Castle Dental Reports 2000 Fourth Quarter and Year End Results; Bank Negotiations Continuing

Apr 20, 2001, 01:00 ET from Castle Dental Centers, Inc.

    HOUSTON, April 20 /PRNewswire Interactive News Release/ --
 Castle Dental Centers (Nasdaq: CASL) today reported that revenues for the year
 ended December 31, 2000 increased 3 percent to $106 million compared with
 revenues of $102.7 million in 1999.  Revenues for the fourth quarter of 2000
 were $25.7 million, down less than one percent from fourth quarter 1999
 revenues of $25.8 million.
     The company, however, reported a net loss of $8.0 million, or $1.25 per
 share, for the fourth quarter of 2000 as it continued to be impacted by higher
 bad debt expense, costs related to previously announced plans to close
 unprofitable dental centers, severance and other expenses resulting from the
 reorganization of management and corporate staffs, higher legal and consulting
 fees, and increased interest costs.  Fourth quarter 2000 results were also
 adversely affected by lower than expected patient revenues resulting from the
 general slowdown in economic conditions experienced in November and December.
 For the year ended December 31, 2000, the company recognized a net loss of
 $19.1 million, or $2.96 per share.  These results compare with a net loss of
 $421,000, or $0.06 per share for the 1999 fourth quarter and net income of
 $1.2 million, or $0.18 per share, for the full year 1999.
     As a result of the losses incurred in 2000, the Company continues to be in
 default of debt agreements totaling $63.8 million with its senior and
 subordinated creditors.  Due to these defaults the Company has received an
 opinion from its public accountants, PricewaterhouseCoopers LLP, expressing
 doubt about the Company's ability to continue as a going concern.  This
 opinion was included in the Company's annual report on Form 10-K filed with
 the Securities and Exchange Commission on April 19, 2001.
     The company has been in negotiations with its senior and senior
 subordinated lenders since early 2001 and has put forth a plan to restructure
 the debt agreements and meet its operating requirements for 2001.  Components
 of this plan include: (i) reorganization of field management to improve
 efficiency and reduce regional overhead costs; (ii) reduction in corporate
 general and administrative costs through job eliminations and reduction in
 other overhead expenses; (iii) closing of unprofitable and under-performing
 dental centers; (iv) realignment of accounts receivable management to focus on
 improved collection of insurance and patient receivables; (v) restructuring of
 compensation for management to emphasize performance-based incentives; and,
 (vi) cancellation of further de novo development and reducing capital
 expenditures.  Although no assurances can be given as to the ultimate success
 of these negotiations, management believes that it will receive a forbearance
 agreement from its senior and senior subordinated creditors in the near
 future.
     Commenting on the year-end results, Ira Glazer, chief executive officer,
 stated, "Castle Dental's operating results in 2000 were impacted by
 significant write downs of accounts receivable and non-recurring charges
 related to excessive litigation and legal expenses, and asset impairment costs
 resulting from our plans to close under-performing dental centers.  We are
 continuing to restructure our business to return to profitable operations and
 expect that first quarter results will show improvement over the trends in the
 last six months.  Patient revenues will increase by more than 7% over the
 fourth quarter 2000 and operating expense reductions will begin to be
 realized.  Although we will continue to be affected by high interest expense
 and restructuring costs through the first half of 2001, we believe that cash
 flow from operations will be more than sufficient to meet our operating
 needs."  Glazer continued, "We are grateful for the continued dedication of
 the dental professionals and staff employees throughout our organization who
 are maintaining the high level of dental services provided to our patients.
 The anticipated completion of our bank negotiations and the accelerated
 implementation of our business plan, which we believe will result in major
 financial improvements, should provide a major one-two punch to put Castle on
 track for long-term profitability."
     Castle Dental Centers, Inc. develops, manages and operates integrated
 dental networks through contractual affiliations with general, orthodontic and
 multi-specialty dental practices in the U.S.  The Company manages 101 dental
 centers with approximately 200 affiliated dentists in Texas, Florida,
 Tennessee and California.
 
     Information contained in this press release, other than historical
 information, may be considered forward-looking in nature and is subject to
 various risks, uncertainties and assumptions.  Among the key factors that may
 have a direct bearing on the Company are fluctuations in the economy, the
 degree and nature of competitions and the demand for the Company's services,
 changes in laws and regulations affecting the Company's business, the
 Company's inability at any time to complete acquisitions and integrate the
 operations of acquired businesses, and numerous other factors discussed in the
 Company's filings with the Securities and Exchange Commission.
 
 
                           CASTLE DENTAL CENTERS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands, Except Per Share Data)
 
                                        Three Months      Twelve Months
                                            Ended             Ended
                                          December,          December,
                                        2000     1999      2000      1999
 
     Net patient revenues              $25,679  $25,781  $106,023  $102,701
 
     Expenses:
        Dentist salaries and other
         professional costs              7,359    6,597    28,384    26,984
        Clinical salaries                5,239    5,312    20,795    21,408
        Dental supplies and laboratory
         fees                            3,240    2,821    11,730     9,641
        Rent and lease expense           1,963    1,675     7,608     6,203
        Advertising and marketing          824      751     3,847     3,650
        Depreciation and amortization    1,630    1,497     6,796     5,792
        Asset impairment                 1,657      ---     3,567       ---
        Other operating expenses         1,872    1,720     7,344     6,154
        Bad debt expense                 3,390    1,737    15,325     4,160
        General and administrative       4,013    3,108    13,128    10,909
               Total expenses           31,187   25,218   118,524    94,901
 
     Operating income                   (5,508)     563   (12,501)    7,800
 
     Litigation expense                    ---      ---     1,495     1,366
     Interest expense                    2,740    1,214     7,751     4,369
     Other expense (income), net           (22)      (7)      (28)       34
 
     Income (loss) before income taxes  (8,226)    (644)  (21,719)    2,031
 
     Provision (benefit) for income
      taxes                               (214)    (223)   (2,595)      835
 
     Net income (loss)                 $(8,012)   $(421) $(19,124)   $1,196
 
     Income (loss) per common share:
               Basic and diluted        $(1.25)  $(0.06)   $(2.96)    $0.18
 
 
     Weighted average number of common
      and common equivalent shares
      outstanding
               Basic                     6,417    6,825     6,451     6,825
               Diluted                   6,417    6,861     6,451     6,850
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X36325586
 
 

SOURCE Castle Dental Centers, Inc.
    HOUSTON, April 20 /PRNewswire Interactive News Release/ --
 Castle Dental Centers (Nasdaq: CASL) today reported that revenues for the year
 ended December 31, 2000 increased 3 percent to $106 million compared with
 revenues of $102.7 million in 1999.  Revenues for the fourth quarter of 2000
 were $25.7 million, down less than one percent from fourth quarter 1999
 revenues of $25.8 million.
     The company, however, reported a net loss of $8.0 million, or $1.25 per
 share, for the fourth quarter of 2000 as it continued to be impacted by higher
 bad debt expense, costs related to previously announced plans to close
 unprofitable dental centers, severance and other expenses resulting from the
 reorganization of management and corporate staffs, higher legal and consulting
 fees, and increased interest costs.  Fourth quarter 2000 results were also
 adversely affected by lower than expected patient revenues resulting from the
 general slowdown in economic conditions experienced in November and December.
 For the year ended December 31, 2000, the company recognized a net loss of
 $19.1 million, or $2.96 per share.  These results compare with a net loss of
 $421,000, or $0.06 per share for the 1999 fourth quarter and net income of
 $1.2 million, or $0.18 per share, for the full year 1999.
     As a result of the losses incurred in 2000, the Company continues to be in
 default of debt agreements totaling $63.8 million with its senior and
 subordinated creditors.  Due to these defaults the Company has received an
 opinion from its public accountants, PricewaterhouseCoopers LLP, expressing
 doubt about the Company's ability to continue as a going concern.  This
 opinion was included in the Company's annual report on Form 10-K filed with
 the Securities and Exchange Commission on April 19, 2001.
     The company has been in negotiations with its senior and senior
 subordinated lenders since early 2001 and has put forth a plan to restructure
 the debt agreements and meet its operating requirements for 2001.  Components
 of this plan include: (i) reorganization of field management to improve
 efficiency and reduce regional overhead costs; (ii) reduction in corporate
 general and administrative costs through job eliminations and reduction in
 other overhead expenses; (iii) closing of unprofitable and under-performing
 dental centers; (iv) realignment of accounts receivable management to focus on
 improved collection of insurance and patient receivables; (v) restructuring of
 compensation for management to emphasize performance-based incentives; and,
 (vi) cancellation of further de novo development and reducing capital
 expenditures.  Although no assurances can be given as to the ultimate success
 of these negotiations, management believes that it will receive a forbearance
 agreement from its senior and senior subordinated creditors in the near
 future.
     Commenting on the year-end results, Ira Glazer, chief executive officer,
 stated, "Castle Dental's operating results in 2000 were impacted by
 significant write downs of accounts receivable and non-recurring charges
 related to excessive litigation and legal expenses, and asset impairment costs
 resulting from our plans to close under-performing dental centers.  We are
 continuing to restructure our business to return to profitable operations and
 expect that first quarter results will show improvement over the trends in the
 last six months.  Patient revenues will increase by more than 7% over the
 fourth quarter 2000 and operating expense reductions will begin to be
 realized.  Although we will continue to be affected by high interest expense
 and restructuring costs through the first half of 2001, we believe that cash
 flow from operations will be more than sufficient to meet our operating
 needs."  Glazer continued, "We are grateful for the continued dedication of
 the dental professionals and staff employees throughout our organization who
 are maintaining the high level of dental services provided to our patients.
 The anticipated completion of our bank negotiations and the accelerated
 implementation of our business plan, which we believe will result in major
 financial improvements, should provide a major one-two punch to put Castle on
 track for long-term profitability."
     Castle Dental Centers, Inc. develops, manages and operates integrated
 dental networks through contractual affiliations with general, orthodontic and
 multi-specialty dental practices in the U.S.  The Company manages 101 dental
 centers with approximately 200 affiliated dentists in Texas, Florida,
 Tennessee and California.
 
     Information contained in this press release, other than historical
 information, may be considered forward-looking in nature and is subject to
 various risks, uncertainties and assumptions.  Among the key factors that may
 have a direct bearing on the Company are fluctuations in the economy, the
 degree and nature of competitions and the demand for the Company's services,
 changes in laws and regulations affecting the Company's business, the
 Company's inability at any time to complete acquisitions and integrate the
 operations of acquired businesses, and numerous other factors discussed in the
 Company's filings with the Securities and Exchange Commission.
 
 
                           CASTLE DENTAL CENTERS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands, Except Per Share Data)
 
                                        Three Months      Twelve Months
                                            Ended             Ended
                                          December,          December,
                                        2000     1999      2000      1999
 
     Net patient revenues              $25,679  $25,781  $106,023  $102,701
 
     Expenses:
        Dentist salaries and other
         professional costs              7,359    6,597    28,384    26,984
        Clinical salaries                5,239    5,312    20,795    21,408
        Dental supplies and laboratory
         fees                            3,240    2,821    11,730     9,641
        Rent and lease expense           1,963    1,675     7,608     6,203
        Advertising and marketing          824      751     3,847     3,650
        Depreciation and amortization    1,630    1,497     6,796     5,792
        Asset impairment                 1,657      ---     3,567       ---
        Other operating expenses         1,872    1,720     7,344     6,154
        Bad debt expense                 3,390    1,737    15,325     4,160
        General and administrative       4,013    3,108    13,128    10,909
               Total expenses           31,187   25,218   118,524    94,901
 
     Operating income                   (5,508)     563   (12,501)    7,800
 
     Litigation expense                    ---      ---     1,495     1,366
     Interest expense                    2,740    1,214     7,751     4,369
     Other expense (income), net           (22)      (7)      (28)       34
 
     Income (loss) before income taxes  (8,226)    (644)  (21,719)    2,031
 
     Provision (benefit) for income
      taxes                               (214)    (223)   (2,595)      835
 
     Net income (loss)                 $(8,012)   $(421) $(19,124)   $1,196
 
     Income (loss) per common share:
               Basic and diluted        $(1.25)  $(0.06)   $(2.96)    $0.18
 
 
     Weighted average number of common
      and common equivalent shares
      outstanding
               Basic                     6,417    6,825     6,451     6,825
               Diluted                   6,417    6,861     6,451     6,850
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X36325586
 
 SOURCE  Castle Dental Centers, Inc.