Hector Communications Corporation Reports Revenues and Earnings for
the Third Quarter of 2004 Hector Communications Corporation
Declares First Cash Dividend HECTOR, Minn., Nov. 2
/PRNewswire-FirstCall/ -- Hector Communications Corporation
(AMEX:HCT) today reported operating results for its third quarter
and nine month periods ended September 30, 2004. The Company's
operating results for the corresponding 2003 periods have been
restated to reflect the effects of the split-up of Alliance
Telecommunications Corporation. The Company also announced that it
will pay a cash dividend to shareholders for the first time in its
history. Operating Results Revenues from continuing operations were
$7,806,000 for the three months ended September 30, 2004, a
decrease of 4% from $8,107,000 in 2003. The revenue decrease was
due to lower network access revenues from long distance providers
and reduced universal support payments from NECA. Access revenues
from wireless communications providers were also lower due to the
impact of new interconnection agreements that have been negotiated
between the Company and selected wireless carriers. Operating
income from continuing operations decreased 9% to $1,923,000 in
2004 from $2,120,000 in 2003. Income from the Company's investment
in Midwest Wireless Holdings, LLC was $843,000 in the 2004 period
compared to $596,000 in 2003. Income from continuing operations was
$1,294,000 or $.32 per diluted share in 2004 compared to $1,008,000
or $.27 per diluted share in 2003. Income from discontinued
operations was $210,000 or $.05 per diluted share in 2003. Revenues
from continuing operations were $23,743,000 for the nine months
ended September 30, 2004, a decrease of 2% from $24,194,000 in
2003. The revenue decrease was due to lower network access revenues
from long distance providers and lower video service revenues due
to sales of cable television systems in 2003. Operating income from
continuing operations decreased 7% to $5,356,000 in 2004 from
$5,772,000 in 2003. Income from the Company's investment in Midwest
Wireless Holdings, LLC was $2,151,000 in the 2004 period compared
to $1,903,000 in 2003. The Company's 2003 results benefited from
gains on sales of cable television systems totaling $1,081,000
($.17 per diluted share net of income taxes). Income from
continuing operations was $3,442,000 or $.87 per diluted share in
2004 compared to $3,030,000 or $.81 per diluted share in 2003.
Income from discontinued operations was $882,000 or $.23 per
diluted share in 2003. Curtis A. Sampson, chairman and chief
executive officer, said, "The Company's operating results continue
to reflect the gains the wireless industry is making in competition
with wireline carriers. Hector has a significant investment in the
wireless industry itself through its 8% ownership interest in
Midwest Wireless. The decrease in the Company's operating income in
2004 has been offset by the sharp increase in Midwest Wireless
earnings and lower borrowing costs, a trend that is expected to
continue." Curtis also said, "The dividend we are paying in
December is the first in the history of the Company. It is a
reflection of the Company's strong financial position and bright
earnings outlook." Dividend The Company's Board of Directors has
declared a cash dividend of $.05 per share. The dividend will be
paid on December 15, 2004 to shareholders of record on November 30,
2004. Hector Communications Corporation is a telecommunications
holding company which through its subsidiaries provides
telecommunications services in rural communities in Minnesota,
Wisconsin and North Dakota. The Company serves 29,700 telephone
access lines, 8,200 cable television subscribers and 10,800
internet customers and has minority ownership interests in many
other telecommunications companies. From time to time in reports
filed with the Securities and Exchange Commission, in press
releases, and in other communications to shareholders and the
investing public, the Company may make statements regarding the
Company's future financial performance. Such forward-looking
statements are subject to risks and uncertainties, including but
not limited to, the effects of the Telecommunications Act, new
technological developments which may reduce barriers for
competitors entering the Company's local exchange or cable
television markets, higher than expected expenses and other risks
involving the telecommunications industry generally. All such
forward-looking statements should be considered in light of such
risks and uncertainties. Hector Communications Corporation and
Subsidiaries Earnings Summary Three Months Ended September 30 2004
2003 Revenues from continuing operations $7,805,590 $8,106,588
Operating income from continuing operations 1,923,268 2,120,314
Other income (expense): Income (loss) from investments: Midwest
Wireless Holdings, LLC 842,842 596,331 Other unconsolidated
affiliates 52,003 (30,556) Interest and dividend income 75,043
51,455 Interest expense (728,323) (961,574) Gain on sale of Hastad
Engineering 12,805 Net other income (expense) 254,370 (344,344)
Income from continuing operations before income taxes 2,177,638
1,775,970 Income tax expense (884,000) (768,000) Income from
continuing operations 1,293,638 1,007,970 Income from discontinued
operations 209,505 Net Income $1,293,638 $1,217,475 Basic net
income per common share: Continuing operations $.35 $.29
Discontinued operations .06 $.35 $.35 Diluted net income per share:
Continuing operations $.32 $.27 Discontinued operations .05 $.32
$.32 Hector Communications Corporation and Subsidiaries Earnings
Summary Nine Months Ended September 30 2004 2003 Revenues from
continuing operations $23,743,249 $24,193,995 Operating income from
continuing operations 5,356,219 5,772,394 Other income (expense):
Income (loss) from investments: Midwest Wireless Holdings, LLC
2,151,089 1,903,090 Other unconsolidated affiliates 231,444
(75,904) Interest and dividend income 191,575 186,921 Interest
expense (2,216,200) (2,730,426) Gain on sale of cable television
systems 28,590 1,080,723 Gain on sale of Hastad Engineering 12,805
Net other income (expense) 399,303 364,404 Income from continuing
operations before income taxes 5,755,522 6,136,798 Income tax
expense (2,314,000) (2,447,000) Minority interest in earnings of
continuing operations of Alliance Telecommunications Corp.
(659,624) Income from continuing operations 3,441,522 3,030,174
Income from discontinued operations 881,854 Net Income $3,441,522
$3,912,028 Basic net income per common share: Continuing operations
$.95 $.87 Discontinued operations .25 $.95 $1.12 Diluted net income
per share: Continuing operations $.87 $.81 Discontinued operations
.23 $.87 $1.04 Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet September 30 December 31 2004 2003 Cash
$20,215,528 $16,581,315 Other current assets 8,242,717 8,609,295
Property, plant and equipment, net 40,275,697 43,088,106 Excess of
cost over net assets acquired 30,921,094 31,691,927 Investment in
Midwest Wireless Holdings, LLC 14,932,409 13,349,155 Investments in
other unconsolidated affiliates 2,860,208 2,796,035 Other
investments 6,913,255 6,533,858 Other assets 373,943 409,664 Total
Assets $124,734,851 $123,059,355 Notes payable and current portion
of long-term debt $6,512,000 $6,537,800 Other current liabilities
4,458,872 5,338,386 Long-term debt, less current portion 54,738,786
57,529,378 Deferred taxes and credits 5,419,958 4,911,869 Deferred
compensation 713,164 698,254 Stockholders' equity 52,892,071
48,043,668 Total Liabilities and Stockholders' Equity $124,734,851
$123,059,355 DATASOURCE: Hector Communications Corporation CONTACT:
Curtis A. Sampson, Chairman and Chief Executive Officer, Steven H.
Sjogren, President, or Paul N. Hanson, Vice President and
Treasurer, all of Hector Communications Corporation,
+1-320-848-6231
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