OCA, Inc. (NYSE:OCA) today provided the following excerpt from its
October 31, 2005 Form 8-K, which was filed with the Securities and
Exchange Commission on November 4, 2005: "The following discussion
serves to update our 8-K filed with the Securities & Exchange
Commission ("SEC") on June 7, 2005 (the "June 8-K") and should be
read in conjunction with the June 8-K. Financial Information
Update. Recent events described in this Report and in the June 8-K
have placed constraints on our cash flow. In general, we have
addressed these constraints by discontinuing funding of non-core
operations and more actively managing cash on a daily basis.
Assuming our doctor affiliates continue to make deposits, as they
are contractually obligated to do, we believe we will have
sufficient cash to pay our obligations as they come due and to
operate our business as presently configured. Furthermore,
effective October 31, 2005, our lenders granted and funded an
additional credit advance of $1.2 million, less expenses, under our
senior credit facility. Given that our 2004 audit has not yet been
completed and the preparation of our quarterly information for the
first through third quarters of 2005 has been delayed, we have not
yet been able to file our Form 10-K for the year ended December 31,
2004 or any of our subsequent Forms 10-Q. In order to inform our
shareholders of the ongoing operations of OCA, we provide the
following approximate quarterly information (dollar amounts in
millions). -0- *T 1st 2nd 3rd 4th 1st 2nd 2004 2004 2004 2004 2005
2005 ------- ------- ------- ------- ------- ------- Practice
Collections $107.9 $100.4 $101.1 $96.1 $103.7 $100.6 Practice
Expenses $86.8 $85.2 $83.8 $85.8 $85.0 $86.7 Corporate G&A $6.3
$8.6 $5.3 $6.1 $6.1 $7.6 Notes: 1. Information has not been audited
and changes may result from an audit. 2. Collections are actual
cash amounts received by practices for services to patients. 3.
Practice expenses include compensation to doctors. 4. Corporate
G&A represents corporate salaries and other corporate costs. In
the second quarter of 2005 professional fees include costs of
additional professionals required by our banks and special
committee. Assumptions: 1. No amounts are included in practice
collections or expenses for practices that discontinued with OCA
from the date of discontinuance. 2. OCA outsource practice
collections and practice expenses are included. 3. Gains or losses
from practices that discontinued with OCA are not included. 4. Cash
received from doctor buy-outs of practices that discontinued with
OCA are not included. 5. Depreciation and amortization are not
included. 6. Interest and income taxes are not included. 7. No
amounts are included for costs incurred resulting from Hurricanes
Katrina, Rita or Wilma, nor is any potential reimbursement from
insurance included. *T Since the beginning of July 2005, practices
that have recently ceased making their deposits with OCA, and
willingly breached their agreements with us, account for
approximately $44 million in revenues, and annual service fees (net
of rebates and incentive payments) associated with these practices
are approximately $5.7 million. Some of the doctors associated with
these practices have already expressed their willingness to
negotiate amicable resolutions with OCA, although it is too early
to predict the forms such resolutions will take. Payments to
Affiliated Doctors. In mid-August, 2005, we paid a total of $6.2
million in profit sharing payments out of our existing cash
resources to our affiliated doctors in full payment of amounts due
them in August 2005. The next payment due them is November 2005,
and will be made in full and on time. Hurricanes. On August 29,
2005, Hurricane Katrina caused the evacuation of our corporate
office and temporary shut down of worldwide systems supporting our
affiliated doctors. We fully implemented our disaster recovery
plan. Our computer and business systems have been fully restored
with IBM in New York. By September 6, 2005, we had relocated our
corporate office, including approximately 90 employees, to Ft.
Lauderdale, FL. All told, Hurricanes Katrina and Rita disrupted the
operations of only approximately 1% of our affiliated offices. We
are working with our doctors to restore the operations of their
practices as quickly as possible. We recognize the importance of
our relationship with our doctors and intend to subsidize them for
any losses not covered by our insurance. Throughout the hurricane
period and thereafter we have received the help and support of the
vast majority of our affiliated doctors, for which we are very
grateful. A minority of our doctors, however, have stopped
depositing with us in violation of their contracts with us. We hope
they will reconsider this unwarranted action. We believe that we
will be able to return to our corporate office in Metairie, La. in
mid to late November, 2005. Hurricane Rita had no further material
effect on our corporate operations. Hurricane Wilma, on the other
hand, hit our temporary headquarters, and caused the evacuation of
both our business and the hotel housing most of our employees. Both
locations are currently inaccessible and without power. It is too
early to assess any losses to us or our doctors, but this event
will not delay our payments to our doctors due in November. The
hurricanes and their aftermath obviously caused us to incur losses
to our operations, the amount of which is not fully quantified at
this time. We have business interruption insurance with claim
limits of up to $30 million and have retained Alex N. Sill Company,
international loss consultants and appraisers, to assist us in
filing our claim, and their work is in process. We anticipate that
we will recover all or a significant portion of our losses, but the
amount of the recovery and when the claim will be paid cannot be
determined at this time. Accounting Assistance. As a result of
staffing disruptions, due in part to Hurricane Katrina, we have
assembled a team of financial experts including certified public
accountants and former principal accounting officers of publicly
traded companies to assist us in producing our financial
information, working to satisfy external audit and reporting
requirements and provide financial information to our lenders. We
believe, however, that the integrity of our financial information
provided to our doctors has not been affected by the recent
hurricanes. Because of our temporary relocation to Ft. Lauderdale,
we hired Kramer Weisman and Associates, L.L.P., located in Davie,
Florida, to assist in discussions and negotiations with our
lenders, address financial and liquidity issues and facilitate the
financial close process and annual audit, and to provide other
assistance. Special Committee. The Special Committee appointed by
our Board of Directors on June 2, 2005 to review possible
accounting irregularities as described in the June 8-K appointed
Fulbright & Jaworski L.L.P. as its independent counsel and
certain independent accounting advisors. The Committee and its
advisors have reviewed thousands of pages of records and
interviewed 21 persons. In the process of its review, the Committee
had identified issues for follow up and was proceeding to review
these issues when Hurricane Katrina hit. This has delayed the
Committee's work, and it is now unclear when/the Committee will be
able to conclude, in part as a result of our inability to access
records in storage in the Katrina affected area. Furthermore,
Fulbright & Jaworski resigned as independent counsel to the
Special Committee after Hurricane Katrina and has been replaced by
Phelps Dunbar LLP. We do not anticipate that this change in
independent counsel will cause any further delays in the work of
the Special Committee. As reported in the June 8-K, we identified
certain entries with respect to 2000 and 2001, which for 2001
totaled $29.4 million. The Committee has determined that there were
no similar entries for 2002 and subsequent years. As to the 2001
entries, the Committee has determined that they were made in the
normal course of quarterly closing and has obtained the full
supporting documentation for these entries. Approximately $6
million were determined not to be in accordance with generally
accepted accounting principles, primarily because of improper
capitalization of certain acquisition costs and supply costs and
that approximately $14 million of the entries were correct. The
Committee is still reviewing the remaining $9.4 million. In
addition, the Committee has also identified approximately $3
million in start up costs related to its entry into Japan that were
improperly capitalized during the period from 1998 through 2000.
These capitalized costs were then amortized over approximately
three years. The effect of these capitalized costs do not affect
2004. Financial Statements. The work of the Special Committee, the
correction of the errors described in the June 8-K and the effects
of the hurricanes have further delayed the completion of our 2004
audit, and our quarterly information for the first and second
quarters of 2005, and will delay our third quarter report. Our
independent auditor has suspended its audit of our 2004 financial
statements until it has received and reviewed the final report of
the Special Committee, and we have presented it with revised 2004
financial statements for audit. As a result of the delays in
meeting these two requirements, the expected completion date of our
audit is now uncertain. Our waiver of the audit requirement by our
lenders expires on October 31, 2005, and we are in the process of
requesting an additional waiver as well as waivers of certain other
nonfinancial covenant requirements but have not yet obtained them,
and if we don't obtain them our lenders will have the right to
accelerate our debt, demand payment and exercise other remedies in
the credit agreement. We have also retained Jefferies & Co. to
assist us in this regard and to assist in the possible refinancing
of our bank debt. In the meantime, we have effectively ceased
funding our international operations in order to conserve cash and
focus solely on our domestic business. Before the issuance of Staff
Accounting Bulletin 101 ("SAB 101") by the SEC in December, 1999,
we considered ourselves to be a partner in nationwide orthodontic
practices and considered our revenues to be derived from direct
service to patients. After SAB 101, and after long discussions with
our accountants and the SEC staff, we revised our view and
considered ourselves an orthodontic practice support firm whose
revenues were derived from administrative services to our doctors,
and we developed new systems to calculate revenue under this new
concept and under SAB 101. With the issuance in December 2003 of
revised Financial Accounting Standards Board Interpretation No. 46
("FIN 46"), we again tested our relations with our doctors and
determined on the basis of the FIN 46 guidance that we were indeed
an orthodontic practice for financial reporting purposes and
therefore must recognize our revenue on that basis under SAB 101
and FIN 46. This new approach required us to develop a new
methodology and system to calculate revenue. Our financial group,
in consultation with our auditors, developed a new
revenue/receivable computation methodology that we believed was
appropriate and complied with SAB 101 and FIN 46. During the first
quarter of 2005, our auditors became uncomfortable with our
mutually agreed upon 2004 revenue recognition method. We then began
trying to work with our auditors to perfect this method. However,
because we are the only publicly traded orthodontic practice, we
have no peer guidance or rulings to look to for assistance in
developing methods that comply with SAB 101 and FIN 46. Thus, very
little progress was made over the next several months.
Consequently, we had previously issued a non-reliance notice based
on these events. While in the process of applying and refining a
new methodology, hurricane Katrina struck and our attention
necessarily turned to this crisis. We have now refocused on our
methodology to allow us to complete our 2004 financial statements
and our 2004 audit. The results of this new methodology may affect
our financial statements, but the effect is unknown at this time.
We have previously issued a non-reliance notice for our 2004
quarterly statements, as we do not know if the revised methodology
and corrections will result in revenues higher or lower than that
reported in our quarterly reports for 2004. We are continuing to
refine our new methodology and making corrections. The ultimate
impact of the new methodology and the corrections, and whether the
final adjustments to previously reported financial statements will
be positive or negative, are unknown at this time. Bartholomew F.
Palmisano, Jr. Because of disruptions related to Hurricane Katrina,
we asked Bart Palmisano, Jr., who as reported in the June 8-K has
been placed on administrative leave, to return to the Company in a
non-executive and non-management capacity to assist us temporarily
in the following matters: 1. Helping Bart Palmisano, Sr. to contact
the various department heads of the Company immediately after
Hurricane Katrina struck the New Orleans area and to arrange the
relocation of such department heads to the Ft. Lauderdale, FL area;
2. Meeting with Bart Palmisano, Sr. and department heads of the
Company to determine how best to: (a) contact Company employees,
(b) arrange necessary conference calls in the immediate aftermath
of Hurricane Katrina, (c) organize and coordinate the Company's
day-to-day operations on a modified basis in temporary office
space, (d) search for appropriate temporary office space in the Ft.
Lauderdale, FL area, and (e) organize other elements involved with
relocating the Company's employees to the Ft. Lauderdale, FL area
in the aftermath of Hurricane Katrina; 3. Organizing the Company's
Practice Enhancement Consultants to make calls to our affiliated
doctors and to address questions likely to be raised by such
doctors; and 4. Helping the Company generate responses to due
diligence requests made by the Company's existing and potential new
lenders. However, never at any point during this period of
relocation by the Company in the aftermath of Hurricane Katrina was
Bart Palmisano, Jr. involved in any decisions affecting the
Company's accounting or financial reporting processes. Instead, he
was asked to assist the Company in a limited capacity during a time
of crisis, in which his institutional knowledge and ability to
address immediately the specific issues set forth above were of
vital importance to the Company. Forward Looking Statements.
Certain statements herein not based on historical facts are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
These statements may be identified by their reference to a future
period or periods or by the use of forward-looking terminology,
such as "anticipate," "believe," "estimate," "expect," "may,"
"might," "will," "would," or "intend." They include, without
limitation, those relating to our liquidity, discussions and
negotiations with our lenders, potential extensions, waivers and
forbearances with respect to our credit facility, ability to
continue to provide services, remediation of control weaknesses and
deficiencies and the timing of filing our SEC reports. We caution
you not to place undue reliance on these statements in that actual
results could differ materially from those indicated, due to a
variety of factors including, but not limited to, further delays in
completing our financial close process and the 2004 audit,
disruption of our relationships with, or loss of a significant
number of, our affiliated practices, material reductions in the
funds remitted to us by affiliated practices, adverse
determinations in our review of certain accounting matters and
internal review by the Special Committee, failure or delay in
obtaining a waiver or extension or additional borrowings from the
lenders on acceptable terms, potential default under our credit
facility, potential adverse changes in our financial results and
condition, adverse outcomes of litigation against us, or inability
to resolve that litigation on favorable terms, inability or delay
in successfully executing our strategies or to attract and retain
qualified management, personnel and affiliated practitioners, or to
effectively market our services and our affiliated practices,
impact of competition and existing and future regulations and laws
affecting orthodontics, pediatric dentistry and our business,
difficulties in staffing and managing foreign offices and other
difficulties arising from international expansion, adverse changes
in general economic conditions and business conditions, hurricane
impact and other risks detailed from time to time in our press
releases, Form 10-K for the year ended December 31, 2003, and other
filings with the SEC. We undertake no obligation to update these
statements to reflect events or circumstances that occur after the
date on which they were made." Bart F. Palmisano, Sr., Chief
Executive Officer of OCA commented, "Our Company has been hit by
the greatest natural disaster ever to affect the United States,
causing us to abruptly leave our offices and homes and live
temporarily in hotel rooms in Ft. Lauderdale and Atlanta to
continue to give services to our doctors. We hope to return to our
offices in Metairie in mid to late November after being away for
almost three months. Unfortunately we have had a number of our
employees decide to not return to Metairie because of their own
personal impact from the hurricane." About OCA OCA is the leading
provider of business services to orthodontists and pediatric
dentists. The Company's client practices provide treatment to
patients throughout the United States and in Japan, Mexico, Spain,
Brazil and Puerto Rico. For additional information on OCA, visit
the Company's website: www.4braces.com.
Grafico Azioni Omnichannel Acquisition (NYSE:OCA)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni Omnichannel Acquisition (NYSE:OCA)
Storico
Da Mag 2023 a Mag 2024