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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., +1-925-941-6260 Web site: http://www.britesmile.com/

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