BALA CYNWYD, Pa., April 22, 2003 (PRIMEZONE) -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Eastern District of Louisiana on behalf of all purchasers of the common stock of Orthodontic Centers of America, Inc. ("OCA" or the "Company") (NYSE:OCA) from November 14, 2002 through March 18, 2003, inclusive (the "Class Period").
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The complaint charges OCA and certain of its officers and directors with violations of the Securities and Exchange Act of 1934. More specifically, the complaint alleges that on May 17, 2001, OCA and OrthAlliance, Inc. ("OrthAlliance") announced that the parties had entered into a definitive merger agreement, whereby a wholly owned subsidiary of OCA would merge into OrthAlliance in a stock-for-stock transaction, with OrthAlliance becoming a wholly owned subsidiary of OCA. Following the May 17, 2001 announcement, a number of OrthAlliance's affiliated practices filed lawsuits against OrthAlliance and/or notified OrthAlliance that it was in default under their service, management service, and consulting agreements, in response to which OrthAlliance engaged outside counsel to represent its interests.
The complaint also alleges that after the announcement of the completed merger on November 9, 2001, OCA set forth an integration plan with respect to OrthAlliance affiliated practices. The integration plan, however, was not proceeding "very, very well" as articulated by defendants. In fact, several other OrthAlliance affiliated practices, in addition to the practices that filed lawsuits, discontinued paying their services fees under their service, management service, and consulting agreements; while at the same time, OCA continued to recognize revenue it allegedly received from such fees.
The complaint further alleges that the statements disseminated by defendants during the Class Period and with respect to the financial well-being of the Company were each materially false and misleading because OCA failed to disclose and indicate that the integration of OrthAlliance practices was not proceeding as had indicated by the defendants, which, in turn, caused the Company to experience less profit generation because (1) not only had some OrthAlliance practices sued but other OrthAlliance practices had discontinued paying their services fees; (2) because the Company continued to recognize revenue from the services from OrthAlliance practices that were in litigation and from those that had stopped paying their service fees; (3) because the defendants mischaracterized that only "some doctors" had stopped paying their service fees, which only created "a little noise" for the Company when in fact the magnitude of the problem, which OCA was required to report, was greater than reported; (4) because the Company was recognizing revenue in violation of the Generally Accepted Accounting Principles ("GAAP"); and (5) because the defendants were actively concealing these facts in order to manipulate the Company's earnings outlooks in order to maintain its favorable stock prices.
The complaint additionally alleges that following the close of the markets on March 18, 2003, OCA issued a press release announcing its year-end earnings for 2002 wherein the Company reported that earnings and fee revenue were down from the previous year. The decline in fee revenue resulted from numerous OrthAlliance affiliated practices that discontinued paying fees required under their service, management service, and consulting agreements in 2002.
Market reaction to these revelations was swift. Immediately following the announcement on March 19, 2003, shares of the Company fell $3.93, or 41 percent, to close at $5.64, from a closing price of $9.57 per share on March 18, 2003.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered in excess of a billion dollars on behalf of institutional and high net worth individual investors. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com/currentcases.cfm.
If you are a member of the class described above, you may, not later than June 23, 2003, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.