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<div> NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS In December 2011, an accounting standards update regarding balance sheet disclosures of offsetting assets and liabilities was issued. This update requires disclosure on information about offsetting and related arrangements to enable users of an entity's financial statements to understand the effect of those arrangements on its financial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not believe this will have a material impact on its disclosures or consolidated financial statements. In July 2012, an accounting standards update regarding "Testing Indefinite-Lived Intangible Assets for Impairment" was issued. This update allows an entity to first assess qualitative factors in determining whether events and circumstances indicate that it is more-likely-than not that an indefinite-lived intangible asset is impaired. If an entity determines that it is not more-likely-than not that the indefinite-lived intangible asset is impaired, then the entity is not required to perform a quantitative impairment test. This update is effective for fiscal years beginning after September 15, 2012. The Company is currently evaluating the effects this new standard may have on its consolidated financial statements. </div>

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<div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="2%"> </td> <td width="18%"> </td> <td width="2%"> </td> <td width="20%"> </td> <td width="2%"> </td> <td width="13%"> </td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="2%" align="center"> </td> <td width="18%" align="center"> </td> <td width="2%" align="center"> </td> <td width="20%" align="center">Unrealized</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Fair Value</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="2%" align="center"> </td> <td width="18%" align="center">Amortized</td> <td width="2%" align="center"> </td> <td width="20%" align="center">Gains</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Carrying</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Cost</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="20%" align="center">(Losses)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td></tr> <tr valign="bottom"><td width="38%" align="left">June 30, 2012</td> <td width="2%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="20%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Bank certificate of deposit</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">260</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 11px;" width="20%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="13%" align="right">260</td></tr> <tr><td width="95%" colspan="7"> </td></tr> <tr valign="bottom"><td width="38%" align="left">December 31, 2011</td> <td width="2%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="20%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Bank certificate of deposit</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">259</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 11px;" width="20%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="13%" align="right">259</td></tr></table> </div>

<div> <div> Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments consisting only of normal recurring adjustments considered necessary for fair presentation have been included. Operating results and cash flows for the six-month period ended June 30, 2012 are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and any disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.</div> </div>

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<div> <table border="0" cellspacing="0"> <tr><td width="59%"> </td> <td width="3%" align="center"> </td> <td width="18%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="17%" align="center"> </td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Three Months Ended June 30,</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">Six Months Ended June 30,</td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">2011</td></tr> <tr valign="bottom"><td width="59%" align="left">Operating revenues</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">7,664</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">15,408</td></tr> <tr valign="bottom"><td width="59%" align="left">Net income (loss)</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(68</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">553</td></tr> <tr valign="bottom"><td width="59%" align="left">Earnings (loss) per common share:</td> <td width="3%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="17%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Basic</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(0.01</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">0.10</td></tr> <tr valign="bottom"><td width="59%" align="left">Diluted</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(0.01</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">0.10</td></tr></table> </div>

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<div> NOTE 2: BUSINESS ACQUISITION The following unaudited pro forma consolidated results of operations for the Company for the three and six months ended June 30, 2011 assumes that the purchase of certain assets and assumption of certain liabilities of Alteva, LLC (now Avetla, LLC) on August 5, 2011 occurred instead on January 1, 2011. The unaudited pro forma information presents the combined operating results of the purchased lines of business and the Company with the results prior to the asset purchase date adjusted for amortization of intangibles and depreciation of fixed assets based on the purchase price allocation and the elimination of acquisition related costs. These unaudited pro forma results do not purport to be indicative of the results that would have been obtained if the asset purchase occurred as of January 1, 2011 nor does the unaudited pro forma data intend to be a projection of results that may be obtained in the future. <div> <table border="0" cellspacing="0"> <tr><td width="59%"> </td> <td width="3%" align="center"> </td> <td width="18%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="17%" align="center"> </td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Three Months Ended June 30,</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">Six Months Ended June 30,</td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">2011</td></tr> <tr valign="bottom"><td width="59%" align="left">Operating revenues</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">7,664</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">15,408</td></tr> <tr valign="bottom"><td width="59%" align="left">Net income (loss)</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(68</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">553</td></tr> <tr valign="bottom"><td width="59%" align="left">Earnings (loss) per common share:</td> <td width="3%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="17%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Basic</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(0.01</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">0.10</td></tr> <tr valign="bottom"><td width="59%" align="left">Diluted</td> <td style="border-bottom: #000000 3px double;" width="3%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">(0.01</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">0.10</td></tr></table></div>   <div> </div> </div>

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66000

1600000

<div> NOTE 15: STOCK BASED COMPENSATION The Company adopted and, at its annual meeting held on April 29, 2011, its shareholders approved the Amended and Restated 2008 Long-Term Incentive Plan (the "Amended and Restated LTIP") to assist the Company and its affiliates in attracting, motivating and retaining selected individuals to serve as employees, directors, consultants and advisors of the Company and its affiliates by providing incentives to such individuals through the ownership and performance of the Company's common stock. The Amended and Restated LTIP increased the total number of shares authorized under the Amended and Restated LTIP from 500,000 shares to 1,100,000 shares of common stock. Shares available for grant under the Amended and Restated LTIP may be either authorized but unissued shares or shares that have been reacquired by the Company and designated as treasury shares. As of June 30, 2012, 629,469 shares of common stock were available for grant under the Amended and Restated LTIP. The Amended and Restated LTIP permits the issuance by the Company of awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units and performance shares. The exercise price per share of the Company's common stock purchasable under any stock option or stock appreciation right may not be less than 100% of the fair market value of one share of common stock on the date of grant. The term of any stock option or stock appreciation may not exceed ten years. The Amended and Restated LTIP also provides plan participants with a cashless mechanism to exercise their stock options. Issued restricted stock, stock options and restricted stock units are subject to vesting restrictions. <div> </div> Restricted Common Stock Awards The following table summarizes the restricted common stock activity with certain eligible participants during the six months ended June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="28%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="17%"> </td></tr> <tr valign="bottom"><td align="left"> </td> <td align="center"> </td> <td align="center"> </td> <td align="center"> </td> <td align="center">Grant Date</td></tr> <tr valign="bottom"><td align="left"> </td> <td align="center">Date Issued</td> <td align="center">Shares</td> <td align="center"> </td> <td align="center">Fair Value per Share</td></tr> <tr><td colspan="5"> </td></tr> <tr valign="bottom"><td align="left">Restricted stock granted</td> <td style="text-indent: 6px;" align="right">01/06/12</td> <td style="text-indent: 3px;" align="right">14,608</td> <td align="left">$</td> <td align="center">12.93</td></tr> <tr valign="bottom"><td align="left">Restricted stock granted</td> <td style="text-indent: 6px;" align="right">02/24/12</td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" align="right">31,673</td> <td align="left">$</td> <td align="center">14.38</td></tr> <tr valign="bottom"><td align="left">Total restricted stock granted</td> <td align="left"> </td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" align="right">46,281</td> <td align="left"> </td> <td align="left"> </td></tr></table></div>   Stock-based compensation expense for restricted stock awards was $320 and $448 for the six months ended June 30, 2012 and 2011, respectively, and $166 and $333 for the three months ended June 30, 2012 and 2011, respectively. Restricted stock awards are amortized over their respective vesting periods of two or three years. The Company records stock-based compensation for grants of restricted stock awards on a straight-line basis. The Company has determined expected forfeitures based on recent activity and is recognizing compensation expense only for those restricted common shares expected to vest. The following table summarizes the restricted common stock activity during the six-month periods ended June 30, 2012 and 2011: <div> <table border="0" cellspacing="0"> <tr><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="33%" colspan="4" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="29%" colspan="4" align="center">2011</td></tr> <tr><td width="100%" colspan="9" align="center"> </td></tr> <tr><td width="100%" colspan="9" align="center"> </td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center">Grant Date</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Grant Date</td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center">Weighted Average</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Weighted Average</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="38%" align="left">Unvested Shares</td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Price per Share</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Price per Share</td></tr> <tr><td width="100%" colspan="9"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Balance - Beginning of period</td> <td width="15%" align="right">68,559</td> <td width="2%" align="left"> </td> <td width="2%" align="center">$</td> <td width="14%" align="center">14.15</td> <td width="13%" align="right">47,373</td> <td width="2%" align="left"> </td> <td width="2%" align="center">$</td> <td width="12%" align="center">12.64</td></tr> <tr valign="bottom"><td width="38%" align="left">Granted</td> <td width="15%" align="right">46,281</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="center">13.92</td> <td width="13%" align="right">58,676</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="center">14.67</td></tr> <tr valign="bottom"><td width="38%" align="left">Vested</td> <td width="15%" align="right">(31,094</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="14%" align="center">13.92</td> <td width="13%" align="right">(33,986</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="center">13.25</td></tr> <tr valign="bottom"><td width="38%" align="left">Forfeited</td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">(148</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">13.67</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">0.00</td></tr> <tr valign="bottom"><td width="38%" align="left">Balance - End of period</td> <td style="border-bottom: #000000 3px double;" width="15%" align="right">83,598</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="center">14.11</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">72,063</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="center">13.99</td></tr></table></div>   The total fair value of restricted stock vested during the six-month periods ended June 30, 2012 and 2011 was $433 and $451, respectively. Stock Options The following tables summarize stock option activity for the six-month periods ended June 30, 2012 and 2011, along with stock options exercisable at the end of the period: <div> <table border="0" cellspacing="0"> <tr><td width="42%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td style="border-bottom: #000000 3px double;" width="31%" colspan="4" align="center">2012</td> <td style="border-bottom: #000000 3px double;" width="29%" colspan="4" align="center">2011</td></tr> <tr><td width="102%" colspan="9" align="center"> </td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Weighted</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Weighted</td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Average</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Average</td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Exercise</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Exercise</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="42%" align="left">Options</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Price</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Price</td></tr> <tr><td width="102%" colspan="9"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Outstanding - beginning of period</td> <td width="14%" align="right">203,864</td> <td width="2%" align="left"> </td> <td width="2%" align="right">$</td> <td width="13%" align="center">14.02</td> <td width="13%" align="right">160,733</td> <td width="2%" align="left"> </td> <td width="2%" align="right">$</td> <td width="12%" align="center">11.33</td></tr> <tr valign="bottom"><td width="42%" align="left">Stock options granted</td> <td width="14%" align="right">144,852</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="center">14.38</td> <td width="13%" align="right">148,381</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="center">14.83</td></tr> <tr valign="bottom"><td width="42%" align="left">Exercised</td> <td width="14%" align="right">(45,610</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="center">14.85</td> <td width="13%" align="right">(103,319</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="center">11.01</td></tr> <tr valign="bottom"><td width="42%" align="left">Forfeited</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">0.00</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">0.00</td></tr> <tr valign="bottom"><td width="42%" align="left">Outstanding - end of period</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">303,106</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="center">14.07</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">205,795</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="center">13.89</td></tr> <tr><td width="102%" colspan="9"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Vested and expected to vest at June 30</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">303,106</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">205,795</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Exercisable at June 30</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">77,990</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">24,206</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr></table></div>   <div> </div> Stock options vest over a three-year period. The following table summarizes information about fixed-price stock options outstanding at June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center">Weighted</td> <td width="14%" align="center">Weighted Average</td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center">Average</td> <td width="14%" align="center">Remaining</td> <td width="14%" colspan="2" align="center">Aggregate</td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center">Shares</td> <td width="2%" align="center"> </td> <td width="16%" align="center">Exercise</td> <td width="14%" align="center">Contractual</td> <td width="14%" colspan="2" align="center">Instrinsic</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="6%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Exercise Price Per Share</td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">Outstanding</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="center">Price</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Life (Years)</td> <td style="border-bottom: #000000 1px solid;" width="14%" colspan="2" align="center">Value</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">10.78</td> <td width="17%" align="right">15,166</td> <td width="2%" align="left">$</td> <td width="16%" align="center">10.78</td> <td width="14%" align="center">6.2</td> <td width="2%" align="left">$</td> <td width="12%" align="right">36</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">10.02</td> <td width="17%" align="right">4,051</td> <td width="2%" align="left"> </td> <td width="16%" align="center">10.02</td> <td width="14%" align="center">6.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">13</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">11.20</td> <td width="17%" align="right">7,517</td> <td width="2%" align="left"> </td> <td width="16%" align="center">11.20</td> <td width="14%" align="center">6.8</td> <td width="2%" align="left"> </td> <td width="12%" align="right">15</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.97</td> <td width="17%" align="right">7,000</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.97</td> <td width="14%" align="center">7.4</td> <td width="2%" align="left"> </td> <td width="12%" align="right">1</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.76</td> <td width="17%" align="right">333</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.76</td> <td width="14%" align="center">7.4</td> <td width="2%" align="left"> </td> <td width="12%" align="right">1</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.88</td> <td width="17%" align="right">22,328</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.88</td> <td width="14%" align="center">7.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.70</td> <td width="17%" align="right">18,849</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.70</td> <td width="14%" align="center">8.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.85</td> <td width="17%" align="right">83,010</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.85</td> <td width="14%" align="center">8.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.38</td> <td width="17%" align="right">144,852</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.38</td> <td width="14%" align="center">9.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr><td width="87%" colspan="8"> </td></tr> <tr valign="bottom"><td width="6%" align="right"> </td> <td width="18%" align="left"> </td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="17%" align="right">303,106</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="16%" align="center">14.07</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="14%" align="center">9.1</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="12%" align="right">73</td></tr> <tr><td width="87%" colspan="8"> </td></tr> <tr valign="bottom"><td width="6%" align="right"> </td> <td width="18%" align="left">Exercisable at June 30, 2012</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">77,990</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="16%" align="center">13.07</td> <td style="border-bottom: #000000 3px double;" width="14%" align="center">7.9</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">13</td></tr></table></div>   Stock-based compensation expense for stock option awards was $78 and $178 for the six months ended June 30, 2012 and 2011, respectively, and $40 and $148 for the three months ended June 30, 2012 and 2011, respectively. The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on the last trading day, June 29, 2012, and the exercise price times the number of shares) that would have been received by the option holders had all the option holders exercised in-the-money stock options on June 30, 2012. This amount changes based on the fair market value of the Company's common stock. The fair value of the above stock-based option awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the six months ended June 30, 2012 and 2011: <div> <table border="0" cellspacing="0"> <tr><td width="60%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="3%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="3%"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Options</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td></tr> <tr><td width="94%" colspan="7"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Expected life (in years)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">10</td> <td width="3%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">10</td> <td width="3%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Interest rate</td> <td width="2%" align="left"> </td> <td width="12%" align="right">2.70</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">3.40</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Volatility</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27.10</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">32.77</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Dividend yield</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.23</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.00</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Weighted-average fair value per share at grant date</td> <td width="2%" align="left">$</td> <td width="12%" align="right">1.37</td> <td width="3%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">2.16</td> <td width="3%" align="left"> </td></tr></table></div>   The following table sets forth the total stock-based compensation expense resulting from stock options and restricted stock granted to employees, as well as the effects of the acceleration of the vesting of stock options and restricted stock which had been granted to the Company's former Chief Financial Officer in 2011 in the amount of $345, which are included in the Company's consolidated statements of income for the three and six month periods ended June 30, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="46%"> </td> <td width="2%"> </td> <td width="10%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="46%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="4" align="center">Three Months</td> <td style="border-bottom: #000000 1px solid;" width="28%" colspan="4" align="center">Six Months</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="46%" align="left">Stock-Based Compensation Expense</td> <td style="border-bottom: #000000 1px solid;" width="12%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="15%" colspan="2" align="center">2011</td> <td style="border-bottom: #000000 1px solid; text-indent: 8px;" width="14%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="14%" colspan="2" align="center">2011</td></tr> <tr><td width="101%" colspan="9"> </td></tr> <tr valign="bottom"><td width="46%" align="left">Cost of services and products</td> <td width="2%" align="left">$</td> <td width="10%" align="right">0</td> <td width="2%" align="left">$</td> <td width="13%" align="right">17</td> <td width="2%" align="left">$</td> <td width="12%" align="right">0</td> <td width="2%" align="center">$</td> <td width="12%" align="right">34</td></tr> <tr valign="bottom"><td width="46%" align="left">Selling, general and administrative expenses</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="10%" align="right">206</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">464</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">398</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">592</td></tr> <tr valign="bottom"><td width="46%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="10%" align="right">206</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">481</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">398</td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">626</td></tr></table></div>   As of June 30, 2012, $1,213 of total unrecognized compensation expense related to stock options and restricted common stock is expected to be recognized over a weighted average period of approximately 2.1 years. </div>

2847000

3131000

13000

0.11

-0.05

-0.26

-0.04

0.11

-0.05

-0.26

-0.04

<div> NOTE 6: EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income applicable to common shares by the weighted average number of common shares adjusted to include the effect of potentially dilutive securities. Potentially dilutive securities include incremental shares issuable upon exercise of outstanding stock options and shares of unvested restricted stock. Diluted earnings per share exclude all dilutive securities if their effect is anti-dilutive. The weighted average number of shares of common stock used in diluted earnings per share for the three and six months ended June 30, 2012 and 2011 is as follows: <div class="MetaData"> <div> <table border="0" cellspacing="0"> <tr><td width="36%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="11%"> </td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="29%" colspan="3" align="center">Three Months Ended June 30,</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="3" align="center">Six Months Ended June 30,</td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" colspan="2" align="center">2012 (1)</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2011 (1)</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2012 (1)</td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">2011</td></tr> <tr><td width="94%" colspan="8"> </td></tr> <tr valign="bottom"><td width="36%" align="left">Weighted average shares of common stock</td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 1px;" width="36%" align="left">used in basic earnings per share</td> <td width="13%" align="right">5,458,223</td> <td width="2%" align="left"> </td> <td width="14%" align="right">5,406,894</td> <td width="2%" align="left"> </td> <td width="14%" align="right">5,450,345</td> <td width="2%" align="left"> </td> <td width="11%" align="right">5,400,822</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of puttable common stock</td> <td width="13%" align="right">272,479</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">272,479</td> <td width="2%" align="left"> </td> <td width="11%" align="right">0</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of stock options</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="11%" align="right">6,290</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of restricted stock</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">17,175</td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">5,730,702</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">5,406,894</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">5,722,824</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="right">5,424,287</td></tr></table></div>   (1) Basic and diluted weighted average shares were the same for the three months and six months ended June 30, 2012 because the effects of the potentially diluted securities were anti-dilutive and they were excluded from the calculation.</div> </div>

0.343

0.348

0.310

0.303

P2Y1M6D

1213000

13600000

13000000

0.08108

<div> NOTE 11: ORANGE COUNTY-POUGHKEEPSIE LIMITED PARTNERSHIP The Company is a limited partner in the Orange County-Poughkeepsie Limited Partnership ("O-P") and had an 8.108% equity interest as of June 30, 2012 and 2011, which is accounted for under the equity method of accounting. The majority owner and general partner is Verizon Wireless of the East LP. On May 26, 2011, the Company entered into an agreement with Verizon Wireless of the East LP, the general partner and a limited partner, and Cellco Partnership, the other limited partner, in the O-P to make certain changes to the O-P partnership agreement, which, among other things, specifies that the O-P will provide 4G cellular services (the "4G Agreement"). The 4G Agreement provides that the O-P's business will be converted from a wholesale business to a retail business. The 4G Agreement provides for guaranteed annual cash distributions to the Company from the O-P through 2013. For 2011, annual cash distributions from the O-P were $13,600 and for 2012 and 2013 the annual cash distribution will be $13,000. Annual cash distributions are paid in equal quarterly amounts. The 4G Agreement also gives the Company the right (the "Put") to require one of the O-P's limited partners to purchase all the Company's ownership interest in the O-P during April 2013 or April 2014 for an amount equal to the greater of (a) $50,000 or (b) the product of five (5) times 0.081081 times the O-P's EBITDA, as defined in the 4G Agreement, for the calendar year preceding the exercise of the Put. The conversion of the O-P from a wholesale business to a retail business pursuant to the 4G Agreement increased the cellular service costs and operating expenses incurred by the O-P, which caused a subsequent reduction in the O-P's net income due primarily to the inclusion of sales and marketing expenses. Although the Company's share of the O-P net income recorded in the Company's income statement has decreased, the annual cash distributions the Company receives from the O-P will remain unchanged through 2013 pursuant to the terms of the 4G Agreement. Pursuant to the equity method accounting, the Company is required to record the income from the O-P as an increase to the Company's investment account. The Company is required to apply the cash payments made under the 4G Agreement as a return on its investment when received. Under equity method accounting, the Company currently reports as income its proportionate share of the O-P income, which is less than the guaranteed cash distributions it receives from the O-P. The cash distributions the Company receives from the O-P that are in excess of the Company's proportionate share of the O-P income is applied to its investment account. As a result of receiving the fixed guaranteed cash distributions from the O-P in excess of the Company's proportionate share of the O-P income, the investment account was reduced to zero during the quarter ended June 30, 2012. Therefore, the Company will record the greater of the Company's share of the O-P income or the fixed guaranteed cash distributions that are received from the O-P beginning in the three months ended September 30, 2012, directly to the Company's statement of operations as other income. <div class="MetaData"> The following summarizes the income statement (unaudited) for the six months ended June 30, 2012 and 2011 that the O-P provided to the Company: <div> <table border="0" cellspacing="0"> <tr><td width="60%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="60%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="3" align="center">2011 (1)</td></tr> <tr valign="bottom"><td width="60%" align="left">Net sales</td> <td width="2%" align="right">$</td> <td width="14%" align="right">150,416</td> <td width="2%" align="left">$</td> <td width="12%" align="right">116,165</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Cellular service cost</td> <td width="2%" align="right"> </td> <td width="14%" align="right">70,353</td> <td width="2%" align="left"> </td> <td width="12%" align="right">32,508</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Operating expenses</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">41,375</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">16,868</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Operating income</td> <td width="2%" align="right"> </td> <td width="14%" align="right">38,688</td> <td width="2%" align="left"> </td> <td width="12%" align="right">66,789</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Other income</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">6</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">14</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Net income</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">38,694</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">66,803</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="92%" colspan="6"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Company share</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">3,137</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">5,416</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   (1) The O-P's income statement for the six months ended June 30, 2011, represents four months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6 to the O-P Limited Partnership Agreement effective May 1, 2011 ("Amendment 6") The following summarizes the income statement (unaudited) for the three months ended June 30, 2012 and 2011 that O-P provided to the Company: <div> <table border="0" cellspacing="0"> <tr><td width="59%"> </td> <td width="3%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="3" align="center">2011 (1)</td></tr> <tr valign="bottom"><td width="59%" align="left">Net sales</td> <td width="3%" align="right">$</td> <td width="14%" align="right">76,180</td> <td width="2%" align="left">$</td> <td width="12%" align="right">67,776</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Cellular service cost</td> <td width="3%" align="right"> </td> <td width="14%" align="right">34,305</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27,020</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Operating expenses</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">20,755</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">13,659</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Operating income</td> <td width="3%" align="right"> </td> <td width="14%" align="right">21,120</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27,097</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Other income</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">4</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">16</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Net income</td> <td style="border-bottom: #000000 3px double;" width="3%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">21,124</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">27,113</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="92%" colspan="6"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Company share</td> <td style="border-bottom: #000000 3px double;" width="3%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">1,713</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">2,198</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   (1) The O-P's income statement represents, for the three months ended June 30, 2011, one months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6.</div> <div> </div> The following summarizes the balance sheet as of June 30, 2012 (unaudited) and December 31, 2011 that O-P provided to the Company: <div> <table border="0" cellspacing="0"> <tr><td width="68%"> </td> <td width="2%"> </td> <td width="15%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="68%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td></tr> <tr valign="bottom"><td width="68%" align="left">Current assets</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="15%" align="right">20,469</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="12%" align="right">20,525</td></tr> <tr valign="bottom"><td width="68%" align="left">Property, plant and equipment, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="15%" align="right">39,472</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="12%" align="right">39,596</td></tr> <tr valign="bottom"><td width="68%" align="left">Total assets</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="15%" align="right">59,941</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">60,121</td></tr> <tr><td width="99%" colspan="5"> </td></tr> <tr valign="bottom"><td width="68%" align="left">Total liabilities</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="15%" align="right">33,336</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="12%" align="right">42,500</td></tr> <tr valign="bottom"><td width="68%" align="left">Partners' capital</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="15%" align="right">26,605</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="12%" align="right">17,621</td></tr> <tr valign="bottom"><td width="68%" align="left">Total liabilities and partners' capital</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="15%" align="right">59,941</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">60,121</td></tr></table></div>   </div>

60121000

59941000

32508000

27020000

70353000

34305000

20525000

20469000

17621000

26605000

42500000

33336000

60121000

59941000

66803000

27113000

38694000

21124000

39596000

39472000

116165000

67776000

150416000

76180000

<div> <div class="MetaData"> The following table represents the Company's fair value hierarchy for its financial assets (cash equivalents and short-term investments) measured at fair value on a recurring basis as of June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="39%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="39%" align="left">Short-term investments</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">260</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">260</td></tr></table></div>   <div> </div> The following table represents the Company's fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="42%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="42%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="42%" align="left">Short-term investments</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">259</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 5px;" width="12%" align="right">259</td></tr></table></div></div> </div>

11.74

0.1203

0.1963

0.0015

<div> NOTE 5: FAIR VALUE Fair value is the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company is required by accounting standards to provide the disclosure framework for measuring fair value and expands disclosure about fair value measurements. Fair value measurements are classified and disclosed in one of the following categories: <div> <table border="0" cellspacing="0"> <tr><td width="10%"> </td> <td width="89%"> </td></tr> <tr valign="top"><td width="10%"> Level 1:</td> <td width="89%"> Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.</td></tr> <tr><td colspan="2"> </td></tr> <tr valign="top"><td width="10%"> Level 2:</td> <td width="89%"> Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.</td></tr> <tr><td colspan="2"> </td></tr> <tr valign="top"><td width="10%"> Level 3:</td> <td width="89%"> Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company's valuation models are primarily industry standard models. Level 3 instruments include derivative instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.</td></tr></table></div>   Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. <div class="MetaData"> The following table represents the Company's fair value hierarchy for its financial assets (cash equivalents and short-term investments) measured at fair value on a recurring basis as of June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="39%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="39%" align="left">Short-term investments</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">260</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">260</td></tr></table></div>   <div> </div> The following table represents the Company's fair value hierarchy for its financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="42%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="42%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="42%" align="left">Short-term investments</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">259</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 5px;" width="12%" align="right">259</td></tr></table></div></div>   Derivative liability In connection with the Company's acquisition of substantially all of the assets and assumption of certain liabilities of Alteva, LLC (now Avetla, LLC) on August 5, 2011, the members of Avetla, LLC entered into a Lock-Up and Put Agreement with the Company effective October 21, 2011. The Lock-up and Put Agreement includes a purchase price protection that provides that if the price of the Company's common stock for the 30 trading days immediately prior to the October 21, 2012 or December 15, 2012 (but excluding the three trading days prior to and after the record date for any cash dividend declared by the Company) ( the "Release Date Price") is less than $11.74, then the Company will issue to the Avetla, LLC members the aggregate number of shares of the Company's common stock equal to the difference between $1,600 and the market value of 50% of the aggregate shares on October 21, 2012 or December 15, 2012, or 100% of the aggregate shares if the release Date is less than $11.74 on both dates. The purchase price protection provision is considered to be a derivative instrument and must be valued and recognized at the instrument's current fair market value as of the date of issuance and adjusted each period the financial statements are presented. The Company employed a binomial pricing model to calculate the fair value of the price protection and recorded the fair value as a current liability on its consolidated balance sheet. Inputs are adjusted each period to reflect changes in the Company's estimate of value of the underlying common stock. The fair value of the price protection was estimated utilizing the binomial pricing model with the following assumptions as of June 30, 2012 and December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="65%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="65%" align="center">Binomial method</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">June 30, 2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">December 31, 2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Model iterations</td> <td width="2%" align="left"> </td> <td width="14%" align="right">100.5</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">100.5</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Simulated median price</td> <td width="2%" align="left">$</td> <td width="14%" align="right">13.51</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">13.45</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Exercise price per share</td> <td width="2%" align="left">$</td> <td width="14%" align="right">11.74</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">11.74</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Expected volatility</td> <td width="2%" align="left"> </td> <td width="14%" align="right">19.63</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">12.03</td> <td width="2%" align="left">%</td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Risk free interest rate</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0.15</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0.15</td> <td width="2%" align="left">%</td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Yield rate</td> <td width="2%" align="left"> </td> <td width="14%" align="right">7.99</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.73</td> <td width="2%" align="left">%</td></tr></table></div>   <div class="MetaData"> The following table represents the Company's fair value hierarchy for its financial liabilities measured at fair value on a recurring basis as of June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="44%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="44%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 2px;" width="14%" colspan="2" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="44%" align="left">Derivative liability in connection with business acquisition</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="11%" align="right">66</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 6px;" width="12%" align="right">66</td></tr></table></div>   The following table represents the Company's fair value hierarchy for its financial liabilities measured at fair value on a recurring basis as of December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="44%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="44%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 2px;" width="14%" colspan="2" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="44%" align="left">Derivative liability in connection with business acquisition</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 6px;" width="11%" align="right">131</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 5px;" width="12%" align="right">131</td></tr></table></div></div>   The following table represents a summary of changes in the fair value of the Company's Level 3 derivative liability for the period ended June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="78%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="4%"> </td></tr> <tr valign="bottom"><td width="78%" align="left">Derivative liability balance December 31, 2011</td> <td width="2%" align="left">$</td> <td width="12%" align="right">131</td> <td width="4%" align="left"> </td></tr> <tr valign="bottom"><td width="78%" align="left">Decrease in fair value of price protection instrument</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(65</td> <td style="border-bottom: #000000 1px solid;" width="4%" align="left">)</td></tr> <tr valign="bottom"><td width="78%" align="left">Derivative liability balance June 30, 2012</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">66</td> <td style="border-bottom: #000000 3px double;" width="4%" align="left"> </td></tr></table></div>   <div> </div> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="65%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="65%" align="center">Binomial method</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">June 30, 2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">December 31, 2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Model iterations</td> <td width="2%" align="left"> </td> <td width="14%" align="right">100.5</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">100.5</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Simulated median price</td> <td width="2%" align="left">$</td> <td width="14%" align="right">13.51</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">13.45</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Exercise price per share</td> <td width="2%" align="left">$</td> <td width="14%" align="right">11.74</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">11.74</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Expected volatility</td> <td width="2%" align="left"> </td> <td width="14%" align="right">19.63</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">12.03</td> <td width="2%" align="left">%</td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Risk free interest rate</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0.15</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0.15</td> <td width="2%" align="left">%</td></tr> <tr valign="bottom"><td style="text-indent: 2px;" width="65%" align="left">Yield rate</td> <td width="2%" align="left"> </td> <td width="14%" align="right">7.99</td> <td width="2%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.73</td> <td width="2%" align="left">%</td></tr></table> </div>

<div> <div class="MetaData"> The following table represents the Company's fair value hierarchy for its financial liabilities measured at fair value on a recurring basis as of June 30, 2012: <div> <table border="0" cellspacing="0"> <tr><td width="44%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="44%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 2px;" width="14%" colspan="2" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="44%" align="left">Derivative liability in connection with business acquisition</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="11%" align="right">66</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 6px;" width="12%" align="right">66</td></tr></table></div>   The following table represents the Company's fair value hierarchy for its financial liabilities measured at fair value on a recurring basis as of December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="44%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="44%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 2px;" width="14%" colspan="2" align="center">Level 1</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 2</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">Level 3</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Total</td></tr> <tr valign="bottom"><td width="44%" align="left">Derivative liability in connection with business acquisition</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 6px;" width="11%" align="right">131</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 5px;" width="12%" align="right">131</td></tr></table></div></div> </div>

567000

281000

219000

67000

1131000

619000

366000

146000

9172000

5400000

1372000

2400000

9577000

5400000

1777000

2400000

8605000

5119000

1153000

2333000

8446000

4781000

1411000

2254000

P8Y

P5Y

P15Y

P8Y

P5Y

P15Y

9121000

<div> NOTE 7: GOODWILL AND OTHER INTANGIBLE ASSETS The Unified Communications segment includes $9,121 of goodwill as of June 30, 2012, resulting from the Company's acquisition of substantially all of the assets and certain liabilities of Alteva, LLC in 2011. Acquired goodwill is tested for impairment annually using a fair value approach. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an entity below its carrying value. Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual value. Identifiable intangible assets that are subject to amortization are evaluated for impairment. The components of other intangible assets are as follows: <div class="MetaData"> <div> <table border="0" cellspacing="0"> <tr><td width="39%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td width="14%" align="center">Estimated</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Gross</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Accumulated</td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Net</td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Useful Lives</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Amortization</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Value</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="39%" align="left">As of June 30, 2012</td> <td width="14%" align="left"> </td> <td width="2%" align="right"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="39%" align="left">Customer relationships</td> <td width="14%" align="center">8 years</td> <td width="2%" align="right">$</td> <td width="13%" align="right">5,400</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(619</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td style="text-indent: 3px;" width="12%" align="right">4,781</td></tr> <tr valign="bottom"><td width="39%" align="left">Trade name</td> <td width="14%" align="center">15 years</td> <td width="2%" align="right"> </td> <td width="13%" align="right">2,400</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(146</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td style="text-indent: 3px;" width="12%" align="right">2,254</td></tr> <tr valign="bottom"><td width="39%" align="left">Telephone seat licenses</td> <td width="14%" align="center">5 years</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">1,777</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(366</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" width="12%" align="right">1,411</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="39%" align="left">Total</td> <td width="14%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">9,577</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(1,131</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" width="12%" align="right">8,446</td></tr></table></div>   <div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="14%" align="center">Estimated</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Gross</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Accumulated</td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Net</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Useful Lives</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Amortization</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Value</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="38%" align="left">As of December 31, 2011</td> <td width="14%" align="left"> </td> <td width="2%" align="right"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Customer relationships</td> <td width="14%" align="center">8 years</td> <td width="2%" align="right">$</td> <td width="13%" align="right">5,400</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(281</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td style="text-indent: 3px;" width="12%" align="right">5,119</td></tr> <tr valign="bottom"><td width="38%" align="left">Trade name</td> <td width="14%" align="center">15 years</td> <td width="2%" align="right"> </td> <td width="13%" align="right">2,400</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(67</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td style="text-indent: 3px;" width="12%" align="right">2,333</td></tr> <tr valign="bottom"><td width="38%" align="left">Telephone seat licenses</td> <td width="14%" align="center">5 years</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">1,372</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(219</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" width="12%" align="right">1,153</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="38%" align="left">Total</td> <td width="14%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">9,172</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(567</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" width="12%" align="right">8,605</td></tr></table></div></div>   </div>

962000

-368000

-2118000

-327000

5416000

2198000

4521000

3137000

3096000

1713000

-739000

-1979000

<div> NOTE 13: INCOME TAXES Generally, for interim tax reporting, one overall estimated annual effective tax rate is computed for tax jurisdictions not subject to valuation allowance and applied to the year to date ordinary income loss. The effective tax rate for the three months ended June 30, 2012, and 2011 was 30.3% and 34.8%, respectively, and the effective tax rate for the six months ended June 30, 2012 and 2011 was 31.0% and 34.3%, respectively. The adjusted tax rate for the three and six months ended June 30, 2012 was lower than the U.S. statutory rate primarily due to the net tax benefits. The accounting standard regarding accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities, unless expected to be paid within one year. As of June 30, 2012 and December 31, 2011, the Company has no liability for unrecognized tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense. For the six months ended June 30, 2012 and 2011, no interest expense or penalties were incurred relating to unrecognized tax benefits. The Company and its subsidiaries file a U.S. federal consolidated income tax return. The U.S. federal statute of limitations remains open for the years 2008 and thereafter. </div>

330000

-128000

-656000

-99000

100000

25000

294000

-121000

-369000

970000

-676000

253000

-2000

-6000

25000

-8000

-65000

-10000

-38000

-895000

-828000

28000

8000

102000

167000

198000

1283000

656000

17175

6290

272479

8605000

8446000

59000

2000

-169000

-112000

<div> NOTE 9: MATERIALS AND SUPPLIES Material and supplies are carried at average cost. As of June 30, 2012 and December 31, 2011, material and supplies consisted of the following: <div> <table border="0" cellspacing="0"> <tr><td width="72%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="72%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 3px double;" width="14%" colspan="2" align="center">2011</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for outside plant</td> <td width="2%" align="left">$</td> <td width="11%" align="right">258</td> <td width="2%" align="left">$</td> <td width="12%" align="right">322</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for inside plant</td> <td width="2%" align="left"> </td> <td width="11%" align="right">313</td> <td width="2%" align="left"> </td> <td width="12%" align="right">266</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for online equipment</td> <td width="2%" align="left"> </td> <td width="11%" align="right">77</td> <td width="2%" align="left"> </td> <td width="12%" align="right">77</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for video equipment / DIRECTV</td> <td width="2%" align="left"> </td> <td width="11%" align="right">25</td> <td width="2%" align="left"> </td> <td width="12%" align="right">68</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for equipment held for sale or lease</td> <td width="2%" align="left"> </td> <td width="11%" align="right">16</td> <td width="2%" align="left"> </td> <td width="12%" align="right">16</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for VoIP telephone equipment</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">105</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">83</td></tr> <tr valign="bottom"><td width="72%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">794</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">832</td></tr></table></div> </div>

832000

16000

266000

77000

322000

68000

83000

794000

16000

313000

77000

258000

25000

105000

1979000

259000

260000

<div> NOTE 4: SHORT-TERM INVESTMENTS The following is a summary of the Company's short-term investments classified as available for sale at June 30, 2012 and December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="2%"> </td> <td width="18%"> </td> <td width="2%"> </td> <td width="20%"> </td> <td width="2%"> </td> <td width="13%"> </td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="2%" align="center"> </td> <td width="18%" align="center"> </td> <td width="2%" align="center"> </td> <td width="20%" align="center">Unrealized</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Fair Value</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="2%" align="center"> </td> <td width="18%" align="center">Amortized</td> <td width="2%" align="center"> </td> <td width="20%" align="center">Gains</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Carrying</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Cost</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="20%" align="center">(Losses)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td></tr> <tr valign="bottom"><td width="38%" align="left">June 30, 2012</td> <td width="2%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="20%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Bank certificate of deposit</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">260</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 11px;" width="20%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="13%" align="right">260</td></tr> <tr><td width="95%" colspan="7"> </td></tr> <tr valign="bottom"><td width="38%" align="left">December 31, 2011</td> <td width="2%" align="left"> </td> <td width="18%" align="left"> </td> <td width="2%" align="left"> </td> <td width="20%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Bank certificate of deposit</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="18%" align="right">259</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 11px;" width="20%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 7px;" width="13%" align="right">259</td></tr></table></div>   </div>

27638000

27555000

57916000

53773000

15893000

15955000

0.0050

5000000

10000000

5016000

2013-08-02

1139000

380000

<div> <div class="MetaData"> Nature of Operations Warwick Valley Telephone Company (the "Company") is a cloud-based communications company that provides Unified Communications ("UC") solutions and enterprise hosted Voice over Internet Protocol ("VoIP") and operates as a regional Incumbent Local Exchange Carrier ("ILEC") in southern Orange County, New York and northern New Jersey. Through its wholly-owned subsidiaries, the Company delivers cloud-based Unified Communications solutions including Voice over Internet Protocol ("VoIP"), hosted Microsoft Communication Services, fixed mobile convergence and advanced voice applications for a broad customer base including enterprise customers, small and medium-sized businesses and other business customers. The Company's ILEC operations consist of providing historic local and toll telephone service, Internet high speed broadband service, satellite video service and DIRECTV to residential and business customers.</div> </div>

-3959000

-2407000

-1633000

-1904000

2524000

1166000

632000

-240000

-1462000

-228000

619000

-247000

-1475000

-235000

5490000

2209000

4483000

3120000

16517000

8388000

20568000

10333000

-4528000

-422000

-4106000

-2577000

-335000

-2242000

-6601000

-722000

-5879000

-3447000

-310000

-3137000

3347000

2519000

333000

336000

88000

-114000

88000

44000

272000

-37000

339000

170000

8000

201000

94000

260000

131000

-193000

-260000

8000

13000

15000

9000

131000

136000

2860000

3144000

15000

405000

1801000

1499000

993000

<div> NOTE 12: PENSION AND POSTRETIREMENT OBLIGATIONS <div class="MetaData"> The components of net periodic cost (gain) for the six months ended June 30, 2012 and 2011 are as follows: <div> <table border="0" cellspacing="0"> <tr><td width="35%"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 9px;" width="29%" colspan="4" align="center">Pension Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="30%" colspan="5" align="center">Postretirement Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Service cost</td> <td width="2%" align="right">$</td> <td width="12%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">8</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">6</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Interest cost</td> <td width="2%" align="right"> </td> <td width="12%" align="right">383</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">435</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">108</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">123</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Expected return on plan assets</td> <td width="2%" align="right"> </td> <td width="12%" align="right">(438</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(410</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(86</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(81</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of transition asset</td> <td width="2%" align="right"> </td> <td width="12%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">14</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of prior service cost</td> <td width="2%" align="right"> </td> <td width="12%" align="right">28</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">28</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">(165</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(165</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of net loss</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">463</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">436</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">67</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">47</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="100%" colspan="13"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Net periodic benefit cost (gain)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">436</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">489</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(54</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(56</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div>   The components of net periodic cost (gain) for the three months ended June 30, 2012 and 2011 are as follows: <div> <table border="0" cellspacing="0"> <tr><td width="34%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="34%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 9px;" width="30%" colspan="4" align="center">Pension Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="4" align="center">Postretirement Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="34%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Service cost</td> <td width="2%" align="right">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="11%" align="right">4</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">3</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Interest cost</td> <td width="2%" align="right"> </td> <td width="13%" align="right">192</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">217</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">54</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">61</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Expected return on plan assets</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(219</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(205</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="11%" align="right">(43</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(40</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="34%" align="left">Amortization of transition asset</td> <td width="2%" align="right"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">7</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">7</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Amortizaton of prior service cost</td> <td width="2%" align="right"> </td> <td width="13%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">(83</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(83</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="34%" align="left">Amortization of net loss</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">231</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">218</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="right">34</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">24</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="13"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Net periodic benefit cost (gain)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">218</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">244</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">(27</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(28</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div></div>   The Company expects to contribute a total of $622 to its pension and postretirement benefit plans in 2012. For the six months ended June 30, 2012, the Company has contributed $280 of this amount to its pension and postretirement benefit plans. </div>

622000

9915000

9613000

13000

7000

13000

7000

100

0.01

100

0.01

5000

10000000

5000

10000000

5000

10000000

500000

731000

929000

2715000

3371000

131000

66000

<div> <div class="MetaData">Reclassifications Certain items in the 2011 segment footnote (see Note 8) have been reclassified in order to conform to the 2012 presentation.</div> </div>

1350000

6095000

-340000

-111000

1176000

1725000

<div> NOTE 10: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost, consisting of the following as of June 30, 2012 and December 31, 2011: <div> <table border="0" cellspacing="0"> <tr><td width="63%"> </td> <td width="2%"> </td> <td width="15%"> </td> <td width="2%"> </td> <td width="16%"> </td></tr> <tr valign="bottom"><td width="63%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="center">2011</td></tr> <tr valign="bottom"><td width="63%" align="left">Land, buildings and other support equipment</td> <td width="2%" align="left">$</td> <td width="15%" align="right">11,044</td> <td width="2%" align="left">$</td> <td width="16%" align="right">10,908</td></tr> <tr valign="bottom"><td width="63%" align="left">Network communications equipment</td> <td width="2%" align="left"> </td> <td width="15%" align="right">37,073</td> <td width="2%" align="left"> </td> <td width="16%" align="right">36,187</td></tr> <tr valign="bottom"><td width="63%" align="left">Telephone plant</td> <td width="2%" align="left"> </td> <td width="15%" align="right">30,741</td> <td width="2%" align="left"> </td> <td width="16%" align="right">30,571</td></tr> <tr valign="bottom"><td width="63%" align="left">Online plant</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">6,551</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">6,885</td></tr> <tr valign="bottom"><td width="63%" align="left">Plant in service</td> <td width="2%" align="left"> </td> <td width="15%" align="right">85,409</td> <td width="2%" align="left"> </td> <td width="16%" align="right">84,551</td></tr> <tr valign="bottom"><td width="63%" align="left">Plant under construction</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">867</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">297</td></tr> <tr valign="bottom"><td width="63%" align="left"> </td> <td width="2%" align="left"> </td> <td width="15%" align="right">86,276</td> <td width="2%" align="left"> </td> <td width="16%" align="right">84,848</td></tr> <tr valign="bottom"><td width="63%" align="left">Less: Accumulated depreciation</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">61,327</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">59,423</td></tr> <tr valign="bottom"><td width="63%" align="left">Property, plant and equipment, net</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="15%" align="right">24,949</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="16%" align="right">25,425</td></tr></table></div>   </div>

84848000

297000

36187000

10908000

6885000

84551000

30571000

86276000

867000

37073000

11044000

6551000

85409000

30741000

25425000

24949000

<div> <table border="0" cellspacing="0"> <tr><td width="63%"> </td> <td width="2%"> </td> <td width="15%"> </td> <td width="2%"> </td> <td width="16%"> </td></tr> <tr valign="bottom"><td width="63%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="center">2011</td></tr> <tr valign="bottom"><td width="63%" align="left">Land, buildings and other support equipment</td> <td width="2%" align="left">$</td> <td width="15%" align="right">11,044</td> <td width="2%" align="left">$</td> <td width="16%" align="right">10,908</td></tr> <tr valign="bottom"><td width="63%" align="left">Network communications equipment</td> <td width="2%" align="left"> </td> <td width="15%" align="right">37,073</td> <td width="2%" align="left"> </td> <td width="16%" align="right">36,187</td></tr> <tr valign="bottom"><td width="63%" align="left">Telephone plant</td> <td width="2%" align="left"> </td> <td width="15%" align="right">30,741</td> <td width="2%" align="left"> </td> <td width="16%" align="right">30,571</td></tr> <tr valign="bottom"><td width="63%" align="left">Online plant</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">6,551</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">6,885</td></tr> <tr valign="bottom"><td width="63%" align="left">Plant in service</td> <td width="2%" align="left"> </td> <td width="15%" align="right">85,409</td> <td width="2%" align="left"> </td> <td width="16%" align="right">84,551</td></tr> <tr valign="bottom"><td width="63%" align="left">Plant under construction</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">867</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">297</td></tr> <tr valign="bottom"><td width="63%" align="left"> </td> <td width="2%" align="left"> </td> <td width="15%" align="right">86,276</td> <td width="2%" align="left"> </td> <td width="16%" align="right">84,848</td></tr> <tr valign="bottom"><td width="63%" align="left">Less: Accumulated depreciation</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">61,327</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="right">59,423</td></tr> <tr valign="bottom"><td width="63%" align="left">Property, plant and equipment, net</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="15%" align="right">24,949</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="16%" align="right">25,425</td></tr></table> </div>

670000

-670000

759000

30641000

26034000

11989000

9348000

2641000

5811000

4600000

1211000

13967000

7441000

6526000

6886000

3634000

3252000

<div> <table border="0" cellspacing="0"> <tr><td width="46%"> </td> <td width="2%"> </td> <td width="10%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="46%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="4" align="center">Three Months</td> <td style="border-bottom: #000000 1px solid;" width="28%" colspan="4" align="center">Six Months</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="46%" align="left">Stock-Based Compensation Expense</td> <td style="border-bottom: #000000 1px solid;" width="12%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="15%" colspan="2" align="center">2011</td> <td style="border-bottom: #000000 1px solid; text-indent: 8px;" width="14%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="14%" colspan="2" align="center">2011</td></tr> <tr><td width="101%" colspan="9"> </td></tr> <tr valign="bottom"><td width="46%" align="left">Cost of services and products</td> <td width="2%" align="left">$</td> <td width="10%" align="right">0</td> <td width="2%" align="left">$</td> <td width="13%" align="right">17</td> <td width="2%" align="left">$</td> <td width="12%" align="right">0</td> <td width="2%" align="center">$</td> <td width="12%" align="right">34</td></tr> <tr valign="bottom"><td width="46%" align="left">Selling, general and administrative expenses</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="10%" align="right">206</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">464</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">398</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">592</td></tr> <tr valign="bottom"><td width="46%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="10%" align="right">206</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">481</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">398</td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">626</td></tr></table> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="78%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="4%"> </td></tr> <tr valign="bottom"><td width="78%" align="left">Derivative liability balance December 31, 2011</td> <td width="2%" align="left">$</td> <td width="12%" align="right">131</td> <td width="4%" align="left"> </td></tr> <tr valign="bottom"><td width="78%" align="left">Decrease in fair value of price protection instrument</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(65</td> <td style="border-bottom: #000000 1px solid;" width="4%" align="left">)</td></tr> <tr valign="bottom"><td width="78%" align="left">Derivative liability balance June 30, 2012</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">66</td> <td style="border-bottom: #000000 3px double;" width="4%" align="left"> </td></tr></table> </div>

<div> <div class="MetaData"> <div> <table border="0" cellspacing="0"> <tr><td width="39%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td width="14%" align="center">Estimated</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Gross</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Accumulated</td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Net</td></tr> <tr valign="bottom"><td width="39%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Useful Lives</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Amortization</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Value</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="39%" align="left">As of June 30, 2012</td> <td width="14%" align="left"> </td> <td width="2%" align="right"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="39%" align="left">Customer relationships</td> <td width="14%" align="center">8 years</td> <td width="2%" align="right">$</td> <td width="13%" align="right">5,400</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(619</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td style="text-indent: 3px;" width="12%" align="right">4,781</td></tr> <tr valign="bottom"><td width="39%" align="left">Trade name</td> <td width="14%" align="center">15 years</td> <td width="2%" align="right"> </td> <td width="13%" align="right">2,400</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(146</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td style="text-indent: 3px;" width="12%" align="right">2,254</td></tr> <tr valign="bottom"><td width="39%" align="left">Telephone seat licenses</td> <td width="14%" align="center">5 years</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">1,777</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(366</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" width="12%" align="right">1,411</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="39%" align="left">Total</td> <td width="14%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">9,577</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(1,131</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" width="12%" align="right">8,446</td></tr></table></div>   <div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td width="14%" align="center">Estimated</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Gross</td> <td width="2%" align="center"> </td> <td width="13%" align="center">Accumulated</td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Net</td></tr> <tr valign="bottom"><td width="38%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Useful Lives</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Value</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Amortization</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Value</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="38%" align="left">As of December 31, 2011</td> <td width="14%" align="left"> </td> <td width="2%" align="right"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Customer relationships</td> <td width="14%" align="center">8 years</td> <td width="2%" align="right">$</td> <td width="13%" align="right">5,400</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(281</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td style="text-indent: 3px;" width="12%" align="right">5,119</td></tr> <tr valign="bottom"><td width="38%" align="left">Trade name</td> <td width="14%" align="center">15 years</td> <td width="2%" align="right"> </td> <td width="13%" align="right">2,400</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(67</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td style="text-indent: 3px;" width="12%" align="right">2,333</td></tr> <tr valign="bottom"><td width="38%" align="left">Telephone seat licenses</td> <td width="14%" align="center">5 years</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">1,372</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(219</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" width="12%" align="right">1,153</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="38%" align="left">Total</td> <td width="14%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">9,172</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(567</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" width="12%" align="right">8,605</td></tr></table></div></div> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="72%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="72%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 3px double;" width="14%" colspan="2" align="center">2011</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for outside plant</td> <td width="2%" align="left">$</td> <td width="11%" align="right">258</td> <td width="2%" align="left">$</td> <td width="12%" align="right">322</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for inside plant</td> <td width="2%" align="left"> </td> <td width="11%" align="right">313</td> <td width="2%" align="left"> </td> <td width="12%" align="right">266</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for online equipment</td> <td width="2%" align="left"> </td> <td width="11%" align="right">77</td> <td width="2%" align="left"> </td> <td width="12%" align="right">77</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for video equipment / DIRECTV</td> <td width="2%" align="left"> </td> <td width="11%" align="right">25</td> <td width="2%" align="left"> </td> <td width="12%" align="right">68</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for equipment held for sale or lease</td> <td width="2%" align="left"> </td> <td width="11%" align="right">16</td> <td width="2%" align="left"> </td> <td width="12%" align="right">16</td></tr> <tr valign="bottom"><td width="72%" align="left">Inventory for VoIP telephone equipment</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">105</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">83</td></tr> <tr valign="bottom"><td width="72%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">794</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">832</td></tr></table> </div>

<div> <div class="MetaData"> The components of net periodic cost (gain) for the six months ended June 30, 2012 and 2011 are as follows: <div> <table border="0" cellspacing="0"> <tr><td width="35%"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 9px;" width="29%" colspan="4" align="center">Pension Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="30%" colspan="5" align="center">Postretirement Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Service cost</td> <td width="2%" align="right">$</td> <td width="12%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">8</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">6</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Interest cost</td> <td width="2%" align="right"> </td> <td width="12%" align="right">383</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">435</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">108</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">123</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Expected return on plan assets</td> <td width="2%" align="right"> </td> <td width="12%" align="right">(438</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(410</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(86</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(81</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of transition asset</td> <td width="2%" align="right"> </td> <td width="12%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">14</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of prior service cost</td> <td width="2%" align="right"> </td> <td width="12%" align="right">28</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">28</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">(165</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(165</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="35%" align="left">Amortization of net loss</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">463</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">436</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">67</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">47</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="100%" colspan="13"> </td></tr> <tr valign="bottom"><td width="35%" align="left">Net periodic benefit cost (gain)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">436</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">489</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(54</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(56</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div>   The components of net periodic cost (gain) for the three months ended June 30, 2012 and 2011 are as follows: <div> <table border="0" cellspacing="0"> <tr><td width="34%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="11%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="34%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 9px;" width="30%" colspan="4" align="center">Pension Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="4" align="center">Postretirement Benefits</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="34%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Service cost</td> <td width="2%" align="right">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="11%" align="right">4</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">3</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Interest cost</td> <td width="2%" align="right"> </td> <td width="13%" align="right">192</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">217</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">54</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">61</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Expected return on plan assets</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(219</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(205</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="11%" align="right">(43</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(40</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="34%" align="left">Amortization of transition asset</td> <td width="2%" align="right"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">7</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">7</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Amortizaton of prior service cost</td> <td width="2%" align="right"> </td> <td width="13%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="right">14</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="right">(83</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(83</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="34%" align="left">Amortization of net loss</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">231</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">218</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="right">34</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">24</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="13"> </td></tr> <tr valign="bottom"><td width="34%" align="left">Net periodic benefit cost (gain)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">218</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">244</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">(27</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(28</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div></div> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="33%" colspan="4" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="29%" colspan="4" align="center">2011</td></tr> <tr><td width="100%" colspan="9" align="center"> </td></tr> <tr><td width="100%" colspan="9" align="center"> </td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center">Grant Date</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Grant Date</td></tr> <tr valign="bottom"><td width="38%" align="center"> </td> <td width="15%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="14%" align="center">Weighted Average</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Weighted Average</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="38%" align="left">Unvested Shares</td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Price per Share</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Price per Share</td></tr> <tr><td width="100%" colspan="9"> </td></tr> <tr valign="bottom"><td width="38%" align="left">Balance - Beginning of period</td> <td width="15%" align="right">68,559</td> <td width="2%" align="left"> </td> <td width="2%" align="center">$</td> <td width="14%" align="center">14.15</td> <td width="13%" align="right">47,373</td> <td width="2%" align="left"> </td> <td width="2%" align="center">$</td> <td width="12%" align="center">12.64</td></tr> <tr valign="bottom"><td width="38%" align="left">Granted</td> <td width="15%" align="right">46,281</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="center">13.92</td> <td width="13%" align="right">58,676</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="center">14.67</td></tr> <tr valign="bottom"><td width="38%" align="left">Vested</td> <td width="15%" align="right">(31,094</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="14%" align="center">13.92</td> <td width="13%" align="right">(33,986</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="center">13.25</td></tr> <tr valign="bottom"><td width="38%" align="left">Forfeited</td> <td style="border-bottom: #000000 1px solid;" width="15%" align="right">(148</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">13.67</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">0.00</td></tr> <tr valign="bottom"><td width="38%" align="left">Balance - End of period</td> <td style="border-bottom: #000000 3px double;" width="15%" align="right">83,598</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="center">14.11</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">72,063</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="center">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="center">13.99</td></tr></table> </div>

<div> Segment balance sheet information as of June 30, 2012 and December 31, 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="65%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="65%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">June 30, 2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">December 31, 2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="65%" align="left">Segment assets</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">117,602</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">116,215</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Unified Communications</td> <td width="2%" align="left"> </td> <td width="13%" align="right">22,383</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">21,543</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Eliminations</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(86,212</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(79,842</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="65%" align="left">Total segment assets</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">53,773</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">57,916</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   Segment statement of operations information for the three months ended June 30, 2012 and 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating revenues</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">3,634</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">4,600</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">3,252</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">1,211</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating revenues</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">6,886</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">5,811</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment depreciation and amortization</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">829</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">1,152</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">467</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">189</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment depreciation and amortization</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">1,296</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">1,341</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(310</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td width="12%" align="right">(335</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(3,137</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(2,242</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(3,447</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(2,577</td> <td width="2%" align="left">)</td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Interest income, (expense), net</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(112</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">2</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income from equity investment</td> <td width="2%" align="left"> </td> <td width="13%" align="right">3,096</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">2,198</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Other (expenses) income, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">136</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">9</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">(Loss) before income taxes</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(327</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(368</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div>   Segment income statement information for the six months ended June 30, 2012 and 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating revenues</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">7,441</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">9,348</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">6,526</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">2,641</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating revenues</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">13,967</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">11,989</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment depreciation and amortization</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">1,681</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">2,294</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">894</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">444</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment depreciation and amortization</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">2,575</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">2,738</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(722</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td width="12%" align="right">(422</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(5,879</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(4,106</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(6,601</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(4,528</td> <td width="2%" align="left">)</td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Interest income, (expense), net</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(169</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">59</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income from equity investment</td> <td width="2%" align="left"> </td> <td width="13%" align="right">4,521</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">5,416</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Other (expenses) income, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">131</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">15</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income (loss) before income taxes</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(2,118</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">962</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="38%"> </td> <td width="28%"> </td> <td width="11%"> </td> <td width="3%"> </td> <td width="17%"> </td></tr> <tr valign="bottom"><td align="left"> </td> <td align="center"> </td> <td align="center"> </td> <td align="center"> </td> <td align="center">Grant Date</td></tr> <tr valign="bottom"><td align="left"> </td> <td align="center">Date Issued</td> <td align="center">Shares</td> <td align="center"> </td> <td align="center">Fair Value per Share</td></tr> <tr><td colspan="5"> </td></tr> <tr valign="bottom"><td align="left">Restricted stock granted</td> <td style="text-indent: 6px;" align="right">01/06/12</td> <td style="text-indent: 3px;" align="right">14,608</td> <td align="left">$</td> <td align="center">12.93</td></tr> <tr valign="bottom"><td align="left">Restricted stock granted</td> <td style="text-indent: 6px;" align="right">02/24/12</td> <td style="border-bottom: #000000 1px solid; text-indent: 3px;" align="right">31,673</td> <td align="left">$</td> <td align="center">14.38</td></tr> <tr valign="bottom"><td align="left">Total restricted stock granted</td> <td align="left"> </td> <td style="border-bottom: #000000 3px double; text-indent: 3px;" align="right">46,281</td> <td align="left"> </td> <td align="left"> </td></tr></table> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center">Weighted</td> <td width="14%" align="center">Weighted Average</td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center"> </td> <td width="2%" align="center"> </td> <td width="16%" align="center">Average</td> <td width="14%" align="center">Remaining</td> <td width="14%" colspan="2" align="center">Aggregate</td></tr> <tr valign="bottom"><td width="6%" align="center"> </td> <td width="18%" align="center"> </td> <td width="17%" align="center">Shares</td> <td width="2%" align="center"> </td> <td width="16%" align="center">Exercise</td> <td width="14%" align="center">Contractual</td> <td width="14%" colspan="2" align="center">Instrinsic</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="6%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="18%" align="center">Exercise Price Per Share</td> <td style="border-bottom: #000000 1px solid;" width="17%" align="center">Outstanding</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" align="center">Price</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Life (Years)</td> <td style="border-bottom: #000000 1px solid;" width="14%" colspan="2" align="center">Value</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">10.78</td> <td width="17%" align="right">15,166</td> <td width="2%" align="left">$</td> <td width="16%" align="center">10.78</td> <td width="14%" align="center">6.2</td> <td width="2%" align="left">$</td> <td width="12%" align="right">36</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">10.02</td> <td width="17%" align="right">4,051</td> <td width="2%" align="left"> </td> <td width="16%" align="center">10.02</td> <td width="14%" align="center">6.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">13</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">11.20</td> <td width="17%" align="right">7,517</td> <td width="2%" align="left"> </td> <td width="16%" align="center">11.20</td> <td width="14%" align="center">6.8</td> <td width="2%" align="left"> </td> <td width="12%" align="right">15</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.97</td> <td width="17%" align="right">7,000</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.97</td> <td width="14%" align="center">7.4</td> <td width="2%" align="left"> </td> <td width="12%" align="right">1</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.76</td> <td width="17%" align="right">333</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.76</td> <td width="14%" align="center">7.4</td> <td width="2%" align="left"> </td> <td width="12%" align="right">1</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">12.88</td> <td width="17%" align="right">22,328</td> <td width="2%" align="left"> </td> <td width="16%" align="center">12.88</td> <td width="14%" align="center">7.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.70</td> <td width="17%" align="right">18,849</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.70</td> <td width="14%" align="center">8.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.85</td> <td width="17%" align="right">83,010</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.85</td> <td width="14%" align="center">8.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr valign="bottom"><td width="6%" align="right">$</td> <td width="18%" align="center">14.38</td> <td width="17%" align="right">144,852</td> <td width="2%" align="left"> </td> <td width="16%" align="center">14.38</td> <td width="14%" align="center">9.7</td> <td width="2%" align="left"> </td> <td width="12%" align="right">0</td></tr> <tr><td width="87%" colspan="8"> </td></tr> <tr valign="bottom"><td width="6%" align="right"> </td> <td width="18%" align="left"> </td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="17%" align="right">303,106</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="16%" align="center">14.07</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="14%" align="center">9.1</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; border-top: #000000 1px solid;" width="12%" align="right">73</td></tr> <tr><td width="87%" colspan="8"> </td></tr> <tr valign="bottom"><td width="6%" align="right"> </td> <td width="18%" align="left">Exercisable at June 30, 2012</td> <td style="border-bottom: #000000 3px double;" width="17%" align="right">77,990</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="16%" align="center">13.07</td> <td style="border-bottom: #000000 3px double;" width="14%" align="center">7.9</td> <td width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">13</td></tr></table> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="42%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td style="border-bottom: #000000 3px double;" width="31%" colspan="4" align="center">2012</td> <td style="border-bottom: #000000 3px double;" width="29%" colspan="4" align="center">2011</td></tr> <tr><td width="102%" colspan="9" align="center"> </td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Weighted</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Weighted</td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Average</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Average</td></tr> <tr valign="bottom"><td width="42%" align="center"> </td> <td width="14%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center">Exercise</td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center">Exercise</td></tr> <tr valign="bottom"><td style="border-bottom: #000000 1px solid;" width="42%" align="left">Options</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Price</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">Shares</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">Price</td></tr> <tr><td width="102%" colspan="9"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Outstanding - beginning of period</td> <td width="14%" align="right">203,864</td> <td width="2%" align="left"> </td> <td width="2%" align="right">$</td> <td width="13%" align="center">14.02</td> <td width="13%" align="right">160,733</td> <td width="2%" align="left"> </td> <td width="2%" align="right">$</td> <td width="12%" align="center">11.33</td></tr> <tr valign="bottom"><td width="42%" align="left">Stock options granted</td> <td width="14%" align="right">144,852</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="center">14.38</td> <td width="13%" align="right">148,381</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="center">14.83</td></tr> <tr valign="bottom"><td width="42%" align="left">Exercised</td> <td width="14%" align="right">(45,610</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="13%" align="center">14.85</td> <td width="13%" align="right">(103,319</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="center">11.01</td></tr> <tr valign="bottom"><td width="42%" align="left">Forfeited</td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">0.00</td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">0</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">0.00</td></tr> <tr valign="bottom"><td width="42%" align="left">Outstanding - end of period</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">303,106</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="center">14.07</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">205,795</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="center">13.89</td></tr> <tr><td width="102%" colspan="9"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Vested and expected to vest at June 30</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">303,106</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">205,795</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr> <tr valign="bottom"><td width="42%" align="left">Exercisable at June 30</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">77,990</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">24,206</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td></tr></table> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="60%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="3%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="3%"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Options</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="center"> </td></tr> <tr><td width="94%" colspan="7"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Expected life (in years)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">10</td> <td width="3%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">10</td> <td width="3%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Interest rate</td> <td width="2%" align="left"> </td> <td width="12%" align="right">2.70</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">3.40</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Volatility</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27.10</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">32.77</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Dividend yield</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.23</td> <td width="3%" align="left">%</td> <td width="2%" align="left"> </td> <td width="12%" align="right">7.00</td> <td width="3%" align="left">%</td></tr> <tr valign="bottom"><td width="60%" align="left">Weighted-average fair value per share at grant date</td> <td width="2%" align="left">$</td> <td width="12%" align="right">1.37</td> <td width="3%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">2.16</td> <td width="3%" align="left"> </td></tr></table> </div>

<div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Shareholders' equity, beginning of period</td> <td width="2%" align="right">$</td> <td width="13%" align="right">26,153</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">36,425</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Net income (loss)</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(1,462</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">632</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Dividends paid on common stock</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(3,131</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(2,847</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Dividends paid on preferred stock</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(13</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(13</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Stock and stock option compensation</td> <td width="2%" align="right"> </td> <td width="13%" align="right">398</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">626</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Treasury stock purchases</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(789</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(1,476</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Exercise of stock options</td> <td width="2%" align="right"> </td> <td width="13%" align="right">677</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">1,136</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Changes in unrealized gain (loss) on investments</td> <td width="2%" align="right"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">8</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Changes in pension and postretirement benefit plans</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">260</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">193</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Shareholders' equity, end of period</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">22,093</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">34,684</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table> </div>

<div> <div class="MetaData"> <div> <table border="0" cellspacing="0"> <tr><td width="36%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="11%"> </td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="29%" colspan="3" align="center">Three Months Ended June 30,</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="27%" colspan="3" align="center">Six Months Ended June 30,</td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" colspan="2" align="center">2012 (1)</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2011 (1)</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2012 (1)</td> <td style="border-bottom: #000000 1px solid;" width="11%" align="center">2011</td></tr> <tr><td width="94%" colspan="8"> </td></tr> <tr valign="bottom"><td width="36%" align="left">Weighted average shares of common stock</td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="left"> </td> <td width="2%" align="left"> </td> <td width="14%" align="left"> </td> <td width="2%" align="left"> </td> <td width="11%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 1px;" width="36%" align="left">used in basic earnings per share</td> <td width="13%" align="right">5,458,223</td> <td width="2%" align="left"> </td> <td width="14%" align="right">5,406,894</td> <td width="2%" align="left"> </td> <td width="14%" align="right">5,450,345</td> <td width="2%" align="left"> </td> <td width="11%" align="right">5,400,822</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of puttable common stock</td> <td width="13%" align="right">272,479</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">272,479</td> <td width="2%" align="left"> </td> <td width="11%" align="right">0</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of stock options</td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="14%" align="right">0</td> <td width="2%" align="left"> </td> <td width="11%" align="right">6,290</td></tr> <tr valign="bottom"><td width="36%" align="left">Effects of restricted stock</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">0</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="11%" align="right">17,175</td></tr> <tr valign="bottom"><td width="36%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">5,730,702</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">5,406,894</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">5,722,824</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="11%" align="right">5,424,287</td></tr></table></div>   (1) Basic and diluted weighted average shares were the same for the three months and six months ended June 30, 2012 because the effects of the potentially diluted securities were anti-dilutive and they were excluded from the calculation.</div> </div>

<div> NOTE 8: SEGMENT INFORMATION Segment Realignment In the first quarter of 2012, the Company realigned its segment reporting (internal and external) and renamed the Online segment Unified Communications. The Company made these changes as a result of its purchase, on August 5, 2011, of substantially all of the assets of and certain liabilities of Alteva, LLC, formerly a cloud-based Unified Communications solutions provider and enterprise hosted Voice over Internet Protocol ("VoIP") provider. The acquisition is part of the Company's strategy to transform its operations from one primarily dependent upon its ILEC and related revenues, to operations more focused on developing and implementing a Unified Communications solutions strategy. Accordingly, broadband Internet, dial-up Internet access services and TV services, which previously were included in the Company's Online segment, became part of the Telephone segment. Concurrently, to align the segments with the Company's revised management structure and operating model, wholesale carrier services and conference services were moved out of the Telephone segment and into the Unified Communications service segment. The Company believes the new strategy, which realigns the reportable segments, will enable the Company to develop a more sustainable business in the future that will drive earnings growth and provide a better return on our assets. The Company's segments are strategic business units that offer different products and services and are managed as Telephone and Unified Communications ("UC") services. The Company evaluates the performance of the segments based upon factors such as revenue growth, expense containment, market share and operating results. The Telephone segment provides telecommunications services including local, network access, long distance services, wireless, broadband, TV service and directory services. The UC segment provides enterprise hosted VoIP services, wholesale carrier services and conference services. The segment results presented below are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities during the periods presented. Segment balance sheet information as of June 30, 2012 and December 31, 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="65%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="65%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">June 30, 2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">December 31, 2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="65%" align="left">Segment assets</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">117,602</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">116,215</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Unified Communications</td> <td width="2%" align="left"> </td> <td width="13%" align="right">22,383</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">21,543</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="65%" align="left">Eliminations</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(86,212</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(79,842</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 10pt;" width="65%" align="left">Total segment assets</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">53,773</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">57,916</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   Segment statement of operations information for the three months ended June 30, 2012 and 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating revenues</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">3,634</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">4,600</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">3,252</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">1,211</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating revenues</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">6,886</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">5,811</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment depreciation and amortization</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">829</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">1,152</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">467</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">189</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment depreciation and amortization</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">1,296</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">1,341</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(310</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td width="12%" align="right">(335</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(3,137</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(2,242</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(3,447</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(2,577</td> <td width="2%" align="left">)</td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Interest income, (expense), net</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(112</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">2</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income from equity investment</td> <td width="2%" align="left"> </td> <td width="13%" align="right">3,096</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">2,198</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Other (expenses) income, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">136</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">9</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">(Loss) before income taxes</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(327</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">(368</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td></tr></table></div>   Certain regulatory revenue, which includes Universal Service Funds ("USF") and National Exchange Carrier Association ("NECA") pool settlements, accounted for 8% and 13% of the Company's revenues for the three months ended June 30, 2012 and 2011, respectively. Accounts receivable for certain regulatory revenue represented 11% and 13% of consolidated accounts receivable at June 30, 2012 and 2011, respectively. <div> </div> Segment income statement information for the six months ended June 30, 2012 and 2011 is set forth below: <div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%"> </td> <td width="13%"> </td> <td width="2%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating revenues</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">7,441</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">9,348</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">6,526</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">2,641</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating revenues</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">13,967</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">11,989</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment depreciation and amortization</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">1,681</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">2,294</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">894</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">444</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment depreciation and amortization</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">2,575</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">2,738</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="left"> </td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="left"> </td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Telephone</td> <td width="2%" align="left">$</td> <td width="13%" align="right">(722</td> <td width="2%" align="left">)</td> <td width="2%" align="left">$</td> <td width="12%" align="right">(422</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td style="text-indent: 5px;" width="66%" align="left">Unified Communications</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">(5,879</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">(4,106</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Total segment operating loss</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(6,601</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(4,528</td> <td width="2%" align="left">)</td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Interest income, (expense), net</td> <td width="2%" align="left"> </td> <td width="13%" align="right">(169</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">59</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income from equity investment</td> <td width="2%" align="left"> </td> <td width="13%" align="right">4,521</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">5,416</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Other (expenses) income, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">131</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">15</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Income (loss) before income taxes</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">(2,118</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">)</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">962</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   Certain regulatory revenue, which includes USF and NECA pool settlements, accounts for 8% and 13% of the Company's revenues for the six months ended June 30, 2012 and 2011, respectively. Accounts receivable for certain regulatory revenue represents 11% and 13% of consolidated accounts receivable at June 30, 2012 and 2011, respectively. </div>

7588000

4103000

11011000

5603000

626000

398000

148

0.00

13.67

58676

46281

31673

14608

14.67

13.92

14.38

12.93

47373

72063

68559

83598

12.64

13.99

14.15

14.11

33986

31094

451000

433000

13.25

13.92

0.0700

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P10Y

0.0340

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1100000

500000

629469

13000

24206

77990

148381

144852

2.16

1.37

160733

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203864

303106

11.33

13.89

14.02

14.07

205795

303106

11.01

14.85

14.83

14.38

13.07

P7Y10M24D

77990

303106

83010

333

7000

144852

15166

18849

22328

7517

4051

14.07

14.85

12.76

12.97

14.38

10.78

14.70

12.88

11.20

10.02

P9Y1M6D

P8Y10M24D

P7Y8M12D

P9Y10M24D

P6Y4M24D

P8Y10M24D

P7Y10M24D

P7Y1M6D

P7Y

13.45

13.51

5600000

7325000

259000

260000

<div> NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <div class="MetaData"> Nature of Operations Warwick Valley Telephone Company (the "Company") is a cloud-based communications company that provides Unified Communications ("UC") solutions and enterprise hosted Voice over Internet Protocol ("VoIP") and operates as a regional Incumbent Local Exchange Carrier ("ILEC") in southern Orange County, New York and northern New Jersey. Through its wholly-owned subsidiaries, the Company delivers cloud-based Unified Communications solutions including Voice over Internet Protocol ("VoIP"), hosted Microsoft Communication Services, fixed mobile convergence and advanced voice applications for a broad customer base including enterprise customers, small and medium-sized businesses and other business customers. The Company's ILEC operations consist of providing historic local and toll telephone service, Internet high speed broadband service, satellite video service and DIRECTV to residential and business customers.</div> <div> Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments consisting only of normal recurring adjustments considered necessary for fair presentation have been included. Operating results and cash flows for the six-month period ended June 30, 2012 are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and any disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.</div> <div class="MetaData">Reclassifications Certain items in the 2011 segment footnote (see Note 8) have been reclassified in order to conform to the 2012 presentation.</div>   </div>

626000

398000

26153000

22093000

36425000

34684000

26153000

22093000

<div> NOTE 14: SHAREHOLDERS' EQUITY A summary of the changes to shareholders' equity for the six months ended June 30, 2012 and 2011 is provided below: <div> <table border="0" cellspacing="0"> <tr><td width="66%"> </td> <td width="2%" align="center"> </td> <td width="13%" align="center"> </td> <td width="2%" align="center"> </td> <td width="2%" align="center"> </td> <td width="12%" align="center"> </td> <td width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Shareholders' equity, beginning of period</td> <td width="2%" align="right">$</td> <td width="13%" align="right">26,153</td> <td width="2%" align="left"> </td> <td width="2%" align="left">$</td> <td width="12%" align="right">36,425</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Net income (loss)</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(1,462</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">632</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Dividends paid on common stock</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(3,131</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(2,847</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Dividends paid on preferred stock</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(13</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(13</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Stock and stock option compensation</td> <td width="2%" align="right"> </td> <td width="13%" align="right">398</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">626</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Treasury stock purchases</td> <td width="2%" align="right"> </td> <td width="13%" align="right">(789</td> <td width="2%" align="left">)</td> <td width="2%" align="left"> </td> <td width="12%" align="right">(1,476</td> <td width="2%" align="left">)</td></tr> <tr valign="bottom"><td width="66%" align="left">Exercise of stock options</td> <td width="2%" align="right"> </td> <td width="13%" align="right">677</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">1,136</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Changes in unrealized gain (loss) on investments</td> <td width="2%" align="right"> </td> <td width="13%" align="right">0</td> <td width="2%" align="left"> </td> <td width="2%" align="left"> </td> <td width="12%" align="right">8</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Changes in pension and postretirement benefit plans</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="13%" align="right">260</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">193</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr><td width="99%" colspan="7"> </td></tr> <tr valign="bottom"><td width="66%" align="left">Shareholders' equity, end of period</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="13%" align="right">22,093</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">34,684</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div> </div>

103319

45610

1136000

677000

<div> NOTE 16: SUBSEQUENT EVENTS The Company has evaluated subsequent events occurring after the balance sheet date. Based on this evaluation, the Company has determined that no subsequent events, except for the matters discussed below, have occurred that require disclosure in the condensed consolidated financial statements. On July 19, 2012, the New York State Public Service Commission ("PSC") approved the Company's petition to restructure its corporate organization. The Company has been granted the ability to transfer its regulated assets to a newly formed wholly-owned subsidiary named Warwick Valley Telephone Company, LLC, which will operate as a regulated subsidiary. In connection with the corporate restructuring, the Company plans to change its name to WVT Communications Group Inc. and operate as a holding company. The Company has submitted a similar petition with the New Jersey Board of Public Utilities ("BPU") and anticipates receiving approval of such petition during the third quarter of 2012. During July 2012, the Company drew down $1,350 from its line of credit with Provident Bank for capital expenditures and working capital. On August 2, 2012, the Company entered into a third supplement to its Master Loan Agreement with CoBank ACB ("CoBank"). Under the third supplement to the Master Loan Agreement, this revolving loan facility was increased from $5,000 to $10,000 and matures on August 2, 2013. Under the third supplement, if the Company exercises the O-P Put, then the Company must prepay any amounts outstandingunder the revolving loan facility and the revolving loan facility may terminate. Under the third supplement, interest accrues on outstanding indebtedness under the revolving loan facility at an interest rate selected by the Company. The Company may select a variable rate option or a LIBOR plus 4.50% option. The Company is required to also pay an unused line fee of 0.50% per annum. Also under the third supplement, the modified total Leverage Ratio and modified Debt Service Coverage Ratio, as such terms are defined in the Master Loan Agreement, were changed to 2.50x and a new Fixed Charge Coverage Ratio, as such term is defined in the Master Loan Agreement, of not less than 1.00x was added to the Master Loan Agreement. In connection with the closing of the third supplement, the Company drew down $6,095, which was used to repay the outstanding amount under the second supplement of $5,016, the $670 holdback due to Alteva, LLC (now Avetla, LLC) in connection with the Company's purchase of substantially all of the assets of Alteva, LLC and related closing costs. On August 3, 2012, Ralph Martucci, Jr. resigned as the Company's Executive Vice President, Chief Financial Officer and Treasurer and Brian H. Callahan was appointed to succeed Mr. Martucci. On August 6, 2012, the Company paid $670 to Avetla, LLC due in connection with the Company's purchase of substantially all of the assets of Alteva, LLC. </div>

4125000

0.01

272479

735391

788825

6262000

7049000

1476000

789000

45000

6000

5424287

5406894

5722824

5730702

5400822

5406894

5722824

5730702

2377000 2247000 472000 484000 0.00 0.00 -0.26 -0.04 0.00 0.00 -0.26 -0.04 50000000 5 0.081081 <div> <table border="0" cellspacing="0"> <tr><td width="68%"> </td> <td width="2%"> </td> <td width="15%"> </td> <td width="2%"> </td> <td width="12%"> </td></tr> <tr valign="bottom"><td width="68%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="15%" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="center"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="center">2011</td></tr> <tr valign="bottom"><td width="68%" align="left">Current assets</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="15%" align="right">20,469</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="12%" align="right">20,525</td></tr> <tr valign="bottom"><td width="68%" align="left">Property, plant and equipment, net</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="15%" align="right">39,472</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="12%" align="right">39,596</td></tr> <tr valign="bottom"><td width="68%" align="left">Total assets</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="15%" align="right">59,941</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">60,121</td></tr> <tr><td width="99%" colspan="5"> </td></tr> <tr valign="bottom"><td width="68%" align="left">Total liabilities</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="15%" align="right">33,336</td> <td width="2%" align="left">$</td> <td style="text-indent: 4px;" width="12%" align="right">42,500</td></tr> <tr valign="bottom"><td width="68%" align="left">Partners' capital</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="15%" align="right">26,605</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid; text-indent: 4px;" width="12%" align="right">17,621</td></tr> <tr valign="bottom"><td width="68%" align="left">Total liabilities and partners' capital</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="15%" align="right">59,941</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double; text-indent: 4px;" width="12%" align="right">60,121</td></tr></table> </div> <div> <div class="MetaData"> The following summarizes the income statement (unaudited) for the six months ended June 30, 2012 and 2011 that the O-P provided to the Company: <div> <table border="0" cellspacing="0"> <tr><td width="60%"> </td> <td width="2%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="60%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="3" align="center">2011 (1)</td></tr> <tr valign="bottom"><td width="60%" align="left">Net sales</td> <td width="2%" align="right">$</td> <td width="14%" align="right">150,416</td> <td width="2%" align="left">$</td> <td width="12%" align="right">116,165</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Cellular service cost</td> <td width="2%" align="right"> </td> <td width="14%" align="right">70,353</td> <td width="2%" align="left"> </td> <td width="12%" align="right">32,508</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Operating expenses</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">41,375</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">16,868</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Operating income</td> <td width="2%" align="right"> </td> <td width="14%" align="right">38,688</td> <td width="2%" align="left"> </td> <td width="12%" align="right">66,789</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Other income</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">6</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">14</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Net income</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">38,694</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">66,803</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="92%" colspan="6"> </td></tr> <tr valign="bottom"><td width="60%" align="left">Company share</td> <td style="border-bottom: #000000 3px double;" width="2%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">3,137</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">5,416</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   (1) The O-P's income statement for the six months ended June 30, 2011, represents four months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6 to the O-P Limited Partnership Agreement effective May 1, 2011 ("Amendment 6") The following summarizes the income statement (unaudited) for the three months ended June 30, 2012 and 2011 that O-P provided to the Company: <div> <table border="0" cellspacing="0"> <tr><td width="59%"> </td> <td width="3%"> </td> <td width="14%"> </td> <td width="2%"> </td> <td width="12%"> </td> <td width="2%"> </td></tr> <tr valign="bottom"><td width="59%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="17%" colspan="2" align="center">2012</td> <td style="border-bottom: #000000 1px solid;" width="16%" colspan="3" align="center">2011 (1)</td></tr> <tr valign="bottom"><td width="59%" align="left">Net sales</td> <td width="3%" align="right">$</td> <td width="14%" align="right">76,180</td> <td width="2%" align="left">$</td> <td width="12%" align="right">67,776</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Cellular service cost</td> <td width="3%" align="right"> </td> <td width="14%" align="right">34,305</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27,020</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Operating expenses</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">20,755</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">13,659</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Operating income</td> <td width="3%" align="right"> </td> <td width="14%" align="right">21,120</td> <td width="2%" align="left"> </td> <td width="12%" align="right">27,097</td> <td width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Other income</td> <td style="border-bottom: #000000 1px solid;" width="3%" align="right"> </td> <td style="border-bottom: #000000 1px solid;" width="14%" align="right">4</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td> <td style="border-bottom: #000000 1px solid;" width="12%" align="right">16</td> <td style="border-bottom: #000000 1px solid;" width="2%" align="left"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Net income</td> <td style="border-bottom: #000000 3px double;" width="3%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">21,124</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">27,113</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr> <tr><td width="92%" colspan="6"> </td></tr> <tr valign="bottom"><td width="59%" align="left">Company share</td> <td style="border-bottom: #000000 3px double;" width="3%" align="right">$</td> <td style="border-bottom: #000000 3px double;" width="14%" align="right">1,713</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left">$</td> <td style="border-bottom: #000000 3px double;" width="12%" align="right">2,198</td> <td style="border-bottom: #000000 3px double;" width="2%" align="left"> </td></tr></table></div>   (1) The O-P's income statement represents, for the three months ended June 30, 2011, one months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6.</div> </div> 16868000 13659000 41375000 20755000 66789000 27097000 38688000 21120000 14000 16000 6000 4000 100.5 100.5 0.0773 0.0799 1.00 0 118000 73000 0 1000 1000 0 36000 0 7000 15000 13000 9348000 4600000 7441000 3634000 1476000 677000 2641000 1211000 6526000 3252000 0 0 272479 272479 0 0 272479 272479 5400822 5406894 5450345 5458223 The O-P's income statement for the six months ended June 30, 2011, represents four months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6 to the O-P Limited Partnership Agreement effective May 1, 2011 ("Amendment 6") The O-P's income statement represents, for the three months ended June 30, 2011, one months of the O-P operating as a wholesale business and two months of the O-P operating as a retail business in accordance with Amendment 6. Basic and diluted weighted average shares were the same for the three months and six months ended June 30, 2012 because the effects of the potentially diluted securities were anti-dilutive and they were excluded from the calculation.