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Filed by OrthAlliance, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: OrthAlliance, Inc.
Commission Number: 000-22975
In connection with the proposed merger, OCA and OrthAlliance will file a proxy
statement/prospectus with the Securities and Exchange Commission ("SEC").
Investors are urged to read the proxy statement/prospectus, because it will
contain important information about the merger, OCA and OrthAlliance. After the
proxy statement/prospectus is filed with the SEC, the proxy statement/prospectus
will be available free of charge, both on the SEC's web site (www.sec.gov) and
from OCA and OrthAlliance by directing a request to Orthodontic Centers of
America, Inc., 5000 Sawgrass Village Circle, Suite 30, Ponte Vedra Beach, FL
32082, Attention: Investor Relations, or to OrthAlliance, Inc., 21535 Hawthorne
Boulevard, Suite 200, Torrance, CA 90503, Attention: Investor Relations.
OrthAlliance and its directors and officers may be deemed to be participants in
the solicitation of proxies with respect to a shareholder meeting to be held in
connection with the merger. Information about the participants in the
solicitation, including their interests in shares of OrthAlliance's common
stock, is set forth in OrthAlliance's Annual Report on Form 10-K for the year
ended December 31, 2000 filed with the SEC. Investors may obtain additional
information regarding the interests of OrthAlliance and its directors and
officers in the merger by reading the proxy statement/prospectus when it becomes
available. This does not constitute an offer of any securities for sale.
A. NEWS RELEASE
[OrthAlliance Logo]
FOR IMMEDIATE RELEASE
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CONTACT: JAMES C. WILSON
CHIEF FINANCIAL OFFICER
(310) 792-1300
ORTHALLIANCE REPORTS SECOND QUARTER RESULTS
HIGHLIGHTS:
o Second quarter net revenues increased 6% to $38.2 million
o Six months net revenues increased 16% to $76.8 million
o EBITDA at $6.1 million for the quarter; $13.0 million year-to-date
o Earnings per share of $0.11; year-to-date at $0.26
o Six months cash flow from operations at $11.5 million
TORRANCE, California (August 7, 2001) - OrthAlliance, Inc. (Nasdaq/NM:ORAL), a
leading provider of practice management and consulting services to orthodontic
and pediatric dentistry practices, today reported financial results for the
second quarter and six months ended June 30, 2001.
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Net revenues for the second quarter ended June 30, 2001, increased 5.9% to
$38.2 million compared with $36.1 million reported for the same period in the
prior year period. Net income for the second quarter of 2001 totaled $1.4
million compared with net income of $2.7 million for the second quarter ended
June 30, 2000. Second quarter results included approximately $1.6 million of
costs associated with the Company's strategic alternatives project primarily
related to costs of advisers, legal and professional and other
transaction-related expenses. Earnings per share (diluted) for the second
quarter of 2001 were $0.11 compared with earnings per share (diluted) of $0.21
for the same period in 2000. In addition, the Company's comparative
same-practice growth approximated 6.3% for the second quarter ended June 30,
2001.
Net revenues for the six months ended June 30, 2001, increased 16.0% to
$76.8 million compared with $66.2 million reported for the same period in the
prior year period. Net income for the six-month period ended June 30, 2001,
totaled $3.2 million compared with net income of $5.3 million for the six months
ended June 30, 2000. Earnings per share (diluted) for the first half of 2001
were $0.26 compared with earnings per share (diluted) of $0.41 for the same
period in 2000.
As of June 30, 2001, the Company had affiliations with 226 practitioners
operating out of 397 offices in 32 states. Annual patient revenues at
acquisition and before internal growth approximate $192.2 million.
On May 16, 2001, OrthAlliance entered into a definitive merger agreement
with Orthodontic Centers of America , Inc. (NYSE:OCA). OCA is a leading provider
of integrated business services to orthodontic practices. As of June 30, 2001,
OCA was affiliated with over 400 orthodontists treating over 350,000 patients in
over 600 orthodontic centers throughout the United States and in Japan, Mexico
and Spain. Under the terms of the agreement, a wholly owned subsidiary of OCA
would merger into OrthAlliance in a stock-for-stock transaction, with
OrthAlliance becoming a wholly owned subsidiary of OCA. OrthAlliance and OCA
also subsequently announced that the Company had received signed amendments to
the employment agreements and service or consulting agreements of its affiliated
professionals representing more than the minimum threshold amounts specified as
a condition to OCA's obligation to close the proposed merger with OrthAlliance.
The closing is also subject to approval by OrthAlliance stockholders and other
conditions.
W. Dennis Summers, chairman of the board of OrthAlliance and interim
president and chief executive officer of the Company, said, "We are pleased to
report that we were able to sustain solid financial performance in the second
quarter - especially in the midst of the transition we are making as a company.
Our progress in the pending merger between OrthAlliance and Orthodontic Centers
of America, Inc. (OCA) is on track. OCA and OrthAlliance recently announced that
OrthAlliance had received from its affiliates more than the minimum number of
signed amendments to employment and service or consulting agreements specified
as a condition to the merger agreement. With this condition met, and
anticipating approval by OrthAlliance shareholders, we currently anticipate the
transaction to close over the next several months. We continue to believe that
this merger is in the best interests of OrthAlliance shareholders, as evidenced
by the strong second quarter results recently announced
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by Orthodontic Centers of America. We look forward to playing an important role
in this dynamic company."
Due to the pending merger of OrthAlliance and Orthodontic Centers of
America, the Company will not be hosting a conference call to discuss second
quarter results.
In connection with the proposed merger, OCA and OrthAlliance will file a
proxy statement/prospectus with the Securities and Exchange Commission (SEC),
and OCA will file a registration statement on Form S-4 with the SEC. Investors
are urged to read the proxy statement/prospectus that will be part of the
registration statement, because it will contain important information about the
merger, OCA and OrthAlliance. After the proxy statement/prospectus and
registration statements are filed with the SEC, the registration statement and
the proxy statement/prospectus will be available free of charge, both on the
SEC's web site (www.sec.gov) and from OCA and OrthAlliance by directing a
request to the attention of the Investor Relations department of Orthodontic
Centers of America, Inc., 5000 Sawgrass Village Circle, Suite 30, Ponte Vedra
Beach, Florida 32082, or to the attention of the Investor Relations department
of OrthAlliance, Inc., 21535 Hawthorne Boulevard, Suite 200, Torrance,
California 90503. OrthAlliance and its directors and officers may be deemed to
be participants in the solicitation of proxies with respect to a shareholder
meeting to be held in connection with such merger. Information about the
participants in the solicitation, including their interests in shares of
OrthAlliance's common stock, is set forth in OrthAlliance's Annual Report on
Form 10-K for the year ended December 31, 2000, filed with the SEC. Investors
may obtain additional information regarding the interests of OrthAlliance and
its directors and officers by reading the proxy statement/prospectus when it
becomes available.
OrthAlliance, Inc. is the second largest provider of practice management
and consulting services to orthodontic and pediatric dentistry practices in the
United States.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on certain assumptions and analysis made by the Company in light of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors the Company believes are important under
the circumstances. Such statements are subject to a number of assumptions,
risks, and uncertainties that could cause actual future activities and results
of operations to be materially different from those set forth in the
forward-looking statements. Important factors that could cause actual activities
and results to differ include, without limitation, dependence on practice
revenues and collections therein, and good relationships with our practice
affiliates, access to capital sources, regulatory constraints, competition,
retention of key personnel and other factors set forth in the Company's
Securities and Exchange Commission filings.
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ORTHALLIANCE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
JUNE 30, JUNE 30,
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2001 2000 2001 2000(3)
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Net revenues $ 38,199 $ 36,056 $ 76,789 $ 66,201
Costs and expenses:
Salaries and benefits 12,065 9,858 24,277 18,468
Orthodontic and dental supplies 3,794 3,500 7,597 6,180
Rent 3,019 3,048 6,146 5,559
General and administrative 13,252 11,289 25,791 20,571
Depreciation and amortization 1,916 1,732 3,809 3,142
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Operating expenses 34,046 29,427 67,620 53,920
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Operating income 4,153 6,629 9,169 12,281
Interest expense, net 1,748 1,817 3,533 2,898
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Income before income taxes 2,405 4,812 5,636 9,383
Provision for income taxes 1,019 2,109 2,446 4,120
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Net income $ 1,386 $ 2,703 $ 3,190 5,263
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Net income per common share (basic and diluted) $ 0.11 $ 0.21 $ 0.26 $ 0.41
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Weighted average number of common shares outstanding:
Basic 12,249 12,860 12,249 12,949
Diluted 12,249 12,868 12,249 12,964
Unaudited Supplemental Information
(Dollars in thousands):
Reimbursed Practice Expenses $ 28,852 $ 26,560 $ 58,421 $ 48,437
Practitioner Data: First Second
At Quarter Quarter
IPO 1997(2) 1998 1999 2000 2001 2001 Total
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Annual patient revenues
at affiliation, net(1) $60,400 $ 10,826 $ 38,761 $36,008 $44,812 $ 912 $ 447 $192,166
Number of practitioners, net 82 17 38 40 48 1 0 226
Number of offices, net 147 31 67 73 76 1 2 397
Additional states represented 16 2 11 3 0 0 0 32
(1) Excludes same-practice growth
(2) Includes period from August 26, 1997, (IPO) to December 31, 1997.
(3) Includes results of New Image from March 1, 2000
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In connection with the proposed merger, OCA will file a registration statement
on Form S-4 with the Securities and Exchange Commission ("SEC"). Investors are
urged to read the proxy statement/prospectus that will be part of the
registration statement, because it will contain important information about the
merger, OCA and OrthAlliance. After the registration statement is filed with the
SEC, the registration statement and the proxy statement/prospectus will be
available free of charge, both on the SEC's web site (www.sec.gov) and from OCA
and OrthAlliance by directing a request to Orthodontic Centers of America, Inc.,
5000 Sawgrass Village Circle, Suite 30, Ponte Vedra Beach, FL 32082, Attention:
Investor Relations, or to OrthAlliance, Inc., 21535 Hawthorne Boulevard, Suite
200, Torrance, CA 90503, Attention: Investor Relations. OrthAlliance and its
directors and officers may be deemed to be participants in the solicitation of
proxies with respect to a shareholder meeting to be held in connection with such
merger. Information about the participants in the solicitation, including their
interests in shares of OrthAlliance's common stock, is set forth in
OrthAlliance's Annual Report on Form 10-K for the year ended December 31, 2000
filed with the SEC. Investors may obtain additional information regarding the
interests of OrthAlliance and its directors and officers by reading the proxy
statement/prospectus when it becomes available.
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