BriteSmile Reports 2005 Results

WALNUT CREEK, Calif., April 17  /PRNewswire-FirstCall/ -- BriteSmile, Inc. (NASDAQ:BSML), a leading provider of state-of-the-art teeth-whitening systems, today released results for the quarter and year ended December 31, 2005. BriteSmile (the "Company") determined to sell its business operations in 2005. The Company sold its Associated Center business in March 2006 and signed an agreement in January 2006 to sell its Center business, which it expects to close in April 2006.  As a result of the Company's determination to sell its operations, the financial information included in this release is presented in two different formats.  First, it is presented on a continued operations basis reflecting a full operating statement and balance sheet consistent with the presentation of prior quarters in 2005. Second, it is presented on a discontinued operations basis, reflecting all revenue and associated operating expenses condensed into gain or loss from discontinued operations, as well as assets and liabilities held for sale on the balance sheet. The discontinued operations basis is disclosed and explained fully in the Company's Form 10-K recently filed with the Securities and Exchange Commission.

The following paragraphs summarize the results for the fourth quarter and full year of 2005 on a continuing operations basis. It should be noted that there were 14 weeks and 53 weeks, respectively, in the Company's fiscal fourth quarter and full year 2005, compared to 13 weeks and 52 weeks in 2004. The additional week in 2005 resulted from the Company's accounting policy to end the fiscal year on the last Saturday of each year.

Total revenue for the fourth quarter of 2005 was $10.2 million, up 6% compared to $9.6 million in the fourth quarter of 2004.  The net loss in the quarter was $(3.3) million or $(0.31) per share, compared with a loss of $(3.3) million or $(0.32) in the same quarter last year.

Earnings in the fourth quarter of 2005, before interest, tax, depreciation, and amortization (EBITDA), were $(0.7) million.  This compares to an EBITDA of $(2.4) million in the fourth quarter of 2004. EBITDA is a non- GAAP financial measure.  It reflects operating income excluding depreciation and amortization of approximately $1.6 million and $1.7 million in the fourth quarter of 2005 and 2004, respectively. More information regarding this non- GAAP financial measure, and a reconciliation of EBITDA to net loss, the most directly comparable GAAP measure, is provided below.

Total revenue for fiscal year 2005 was $40.0 million, down 13% compared to $46.0 million in 2004.

The net loss in fiscal year 2005 was $(17.8) million or $(1.69) per share, compared with a loss of $(7.8) million or $(0.76) per share in 2004.

EBITDA in fiscal year 2005 was $(11.1) million.  This compares to an EBITDA of $(1.2) million in 2004. EBITDA in 2005 and 2004 reflects operating income excluding depreciation and amortization of approximately $6.5 million and $6.8 million, respectively.

BriteSmile will not have an earnings conference call this quarter. Please consult the Company's Form 10-K recently filed with the SEC for more information regarding 2005 results and the recent events related to the sale of BriteSmile's businesses.

This release, other than historical information, consists of forward- looking statements that involve risks and uncertainties such as the Company's ability to close the sale of its Center division. Readers are referred to the documents filed by BriteSmile with the Securities and Exchange Commission, specifically the Company's most recent reports on Forms 10-K and 10-Q, that identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. BriteSmile and its affiliates disclaim any intent or obligation to update these forward-looking statements.

Non-GAAP Financial Information

BriteSmile provides non-GAAP EBITDA or earnings before interest, taxes, depreciation and amortization as additional information for its operating results. These measures are not in accordance with, or an alternative for financial measures calculated in accordance with generally accepted accounting principles, including net income or loss, the most directly comparable GAAP measure, and may be different from non-GAAP measures used by other companies. BriteSmile's management believes this non-GAAP measure is useful to investors because of: (i) the significant amount of non-cash depreciation and amortization incurred by the Company in its operating results ($6.5 million in 2005 and $6.8 million in 2004) and (ii) a mark-to-market gain in financial instruments relating to the December 2004 convertible debt offering is a significant non-operating and non-cash impact on earnings (mark-to-market gains were $3.8 million in 2005 and $1.1 million in 2004).  Investors are cautioned that the items excluded from EBITDA are significant components in understanding and assessing BriteSmile's financial performance.

                             BriteSmile, Inc.
           Condensed Consolidated Statements of Operations Data
                       Continuing Operations Basis
                               (unaudited)
                   ($ in thousands, except share data)

                               14 Weeks    13 Weeks    53 Weeks   52 Weeks
                                 Ended       Ended       Ended      Ended
                                 Dec 31,     Dec 25,     Dec 31,    Dec 25,
                                  2005        2004        2005       2004
  REVENUES:
    Center whitening fees, net   $4,675      $3,517     $17,434     $17,107
    Associated Center whitening
     fees, net                    3,889       4,473      16,741      21,081
    Product and other revenue     1,629       1,602       5,821       7,781
      Total revenues, net        10,193       9,592      39,995      45,969

  OPERATING COSTS AND EXPENSES:
    Operating and occupancy
     costs                        4,325       4,696      18,078      17,361
    Selling, general and
     administrative expenses      6,570       7,259      32,719      29,360
    Research and development
     expenses                        45          59         266         484
      Total Operating Costs and
       Expenses, excluding
       depreciation and
       amortization              10,940      12,014      51,064      47,205

    Operating income (loss)
     before depreciation and
     amortization (EBITDA)         (747)     (2,422)    (11,069)     (1,236)

    Depreciation and
     amortization                 1,627       1,708       6,498       6,750
      Loss from operations       (2,374)     (4,130)    (17,567)     (7,986)

    Gain (loss) on mark-to-
     market of convertible
     note instruments                18       1,060       3,811       1,060
    Other income/(expense), net    (938)       (265)     (3,864)       (799)
      Loss before income tax
       provision                 (3,294)     (3,335)    (17,620)     (7,725)

  INCOME TAX                          1           6         152          95

      Net loss                  $(3,295)    $(3,341)   $(17,772)     (7,820)

  BASIC AND DILUTED NET LOSS
   PER SHARE                     $(0.31)     $(0.32)     $(1.69)     $(0.76)

  WEIGHTED AVG SHARES - BASIC
   AND DILUTED               10,549,130  10,339,294  10,534,553  10,291,714


                             BRITESMILE, INC.
    Reconciliation of Non-GAAP financial measures - EBITDA to Net Loss
                       CONTINUING OPERATIONS BASIS
                               (unaudited)
                             ($ in thousands)

                                      14 Weeks 13 Weeks  53 Weeks  52 Weeks
                                        Ended    Ended     Ended     Ended
                                        Dec 31,  Dec 25,   Dec 31,   Dec 25,
                                         2005     2004      2005      2004

  Net loss                              $(3,295) $(3,341) $(17,772) $(7,820)
  Add back:  Other expense, net             938      265     3,864      799
  Add back:  Income tax expense               1        6       152       95
  Add back:  Depreciation and
   amortization                           1,627    1,708     6,498    6,750
  Gain from mark-to-market of
   financial instruments related to
   convertible debt                         (18)  (1,060)   (3,811)  (1,060)
  EBITDA                                  $(747) $(2,422) $(11,069) $(1,236)


                             BRITESMILE, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                               (unaudited)
                   ($ in thousands, except share data)

                                              December 31,      December 25,
                                                  2005               2004
                         ASSETS

  CURRENT ASSETS:
    Cash and cash equivalents                     $5,518           $18,880
    Trade accounts receivable                      1,675             2,118
    Inventories                                      916             1,635
    Prepaid expenses and other                     1,296               704
      Total current assets                         9,405            23,337

  PROPERTY AND EQUIPMENT, net                     10,250            12,426

  OTHER ASSETS                                     3,371             3,843

  INTANGIBLES, net                                 4,816             5,469

  TOTAL ASSETS                                   $27,842           $45,075

            LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                              $3,693            $5,182
    Accrued liabilities                            9,495             6,867
    Deferred revenue                               2,252             1,049
    Current portion of long-term debt and
     capital lease obligations                    14,585             3,062
       Total current liabilities                  30,025            16,160

  LONG-TERM LIABILITIES:
    Long-term debt and capital lease
     obligations                                      --            15,650
    Other long term liabilities                      268               683
      Total long-term liabilities                    268            16,333

      Total liabilities                           30,293            32,493

  STOCKHOLDERS' EQUITY:
    Common stock                                      38                38
    Additional paid-in capital                   173,340           170,601
    Accumulated deficit                         (175,829)         (158,057)
      Total shareholders' equity                  (2,451)           12,582

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $27,842           $45,075


                             BRITESMILE, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
                      DISCONTINUED OPERATIONS BASIS
                               (unaudited)
                   ($ in thousands, except share data)

                                                53 Weeks         52 Weeks
                                                  Ended            Ended
                                                  Dec 31,          Dec 25,
                                                   2005             2004
  REVENUES:
    Center whitening fees, net                      $--              $--
    Associated Center whitening fees, net            --               --
    Product and other revenue                        --               --
      Total revenues, net                            --               --

  OPERATING COSTS AND EXPENSES:
    Operating and occupancy costs                    --               --
    Selling, general and administrative expenses  8,410            8,288
    Research and development expenses               266              484
    Depreciation and amortization                   809              876
      Total Operating Costs and Expenses          9,485            9,648

    Gain (loss) on mark-to-market of convertible
     note instruments                             3,811            1,060
    Other income/(expense), net                  (3,992)            (884)

      Loss from continuing operations before
       income tax                                (9,665)          (9,472)

  INCOME TAX                                        152               95

      Net loss from continuing operations       $(9,817)          (9,567)

  Income (Loss) from discontinued operations,
   net of tax                                    (7,955)           1,747

  NET LOSS ATTRIBUTABLE TO COMMON
   SHAREHOLDERS                                $(17,772)         $(7,820)

  BASIC AND DILUTED NET LOSS PER SHARE FOR
   CONTINUING OPERATIONS                         $(0.93)          $(0.93)

  BASIC AND DILUTED NET LOSS PER SHARE FOR
   DISCONTINUED OPERATIONS                       $(0.76)           $0.17 1)

  BASIC AND DILUTED NET LOSS PER COMMON SHARE    $(1.69)          $(0.76)

  WEIGHTED AVERAGE SHARES - BASIC            10,534,553       10,291,714

  WEIGHTED AVERAGE SHARES - DILUTED          10,534,553       11,073,098

  1) In 2004, the gain per common share for the discontinued operation was
     $0.17 for basic earnings per share and $0.16 for diluted earnings per
     share.


                             BRITESMILE, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                      DISCONTINUED OPERATIONS BASIS
                               (unaudited)
                   ($ in thousands, except share data)

                                               December 31,     December 25,
                                                   2005             2004
                         ASSETS

  CURRENT ASSETS:
    Cash and cash equivalents                     $5,504           $18,880
    Assets held for sale                          19,213            22,478
    Prepaid expenses and other                       750               638
      Total current assets                        25,467            41,996

  PROPERTY AND EQUIPMENT, net                        629               648

  OTHER ASSETS                                       280             1,102

  INVESTMENTS, RESTRICTED AS TO USE                1,466             1,329

  TOTAL ASSETS                                   $27,842           $45,075


            LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                              $3,598            $5,027
    Accrued liabilities                            7,527             5,315
    Accrual for store closures                       403               155
    Liabilities held for sale                      4,678             3,526
    Accrued interest due to a related party          264                --
    Long-term debt with related party - current
     portion                                       6,024               100
    Convertible debt - current portion             6,828                --
    Convertible debt with related party - current
     portion                                         621                --
    Financial instruments related to convertible
     dept - current portion                            9               432
    Capital lease obligation with related party
     - current portion                                73             1,605
       Total current liabilities                  30,025            16,160

  LONG-TERM LIABILITIES:
    Long-term debt and capital lease obligations      --            15,650
    Other long term liabilities                      268               683
      Total long-term liabilities                    268            16,333

      Total liabilities                           30,293            32,493

  STOCKHOLDERS' EQUITY:
    Common stock                                      38                38
    Additional paid-in capital                   173,340           170,601
    Accumulated deficit                         (175,829)         (158,057)
      Total shareholders' equity                  (2,451)           12,582

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $27,842           $45,075


DATASOURCE: BriteSmile, Inc.



CONTACT:  investors, Kenneth A. Czaja, CFO of BriteSmile, Inc.,

[phone]



Web site:  http://www.britesmile.com/ 

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