Hector Communic (AMEX:HCT)
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HECTOR, Minn., May 10 /PRNewswire-FirstCall/ -- Hector Communications Corporation (AMEX:HCT) today reported operating results for its first quarter ended March 31, 2006. Revenues were $7,754,000 for the three months ended March 31, 2006, an increase of 1% from $7,649,000 in 2005. The revenue increase was mainly due to increased sales of high speed Internet services to customers. Operating income increased 3% to $1,869,000 compared to $1,813,000 in 2005. Income from the Company's investment in Midwest Wireless Holdings LLC was $1,566,000 in the 2006 period compared to $1,070,000 in 2005. Net income was $1,699,000 or $.41 per diluted share in 2006 compared to $1,386,000 or $.34 per diluted share in 2005.
Curtis A. Sampson, Chairman and Chief Executive Officer, said, "Midwest Wireless Holdings LLC, which is expected to be sold in 2006, has been the driver for Hector's increases in net income and per share earnings in recent years. We expect our core wireline telephone business to face significant challenges in the future, including loss of access revenue due to the impact of the dramatic growth in wireless telephony, possible changes to the level of regulatory support for rural telecommunications and the emergence of Voice over Internet Protocol (VoIP). In 2005 we retained the investment-banking firm of Stifel Nicolaus to assist us in assessing available strategic options for maximizing value to shareholders. That process is continuing."
Hector Communications Corporation is a telecommunications holding company that, through its subsidiaries, provides local telephone, video and high-speed Internet service in rural communities in Minnesota, Wisconsin and North Dakota. The Company serves 29,400 telephone access lines, 8,000 cable television subscribers and 11,300 Internet customers and has minority ownership interests in 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 March 31
2006 2005
Revenues $7,754,191 $7,648,997
Operating income 1,868,762 1,813,311
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 1,566,365 1,070,343
Other unconsolidated affiliates (49,898) (2,201)
Interest and dividend income 228,684 184,781
Interest expense (726,289) (730,172)
Net other income 1,018,862 522,751
Income from continuing operations
before income taxes 2,887,624 2,336,062
Income tax expense 1,189,000 950,000
Net Income $1,698,624 $1,386,062
Basic net income per common share: $.42 $.37
Diluted net income per share $.41 $.34
Cash dividends per share $.10 $.05
Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet
March 31 December 31
2006 2005
Cash and cash equivalents $26,961,080 $25,245,358
Other current assets 3,931,515 4,477,313
Property, plant and equipment, net 36,724,908 37,381,570
Excess of cost over net assets
acquired 30,921,094 30,921,094
Investment in Midwest Wireless
Holdings, LLC 18,825,636 18,067,471
Investments in other unconsolidated
affiliates 3,238,214 3,307,593
Other investments 7,653,248 8,037,986
Other assets 300,020 315,906
Total Assets $128,555,715 $127,754,291
Notes payable and current portion of
long-term debt $6,491,000 $6,527,400
Other current liabilities 4,355,796 4,214,147
Long-term debt, less current portion 48,146,191 49,456,138
Deferred taxes and credits 5,260,718 5,308,790
Deferred compensation 797,482 802,116
Stockholders' equity 63,504,528 61,445,700
Total Liabilities and Stockholders'
Equity $128,555,715 $127,754,291
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, +1-320-848-6611