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WALNUT CREEK, Calif., Aug. 21 /PRNewswire-FirstCall/ -- BriteSmile, Inc. (NASDAQ:BSML), a leading provider of state-of-the-art teeth-whitening systems, today released results for the second quarter ended July 1, 2006. The results of BriteSmile's continuing operations for the second quarter 2006 and all prior comparative quarters presented in this report reflect the results of BriteSmile's 17 whitening centers, retail product sales, supporting overhead, and related assets and liabilities ("Centers Business"). The Centers Business was reclassified to continuing operations from its treatment in the first quarter as a discontinued operation due to the termination of the agreement to sell the Centers Business in May. BriteSmile intends to continue operating its whitening centers. Discontinued operations presented in this report for all earlier comparative periods reflect the results of the Associated Centers business that was sold to Discus Dental, Inc. in March 2006. Total revenue for the second quarter of 2006 was $7.8 million, up 52% compared to $5.1 million in the second quarter of 2005. The net loss in the second quarter of 2006 was $774,000 or $(0.07) per share. This compares to a net loss of $6.8 million or $(0.65) per share in the second quarter of 2005. EBITDA (earnings before interest, tax, depreciation, and amortization) for the second quarter ended July 1, 2006 was a negative $1.4 million, compared to a negative EBITDA of $2.6 million in the second quarter of 2005. Excluding approximately $2.2 million of post-close costs related to the sale of the Associated Centers business and costs related to the Company's legal claims, BriteSmile achieved an adjusted positive EBITDA of approximately $800,000 on its continuing Centers Business in the second quarter of 2006. 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. "I am very pleased with the excellent performance of our whitening centers in the second quarter," said John Reed, CEO of BriteSmile. "Total whitening procedures performed in our 17 centers increased by 84% in the second quarter of 2006 compared to a year ago. This sales increase reflects a very strong response to our procedure price reduction to $399 at the end of the first quarter, as well as the addition of two spas since June of last year. At the same time, we were able to significantly improve our advertising productivity as we reduced advertising expense by approximately 60% compared to the spend level in the second quarter of last year. We have also streamlined the spa operating expenses which, combined with the higher revenue levels, have improved the cash contribution of all spas. Looking forward, BriteSmile will continue to drive the Centers Business through advertising, promotions, and other retail strategies to maximize the performance of BriteSmile," said Mr. Reed. BriteSmile will not have an earnings conference call this quarter. Please consult the Company's second quarter Form 10-Q filed with the SEC for more information regarding second quarter 2006 results. BriteSmile markets the most advanced teeth whitening technology available through 17 state-of-the-art BriteSmile Professional Teeth Whitening Centers. BriteSmile Centers are currently operating in Beverly Hills, Irvine, Palo Alto, Walnut Creek, San Francisco and La Jolla, CA; Houston, TX; Denver, CO; Boston, MA; McLean, VA; Atlanta, GA; New York, NY; Chicago and Schaumburg, IL; and, Phoenix, AZ. 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 successfully and profitably operate the Spa Center business. 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 historically incurred by the Company in its operating results ($1.2 million in first half 2005 and $0.8 million in first half 2006), (ii) the non-cash amortization of the discount on debt of $0.7 million in the second quarter of 2005, and (iii) the second quarter results for 2006 included approximately $1.3 million of gain from the settlement of the Procter and Gamble legal claim. Investors are cautioned that the items excluded from EBITDA are significant components in understanding and assessing BriteSmile's financial performance. BRITESMILE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands, except share data) July 1, 2006 Dec. 31, 2005 ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents $5,432 $5,518 Trade accounts receivable, net 709 113 Inventories 742 375 Assets held for sale - 12,214 Prepaid expenses and other 503 1,159 Total Current Assets 7,386 19,379 Property and equipment, net 5,007 5,847 Investments, restricted as to use 12,250 1,466 Other assets 924 1,150 TOTAL ASSETS $25,567 $27,842 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,449 $3,695 Accrued liabilities 10,904 7,533 Accrual for Center closures 189 403 Gift certificate liability 1,245 1,235 Smile Forever - Deferred Revenue 1,306 1,197 Liabilities held for sale - 803 Accrued interest due to a related party - 264 Long-term debt with related party - current portion - 6,024 Convertible debt - current portion - 6,828 Convertible debt with a related party -- current portion - 621 Financial instruments related to convertible debt -- current portion - 9 Capital lease obligations with related parties -- current portion - 73 Total Current Liabilities 15,093 28,685 LONG TERM LIABILITIES: Accrual for Center closures 344 242 Smile Forever Deferred Revenue 549 313 Other Long Term Liabilities 973 1,053 Total Long-term Liabilities 1,866 1,608 Total Liabilities 16,959 30,293 SHAREHOLDERS' EQUITY Common stock, $.001 par value 38 38 Preferred Stock, no par value - - Additional paid-in capital 173,491 173,340 Accumulated Deficit (164,921) (175,829) Total shareholders' equity (deficit) 8,608 (2,451) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $25,567 $27,842 BriteSmile, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands Except Share Data) 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended July 1, June 25, July 1, June 25, 2006 2005 2006 2005 REVENUES: Center whitening fees, net $6,430 $4,149 $10,943 $8,580 Product and other revenue (incl. Smile Forever) 1,330 953 2,852 1,826 Total revenues, net $7,760 $5,102 $13,795 $10,406 OPERATING COSTS AND EXPENSES: Operating and occupancy costs 3,663 3,620 7,001 6,702 Selling, general and administrative expenses 5,477 3,975 9,374 7,926 Research and development expenses 45 74 90 341 Total Operating Expense before depreciation & amortization 9,185 7,669 16,465 14,969 Operating Income/(Loss) before depreciation & amortization $(1,425) $(2,567) $(2,670) $(4,563) (EBITDA) Depreciation and amortization 714 591 821 1,161 Gain/(Loss) from Continuing Operations (2,139) (3,159) (3,491) (5,723) OTHER INCOME/(EXPENSES): Amortization of discount on debt - (663) (530) (1,300) Loss on early extinguishment of debt - - (5,039) - Gain/(Loss) on mark-to-market of convertible note instruments - (99) - 2,631 Gain on settlement of legal claim 1,257 - 1,257 - Other income/(expense), net 119 (517) (845) (725) Gain/(Loss) from Continuing Operations before income tax (763) (4,438) (8,648) (5,117) INCOME TAX 11 25 46 121 Net Income/(loss) from Continuing Operations $(774) $(4,463) $(8,694) $(5,239) Gain/(Loss) from Discontinued Operations, net of tax $- $(2,341) $19,602 $(4,753) Net Income/(Loss) $(774) $(6,804) $10,908 $(9,992) BASIC/DILUTED NET LOSS PER SHARE FOR CONTINUING OPERATIONS $(0.07) $(0.42) $(0.82) $(0.50) BASIC/DILUTED NET INCOME/(LOSS) PER SHARE FOR DISCONTINUED OPERATIONS $- $(0.23) $1.85 $(0.45) BASIC/DILUTED NET INCOME/(LOSS) PER COMMON SHARE $(0.07) $(0.65) $1.03 $(0.95) WEIGHTED AVERAGE SHARES -- BASIC 10,549,423 10,548,621 10,549,277 10,519,416 WEIGHTED AVERAGE SHARES -- DILUTED 10,549,423 10,548,621 10,558,949 10,519,416 Reconciliation of EBITDA to Net Income: 13 weeks 13 weeks 26 weeks 26 weeks ended ended ended ended July 1, June 25, July 1, June 25, 2006 2005 2006 2005 Net Income/(loss) from Continuing Operations $(774) $(4,463) $(8,694) $(5,239) Add back: Loss on early extinguishment of debt $- $- 5,039 $- Add back: (Other income)/ expense, net $(119) $517 $845 $725 Add back: Amortization of debt discount $- $663 $530 $1,300 Add back: Income tax expense $11 $25 $46 $121 Add back: Depreciation and amortization $714 $591 $821 $1,161 Gain/loss on legal settlement (1,257) - (1,257) - (Gain)/loss from mark-to-market of financial instruments related to convertible debt $- $99 $- $(2,631) EBITDA $(1,425) $(2,567) $(2,670) $(4,563) DATASOURCE: BriteSmile, Inc. CONTACT: investors, Kenneth A. Czaja, CFO of BriteSmile, Inc., +1-925-979-2658 Web site: http://www.britesmile.com/

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