Exhibit 99
Contact: Curtis A. Sampson, Chairman and Chief Executive Officer
Steven H. Sjogren, President
Paul N. Hanson, Vice President and Treasurer
For Immediate Release
Hector Communications Corporation Reports
Revenues and Earnings for the first quarter of 2004
May 4, 2004--Hector, MN--Hector Communications Corporation (AMEX: HCT) 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.
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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.
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Hector Communications Corporation and Subsidiaries
Earnings Summary
Three Months Ended March 31
2004 2003
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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)
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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
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Net Income $ 1,193,565 $ 1,126,518
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Basic net income per common share:
Continuing operations $ .34 $ .21
Discontinued operations .11
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$ .34 $ .32
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Diluted net income per share:
Continuing operations $ .31 $ .20
Discontinued operations .10
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$ .31 $ .30
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Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet
March 31 December 31
2004 2003
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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
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Total Assets $125,407,028 $123,059,355
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Notes payable and current portion of long-term debt $ 6,611,000 $ 6,537,800
Other current liabilities 4,988,833 5,338,386
Long-term debt, less current portion 57,903,028 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
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Total Liabilities and Stockholders' Equity $125,407,028 $123,059,355
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