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BriteSmile Reports Third Quarter Results

WALNUT CREEK, Calif., Nov. 8 /PRNewswire-FirstCall/ -- BriteSmile, Inc. (Nasdaq: BSML), a leading international provider of state-of-the-art teeth- whitening systems, today released results for the quarter ended September 25, 2004.

Total revenues increased by $0.5 million, or 4%, to $11.9 million for the third quarter ended September 25, 2004, from $11.4 million in the third quarter of 2003.

The net loss was $(2.5) million or $(0.24) per share in the third quarter compared with $(4.8) million or $(0.70) per share in 2003 (both per share numbers reflect the 5:2 stock split which was effective January 30, 2004).

Earnings before interest, tax, depreciation, and amortization (EBITDA) was $0.2 million in the third quarter 2004, excluding a $0.75 million non-cash charge to BriteSmile's income statement required under accounting rules for certain consulting work initiated and paid for by a principal stockholder, a related party. This compares to an EBITDA of $(2.8) million in the third quarter of last year. EBITDA is a Non-GAAP financial measure. 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.

Other key financial highlights for the third quarter were:

• Center whitening fees of $4.3 million were 6% lower than last year, primarily because of recent consumer market conditions.

• Associated Center whitening fees of $5.6 million were 5% higher than 2003.

• Product sales of $1.9 million were 31% higher than last year, primarily due to sales of the BriteSmile-to-Go(TM) (BTG) take-home whitening pen which was launched in the third quarter of 2003.

"We continue to be pleased by our positive cash earnings in the third quarter, and in the achievement of our revenue guidance for the quarter," said Anthony Pilaro, Chairman and acting CEO. "We also look forward to opening our new spas, starting in the fourth quarter of this year. The Woodfield, Illinois spa outside Chicago is planned to open by the end of November, while the previously announced Shorthills, New Jersey project has been canceled due to zoning issues. Additionally, we are pleased to announce that we have recently signed leases to open 2 more spas by the beginning of the second quarter of 2005: on Madison Avenue in New York City, and on Union Square in San Francisco."

"However," continued Mr. Pilaro, "we experienced a decline in revenues in October which we believe is attributable to a temporary softening in overall retail consumer demand."

With respect to forward guidance, fourth quarter revenues are anticipated to decline both on a sequential and year-over-year basis, due to the demand softness experienced in the first part of the quarter, as well as significant initial shipments of BriteSmile-To-Go in the fourth quarter of last year.

BriteSmile has developed and manufactures the most advanced teeth whitening technology available, as well as manages state-of-the-art BriteSmile Professional Teeth Whitening Centers. BriteSmile Centers are currently operating in Beverly Hills, Irvine, Palo Alto, Walnut Creek and La Jolla, CA; Houston, TX; Denver, CO; Boston, MA; Boca Raton, FL; Atlanta, GA; New York, NY; Chicago, IL; and, Phoenix, AZ. In addition to BriteSmile Centers, the Company has established more than 5,000 Associated Centers. Of the BriteSmile Associated Centers, more than 2,000 are located outside of the United States, in more than 75 countries. For more information about BriteSmile's procedure, call 1-800-BRITESMILE or visit the Company's Website at http://www.britesmile.com .

This release, other than historical information, consists of forward- looking statements that involve risks and uncertainties such as the Company's ability to continue past revenue and EBITDA growth, its ability to establish Associated Centers and Professional Teeth Whitening Centers, the ability of those Centers to attract clients, the development and introduction of new products, acceptance of those new products in the marketplace, development of new strategic and marketing relationships in the United States and internationally, and the Company's continued ability to secure financing to support its expansion. 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 these non-GAAP measures are useful to investors because of the significant amount of non-cash depreciation and amortization incurred by the Company in its operating results ($1.7 million in the third quarter of both 2004 and 2003), and the identified Q3 2004 adjustment of $0.75 million for consulting services would not have been incurred by the Company if not paid for by the related party. 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 (unaudited) ($ in thousands, except share data) 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended September September September September 25, 2004 27, 2003 25, 2004 27, 2003 REVENUES: Center whitening fees, net $ 4,346 $ 4,616 $ 13,590 $ 11,985 Associated Center whitening fees, net 5,646 5,387 16,608 15,937 Product sales 1,884 1,434 6,179 3,470 Total revenues, net 11,876 11,437 36,377 31,392 OPERATING COSTS AND EXPENSES: Operating and occupancy costs 4,491 5,013 12,665 12,849 Selling, general and administrative expenses 7,099 8,779 21,355 21,961 Research and development expenses 110 403 425 772 Operating income (loss) before depreciation and amortization (EBITDA) excluding related party, non-cash charge 176 (2,758) 1,932 (4,190) Related party, non-cash charge 746 --- 746 --- Depreciation and amortization 1,692 1,688 5,042 4,883 Loss from operations (2,262) (4,446) (3,856) (9,073) OTHER INCOME (EXPENSE), net (214) (331) (534) (670) Loss before income tax provision (2,476) (4,777) (4,390) (9,743) INCOME TAX 32 --- 89 4 Net loss $ (2,508) $ (4,777) $ (4,479) $ (9,747) BASIC AND DILUTED NET LOSS PER SHARE $ (0.24) $ (0.70) $ (0.44) $ (1.54) WEIGHTED AVERAGE SHARES -- BASIC AND DILUTED 10,329,190 6,796,368 10,275,854 6,342,383 Reconciliation of Non-GAAP financial measures - EBITDA to Net Loss (unaudited) ($ in thousands) 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended September September September September 25, 2004 27, 2003 25, 2004 27, 2003 Net loss $ (2,508) $ (4,777) $ (4,479) $ (9,747) Add back: Interest expense, net 214 331 534 670 Add back: Income tax expense 32 - 89 4 Add back: Depreciation and amortization 1,692 1,688 5,042 4,883 EBITDA (570) (2,758) 1,186 (4,190) Add back: Related party, non-cash charge 746 - 746 - EBITDA excluding related party, non-cash charge $ 176 $ (2,758) $ 1,932 $ (4,190) BRITESMILE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ($ in thousands, except share data) September 25, December 27, 2004 2003 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,274 $ 5,884 Trade accounts receivable, net of allowances of $391 and $467, respectively 2,342 3,554 Inventories 2,028 1,746 Prepaid expenses and other 456 569 Total current assets 13,100 11,753 PROPERTY AND EQUIPMENT, net 13,352 16,523 OTHER ASSETS 3,925 3,620 INTANGIBLES, net 5,631 6,120 TOTAL ASSETS $ 36,008 $ 38,016 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,430 $ 7,173 Accrued liabilities 6,385 6,884 Deferred revenue 740 597 Current portion of long-term debt and capital lease obligations 3,655 3,800 Total current liabilities 15,210 18,454 LONG TERM LIABILITIES: Long-term debt and capital lease obligations 3,626 5,294 Other long-term liabilities 1,435 1,644 Total long-term liabilities 5,061 6,938 Total liabilities 20,271 25,392 SHAREHOLDERS' EQUITY: Common stock, $.001 par value; 50,000,000 shares authorized; 10,332,899 and 9,525,265 shares issued and outstanding, respectively 38 38 Additional paid-in capital 170,413 162,823 Accumulated deficit (154,714) (150,237) Total shareholders' equity 15,737 12,624 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,008 $ 38,016

SOURCE BriteSmile, Inc.
11/08/2004
CONTACT: Investors: Kenneth A. Czaja, CFO of BriteSmile, Inc., +1-925-941-6260; or Media: Kelly Sullivan, +1-212-515-1908, for BriteSmile, Inc.
Web site: http://www.britesmile.com