UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

For the fiscal year ended September 30, 2000.

		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

For the transition period from                     to                     

Commission file number 000-23953

OMEGA WORLDWIDE, INC.

Registrant’s telephone number, including area code: 734-887-0300

Securities Registered Pursuant to Section 12(b) of the Act:

Common Stock, $.10 Par Value

      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 and 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 No

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

      The aggregate market value of the voting stock of the registrant held by non-affiliates was $23,655,915 based on the $2.25 closing price per share for such stock on the NASDAQ National Market on December 15, 2000.

      As of December 15, 2000, there were 12,340,553 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant’s Proxy Statement for its Annual Meeting of Shareholders which is expected to be filed with the Commission on or about January 25, 2001, are incorporated herein by reference as indicated herein.

Item 1 — Business of the Company

      The business of the Company is to provide asset management services and management advisory services, as well as equity and debt capital, to the healthcare industry, particularly residential healthcare services to the elderly. The Company has established financing activities in the United Kingdom and the Commonwealth of Australia. In the current fiscal year the Company acquired leasehold rights and other assets incidental to 119 nursing homes in the United Kingdom, and has operated these homes since October 31, 1999.

      The Company often provides seed equity and debt capital to enable the establishment of operating or financing firms, identifying high quality management personnel and providing financial support to such companies. The intent of the Company is to invest in less than majority equity positions in such firms, to provide continuing support while such firms are not public, and to secure local capital as the major source of the growth capital for expansion and development of such firms. The result is to enable such firms to access capital markets in the locales in which services are provided.

      The Company was established in November 1997 by Omega Healthcare Investors, Inc. (“Omega Healthcare”), a publicly traded REIT, which owns and finances healthcare operating facilities in the United States. The Company began initial operation as a separate entity on April 2, 1998, when Omega Healthcare distributed shares of the Company’s common stock to Omega Healthcare’s existing shareholders. At the same time, the Company undertook a primary offering and Omega Healthcare undertook a secondary offering of shares of the Company’s common stock. Omega Healthcare distributed 5.2 million shares, sold 2.8 million shares (of which 500,000 shares were sold for the account of the Company) and retained approximately 9.9% of the common shares then outstanding, together with 260,000 preferred shares, in exchange for the contribution to the Company of the following assets:

	(a)  33.375% of the ordinary shares in Principal Healthcare Finance Limited (“Principal-UK”), a Jersey corporation which is engaged in investing in long-term care facilities in the United Kingdom;
	(b)  Warrants to purchase 10,556,361 shares of Principal-UK;
	(c)  A subordinated debt note of Principal-UK in the amount of £15 million; and
	(d)  Miscellaneous other net assets stated at a net carrying amount of $150,000.

      Principal-UK is, as of the date of this report, the owner of 241 long-term care facilities, primarily nursing homes, subject to long-term, triple-net leases to 13 operating companies in the UK. Principal-UK’s revenues for the year ending August 31, 2000 totaled $67.1 million, assets totaled $539 million and net earnings totaled $4.6 million. Principal-UK has employed fixed-rate financing in which it attempts to match the term of assets and liabilities. Its rental agreements provide annual increases in rentals in 30-year terms, generally in accordance with the British consumer price index. Principal has financed its activities through the issuance of long-term, fixed-rate securitized debt. Its initial securitization was issued in December 1997 in the amount of £150 million, repayable in the years 2025 and 2027. In March 1999 a second securitization was issued in the amount of £122 million, repayable in the years 2027 and 2029. Pursuant to a contract expiring on December 31, 2002, the Company provides management services to Principal-UK for a fee equal to 0.9% of assets managed. Both securitizations have maturities that are consistent with the term of the leases with respect to the facilities financed.

      In June 1998, the Company acquired 100% of the units of Assisted Living Unit Trust from FAI Insurances Limited, a life and health insurer in Australia, and its subsidiary, Premier Care Australia (Holdings) Pty Limited, and changed the name of the trust to Principal Healthcare Finance Trust (“Principal-Australia”). Principal-Australia is an Australian Unit Trust which owned, as of the date of acquisition by the Company, long-term nursing homes and assisted living units in New South Wales. Initial long-term financing of A$127.9 million was completed in October 1999. The amount is repayable in quarterly installments through 2027.

1

      Principal-Australia net leased its nursing homes and assisted living units to an affiliate of Moran Health Care Group Pty Limited (“Moran”), the largest operator of long-term care and assisted living facilities in Australia, for an initial term of 30 years. On November 12, 1998, Principal-Australia completed the first phase of a purchase and leaseback transaction, also with Moran, which encompassed 30 long-term care facilities in Victoria, New South Wales and Western Australia. In phase one of the transaction, an affiliate of Moran sold 25 homes to Principal-Australia for A$80 million and immediately leased them back for an initial 30-year term. Simultaneously, phase two of the agreement called for Principal-Australia to acquire, upon completion and rent-up to stabilized occupancy, five additional Victoria facilities from an affiliate of Moran for an aggregate purchase price of A$10.5 million. Phase two was completed in March 1999. As of September 30, 2000, Principal-Australia owns and leases 43 nursing facilities and 483 assisted living facilities in Australia and New Zealand. The Company provides management services to Principal-Australia for a fee equal to 0.9% of assets managed. The agreement extends through December 31, 2007.

      On October 31, 1999 the Company, through its wholly-owned subsidiary, Idun Health Care Limited (“Idun”), acquired the operating subsidiaries of Tamaris, plc, a nursing home operating company in the United Kingdom. The 48 subsidiaries acquired operate 119 nursing homes located throughout England, Scotland and Northern Ireland. The acquisition was accounted for under the purchase method of accounting. The fair market value of the net assets at the date of acquisition, in the opinion of management, was $7.2 million. Fixed assets included in the $7.2 million amount have been written down by $3.5 million as prescribed by accounting principals generally accepted in the United States, to report net assets equal to the purchase price.

      The Company acquired, in connection with its initial establishment, an interest in Essex Healthcare Corporation (“Essex”) and an affiliate, Atrium Living Centers, Inc. In August 1998, the Company invested an additional $500,000, increasing its equity interest in Essex to 47%. Essex is an operator primarily in Ohio of 68 long-term care facilities containing 4,200 beds in Ohio, which are leased from independent third parties, and manages 55 facilities (approximately 2,800 beds) primarily in Indiana. As of November 30, 2000, the Company’s investment in Essex, was sold to Essex for $325,000 in cash, which approximates its book value.

      In August 1998, the Company acquired from a subsidiary of Principal-UK for £640,000 a 19.9% interest in Moran Healthcare (UK) Limited (“Moran UK”), the sole shareholder of Baneberry Healthcare (“Baneberry”), a UK operating company engaged in the business of providing healthcare services in Northern Ireland and England. Baneberry was previously financed by Principal-UK. Moran UK is an affiliate of Moran, the operator of most of the long-term care facilities in Australia that are owned by Principal-Australia.

Employees

      At November 15, 2000, the Company employed ten persons in its operating office in London, England, three persons in its operating office in Sydney, Australia, and three persons at the Company’s executive offices in Ann Arbor, Michigan. The Company’s wholly-owned subsidiary Idun Healthcare Ltd., employs approximately 7,800 employees in the nursing home operations throughout the United Kingdom.

Services Agreement

      Omega Healthcare and the Company had entered into a Services Agreement pursuant to which Omega Healthcare provides shared management and other employees, office space and administrative services to the Company. The Company reimbursed Omega Healthcare quarterly for a portion of Omega Healthcare’s overhead expenses, such as rent, compensation and utilities, based on a formula determined by dividing the value of the assets managed by the Company at the end of each fiscal quarter by the sum of the value of the assets of Omega Healthcare and assets managed by the Company at the end of each fiscal quarter. Upon expiration of this on June 30, 2000, the Company entered into a new agreement requiring quarterly payments to Omega Healthcare of $37,500 for the use of offices and certain administrative and financial services provided by staff of Omega Healthcare.

2

Investment Objectives

      The investment objectives of the Company continue to be:

	1.  To extend its franchise value by providing and financing long-term care services to the elderly.
	2.  To expand its asset management business by establishing new financing entities and establishing relationships with strong operating companies to extend and expand assets under management.
	3.  To expand the Company’s ability to provide financial capital to develop, expand and consolidate nursing home operating companies, primarily outside the United States.
	4.  To grow the capital value of the Company through prudent use of leverage, extension of its franchise value and the application of the intellectual capital of the Company to investment opportunities in Europe, Australia, and the United States.

      There is no expectation or intent in the near-term to pay a dividend on common stock.

      As announced earlier this year, the Company has undertaken a process of exploring strategic alternatives. The Company is continuing to explore alternatives to maximize shareholder value, including the realization of the Company’s underlying investments. The Company has had and is continuing to have discussions with third parties who have expressed an interest in acquiring some or all of the Company’s underlying investments. There can be no assurance any such transaction will be arranged.

Financial information about foreign and domestic operations.

      The information required by this item is incorporated herein by reference to Note 14 the “Business Segment Information” on page F-18 of the Company’s consolidated financial statements.

Regulation of the Healthcare Industry

      The Company will invest in entities which own healthcare facilities principally outside of the United States. Accordingly, the Company does not intend to diversify its investments to reduce the risks associated with investment in the healthcare industry. Future investments by the Company may be on terms or conditions less favorable than the terms applicable to the Company’s current investments. The operation of healthcare facilities is subject to substantial regulation. In addition to other laws and regulations with which the Company will be required to comply, the Company will be subject to laws that govern financial arrangements between healthcare providers. Any failure to comply with these laws or regulations could have an adverse effect on the operations of the Company.

      Healthcare is an area of extensive governmental regulation and frequent regulatory change. Operating companies in which the Company invests, as well as the lessees and mortgagors of Principal-UK, Principal-Australia and similar companies are and will continue to be subject to extensive regulation. Changes in laws or regulations or new interpretations of existing laws or regulations can have a dramatic effect on the healthcare industry with respect to methods of doing business, costs of doing business and revenues. Principal-UK and Principal-Australia are attempting to develop and market a method of financing for healthcare properties which is not, at present, widely accepted in the United Kingdom, Australia or elsewhere, and the business of the Company may not develop and grow as the Company anticipates.

      The operating results of the healthcare facilities underlying the investments of Principal-UK, Principal-Australia and operating companies in which the Company invests will depend on various factors over which the Company will have no control and which may affect the present or future cash flows of the Company. Those factors include, without limitation, general economic conditions, changes in supply of, or demand for, competing long-term healthcare facilities, changes in occupancy levels, the ability of the lessees and mortgagors of Principal-UK, Principal-Australia and similar companies in which the Company invests through rate increases or otherwise to absorb increases in operating expenses, changes in governmental regulations and changes in planning (zoning) regulations.

3

      A significant portion of the revenues of operating companies, including the lessees of Principal-UK, Principal-Australia and similar companies in which the Company invests, will be dependent upon payments from third party payors, including private insurers and local and national governments. The levels of revenues and profitability of such lessees, mortgagors and operating companies may be affected by the continuing efforts of third party payors to contain or reduce the cost of healthcare. Medical advances and changes in the method of providing long-term healthcare services may significantly change the healthcare needs of the elderly and thereby reduce the demand for long-term healthcare facilities. Likewise, such advances and changes may make obsolete the healthcare properties owned or financed by Principal-UK, Principal-Australia and similar companies in which the Company invests.

      Although Principal-UK plans to increase the number of healthcare operators it finances, currently over 50% of Principal-UK’s rents are derived from rent payments received from three operators. Principal-Australia also plans to increase the number of healthcare operators it finances, but presently most of its assets are operated by and leased to affiliates of Moran. Thus, the results of operations and financial condition of Principal-UK and Principal-Australia will be dependent upon the ability of these tenants to meet their obligations under their agreements with Principal-UK and Principal-Australia.

      Healthcare services, particularly those for the elderly outside the United States, often have been provided by government or by not-for-profit organizations, and the ability of the Company to extend its financing and investment activities is premised upon additional changes in the way in which healthcare services for the elderly will be provided in such countries as the Company may invest. While the United Kingdom and the Commonwealth of Australia have been advanced in permitting and encouraging the private for-profit sector to develop healthcare services, there is no assurance that such encouragement and permission will be available in other countries in which the Company may desire to invest.

      No assurance can be given that a lessee will exercise any option to renew its lease upon the expiration of its term. In such an instance, the Company may not be able to locate a qualified purchaser or qualified replacement tenant for the healthcare properties in question, and as a result it would lose a source of revenue while remaining responsible for payment of its obligations incurred in financing such properties.

Directors and Executive Officers of Omega Worldwide

      Set forth below is information regarding (i) current Directors of the Company, who will serve until the term expires at the indicated annual meeting of shareholders or until their successors are elected, and (ii) the current executive officers of the Company, who are elected to serve at the discretion of the Board of Directors.

      Mr. Bailey was the Chief Executive Officer and President of the Company from April 1998 to July 2000. Mr. Bailey has been a Director of the Company since its formation in November 1997. Mr. Bailey served as President and Chief Executive Officer of Omega Healthcare until June 2000, as well as a Director of Omega Healthcare since its formation in 1992, until June 2000, and he served as Chairman of the Board of Directors of Omega Healthcare from 1995 to June 2000. Prior to forming Omega Healthcare, he was a Managing Director of Omega Healthcare Capital, a healthcare investment partnership, from 1986 to 1992. Mr. Bailey was formerly a Director of Evergreen Healthcare, Inc., which was a NYSE listed company engaged in the

4

      Mr. Eden has been a Director of the Company since April 1998. He was elected Chairman of the Board of the Company in July 2000. He is President and principal owner of Eden & Associates, Inc., which provides consulting services to the senior living and long-term care industries. He is also President and principal owner of Senior Living Properties, LLC, and serves as Chairman and Chief Executive Officer of Oakwood Living Centers, Inc., which owns and operates 7 nursing homes in Massachusetts and Virginia. From 1976 to 1992, he held various positions in healthcare at Marriott Corporation ultimately, as Executive Vice President and General Manager of its Senior Living Services Division. Mr. Eden is also a Director of the Alliance for Aging Research and United Vanguard Homes. Mr. Eden was a Director of Omega Healthcare until July 2000.

      Mr. Flaherty joined Omega Healthcare in 1996 and was appointed Vice President-International of Omega Healthcare and Chief Executive of Omega Healthcare (UK) Limited in January 1997. Mr. Flaherty was appointed Chief Operating Officer of the Company in April 1998 and President in July 2000. He has been a Director of the Company since July 2000. Before he joined Omega Healthcare, Mr. Flaherty was Chairman of Black Rock Capital Corporation, a leasing and merchant banking firm he founded in 1994. From April 1991 until December 1993, Mr. Flaherty was Managing Partner of Pareto Partners, a London based investment management firm. Prior to 1991, he was employed by American Express Bank Ltd. in London and Geneva in a number of senior management capacities and by State National Bank of Connecticut and its successor, The Connecticut Bank & Trust Co.

      Mr. Franke has been a Director of the Company since April 1998. He is Chairman and principal owner of Cambridge Partners, Inc., an owner, developer and manager of multifamily housing in Grand Rapids and Ann Arbor, Michigan. He is also the principal owner of private healthcare firms operating in the United States and the United Kingdom and a private hotel firm in the United Kingdom. Mr. Franke has been a Director of Omega Healthcare since its formation in 1992, and since Principal-UK’s formation in 1995, Mr. Franke has been a Director of Principal-UK.

      Dr. Anil K. Gupta has been a Director of the Company since July 7, 1998. He is Professor of Strategy, Organization and International Business at the Robert H. Smith School of Business, The University of Maryland. He holds a Doctor of Business Administration from Harvard Business School. Dr. Gupta served as a director of Vitalink Pharmacy Services, Inc. from 1992 to 1998. Recipient of numerous scholarly awards, he also provides consulting and executive training to a number of multinational companies.

      Mr. Kloosterman has been a Director of the Company since April 1998. He also has been a Director of Omega Healthcare since its formation in 1992 and was a Managing Director of Omega Healthcare Capital from 1986 to 1992. Mr. Kloosterman has been involved in the acquisition, development and management of commercial and multi-family properties since 1978. He has been a senior officer of LaSalle Partners, Inc., and in 1985 he formed Cambridge Partners, Inc., where he serves as President. At Cambridge, he has been involved in the development and management of commercial, apartment and condominium projects in Grand Rapids and Ann Arbor, Michigan and in the Chicago area.

      Mr. Korman has been a Director of the Company since April 1998. He is Chairman of the Board of Trustees of Philadelphia Health Care Trust, a private foundation, and of NutraMax Products, Inc., a public consumer health care products company. He formerly was President, Chief Executive Officer and Director of MEDIQ Incorporated (health care services) from 1977 to 1995. Mr. Korman has been a Director of Omega Healthcare since 1993 and also is a Director of the following public companies: The New America High Income Fund (financial services), The Pep Boys, Inc. (auto supplies), and Kranzco Realty Trust (real estate investment trust).

      Mr. Noble joined Worldwide in March 1999 as Vice President and Chief Financial Officer. From 1995 to 1998, Mr. Noble was Chief Financial Officer of the international group of Culligan Water Technologies, Inc., a manufacturer of water treatment products. From 1991 to 1995, he was Assistant Treasurer for Astrum International, Inc., a holding company in diverse industries.

5

      Mr. Parker served as Chairman of the Company’s Board of Directors from April 1998 to July 2000. He was a consultant to and Director of Omega Healthcare from 1992 to July 2000. Mr. Parker was Chairman of Omega Healthcare from 1992 to 1995 and Managing Director of Omega Healthcare Capital from 1986 to 1992. From 1972 through 1983, Mr. Parker was a senior officer of Beverly Enterprises, the largest operator of long-term care facilities in the United States. At the time of his retirement in 1983, Mr. Parker was Executive Vice President of Beverly Enterprises. Mr. Parker is a registered architect and is licensed in California and Oklahoma. Mr. Parker also served as a Director of GranCare, Inc., a public company engaged in the operation of long-term care facilities, from 1995 to 1997, and of Vitalink Pharmacy Services Inc., a publicly-traded institutional pharmacy, during 1997. He has served as a director of Principal-UK since 1995, and of First National Bank of Bethany, Oklahoma.

      The Company believes that all filings required to be made pursuant to Section 16(a) of the Securities Exchange Act of 1934 were timely made.

Item 2 — Properties

      At September 30, 2000, the Company’s owned property consists of two purchased nursing homes located in the United Kingdom, operated by subsidiaries of Idun. Subsidiaries of Idun are the tenants of 117 nursing homes located throughout the United Kingdom.

Item 3 — Legal Proceedings

      There were no legal proceedings pending as of September 30, 2000, or as of the date of this report, to which the Company is a party or to which the properties are subject, other than those incurred in the normal course of operating the Idun nursing homes. In the opinion of management, the resolution of these cases will not result in a material adverse impact to the Company.

Item 4 — Submission of Matters to a Vote of Security Holders

      No matters were submitted to shareholders during the last quarter of the year covered by this report.

Item 5 — Market for Registrant’s Common Equity and Related Shareholder Matters

      The Company’s shares of common stock are traded on the NASDAQ National Market System under the symbol OWWI. The following tables sets forth, for the periods shown, the high and low closing prices reported on the NASDAQ National Market System:

      The closing price quoted on the NASDAQ National Market System on December 15, 2000 was $2.25 per share. As of December 15, 2000, there are 12,340,553 shares of common stock outstanding with 2,000 registered holders and approximately 12,000 beneficial owners.

6

Item 6 — Selected Financial Data

      The following selected financial data should be used in conjunction with the Company’s consolidated financial statements appearing elsewhere herein (In thousands, except per share data):

Item 7 — 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 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 facilities owned by the Company’s investees as it affects their continuing ability to meet their obligations under the terms of the lease agreements; changes in the operators or ownership of operators; government policy relating to the healthcare industry, including changes in the reimbursement levels; Idun’s and other operators’ continued eligibility to participate in the government-sponsored payment programs; changes in reimbursement by other third-party payors; occupancy levels at the facilities; the availability and cost of capital of the Company and its investees; the strength and financial resources of competitors of the Company and investees; the ability of investees to make additional real estate investments at attractive yields; and the ability of investees to obtain debt and equity capital at reasonable costs.

      Following is a discussion and analysis of the Company’s consolidated results of operations, financial condition and liquidity and capital resources. The discussion should be read in conjunction with the audited consolidated financial statements and notes thereto. The Company began operations on April 2, 1998.

7

Results of Operations

      In prior years the Company generated income from three primary sources: (1) fee income from providing investment advisory and management services; (2) interest income from providing financing to companies in the healthcare and healthcare financing industries; and (3) equity in earnings of companies in the healthcare and healthcare financing industries. In the first quarter of the current fiscal year, the Company added a fourth income source when it acquired, through its wholly-owned subsidiary, Idun Health Care Ltd. (“Idun”), 119 nursing homes in the United Kingdom. Company results for the year ended September 30, 2000 include eleven months of Idun’s operations since the date of acquisition.

      Prior to April 1, 1999, Principal-Australia was reported on a consolidated basis; currently, Principal-Australia, now 47% owned, is reported under the equity method.

Revenues

      Patient services revenue from Idun’s operations was $134,656,000 for the eleven months ending September 30, 2000. Occupancy grew from 88.2% at the date of acquisition to 90.7% at year-end. The improvement is the result of an increased focus on marketing throughout Idun, but specifically in the England homes, which have lower occupancy than those in Scotland and Northern Ireland. The Company acquired Idun with the intention of bringing occupancy up to levels required for profitability and is directing significant resources to this end.

      Fee income from Principal Healthcare Finance Limited (Principal-UK) for the fiscal year of $5,040,000 is essentially equal to the $4,918,000 reported last year. The terms of the Company’s agreement with Principal-UK call for a fee equal to 90 basis points times value of Principal-UK gross assets under management by the Company as computed using UK GAAP. Average assets under management at Principal-UK increased 7.8%, from £283 million to £305 million during the current year. The increase in fees was offset by the reduced value of the British pound sterling versus the US dollar. At year-end, assets under management stood at £311 million. For fiscal year 1999, assets under management increased 24.0%, resulting in the reported increase over annualized results for fiscal year 1998. The fee agreement is scheduled to expire on December 31, 2002.

      Fee income from Principal Healthcare Finance Trust (“Principal-Australia”) is an amount equal to 90 basis points times the value of Principal-Australia’s assets under management by the Company, as computed under Australian GAAP. Prior to April 1, 1999, Principal-Australia fees were eliminated as a result of consolidation. Average assets under management in Australia increased 51.3% for the year, from A$119 million to A$180 million. Principal-Australia’s assets under management at year-end were A$182 million.

      Interest income from Principal-UK was $4,628,000 for fiscal year 2000, compared to $4,761,000 and $1,784,000, respectively, for the two prior fiscal periods. Interest income is earned on £15 million of subdebt and temporary cash advances as required by Principal-UK. The impact of the annual interest rate increase for subordinated debt was $101,000 in fiscal year 2000 and $88,000 for fiscal year 1999. The interest rate on temporary advances remains fixed at 9.25% and average balances outstanding were £10.2 million, £11.0 million and £5.9 million for the fiscal years 2000, 1999 and 1998, respectively.

      Rent income in prior years relates to the period when Principal-Australia was a consolidated entity. The increase from fiscal 1998 to 1999 was the result of the consolidation of two months of Principal-Australia activity in fiscal year 1998 and six months’ activity in fiscal year 1999.

Expenses

      Cost of patient services is incurred in running the Idun nursing homes in the United Kingdom. Minimum wage increases and increased costs of temporary services and overtime have pushed costs up faster than

8

      Despite the increase in levels of assets managed, the total direct cost of asset management, allocated expenses and general and administrative costs declined by $91,000 from the comparable period last year. The allocation from Omega Healthcare Investors, Inc. (“Omega Healthcare”) declined as a result of a reduction in overall cost and negotiated adjustments to previously billed amounts. Beginning July 1, 2000, allocations were further reduced, as Omega Healthcare is no longer providing the services of shared executives for the Company. The increase in fiscal 1999 from annualized 1998 results was caused by the opening of the Australian offices and was reflective of increased assets under management. Principal-Australia incurred most of the interest and depreciation expense in the prior year and is no longer consolidated. Interest expense in the current year arose from financing required to fund the operations of the Idun nursing home businesses.

      Non-recurring expenses in the current year were incurred for advice in pursuing strategic alternatives, including a possible merger or sale transaction. As previously announced, the Company continues to pursue strategic alternatives to maximize shareholder value and is exploring the sale of certain or all of its underlying assets.

Other

      Equity earnings of Principal-UK increased from $1,223,000 in the prior year to $1,468,000 in the current year. The Company’s ownership percentage in Principal-UK has remained constant at 33.375%. The increased income is due to improved performance of Principal-UK as its leased assets and their rents have increased, and Principal-UK achieved more favorable long-term finance rates with the securitization of certain of its rental properties in March 1999. Equity in earnings of Principal-Australia decreased on an annualized basis in 2000 (only six months in 1999) due to the A$182 million financing completed in September 1999. Not all of the proceeds have yet been reinvested in rental properties. Although we are pursuing numerous prospects, the return on temporary investment is not adequate to cover the interest expense.

      The change in the Medicare payment structure enacted last year in the United States resulted in the prior year loss of $282,000 for Essex Healthcare Corporation (“Essex”). Essex management made progress in structuring operations to be profitable under this payment structure and in improving performance at the several skilled nursing facilities that were acquired when they were unprofitable. In addition, it has doubled its beds in fiscal year 2000 to take advantage of the benefits of economies of scale. Subsequent to year-end, the Company sold its shares in Essex to Essex for $325,000 in cash, which approximates book value.

      On April 1, 1999 Principal-Australia sold 6,625,000 newly-issued shares to Omega Healthcare and AMP, and sold 875,000 additional shares to the Company, diluting the Company’s ownership to 47%. The transaction created a one-time gain on dilution of interest in Principal-Australia of $951,000, resulting in after-tax earnings of $628,000, or $0.05 per share. Also in fiscal 1999, the Company recorded a loss of $938,000 on its investment in Tamaris plc, created by a decline in Tamaris’ stock price on the London Exchange. The affected shares were tendered in fiscal year 2000 as part of the consideration in Idun’s purchase of Tamaris’ nursing home assets.

      The Company’s effective tax rate on a year-to-date basis varies from the federal statutory rate of 34% due to the benefit available from foreign tax credits on equity in earnings of Principal-UK which is reported after UK tax expense.

Liquidity and Capital Resources

      The Company has outstanding at year-end $4,850,000 of debt under its line of credit agreement with Fleet Bank, NA, and Harris Trust and Savings Bank. Repayment is due in full by June 30, 2001. The Company anticipates the need to invest approximately $4 million of additional capital in Idun for unpaid

9

Year 2000

      The Company is not aware of any significant adverse effects of year 2000 on its systems and operations.

Impact of Recently Issued Accounting Standards

      In December 1999, the Securities and Exchange Commission (the “Commission”) issued Staff Accounting Bulletin No. 101 (“SAB 101”), “Revenue Recognition in Financial Statements.” SAB 101 summarizes certain of the Commission’s views in applying generally accepted accounting principles to revenue recognition in financial statements. In June 2000, the Commission issued SAB 101B to defer the effective date of implementation of SAB 101 to the calendar fourth quarter 2000. The Company will adopt SAB 101 as of October 1, 2000 and does not expect the adoption to have material impact on the Company’s operations.

      In June 2000, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” which amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS 133 was previously amended by SFAS 137 “Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of FASB Statement 133,” which deferred the effective date of SFAS 133 to fiscal years beginning after June 15, 2000. The Company will adopt SFAS 133 and SFAS 138 effective October 1, 2000. SFAS 133 and SFAS 138 will require the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments, through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of the derivative’s change in fair value will be recognized immediately in earnings. Based on the Company’s derivative positions and their related fair values of approximately $38.5 million recorded at September 30, 2000, the Company estimates that there will not be a material impact on the consolidated financial statements.

Item 7a.  Quantitative and Qualitative Disclosure about Market Risk

      The Company is exposed to various market risks. Market risk is the potential loss arising from adverse changes in market interest rates and prices, such as short-term borrowing and foreign currency exchange rates. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. The Company enters into forward foreign currency contracts, principally to hedge currency fluctuations in its investments denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from changes in exchange rates. At September 30, 2000, the Company had outstanding a British pound sterling forward currency swap to exchange £20 million for $31,750,000 to mature on October 15, 2007, and an Australian dollar forward currency swap to exchange $11.0 million Australia dollars for $6,749,000 to mature on July 3, 2003. From time to time, the Company also may obtain hedges for its foreign currency exposure relative to temporary loans to Principal-UK and Idun. Because of the Company’s foreign exchange contracts, its sensitivity to foreign exchange currency exposure is considered partially mitigated. Most components of the Company’s income are earned in currencies other than the dollar and are subject to fluctuation.

      The Company has approximately $10 million of debt outstanding at September 30, 2000. All of the debt incurs interest expense based on rates that fluctuate with Libor or an equivalent benchmark. Idun’s lease

10

Item 8 — Financial Statements and Supplementary Data

      The consolidated financial statements and report of independent auditors are filed as part of this report on pages F-1 through F-19.

Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.

Item 10 — Directors and Executive Officers of the Registrant

      Located in Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K.

Item 11 — Executive Compensation

      The information required by this item is incorporated by reference to the Company’s definitive proxy statement for the 2001 Annual Meeting of Shareholders, which is expected to be filed on or about January 25, 2001 with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 12 — Security Ownership of Certain Beneficial Owners and Management

      The information required by this item is incorporated by reference to the Company’s definitive proxy statement for the 2001 Annual Meeting of Shareholders, which is expected to be filed on or about January 25, 2001 with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 13 — Certain Relationships and Related Transactions

      The information required by this item is incorporated by reference to the Company’s definitive proxy statement for the 2001 Annual Meeting of Shareholders which is expected to be filed on or about January 25, 2001 with the Securities and Exchange Commission pursuant to Regulation 14A.

Item 14 — Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K.

      (a)(1)  Listing of Consolidated Financial Statements

11

      (a)(2)  Listing of Financial Statement Schedules. All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

      (a)(3)  Listing of Exhibits — See Index to Exhibits beginning on Page 17 of this report.

      (b)  Reports on Form 8-K — none filed in the quarter ended September 30, 2000.

      (c)  Exhibits — See Index to Exhibits beginning on Page 17 of this report.

      (d)  Financial Statement Schedules — The following consolidated financial statement schedule is included herein: None

12

      Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	OMEGA WORLDWIDE, INC.

	By:	/s/ JAMES P. FLAHERTY

	James P. Flaherty
	President and Director

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities on the date indicated.

13

Report of Independent Auditors

Board of Directors

      We have audited the accompanying consolidated balance sheets of Omega Worldwide, Inc. as of September 30, 2000 and 1999, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years ended September 30, 2000 and 1999 and the period from April 2, 1998 (commencement of operations) through September 30, 1998. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Omega Worldwide, Inc. at September 30, 2000 and 1999, and the consolidated results of their operations and their cash flows for years ended September 30, 2000 and 1999 and the period from April 2, 1998 (commencement of operations) through September 30, 1998, in conformity with accounting principles generally accepted in the United States.

	/s/ Ernst & Young LLP

Chicago, Illinois

F-1

CONSOLIDATED BALANCE SHEETS

See notes to consolidated financial statements.

F-2

OMEGA WORLDWIDE, INC.

See notes to consolidated financial statements.

F-3

OMEGA WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

See notes to consolidated financial statements.

F-4

OMEGA WORLDWIDE, INC.