Hector Communications Corporation Reports Revenues and Earnings for 2005 Fourth Quarter and Year

HECTOR, Minn., March 6  /PRNewswire-FirstCall/ -- Hector Communications Corporation (AMEX:HCT) today reported operating results for its fourth quarter and twelve-month periods ended December 31, 2005. Revenues were $8,733,000 for the three months ended December 31, 2005, an increase of 12% from $7,827,000 in 2004. The revenue increase was mainly due to favorable cost study settlements, higher access revenues from NECA and higher internet revenues.  Operating income increased 47% to $2,382,000 compared to $1,626,000 in 2004. Income from the Company's investment in Midwest Wireless Holdings LLC was $1,076,000 in the 2005 period compared to $615,000 in 2004. Net income was $2,012,000 or $.48 per diluted share in 2005 compared to $1,203,000 or $.30 per diluted share in 2004.

Revenues for the 2005 twelve months were $32,373,000, an increase of 3% from $31,570,000 in 2004. Operating income increased 14% to $7,990,000 in 2005 from $6,982,000 in 2004. Income from the Company's investment in Midwest Wireless Holdings LLC increased 69% to $4,682,000 in 2005 from $2,766,000 in 2004. Net income was $6,567,000 or $1.61 per diluted share in 2005 compared to $4,644,000 or $1.17 per diluted share in 2004.

Curtis A. Sampson, Chairman and Chief Executive Officer, said, "Hector's 2005 operating results were very gratifying.  Hector achieved increases in revenues and operating income in a very challenging and competitive operating environment. 2006 will be a year of great change in our business.  The completion of the Midwest Wireless acquisition by Alltel and the redemption of our Rural Telephone Bank stock will greatly increase Hector's liquidity. The management and Board of Directors of the Company continue to assess all strategic options available to us.  We expect to be able to report the results of our assessment to our shareholders prior to the 2006 annual meeting."

Hector Communications Corporation is a telecommunications holding company which, through its wholly-owned and majority-owned subsidiaries, provides local telephone service, video and high-speed internet service in rural communities in Minnesota, Wisconsin and North Dakota.  The Company serves 29,400 telephone access lines, 7,900 cable television subscribers and 11,200 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 December 31
                                                 2005              2004

  Revenues                                    $8,733,057        $7,826,521
  Operating income                             2,382,345         1,625,961
  Other income (expense):
    Income from investments:
      Midwest Wireless Holdings, LLC           1,076,497           614,798
      Other unconsolidated affiliates             63,572           251,403
    Interest and dividend income                 465,102           253,758
    Interest expense                            (734,007)         (650,935)
    Gain on sale of cable television
     systems and other business                                     43,876

      Net other income (expense)                 871,164           512,900

  Income before income taxes                   3,253,509         2,138,861
  Income tax expense                          (1,242,000)         (936,000)

  Net Income                                  $2,011,509        $1,202,861


  Basic net income per common share                 $.51              $.32
  Diluted net income per share                      $.48              $.30
  Dividends per share                               $.10              $.05


                                            Twelve Months Ended December 31
                                                 2005              2004

  Revenues                                   $32,373,475       $31,569,770
  Operating income                             7,989,713         6,982,180
  Other income (expense):
    Income (loss) from investments:
      Midwest Wireless Holdings, LLC           4,681,888         2,765,887
      Other unconsolidated affiliates            199,462           482,847
    Interest and dividend income               1,018,641           445,333
    Interest expense                          (2,957,370)       (2,867,135)
    Gain on sale of cable television
     systems and other business                                     85,271

      Net other income (expense)               2,942,621           912,203

  Income before income taxes                  10,932,334         7,894,383
  Income tax expense                          (4,365,000)       (3,250,000)

  Net Income                                  $6,567,334        $4,644,383

  Basic net income per common share                $1.72             $1.28
  Diluted net income per share                     $1.61             $1.17
  Dividends per share                               $.28              $.05



             Hector Communications Corporation and Subsidiaries
                           Condensed Balance Sheet

                                              December 31       December 31
                                                  2005              2004

  Cash                                       $25,245,358       $19,980,506
  Other current assets                         4,477,313         8,032,610
  Property, plant and equipment, net          37,381,570        40,040,493
  Excess of cost over net assets
   acquired                                   30,921,094        30,921,094
  Investment in Midwest Wireless
   Holdings, LLC                              18,067,471        15,380,543
  Investments in other unconsolidated
   affiliates                                  3,307,593         3,304,726
  Other investments                            8,037,986         6,880,549
  Other assets                                   315,906           382,322

  Total Assets                              $127,754,291      $124,922,843

  Notes payable and current portion of
   long-term debt                             $6,527,400        $6,352,000
  Other current liabilities                    4,214,147         4,060,611
  Long-term debt, less current portion        49,456,138        54,084,480
  Deferred taxes and credits                   5,308,790         5,463,894
  Deferred compensation                          802,116           749,128
  Stockholders' equity                        61,445,700        54,212,730

  Total Liabilities and Stockholders'
   Equity                                   $127,754,291      $124,922,843


DATASOURCE: Hector Communications Corporation



CONTACT: Curtis A. Sampson, Chairman and Chief Executive Officer, or,

Steven H. Sjogren, President, or, Paul N. Hanson, Vice President and Treasurer

all of Hector Communications Corporation, all at [phone]    

Copyright