Multiband Reports Second Quarter 2007 Results

  
    
  
  
    
      Multiband Corporation, (NASDAQ:MBNDD), 
      one of the nation's largest providers of video, voice, and data services 
      to the Multi-Dwelling Unit (Apartment) industry, announced today results 
      for its second quarter for the period ended June 30, 2007. The Company 
      recorded revenues of $3,921,726 for its second quarter of 2007, compared 
      to $4,501,737 in the second quarter of 2006. Second quarter 2007 
      revenues were impacted by the sale of approximately 14,000 owned Revenue 
      Generating Units, which revenues were included in the 2006 second 
      quarter results. The Company throughout 2007 intends to continue to 
      strategically sell certain owned assets and redeploy the proceeds from 
      those assets into facilitating growth of its managed subscriber 
      services, including its support center and its master system operator 
      program. The Company believes it can increase revenues and improve 
      profitability by selling its support center services to its network of 
      system operators and by providing ancillary programs for voice and data 
      services to that same network.
    
    
      Selling, general and administrative expenses declined from $2,909,038 in 
      the second quarter of 2006 to $2,308,426 in the second quarter of fiscal 
      2007, while depreciation and amortization declined from $1,308,614 to 
      $995,068 primarily as a result of a lower number of owned subscribers.
    
    
      Second quarter EBITDA, a non-GAAP measure (earnings before interest, 
      taxes, depreciation, amortization, and other non cash charges) was 
      approximately $160,000 compared to a loss of $50,000 in the second 
      quarter of 2006, an improvement of approximately $210,000.
    
    
      The Company had a net loss of approximately $1.25 million, compared to a 
      net loss of approximately $1.7 million a year ago. The net loss includes 
      approximately $1.45 million from non-cash amortization, depreciation, 
      and other non-cash charges associated with stock and warrant issuance.
    
    
      Revenues in the second quarter of fiscal year 2007, for the MCS segment, 
      decreased 24.4% to $1,404,398 as compared to $1,858,520 in the second 
      quarter of fiscal 2006. Revenues in the second quarter of 2007 for the 
      MDU segment decreased 4.8% to $2,517,328 as compared to $2,643,217 in 
      the second quarter of fiscal 2006. However, the MDU segment numbers, 
      which include net agent fee revenues for owned subscribers, were 
      impacted by the sale of owned subscribers primarily to Consolidated 
      Smart Systems of Los Angeles. Adjusted for those one time events, 
      revenues for the segment grew organically for managed subscribers by 3%. 
      Revenues generated by a shift in focus from owning subscribers to 
      managing them and providing call and support center functions generated 
      more efficient operating margins resulting in the improved EBITDA. 
      Additionally, the Company anticipates additional call and support center 
      revenues to be added in future quarters as the transition from owning to 
      managing matures.
    
    
      “Our quarterly results reflect continued 
      improvement in the Company’s operating results 
      due to the decision to sell certain subscribers while maintaining the 
      servicing rights,” said James L. Mandel CEO of 
      Multiband. “The sale of these subscribers, 
      while maintaining ongoing servicing rights, not only provides us with 
      compelling economics, but furthers our strategic goal of servicing, 
      rather than owning, our subscribers. In addition, the recently announced 
      non-binding letter of intent to merge with DirecTech will dramatically 
      change the Company, once consummated. DirecTECH's national teams of 
      technicians already offer provisioning services. This will create for 
      Multiband the opportunity to cross-sell additional telephone and 
      Internet services to the combined customer base that will result from 
      the merger. The new company’s ability to offer 
      a Triple Play makes DIRECTV a more competitive alternative to cable 
      television and allows DirecTECH to further solidify its relationship 
      with the customers it serves. We remain highly focused on completing 
      this transaction prior to year-end. Clearly, with pro-forma revenues of 
      approximately $200 million, Multiband will be a much more formidable 
      competitor in this exciting and growing industry.”
    
    
      Subsequent to the end of the quarter, the Company entered into a 
      non-binding letter of intent which sets forth the proposed terms of a 
      transaction under which Multiband and DirecTECH Holding Company, Inc. (“DTHC”) 
      will merge into a combined entity ("New Multiband").If the merger 
      occurs, New Multiband will acquire closely-held DTC in an all-stock 
      transaction. The parties intend to enter into a definitive agreement by 
      the end of September and to complete the merger prior to year-end. 
      DirecTECH provisions home satellite television for DIRECTV in 
      approximately 32 cities covering 20% of the country. The company is 
      estimated to provision satellite television service for approximately 
      1.5 million customers annually. New Multiband is expected to have 
      approximately 3,000 employees. The two companies had pro forma 2006 
      unaudited revenue of approximately $200 million.
    
    
      Subsequent to the end of the second quarter, the Company executed an 
      asset purchase agreement to sell 11,166 subscribers and the related 
      access agreement and telecommunication assets located in 189 
      multi-family properties to MDU Communications. Concurrent with the 
      signing of the agreement, the Company closed on the initial sale of 
      7,280 subscribers located in 157 properties. The parties expect to close 
      on the balance of 3,886 subscribers in 24 properties by the end of the 
      third quarter. The acquisition purchase price was $4.01 million payable 
      in cash at the closings. Additional payments may accrue to Multiband 
      over the next two year period based on certain property and subscriber 
      performance criteria. Additionally, the sale agreement provides for the 
      provisioning of call and support center services by Multiband to MDU 
      Communications.
    
    
      About Multiband
    
    
      Multiband Corporation is a leading provider of software and integrated 
      billing services; including video, voice, data and other value-added 
      local services to multiple dwelling units (MDU's) on a single bill, 
      directly and through strategic partnerships. Multiband also is an 
      exclusive DirectTV master system operator. Multiband is headquartered in 
      Minneapolis, MN and has offices across the United States, as well as, a 
      state of the art service and support center located in Fargo, ND 
      providing call center capabilities and other value-added services.
    
    
      Safe Harbor for Forward Looking and Cautionary Statements
    
    
      Statements included in this release may constitute forward-looking 
      statements within the meaning of the Private Securities Litigation 
      Reform Act of 1995. Such statements involve a number of risks and 
      uncertainties such as competitive factors, technological development, 
      market demand and Multiband's ability to obtain new contracts and 
      accurately estimate net revenues due to variability in size, scope and 
      duration of projects, and internal issues in the sponsoring client. 
      Further information regarding potential factors that affect Multiband's 
      financial results can be found in Multiband's Registration Statement and 
      in its Reports on Forms 8-K filed with the Securities and Exchange 
      Commission (SEC).
    
    
      Non-GAAP Financial Measures
    
    
      To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley 
      Act, Multiband Corporation attached to this news release and will post 
      to the company’s investor relations web site (www.multibandusa.com) 
      any reconciliations of differences between non-GAAP financial 
      information that may be required in connection with issuing the company’s 
      quarterly financial results.
    
    
      The Company, as is common in the cable and telecommunications 
      industries, uses EBITDA as a measure of performance to demonstrate 
      earnings exclusive of interest and non-cash events. The Company manages 
      its business based on its cash flows. The majority of the Company’s 
      non-cash expense results from amortization of intangible right of entry 
      agreement assets obtained through acquisition. The Company, in its daily 
      management of its business affairs and analysis of its monthly, 
      quarterly and annual performance, makes its decisions based on cash 
      flows, not on the amortization of the aforementioned assets obtained 
      through historical activities. The Company, in managing its current and 
      future affairs, cannot affect the amortization of the intangible assets 
      to any material degree, and therefore uses EBITDA as its primary 
      management guide. Since an outside investor may base its evaluation of 
      the Company’s performance based on the Company’s 
      net loss not its cash flows, there is a limitation to the EBITDA 
      measurement. EBITDA is not, and should not be considered, an alternative 
      to net loss, loss from operations, or any other measure for determining 
      operating performance of liquidity, as determined under accounting 
      principals generally accepted in the United States (GAAP). The most 
      directly comparable GAAP reference in the Company’s 
      case is the removal of interest, depreciation, amortization, taxes and 
      other non-cash expense. The following table reconciles the Company’s 
      EBITDA to our consolidated net loss as computed under GAAP.
    
    
      
        
          
            Multiband Corporation and Subsidiaries
          
          
            Second Quarter 10-Q
          
          
            June 30, 2007
          
        
      
      
        
           
        
      
      
        
        
        
          Three Months Ended
        
      
      
        
        
        
          June 30,
        
        
        
        
          June 30,
        
      
      
        
        
        
          2006
        
        
        
        
          2007
        
      
      
        
          Selected Data
        
        
        
        
        
        
        
      
      
        
          Revenues
        
        
          $ 4,501,737
        
        
           
        
        
          $3,921,726
        
      
      
        
          EBITDA (not including discontinued operations)
        
        
          $ (48,496)
        
        
        
        
          $161,090
        
      
      
        
          Net Interest Expense (Cash and non-cash)
        
        
          (250,890)
        
        
        
        
          (168,010)
        
      
      
        
          Depreciation & Amortization
        
        
          (1,363,397)
        
        
        
        
          ($995,068)
        
      
      
        
          
            Gains/Losses,Taxes and Other Non Cash Expense associated withStock 
            Issuance and Provisions for doubtful accounts and inventory 
            reserves
          
        
        
          (280,604)
        
        
        
        
          (277,991)
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
           
        
        
           
        
        
           
        
      
      
        
          Net Loss
        
        
          $ (1,943,387)
        
        
           
        
        
          $(1,279,979)