Hector Communic (AMEX:HCT)
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Hector Communications Corporation Reports Revenues and Earnings
for the Second Quarter of 2004
HECTOR, Minn., Aug. 2 /PRNewswire-FirstCall/ -- Hector Communications
Corporation (AMEX:HCT) today reported operating results for its second quarter
and six month periods ended June 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.
Revenues from continuing operations were $7,992,000 for the three months ended
June 30, 2004, a decrease of 1% from $8,054,000 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 20% to $1,452,000 in 2004
from $1,820,000 in 2003. Income from the Company's investment in Midwest
Wireless Holdings LLC was $626,000 in the 2004 period compared to $684,000 in
2003. The Company recorded gains on sales of cable television systems totaling
$1,081,000 ($.17 per diluted share net of income taxes) in the 2003 period.
Income from continuing operations was $954,000 or $.24 per diluted share in
2004 compared to $1,290,000 or $.34 per diluted share in 2003. Income from
discontinued operations was $278,000 or $.08 per diluted share in 2003.
Revenues from continuing operations were $15,938,000 for the six months ended
June 30, 2004, a decrease of 1% from $16,087,000 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 6% to $3,433,000 in 2004
from $3,652,000 in 2003. Income from the Company's investment in Midwest
Wireless Holdings LLC was $1,308,000 in the 2004 period compared to $1,307,000
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 $2,148,000 or $.55 per diluted
share in 2004 compared to $2,022,000 or $.54 per diluted share in 2003. Income
from discontinued operations was $672,000 or $.18 per diluted share in 2003.
Curtis A. Sampson, chairman and chief executive officer, said that the
Company's operating results in the first half of 2004 were a reflection of the
increasingly tough competitive environment rural telephone companies face. He
said that the Company is continuing to shed unprofitable operations and search
for cost saving opportunities. The Company is continuing to see growth from
its broadband offerings but that has not been enough to offset the decline in
access revenues and the increases in the Company's operating costs.
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
29,900 telephone access lines, 8,350 cable television subscribers and 10,900
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 June 30
2004 2003
Revenues from continuing operations $7,992,006 $8,054,450
Operating income from continuing
operations 1,451,758 1,820,139
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 626,118 683,998
Other unconsolidated affiliates 134,255 51,208
Interest and dividend income 63,006 54,535
Interest expense (716,408) (875,731)
Gain on sale of cable television systems 28,590 1,080,723
Net other income (expense) 135,561 994,733
Income from continuing operations before
income taxes 1,587,319 2,814,872
Income tax expense (633,000) (1,060,000)
Minority interest in earnings of continuing
operations of Alliance Telecommunications
Corp. (464,943)
Income from continuing operations 954,319 1,289,929
Income from discontinued operations 278,106
Net Income $954,319 $1,568,035
Basic net income per common share:
Continuing operations $.26 $.37
Discontinued operations .08
$.26 $.45
Diluted net income per share:
Continuing operations $.24 $.34
Discontinued operations .08
$.24 $.42
Hector Communications Corporation and Subsidiaries
Earnings Summary
Six Months Ended June 30
2004 2003
Revenues from continuing operations $15,937,659 $16,087,407
Operating income from continuing
operations 3,432,951 3,652,080
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 1,308,247 1,306,759
Other unconsolidated affiliates 179,441 (45,348)
Interest and dividend income 116,532 135,466
Interest expense (1,487,877) (1,768,852)
Gain on sale of cable television systems 28,590 1,080,723
Net other income (expense) 144,933 708,748
Income from continuing operations before
income taxes 3,577,884 4,360,828
Income tax expense (1,430,000) (1,679,000)
Minority interest in earnings of continuing
operations of Alliance Telecommunications
Corp. (659,624)
Income from continuing operations 2,147,884 2,022,204
Income from discontinued operations 672,349
Net Income $2,147,884 $2,694,553
Basic net income per common share:
Continuing operations $.60 $.58
Discontinued operations .20
$.60 $.78
Diluted net income per share:
Continuing operations $.55 $.54
Discontinued operations .18
$.55 $.72
Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet
June 30 December 31
2004 2003
Cash $19,659,766 $16,581,315
Other current assets 7,845,847 8,609,295
Property, plant and equipment, net 41,473,141 43,088,106
Excess of cost over net assets acquired 30,921,094 31,691,927
Investment in Midwest Wireless
Holdings, LLC 14,203,468 13,349,155
Investments in other unconsolidated
affiliates 2,890,376 2,796,035
Other investments 6,873,858 6,533,858
Other assets 384,207 409,664
Total Assets $124,251,757 $123,059,355
Notes payable and current portion of
long-term debt $6,561,000 $6,537,800
Other current liabilities 3,928,671 5,338,386
Long-term debt, less current portion 56,324,345 57,529,378
Deferred taxes and credits 5,420,187 4,911,869
Deferred compensation 708,194 698,254
Stockholders' equity 51,309,360 48,043,668
Total Liabilities and Stockholders'
Equity $124,251,757 $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