HCT 8% Hits Based ON Conocophillips Common Stock

Hector Communications Corporation Reports Revenues and Earnings for the First Quarter of 2004 HECTOR, Minn., May 4 /PRNewswire-FirstCall/ -- Hector Communications Corporation 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. 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 March 31 2004 2003 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) 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 Net Income $1,193,565 $1,126,518 Basic net income per common share: Continuing operations $.34 $.21 Discontinued operations .11 $.34 $.32 Diluted net income per share: Continuing operations $.31 $.20 Discontinued operations .10 $.31 $.30 Hector Communications Corporation and Subsidiaries Condensed Balance Sheet March 31 December 31 2004 2003 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 Total Assets $125,407,028 $123,059,355 Notes payable and current portion of long-term debt $6,610,609 $6,537,800 Other current liabilities 4,988,833 5,338,386 Long-term debt, less current portion 57,903,419 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 Total Liabilities and Stockholders' Equity $125,407,028 $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, +1-320-848-6231

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