WALNUT CREEK, Calif., Aug. 13 /PRNewswire-FirstCall/ -- BSML, Inc.,
formerly known as BriteSmile, Inc., (OTC:BSML) today announced its
financial results for its fiscal second quarter and first half
ended June 30, 2007. For the Company's second quarter ended June
30, 2007, revenues decreased approximately 13%, to $6.8 million,
compared to $7.8 million in the second quarter of 2006. Center
revenues, primarily related to performance of our whitening
procedures, decreased by $1.4 million, with sales of our teeth
whitening products through other channels, primarily the QVC
network, increasing by $0.4 million. The Company's net loss in the
second quarter of 2007 was $0.7 million, or $0.07 per share,
compared to a net loss of $0.8 million, or $0.07 per share in the
second quarter of 2006. The net loss for the second quarter of 2006
included a non-recurring gain on settlement of litigation in the
amount of $1.3 million. For the Company's first half ended June 30,
2007, revenues from continuing operations increased approximately
1%, to $13.9 million, compared to $13.8 million in the first half
of 2006. The Company's net loss from continuing operations in the
first half of 2007 was $1.1 million, or $0.10 per share, compared
to a net loss from continuing operations of $10.1 million, or $0.96
per share, in the first half of 2006. Included in the net loss from
continuing operations for the first half of 2006 are non-recurring
items totaling $5.2 million, including a $5.0 million loss
associated with early extinguishment of debt, $0.5 million expense
for debt discount amortization on now-retired debt, $0.8 million in
other non-recurring or non-operating expenses and the $1.3 million
non-recurring gain on settlement of litigation mentioned above. The
Company does not expect similar non-recurring expenses of this
magnitude in 2007 or future periods. The Company had no income from
discontinued operations in the first half of 2007. However, the
Company's sale of its Associated Centers business in first quarter
of 2006 resulted in reported income from discontinued operations
for the first half of 2006 of $21.0 million, or $1.99 per share.
(Net income from discontinued operations for 2006 was subsequently
revised in the third quarter of 2006 to reflect additional legal
expenses, net of tax, of $1.7 million, resulting in income from
discontinued operations for fiscal 2006, net of tax, of $19.3
million.) The Company's net loss in the first half of 2007 was $1.1
million, or $0.10 per share, compared with net income of $10.9
million, or $1.03 per share, in the first half of 2006. The
Company's EBITDA (defined as earnings before interest, tax,
depreciation, amortization and large non-recurring gains and losses
including income from discontinued operations) for the second
quarter ended June 30, 2007, was a loss of $0.5 million, compared
to a loss of $1.4 million in the second quarter of 2006. For the
first half ended June 30, 2007, the Company's EBITDA was a loss of
$0.6 million, compared to a loss of $4.1 million in the first half
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. Dr. Julian Feneley, BSML's President and Chief
Executive Officer, commented on the Company's results as follows:
"The year over year revenue comparison is impacted by the strong
response in Q2 2006 to the whitening procedure price decrease
announced at that time. However, we remain pleased by a significant
increase in our revenues from distribution of our BriteSmile-To-
Go(TM) product through the QVC network and, despite lower overall
revenues, by a significant improvement in our EBITDA, which was
achieved through marketing and operating expense optimization. In
addition, during the period we reached a satisfactory agreement to
settle the Smile, Inc. litigation." The Company finished its 2007
fiscal first half with $2.6 million in cash, compared with $4.7
million at December 30, 2006. The decrease is almost entirely due
to operating uses, including payments to vendors and for income
taxes and the redemption of outstanding gift certificates. Non-GAAP
Financial Information BSML provides non-GAAP EBITDA, defined by the
Company as earnings before interest, taxes, depreciation,
amortization and large non-recurring gains and losses 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. BSML's management believes this non-GAAP measure is
useful to investors because it adjusts for large non-cash or
non-recurring items, including: (i) the significant amount of
non-cash depreciation and amortization historically incurred by the
Company in its operating results, (ii) the non-cash amortization of
the discount on debt of $0.5 million in the first quarter of 2006,
(iii) the loss on the early extinguishment of debt of $5.0 million
reported in the first quarter of 2006 and (iv) the non-recurring
$1.3 million gain on settlement of a legal claim we recognized in
the second quarter of 2006. Our calculation of EBITDA further
excludes results from discontinued operations. Investors are
cautioned that the items excluded from EBITDA are significant
components in understanding and assessing BSML's financial
performance. BSML, Inc., formerly known as BriteSmile, Inc.,
markets the most advanced teeth whitening technology available and
manages state-of-the-art BriteSmile Professional Teeth Whitening
Centers. BSML Spa 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. For more information about
BSML's procedures, 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. Readers are referred to the
documents filed by BSML with the Securities and Exchange
Commission, specifically the Company's most recent reports on Forms
10-K, 10-K/A and 10-Q, that identify important risk factors which
could cause actual results to differ from those contained in the
forward-looking statements. BSML and its affiliates disclaim any
intent or obligation to update these forward-looking statements.
Summary Unaudited Financial Results Follow Condensed Consolidated
Statement of Operations Unaudited (In thousands, except per share
amounts) 26 Weeks 13 Weeks 13 Weeks 26 Weeks Ended Ended Ended
Ended July 1, June 30, July 1, June 30, 2006 2007 2006 2007
(restated) Revenues $6,778 $7,760 $13,939 $13,795 Operating costs
and expenses: Operating and occupancy costs 3,585 3,663 7,229 7,001
Selling, general and administrative expenses 3,693 5,522 7,359
10,858 Depreciation and amortization 361 714 723 821 Total
operating costs and expenses 7,639 9,899 15,311 18,680 Loss from
operations (861) (2,139) (1,372) (4,885) Amortization of discount
on debt -- -- -- (530) Loss on early extinguishment of debt -- --
-- (5,039) Gain on settlement of legal claim -- 1,257 -- 1,257
Other income / (expense), net 176 119 317 (845) Loss from
continuing operations before income tax provision (685) (763)
(1,055) (10,042) Income tax provision 19 11 37 46 Net loss from
continuing operations (704) (774) (1,092) (10,088) Discontinued
operations (Note 5): Income from discontinued operations, net of
tax (twenty-six weeks ended July 1, 2006, includes gain from sale
of business of $14,664, net of tax, and gain on settlement of
litigation of $5,202, net of tax) -- -- -- 20,996 Net income (loss)
attributable to common shareholders $(704) $(774) $(1,092) $10,908
Basic and diluted net loss per common share from continuing
operations $(0.07) $(0.07) $(0.10) $(0.96) Basic net income per
common share from discontinued operations $-- $-- $-- $1.99 Diluted
net income per common share from discontinued operations $-- $--
$-- $1.99 Basic net income (loss) per common share $(0.07) $(0.07)
$(0.10) $1.03 Diluted net income (loss) per common share $(0.07)
$(0.07) $(0.10) $1.03 Shares used in computing net loss per common
share from continuing operations, basic and diluted 10,744 10,549
10,731 10,549 Shares used in computing net income per common share
from discontinued operations, basic 10,744 10,549 10,731 10,549
Shares used in computing net income per common share from
discontinued operations, diluted 10,744 10,555 10,731 10,559 Shares
used in computing net income (loss) per common share, basic 10,744
10,549 10,731 10,549 Shares used in computing net income (loss) per
common share, diluted 10,744 10,555 10,731 10,559 Condensed
Consolidated Balance Sheet Unaudited (In thousands) June 30, 2007
December 30, (Unaudited) 2006 ASSETS Current assets: Cash and cash
equivalents $2,601 $4,734 Trade accounts receivable, net 353 213
Inventories 1,043 1,273 Investments, restricted as to use 177 3,625
Prepaid expenses and other current assets 266 243 Total current
assets 4,440 10,088 Property and equipment, net 3,641 4,258
Investments, restricted as to use 6,199 2,761 Other assets 930 958
Total assets $15,210 $18,065 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $905 $1,770 Accrued
liabilities 6,305 6,776 Accrual for Center closures 178 170 Gift
certificate liability 1,252 1,775 Deferred revenue 2,972 2,590
Total current liabilities 11,612 13,081 Long term liabilities:
Accrual for Center closures 238 258 Deferred revenue 905 1,352
Other long term liabilities 782 892 Total long term liabilities
1,925 2,502 Total liabilities 13,537 15,583 Shareholders' equity
Common stock, $0.001 par value, 50,000,000 shares authorized,
10,744,281 and 10,664,281 shares issued and outstanding at June 30,
2007 and December 30, 2006, respectively 39 39 Additional paid-in
capital 174,186 173,903 Accumulated deficit (172,552) (171,460)
Total shareholders' equity 1,673 2,482 Total liabilities and
shareholders' equity $15,210 $18,065 Reconciliation of Net Income /
(Loss) to EBITDA Unaudited (In thousands) 13 Weeks 13 Weeks 26
Weeks 26 Weeks Ended Ended Ended Ended June 30, July 1, June 30,
July 1, 2007 2006 2007 2006 Net income (loss) $(704) $(774)
$(1,092) $10,908 Deduct: income from discontinued operations -- --
-- (20,996) Deduct: gain on settlement of legal claim -- (1,257) --
(1,257) Add: income tax provision 19 11 37 46 Add (deduct): other
(income) / expense, net (176) (119) (317) 845 Add: loss on early
extinguishment of debt -- -- -- 5,039 Add: amortization of discount
on debt -- -- -- 530 Add: depreciation and amortization 361 714 723
821 EBITDA $(500) $(1,425) $(649) $(4,064) DATASOURCE: BSML, Inc.
CONTACT: Investors, Rich De Young, CFO, +1-925-279-2883, or Media,
Dr. Julian Feneley, CEO, +1-925-279-2863, both of BSML, Inc. Web
site: http://www.britesmile.com/
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