Exhibit 99.1
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 Third Quarter of 2004
Hector Communications Corporation Declares First Cash Dividend
November 2, 2004--Hector, MN--Hector Communications Corporation (AMEX: HCT)
today reported operating results for its third quarter and nine month periods
ended September 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. The Company also announced that it will
pay a cash dividend to shareholders for the first time in its history.
Operating Results
Revenues from continuing operations were $7,806,000 for the three months ended
September 30, 2004, a decrease of 4% from $8,107,000 in 2003. The revenue
decrease was due to lower network access revenues from long distance providers
and reduced universal support payments from NECA. Access revenues from wireless
communications providers were also lower due to the impact of new
interconnection agreements that have been negotiated between the Company and
selected wireless carriers. Operating income from continuing operations
decreased 9% to $1,923,000 in 2004 from $2,120,000 in 2003. Income from the
Company's investment in Midwest Wireless Holdings LLC was $843,000 in the 2004
period compared to $596,000 in 2003. Income from continuing operations was
$1,294,000 or $.32 per diluted share in 2004 compared to $1,008,000 or $.27 per
diluted share in 2003. Income from discontinued operations was $210,000 or $.05
per diluted share in 2003.
Revenues from continuing operations were $23,743,000 for the nine months ended
September 30, 2004, a decrease of 2% from $24,194,000 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 7% to $5,356,000 in
2004 from $5,772,000 in 2003. Income from the Company's investment in Midwest
Wireless Holdings LLC was $2,151,000 in the 2004 period compared to $1,903,000
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 $3,442,000 or $.87 per diluted
share in 2004 compared to $3,030,000 or $.81 per diluted share in 2003. Income
from discontinued operations was $882,000 or $.23 per diluted share in 2003.
Curtis A. Sampson, chairman and chief executive officer, said "The Company's
operating results continue to reflect the gains the wireless industry is making
in competition with wireline carriers. Hector has a significant investment in
the wireless industry itself through its 8% ownership interest in Midwest
Wireless. The decrease in the Company's operating income in 2004 has been offset
by the sharp increase in Midwest Wireless earnings and lower borrowing costs, a
trend that is expected to continue."
Curtis also said, "The dividend we are paying in December is the first in the
history of the Company. It is a reflection of the Company's strong financial
position and bright earnings outlook."
Dividend
The Company's Board of Directors has declared a cash dividend of $.05 per share.
The dividend will be paid on December 15, 2004 to shareholders of record on
November 30, 2004.
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 29,700
telephone access lines, 8,200 cable television subscribers and 10,800 internet
customers 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 September 30
2004 2003
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Revenues from continuing operations $ 7,805,590 $ 8,106,588
Operating income from continuing operations 1,923,268 2,120,314
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 842,842 596,331
Other unconsolidated affiliates 52,003 (30,556)
Interest and dividend income 75,043 51,455
Interest expense (728,323) (961,574)
Gain on sale of Hastad Engineering 12,805
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Net other income (expense) 254,370 (344,344)
Income from continuing operations before
income taxes 2,177,638 1,775,970
Income tax expense (884,000) (768,000)
Income from continuing operations 1,293,638 1,007,970
Income from discontinued operations 209,505
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Net Income $ 1,293,638 $ 1,217,475
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Basic net income per common share:
Continuing operations $ .35 $ .29
Discontinued operations .06
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$ .35 $ .35
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Diluted net income per share:
Continuing operations $ .32 $ .27
Discontinued operations .05
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$ .32 $ .32
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Hector Communications Corporation and Subsidiaries
Earnings Summary
Nine Months Ended September 30
2004 2003
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Revenues from continuing operations $23,743,249 $24,193,995
Operating income from continuing operations 5,356,219 5,772,394
Other income (expense):
Income (loss) from investments:
Midwest Wireless Holdings, LLC 2,151,089 1,903,090
Other unconsolidated affiliates 231,444 (75,904)
Interest and dividend income 191,575 186,921
Interest expense (2,216,200) (2,730,426)
Gain on sale of cable television systems 28,590 1,080,723
Gain on sale of Hastad Engineering 12,805
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Net other income (expense) 399,303 364,404
Income from continuing operations before
income taxes 5,755,522 6,136,798
Income tax expense (2,314,000) (2,447,000)
Minority interest in earnings of continuing
operations of Alliance
Telecommunications Corp. (659,624)
Income from continuing operations 3,441,522 3,030,174
Income from discontinued operations 881,854
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Net Income $ 3,441,522 $ 3,912,028
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Basic net income per common share:
Continuing operations $ .95 $ .87
Discontinued operations .25
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$ .95 $ 1.12
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Diluted net income per share:
Continuing operations $ .87 $ .81
Discontinued operations .23
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$ .87 $ 1.04
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Hector Communications Corporation and Subsidiaries
Condensed Balance Sheet
September 30 December 31
2004 2003
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Cash $ 20,215,528 $ 16,581,315
Other current assets 8,242,717 8,609,295
Property, plant and equipment, net 40,275,697 43,088,106
Excess of cost over net assets acquired 30,921,094 31,691,927
Investment in Midwest Wireless Holdings, LLC 14,932,409 13,349,155
Investments in unconsolidated affiliates 2,860,208 2,796,035
Other investments 6,913,255 6,533,858
Other assets 373,943 409,664
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Total Assets $124,734,851 $123,059,355
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Notes payable and current portion of
long-term debt $ 6,512,000 $ 6,537,800
Other current liabilities 4,458,872 5,338,386
Long-term debt, less current portion 54,738,786 57,529,378
Deferred taxes and credits 5,419,958 4,911,869
Deferred compensation 713,164 698,254
Stockholders' equity 52,892,071 48,043,668
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Total Liabilities and Stockholders' Equity $124,734,851 $123,059,355
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