Hector Communic (AMEX:HCT)
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Hector Communications Corporation Reports Revenues and Earnings
for the First Quarter of 2004
HECTOR, Minn., May 4 /PRNewswire-FirstCall/ -- Hector Communications
Corporation today reported operating results for its first quarter ended March
31, 2004. The Company's operating results for the first quarter of 2003 have
been restated to reflect the effects of the split-up of Alliance
Telecommunications Corporation. Revenues from continuing operations were
$7,946,000 for the three months ended March 31, 2004, a decrease of 1% from
$8,033,000 in 2003. The revenue decrease was due to lower network access
revenues from long distance providers and lower video services revenues
reflecting sales of cable television systems in 2003. Operating income from
continuing operations increased 8% to $1,981,000 in 2004 from $1,832,000 in
2003. Operating expenses were lower in 2004 due to actions taken in 2003 that
reduced employee headcount and incurred severance expenses. Income from the
Company's investment in Midwest Wireless Holdings LLC was $682,000 in the 2004
period compared to $623,000 in 2003. Income from continuing operations
increased 63% to $1,194,000 or $.31 per diluted share in 2004 from $732,000 or
$.20 per diluted share in 2003. Income from discontinued operations was
$394,000 or $.10 per diluted share in 2003.
Curtis A. Sampson, chairman and chief executive officer, said that while the
Company's operating income and net income reached expectations he was
disappointed by the decline in total revenues. He said the Company is
aggressively pursuing new revenue sources to offset the decline in access lines
and access revenues the whole industry is experiencing. "The Company's
broadband offerings are continuing to be well received by customers. The
number of customers subscribing to some form of high-speed DSL service from the
Company has increased 46% in the last 12 months."
Hector Communications Corporation is a telecommunications holding company
which, through its wholly-owned subsidiaries, provides telecommunications
services in rural communities in Minnesota, Wisconsin and North Dakota. The
Company presently serves approximately 29,800 telephone access lines and 9,000
cable television subscribers 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 March 31
2004 2003
Revenues from continuing operations $7,945,653 $8,032,957
Operating income from continuing
operations 1,981,193 1,831,941
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 682,129 622,761
Other unconsolidated affiliates 45,186 (96,556)
Interest and dividend income 53,526 80,931
Interest expense (771,469) (893,121)
Net other income (expense) 9,372 (285,985)
Income from continuing operations
before income taxes 1,990,565 1,545,956
Income tax expense (797,000) (619,000)
Minority interest in earnings of
continuing operations of
Alliance Telecommunications Corp. (194,681)
Income from continuing operations 1,193,565 732,275
Income from discontinued operations 394,243
Net Income $1,193,565 $1,126,518
Basic net income per common share:
Continuing operations $.34 $.21
Discontinued operations .11
$.34 $.32
Diluted net income per share:
Continuing operations $.31 $.20
Discontinued operations .10
$.31 $.30
Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet
March 31 December 31
2004 2003
Cash $18,770,271 $16,581,315
Other current assets 9,652,085 8,609,295
Property, plant and equipment, net 41,788,907 43,088,106
Excess of cost over net assets
acquired 31,691,927 31,691,927
Investment in Midwest Wireless
Holdings, LLC 13,834,467 13,349,155
Investments in other unconsolidated
affiliates 2,817,221 2,796,035
Other investments 6,454,396 6,533,858
Other assets 397,754 409,664
Total Assets $125,407,028 $123,059,355
Notes payable and current portion of
long-term debt $6,610,609 $6,537,800
Other current liabilities 4,988,833 5,338,386
Long-term debt, less current portion 57,903,419 57,529,378
Deferred taxes and credits 4,916,841 4,911,869
Deferred compensation 703,224 698,254
Stockholders' equity 50,284,102 48,043,668
Total Liabilities and Stockholders'
Equity $125,407,028 $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,
+1-320-848-6231