Statements regarding future events and developments and the Company's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] This press release includes Funds From Operations, or FFO, which is a non-GAAP financial measure. For purposes of the Securities and Exchange Commission's ("SEC") Regulation G, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations See Income statement. , balance sheet or statement of cash flows (or equivalent statements) of the company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. As used in this press release, GAAP refers to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, . Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company calculates and reports FFO in accordance with the definition and interpretive in·ter·pre·tive also in·ter·pre·ta·tive adj. Relating to or marked by interpretation; explanatory. in·ter  pre·tive·ly adv. guidelines issued by the National
Association of Real Estate Investment Trusts ("NAREIT"), and
consequently, FFO is defined as net income available to common
stockholders, adjusted for the effects of asset dispositions and certain
non-cash items, primarily depreciation and amortization. FFO available
to common stockholders per share is further adjusted for the effect of
restricted stock awards and the exercise of in-the-money stock options.
The Company believes that FFO is an important supplemental measure of
its operating performance. Because the historical cost accounting
convention Historical Cost Accounting ConventionAn accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition. used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. The term FFO was designed by the real estate industry to address this issue. FFO herein is not necessarily comparable to FFO of other real estate investment trusts, or REITs, that do not use the same definition or implementation guidelines or interpret the standards differently from the Company. Adjusted FFO is calculated as FFO available to common stockholders less one-time revenue and expense items. The Company believes that adjusted FFO provides an enhanced measure of the operating performance of the Company's core portfolio as a REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). . The Company's computation of adjusted FFO is not comparable to the NAREIT definition of FFO or to similar measures reported by other REITs, but the Company believes it is an appropriate measure for this Company. The Company uses FFO as one of several criteria to measure the operating performance of its business. The Company further believes that by excluding the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and between other REITs. The Company offers this measure to assist the users of its financial statements in analyzing its performance; however, this is not a measure of financial performance under GAAP and should not be considered a measure of liquidity, an alternative to net income or an indicator of any other performance measure determined in accordance with GAAP. Investors and potential investors in the Company's securities should not rely on this measure as a substitute for any GAAP measure, including net income. In February 2004, NAREIT informed its member companies that it was adopting the position of the SEC with respect to asset impairment charges and would no longer recommend that impairment write-downs be excluded from FFO. In the tables included in this press release, the Company has applied this interpretation and has not excluded asset impairment charges in calculating its FFO. As a result, its FFO may not be comparable to similar measures reported in previous disclosures. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. NAREIT, there is inconsistency in·con·sis·ten·cy n. pl. in·con·sis·ten·cies 1. The state or quality of being inconsistent. 2. Something inconsistent: many inconsistencies in your proposal. among NAREIT member companies as to the adoption of this interpretation of FFO. Therefore, a comparison of the Company's FFO results to another company's FFO results may not be meaningful. The following table presents a reconciliation of our guidance regarding 2007 FFO and Adjusted FFO to net income available to common stockholders: [TABLE OMITTED] The following table summarizes the results of operations of assets held for sale and facilities sold during the three and twelve months ended December 31, 2006 and 2005, respectively. [TABLE OMITTED] The following tables present selected portfolio information, including operator and geographic concentrations, and revenue maturities for the period ending December 31, 2006. [TABLE OMITTED] [TABLE OMITTED] (1) Revenue includes $0.7 million and $0.9 million reduction for lease inducements for the three and twelve months, respectively. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] The following tables present selected financial information, including leverage and interest coverage ratios, as well as a debt maturity schedule for the period ending December 31, 2006. [TABLE OMITTED] [TABLE OMITTED] The following table presents investment activity for the three- and twelve-month periods ending December 31, 2006. [TABLE OMITTED] |
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