Edgar Filing: ORTHODONTIC CENTERS OF AMERICA INC /DE/

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark one)

[x] Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No fee required)

For the fiscal year ended December 31, 2001

[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required)

For the transition period from _________________ to _________________.

Commission file number: 001-13457

ORTHODONTIC CENTERS OF AMERICA, INC. 401(k) PROFIT SHARING PLAN
---------------------------------------------------------------
(Full title of the plan and the address of the plan,
if different from that of the issuer listed below)

ORTHODONTIC CENTERS OF AMERICA, INC.
3850 N. CAUSEWAY BOULEVARD, SUITE 800
METAIRIE, LOUISIANA 70002
-------------------------
(Name of the issuer of the securities held
pursuant to the plan and the address of
its principal executive office)

REQUIRED INFORMATION

Page

Report of Independent Auditors...................................................................................3

Audited Financial Statements:

Statements of Net Assets Available for Benefits at December 31, 2001 and 2000....................................4

Statements of Changes in Net Assets Available for Benefits for the years ended
December 31, 2001 and 2000..................................................................................5

Notes to Financial Statements, December 31, 2001.................................................................6

Supplemental Schedules:

Schedule G, Part III -- Schedule of Nonexempt Transactions......................................................10

Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)...............................................11

Exhibits:

Exhibit 23 -- Consent of Independent Auditors...................................................................14

Report of Independent Auditors

The Plan Administrator
Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

We have audited the accompanying statements of net assets available for benefits
of Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan as of
December 31, 2001 and 2000, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan'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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.

Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
(held at end of year) as of December 31, 2001 and nonexempt transactions for the
year then ended are presented for purposes of additional analysis and are not a
required part of the financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management. The
supplemental schedules have been subjected to the auditing procedures applied in
our audits of the financial statements and, in our opinion, are fairly stated in
all material respects in relation to the financial statements taken as a whole.

/s/ Ernst & Young LLP

June 24, 2002

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Statements of Net Assets Available for Benefits at December 31, 2001 and 2000

DECEMBER 31,
-----------------------------
2001 2000
------------- -------------

Assets
Investments, at fair value:
Common collective trust funds ............... $ 4,283,834 $ 3,749,134
Mutual fund ................................. 1,393,030 1,191,721
Employer security ........................... 306,851 235,153
------------- -------------
Total investments ................................ 5,983,715 5,176,008

Contributions receivable:
Participants ................................ 53,318 74,214
Employer .................................... 6,128 8,443
------------- -------------
Total contributions receivable ................... 59,446 82,657
------------- -------------
Net assets available for benefits ................ $ 6,043,161 $ 5,258,665
============= =============

See accompanying notes.

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Statements of Changes in Net Assets Available for Benefits for the years ended
December 31, 2001 and 2000

YEAR ENDED DECEMBER 31,
--------------------------------
2001 2000
-------------- --------------

ADDITIONS
Investment income:
Net depreciation in fair value of common collective trust funds ........... $ (121,713) $ (65,708)

Net depreciation in fair value of mutual fund ............................. (162,469) (59,070)
Net appreciation in fair value of employer security ....................... 8,510 110,199
-------------- --------------
(275,672) (14,579)
Contributions:
Participants .......................................................... 1,459,168 1,218,785
Employer, net of forfeitures .......................................... 294,141 255,452
-------------- --------------
1,753,309 1,474,237

Rollovers from other plans ................................................ 90,288 352,597
-------------- --------------
Total additions ........................................................... 1,567,925 1,812,255

DEDUCTIONS
Benefit payments .......................................................... 783,429 733,482
-------------- --------------
Net increase .............................................................. 784,496 1,078,773

Net assets available for benefits:
Beginning of year ..................................................... 5,258,665 4,179,892
-------------- --------------

End of year ........................................................... $ 6,043,161 $ 5,258,665
============== ==============

See accompanying notes.

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Notes to Financial Statements
December 31, 2001

1. DESCRIPTION OF THE PLAN

The following description of the Orthodontic Centers of America, Inc. 401(k)
Profit Sharing Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.

GENERAL

The Plan is a defined contribution plan covering employees of Orthodontic
Centers of America, Inc. (the "Company") who have attained the age of 21 and one
year of service. Orthodontists, pediatric dentists, general dentists and leased
employees are not eligible to participate in the Plan. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

CONTRIBUTIONS

Each year, participants may contribute up to 15% of their total compensation.
Matching contributions by the Company are discretionary. The matching
contribution for 2001 and 2000 was 40% of each participant's contribution,
limited to $600. In addition to matching contributions, the Company may make
additional discretionary contributions, although it made no such contributions
in 2001 or 2000.

INVESTMENT OPTIONS

Upon enrollment in the Plan, a participant may direct employer and employee
contributions in any of ten investment options: (1) Stable Portfolio Group
Trust, (2) Enhanced Stock Market Fund, (3) Evergreen Select Balanced Fund, (4)
Fidelity Advisors Equity Growth Fund, (5) Investment Company of America Fund,
(6) Janus Advisor Worldwide Growth Fund, (9) Fidelity Advisors Intermediate Bond
and (10) Orthodontic Centers of America, Inc. Stock Fund (employer security).

VESTING

Participants vest immediately in their contributions. Participants vest in the
Company's contributions after five years of service.

BENEFIT PAYMENTS

Upon retirement, termination of employment with the Company, or death,
participants or their beneficiaries receive the total balance of their accounts
in the form of a lump-sum payment. A participant may withdraw all or a portion
of his account in the event of financial hardship, as defined in the Plan.

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Notes to Financial Statements

1. DESCRIPTION OF THE PLAN (CONTINUED)

PRIORITIES UPON TERMINATION

Although the Company has not expressed any intent to do so, the Company may
discontinue its contribution or the Plan may be terminated subject to the
provisions of ERISA at the Company's option. If the Plan should be terminated,
the net assets available for plan benefits shall be liquidated. Amounts credited
to the accounts of participants shall become fully vested and nonforfeitable as
of the date of such termination.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The financial statements of the Plan are prepared on the accrual basis of
accounting in accordance with accounting standards generally accepted in the
United States. Benefits are recorded when paid.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes and schedules. Actual results could differ from those
estimates.

INVESTMENTS

The Plan's funds are invested in common collective trust funds and mutual funds
for which the trustee and custodian is Wachovia Bank, National Association
(formerly known as First Union National Bank of North Carolina) ("Wachovia").
The Plan also invests in the Company's common stock, which is held in a separate
Common Stock Trust. The trustee of the Common Stock Trust is a representative of
the Company, and the custodian is Wachovia. Investments in common collective
trust funds are carried at the Plan's pro rata interest in the fair value of the
fund's net assets, as determined by the custodian on the last business day of
the year. Investments in the mutual funds and the Company's common stock are
valued at quoted market prices on the last business day of the year.

ADMINISTRATIVE EXPENSES

The Company pays all of the administrative costs of the Plan.

FORFEITURES

Forfeitures are used to reduce employer contributions in the year following the
forfeiture. As of December 31, 2001 and 2000, there were approximately $32,200
and $47,800, respectively, of forfeited nonvested accounts

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Notes to Financial Statements

3. INVESTMENTS

The following table represents participant-directed investments that represent
5% or more of the Plan's net assets.

DECEMBER 31,
---------------------------------
2001 2000
--------------- ---------------

Wachovia Bank, National Association - Enhanced Stock Market Fund .......... $ 1,485,123 $ 1,925,250
Wachovia Bank, National Association - Stable Group Trust
Portfolio ............................................................ 2,798,711 1,823,884
Evergreen Select Balanced Fund ............................................ 1,001,008 1,191,721
Orthodontic Centers of America, Inc. - Common Stock ....................... 306,851 235,153

4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits at
December 31, 2001 per the financial statements to the Form 5500:

DECEMBER 31,
----------------------------------
2001 2000
--------------- ---------------

Net assets available for benefits per the financial statements ................. $ 6,043,161 $ 5,258,665
Less amounts recorded as contributions receivable .............................. (59,446) (82,657)
--------------- ---------------
Net assets available for benefits per the Form 5500 ............................ $ 5,983,715 $ 5,176,008
=============== ===============

The following is a reconciliation of contributions to the Plan for the year
ended December 31, 2001 per the financial statements to the Form 5500:

Contributions per the financial statements ................................ $ 1,753,309
Less current year contributions receivable ................................ (59,446)
Add prior year contributions receivable ................................... 82,657
---------------
Contributions per the Form 5500 ........................................... $ 1,776,520
===============

Differences between the financial statements and the Form 5500 are due to the
preparation of the financial statements using the accrual basis and the
preparation of the Form 5500 using the cash basis of accounting.

5. INCOME TAX STATUS

The Plan has received a determination letter from the Internal Revenue Service
dated March 16, 1999, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan

is required to operate in conformity with the Code to maintain its
qualification. The plan administrator has indicated that it will take the
necessary steps, if any, to maintain the Plan's qualified status.

6. SUBSEQUENT EVENT

Effective November 9, 2001, the Company entered into a merger with OrthAlliance,
Inc. ("OrthAlliance") whereby OrthAlliance became a wholly-owned subsidiary of
the Company. OrthAlliance sponsored a defined contribution 401(k) plan for
eligible non-highly compensated employees. Participants from the OrthAlliance
plan became eligible to participate in the Company's plan effective January 1,
1002, and their years of service as OrthAlliance employees transferred to the
Company's plan. The Company intends to arrange for the transfer of assets from
the OrthAlliance plan to the Company's plan in 2002.

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Schedule G, Part III -- Schedule of Nonexempt Transactions

EIN: 72-1278948 PN: 001

Year ended December 31, 2001

RELATIONSHIP TO
PLAN, EMPLOYER DESCRIPTION CURRENT NET
IDENTITY OF PARTY INVOLVED OR OTHER OF COST OF VALUE GAIN
PARTY-IN-INTEREST TRANSACTION ASSET* OF ASSET (LOSS)**
---------------------------------- ------------------------------ -------------------------- ------------- ------------ --------

Orthodontic Centers of Employer/Plan Sponsor Failure to timely remit $78,167 $78,602 $435
America, Inc. salary deferrals for the
payroll period
ending March
26, 1999,
April 2, 1999,
May 21, 1999
and May 28,
1999

* Represents the employee contributions which were not remitted timely.

** Represents interest for the use of the amount involved. The Company is in the
process of filing Form 5330 with the IRS in connection with this transaction.

Orthodontic Centers of America, Inc. 401(k) Profit Sharing Plan

Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)

EIN: 72-1278948 PN: 001

December 31, 2001

IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF CURRENT
LESSOR OR SIMILAR PARTY INVESTMENT VALUE
----------------------------------------------------------------------- ------------------------- --------------------

Common Collective Trust Funds:
*Wachovia Bank, National Association - Enhanced
Stock Market Fund............................. 20,832 units $1,485,123

*Wachovia Bank, National Association - Stable
Portfolio Group Trust......................... 43,370 units 2,798,711

Mutual Funds:
Evergreen Select Balanced Fund.................. 94,257 units 1,001,008

Fidelity Advisor Series I Equity Growth Fund.... 628 units 30,584

American Investment Company of America Fund..... 3,283 units 93,653

Janus Advisor Series Worldwide Fund............. 835 units 24,479

Dreyfus S&P Midcap Index Fund................... 9,015 units 189,846

Putnam OTC Emerging Growth Fund................. 1,554 units 11,657

Fidelity Advisor Intermediate Bond Fund......... 3,768 units 41,803

Employer Security:
*Orthodontic Centers of America, Inc. Common
Stock......................................... 10,896 shares 306,851
----------
$5,983,715
==========

* Indicates party-in-interest to the Plan.

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.

ORTHODONTIC CENTERS OF AMERICA, INC.
401(k) PROFIT SHARING PLAN

June 28, 2002

By: /s/ Susan Gossett
--------------------------------
Wachovia Bank, as Trustee

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
------ -----------

23 Consent of Independent Auditors