HECTOR, Minn., Aug. 3 /PRNewswire-FirstCall/ -- Hector
Communications Corporation (AMEX:HCT) today reported operating
results for its second quarter and six month periods ended June 30,
2005. Revenues were $7,858,000 for the three months ended June 30,
2005, a decrease of 2% from $7,992,000 in 2004. The revenue
decrease was mainly due to lower access revenues from long distance
and wireless carriers. Operating income increased 18% to $1,716,000
compared to $1,452,000 in 2004 due to divestitures of unprofitable
business the Company made in the last half of 2004. Income from the
Company's investment in Midwest Wireless Holdings LLC was
$1,297,000 in the 2005 period compared to $626,000 in 2004. Net
income was $1,493,000 or $.37 per diluted share in 2005 compared to
$954,000 or $.24 per diluted share in 2004. Revenues were
$15,507,000 for the six months ended June 30, 2005, a decrease of
3% from $15,938,000 in 2004. Operating income increased 3% to
$3,530,000 compared to $3,433,000 in 2004. Income from the
Company's investment in Midwest Wireless Holdings LLC was
$2,367,000 in the 2005 period compared to $1,308,000 in 2004. Net
income was $2,879,000 or $.71 per diluted share in 2005 compared to
$2,148,000 or $.55 per diluted share in 2004. Curtis A. Sampson,
Chairman and Chief Executive Officer, said "Hector's growth in
operating income and net income in 2005 are reflective of the
outstanding performance of Midwest Wireless and our determination
to focus on core business opportunities and eliminate unprofitable
operations. However, our outlook on our industry has not changed;
the Company's core business, wireline telephone service in rural
communities, will continue to face significant challenges. We
expect access revenue will continue to decline due to the impact of
the dramatic growth in wireless telephony. We believe competitive
challenges from new technologies, including the emergence of Voice
over Internet Protocol (VoIP) will significantly impact our
business and will change the marketplace for telecommunications
services. We recognize that possible changes to the level of
regulatory support for rural telecommunications could be
detrimental to Hector. Given these factors, the management and
Board of Directors of the Company continue to assess all strategic
options available to it and have retained the investment banking
firm of Legg Mason Wood Walker, Inc. to assist in this effort."
Hector Communications Corporation is a telecommunications holding
company that, through its subsidiaries, provides local telephone,
video and high-speed Internet service in rural communities in
Minnesota, Wisconsin and North Dakota. The Company serves 29,300
telephone access lines, 7,800 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 June 30 Six Months
Ended June 30 2005 2004 2005 2004 Revenues $7,858,092 $7,992,006
$15,507,089 $15,937,659 Operating income 1,716,219 1,451,758
3,529,530 3,432,951 Other income (expense): Income (loss) from
investments: Midwest Wireless Holdings, LLC 1,296,875 626,118
2,367,218 1,308,247 Other unconsolidated affiliates 46,630 134,255
44,429 179,441 Interest and dividend income 202,264 63,006 387,045
116,532 Interest expense (745,175) (716,408) (1,475,347)
(1,487,877) Gain on sale of cable television systems 28,590 28,590
Net other income 800,594 135,561 1,323,345 144,933 Income before
income taxes 2,516,813 1,587,319 4,852,875 3,577,884 Income tax
expense 1,024,000 633,000 1,974,000 1,430,000 Net Income $1,492,813
$954,319 $2,878,875 $2,147,884 Basic net income per common share:
$.40 $.26 $.77 $.60 Diluted net income per share $.37 $.24 $.71
$.55 Hector Communications Corporation and Subsidiaries Condensed
Balance Sheet June 30 December 31 2005 2004 Cash and cash
equivalents $25,124,324 $19,980,506 Other current assets 5,107,963
8,032,610 Property, plant and equipment, net 37,531,094 40,040,493
Excess of cost over net assets acquired 30,921,094 30,921,094
Investment in Midwest Wireless Holdings, LLC 16,824,819 15,380,543
Investments in other unconsolidated affiliates 3,284,663 3,304,726
Other investments 7,707,289 6,880,549 Other assets 361,569 382,322
Total Assets $126,862,815 $124,922,843 Notes payable and current
portion of long-term debt $6,630,000 $6,352,000 Other current
liabilities 4,578,409 4,060,611 Long-term debt, less current
portion 52,287,445 54,084,480 Deferred taxes and credits 5,667,079
5,463,894 Deferred compensation 743,271 749,128 Stockholders'
equity 56,956,611 54,212,730 Total Liabilities and Stockholders'
Equity $126,862,815 $124,922,843 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, of Hector Communications Corporation,
+1-320-848-6611
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