MOCC Moscow Cablecom (MM)

Files Restated Financial Statements for Prior Periods NEW YORK, Oct. 25 /PRNewswire-FirstCall/ -- Moscow CableCom Corp. (NASDAQ:MOCC) today announced its results of operations for the three and six months ended June 30, 2006. For the three months ended June 30, 2006, the Company recorded total revenues of $5,216,000, which represents an increase of 117.2% from the revenues of $2,401,000 reported for the period ended June 30, 2005. For the three months ended June 30, 2006, the Company incurred a net loss applicable to common shares of $4,231,000, or $0.42 per basic and diluted share, as compared to a restated net loss applicable to common shares of $1,450,000, or $0.16 per basic and diluted share, for the three months ended June 30, 2005. The current quarter's loss per share was based on 10,149,000 weighted average shares outstanding for the period, while the loss per share for the three month period ended June 30, 2005 was based on 8,834,000 weighted average shares outstanding. For the six months ended June 30, 2006, the Company recorded total revenues of $9,325,000, which represents an increase of 101.3% from the $4,632,000 of revenues recorded for the six months ended June 30, 2005. For the six months ended June 30, 2006, the net loss applicable to common shares was $6,847,000, or $0.72 per share, basic and diluted, as compared to the restated net loss applicable to common shares of $14,334,000 for the six months ended June 30, 2005, or $1.62 per share, basic and diluted. The prior year loss included a non cash beneficial conversion feature charge of $10,781,000 relating to the issuance of Series B Preferred stock in January 2005. This accounted for $1.22 per share, basic and diluted, of the prior year net loss. The sales growth is the direct result of accelerated expansion of the Company's hybrid fiber coaxial network in Moscow, Russia, and of aggressive sales and marketing efforts, which have resulted in increased subscriber levels, particularly for pay television and Internet access services. The Company also announced that it had filed amendments to its quarterly reports on Form 10-Q and its annual report on Form 10-K to incorporate restated financial statements for the periods ended June 30, 2005, September 30, 2005, December 31, 2005 and March 31, 2006 to reflect the correction of errors in its accounting for deferred income taxes as outlined in the Company's press release dated September 8, 2006. As a result of the errors in the Company's accounting for deferred income taxes, the previously issued financial statements had overstated the net loss for the year ended December 31, 2005 by $1,349,000, which is comprised of an overstatement of the net loss for the second quarter of 2005 of $915,000, an understatement of the net loss for the third quarter of 2005 of $165,000 and an overstatement of the net loss for the fourth quarter of 2005 of $599,000. In addition, due to the accounting for deferred income taxes described above, the net loss for the three months ended March 31, 2006 was understated by $233,000. The cumulative effect of the restatement was to increase our previously reported stockholders' equity as of March 31, 2006 by $1,100,000. A component of the adjustment to the deferred tax accounting is attributable to the allocation of the purchase price of ComCor-TV with respect to temporary differences that resulted in deferred tax assets and liabilities as of the February 2004 acquisition date. Accordingly, in restating deferred tax balances, the restated Consolidated Balance Sheets reflect a decrease in the deferred tax valuation allowance and goodwill associated with this acquisition of $706,000 effective with the second quarter of 2005, which was further adjusted as of March 31, 2006 for the change in foreign currency exchange rates. Certain of the above amounts differ slightly from those disclosed in our September 8, 2006 press release, as a result of further refinements in the Company's analysis of its accounting for deferred income taxes. The Company also revised its quarterly reports on Form 10-Q for the periods ended June 30, 2005 and September 30, 2005 to indicate that its disclosure controls and procedures were not effective during those periods, as a result of the material weaknesses described in the Company's annual report on Form 10-K for the year ended December 31, 2005 and in its Form 10-Q for the period ended March 31, 2006. About Moscow CableCom Moscow CableCom Corp. (NASDAQ:MOCC) is the US-based parent of a Moscow, Russia-based company that provides access to pay-TV and Internet services under the brand name "AKADO." AKADO is in the process of expanding its hybrid fiber-coaxial network in Moscow to provide residential and business customers with comprehensive broadband services in digital cable TV and radio, and high- speed data transmission and Internet access. The Company has licenses to provide its services to 1.5 million homes and businesses in Moscow, through its proprietary agreements for use of the Moscow Fiber Optic Network (MFON), the largest high-speed data network in Moscow. At present, no other company in Moscow is providing a full range of residential broadband services. For more information on Moscow CableCom Corp. and AKADO, visit: http://www.moscowcablecom.com/ and http://www.akado.com/. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This press release may contain "forward-looking statements," as the phrase is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may contain words such as "expects," "anticipates," "plans," believes," "projects" and words of similar meaning. These statements relate to our future business and financial performance, including AKADO's development, its ability to attract new subscribers, to continue to expand its network, to achieve positive cash flow and its ability to raise funds for AKADO's development. These statements are based on management's best assessment of Moscow CableCom's and AKADO's strategic and financial position and of future market conditions and trends and involve substantial risks and uncertainties. The actual outcome may differ materially from these statements. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements, including lack of operating history of AKADO, liquidity difficulties, developments in the marketplace for cable services in Moscow, Russia, technological changes, operating in the Russian Federation, including general economic, political, social and tax conditions and legislative and regulatory matters affecting the cable industry, and changes in generally accepted accounting principles are described in the our Annual Report on Form 10-K /A for the year ended December 31, 2005 and other public filings made by us with the Securities and Exchange Commission, which descriptions are incorporated herein by reference. There may be other risks that we have not described that may adversely affect our business and financial condition. We disclaim any obligation to update developments of these risks or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments. MOSCOW CABLECOM CORP. Consolidated Condensed Balance Sheets (unaudited) (in thousands, except per share data) June 30, December 31, 2006 2005 (restated) Assets Current assets: Cash and cash equivalents $9,318 $5,442 Marketable securities 7,602 3,322 Trade receivables, less allowance for doubtful accounts of $141 and $111 404 252 Inventories, net 2,022 1,237 Taxes receivable 5,785 3,523 Deferred costs 628 470 Deferred income taxes 693 398 Prepaid expenses and other current assets 3,465 1,845 Total current assets 29,917 16,489 Property, plant and equipment, net 40,485 25,730 Construction in progress and advances 13,901 9,563 Prepaid pension expense 5,269 5,111 Intangible assets, net 4,786 4,850 Goodwill 4,623 4,409 Investment in Institute for Automated Systems 7,292 7,128 Deferred costs 930 712 Other assets 1,787 716 Total assets $108,990 $74,708 Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt $ 571 $598 Payable to affiliate 651 531 Accounts payable and accrued liabilities 8,647 4,849 Deferred revenue 198 354 Total current liabilities 10,067 6,332 Note payable to shareholder 31,542 20,211 Long-term debt, less current maturities 2,982 1,773 Other long-term obligations 883 720 Deferred revenue 547 380 Deferred income taxes 3,293 2,911 Total liabilities 49,314 32,327 Commitments and contingencies Stockholders' equity: Series A cumulative convertible preferred stock, no par value; 800,000 shares authorized; 150,144 shares issued and outstanding; liquidation preference $18.75 per share 2,792 2,792 Series B convertible preferred stock, $.01 par value, 25,000,000 shares authorized 4,500,000 shares issued and outstanding 45 45 Common stock, $.01 par value; 40,000,000 shares authorized; 11,392,422 shares and 8,860,746 shares, respectively, issued and outstanding 114 89 Additional paid-in capital 88,786 66,243 Accumulated deficit (33,455) (26,608) Treasury stock, at cost, 24,500 shares (180) (180) Accumulated other comprehensive income 1,574 - Total stockholders' equity 59,676 42,381 Total liabilities and stockholders' equity $108,990 $74,308 MOSCOW CABLECOM CORP. Consolidated Condensed Statements of Operations (unaudited) (In thousands, except per share data) Three months ended June 30, Six months ended June 30, 2006 2005 2006 2005 (restated) (restated) Sales and revenues Subscription fees, connection fees and equipment sales $5,162 $2,349 $9,215 $4,538 Other 54 52 110 94 Total revenue 5,216 2,401 9,325 4,632 Cost of sales Services from related party 1,093 432 2,031 803 Salaries and benefits 982 298 1,734 573 Depreciation and amortization 1,275 428 2,060 842 Other 680 466 1,063 894 Total cost of sales 4,030 1,624 6,888 3,112 Gross margin 1,186 777 2,437 1,520 Operating expenses Salaries and benefits 3,134 1,421 5,575 2,724 Depreciation 185 109 416 209 General and administrative 2,377 1,459 4,090 2,488 Total operating expenses 5,696 2,989 10,081 5,421 Loss from operations (4,510) (2,212) (7,644) (3,901) Equity in losses of Institute for Automated Systems (73) (86) (204) (143) Investment income and other income 191 342 316 591 Interest expense (948) (654) (1,557) (1,233) Foreign currency gain (loss) 989 (72) 2,346 (75) Loss before income taxes (4,351) (2,682) (6,743) (4,761) Income tax benefit 177 1,289 9 1,321 Net loss (4,174) (1,393) (6,734) (3,440) Preferred dividends (57) (57) (113) (113) Beneficial conversion feature - - - (10,781) Net loss applicable to common shares $(4,231) $(1,450) $(6,847) $(14,334) Loss per common share: Basic and diluted $(0.42) $(0.16) $(0.72) $(1.62) DATASOURCE: Moscow CableCom Corp. CONTACT: Tate Fite, Chief Financial Officer of Moscow CableCom Corp., +7-495-221-5516, ; or Barbara Cano of Breakstone Group International, for Moscow CableCom Corp., +1-646-452-2334, Web site: http://www.moscowcablecom.com/ http://www.akado.com/

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