10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission file number: 001-33778

INTELIQUENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	31-1786871
(State or other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

550 West Adams Street

Suite 900

Chicago, IL 60661

(Address of principal executive offices, including zip code)

(312) 384-8000

(Registrant’s telephone number, including area code)

Neutral Tandem, Inc.

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 31, 2013, 32,326,705 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.

INTELIQUENT, INC.

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements		3
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2013 and December 31, 2012		3
	Condensed Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2013 and June 30, 2012		4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2013 and June 30, 2012		5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2013 and June 30, 2012		6
	Notes to Condensed Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		22
Item 4.	Controls and Procedures		22
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		22
Item 1A.	Risk Factors		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 3.	Defaults Upon Senior Securities		24
Item 4.	Mine Safety Disclosures		24
Item 5.	Other Information		24
Item 6.	Exhibits		24

2

PART I. FINANCIAL INFORMATION

INTELIQUENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)	June 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	56,718		$	31,479
Receivables — net of allowance of $0 and $423, respectively		30,271			30,759
Deferred income taxes – current		—			1,210
Prepaid expenses		1,451			6,405
Other current assets		2,118			—
Current assets of discontinued operations		—			26,924
Total current assets		90,558			96,777
Property and equipment — net		26,903			44,116
Restricted cash		125			962
Deferred income taxes – noncurrent		5,804			2,710
Other assets		2,277			1,035
Total assets	$	125,667		$	145,600
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,411		$	7,546
Accrued liabilities:
Taxes payable		3,431			2,160
Circuit cost		6,285			8,821
Rent		1,872			1,829
Payroll and related items		3,276			2,687
Other		2,052			1,062
Current liabilities of discontinued operations		—			22,402
Total current liabilities		22,327			46,507
Shareholders’ equity:
Preferred stock — par value of $.001; 50,000 authorized shares; no shares issued and outstanding at June 30, 2013 and December 31, 2012		—			—
Common stock — par value of $.001; 150,000 authorized shares; 32,328 shares and 32,345 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively		33			32
Less treasury stock, at cost; 3,351 shares and 3,083 shares at June 30, 2013 and December 31, 2012, respectively		(51,668	)		(50,103	)
Additional paid-in capital		202,540			199,331
Accumulated other comprehensive loss		—			(4,904	)
Retained earnings		(47,565	)		(45,263	)
Total shareholders’ equity		103,340			99,093
Total liabilities and shareholders’ equity	$	125,667		$	145,600

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

INTELIQUENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Revenue	$	53,449		$	58,262		$	112,737		$	119,149
Operating expense:
Network and facilities expense (excluding depreciation and amortization)		24,053			22,966			48,689			46,935
Operations		7,508			8,674			15,306			17,468
Sales and marketing		1,526			1,997			3,560			4,178
General and administrative		4,535			5,702			9,034			10,951
Depreciation and amortization		3,699			5,371			8,212			10,690
Loss (gain) on disposal of fixed assets		223			(4	)		223			(113	)
Gain on disposal of Americas data assets		(23,171	)		—			(23,171	)		—
Total operating expense		18,373			44,706			61,853			90,109
Income from operations		35,076			13,556			50,884			29,040
Other expense (income):
Interest income		(13	)		(49	)		(52	)		(90	)
Other (income) expense		(4	)		(1	)		1			(1	)
Total other income		(17	)		(50	)		(51	)		(91	)
Income from continuing operations before income taxes		35,093			13,606			50,935			29,131
Provision for income taxes		741			2,933			4,347			6,678
Income from continuing operations		34,352			10,673			46,588			22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361
Earnings per share – continuing operations:
Basic	$	1.05		$	0.34		$	1.44		$	0.71
Diluted	$	1.05		$	0.34		$	1.44		$	0.70
Loss per share – discontinued operations:
Basic	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Diluted	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Earnings per share – net income:
Basic	$	1.02		$	0.12		$	1.24		$	0.33
Diluted	$	1.02		$	0.12		$	1.24		$	0.32
Weighted average number of shares outstanding:
Basic		31,629			31,791			31,585			31,728
Diluted		31,629			32,178			31,585			32,118
Dividends paid per share:	$	1.31		$	—		$	1.31		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

INTELIQUENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2013		2012			2013		2012
Net income	$	33,448	$	3,706		$	40,348	$	10,361
Other comprehensive income (loss):
Foreign currency adjustments		5,078		(5,297	)		4,904		(2,595	)
Total other comprehensive income (loss)		5,078		(5,297	)		4,904		(2,595	)
Comprehensive income (loss)	$	38,526	$	(1,591	)	$	45,252	$	7,766

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

INTELIQUENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2013			2012
Operating
Net income	$	40,348		$	10,361
Adjustments to reconcile net cash flows from operating activities:
Depreciation and amortization		9,455			15,095
Deferred income taxes		(1,884	)		(13	)
Loss (gain) on disposal of fixed assets		490			(109	)
Gain on disposal of Americas data assets		(23,171	)		—
Gain on disposal of discontinued operations		(794	)		—
Non-cash share-based compensation		3,930			6,027
Loss on intercompany foreign exchange transactions		56			297
Excess tax deficiency associated with share-based payments		504			120
Changes in assets and liabilities:
Receivables		(3,860	)		4,568
Other current assets		1,933			(3,927	)
Other noncurrent assets		(44	)		120
Accounts payable		198			(1,366	)
Accrued liabilities		3,252			4,295
Noncurrent liabilities		—			178
Net cash provided by operating activities		30,413			35,646
Investing
Purchase of equipment		(7,982	)		(14,869	)
Proceeds from sale of equipment		28			107
Proceeds from disposition of discontinued operations, net of transaction costs		9,709			—
Proceeds from disposition of Americas data assets, net of transaction costs		37,092			—
Decrease in restricted cash		837			—
Net cash provided by (used for) investing activities		39,684			(14,762	)
Financing
Proceeds from the exercise of stock options		220			69
Restricted shares withheld to cover employee taxes paid		(365	)		(657	)
Dividends paid		(42,650	)		—
Payments made for repurchase of common stock		(1,565	)		—
Excess tax deficiency associated with share-based payments		(504	)		(120	)
Net cash used for financing activities		(44,864	)		(708	)
Effect of exchange rate changes on cash		6			(256	)
Net Increase In Cash And Cash Equivalents		25,239			19,920
Cash And Cash Equivalents — Beginning		31,479			90,279
Cash And Cash Equivalents — End	$	56,718		$	110,199
Supplemental Disclosure Of Cash Flow Information:
Cash paid for taxes	$	1,187		$	9,536
Supplemental Disclosure Of Noncash Flow Items:
Investing Activity — Accrued purchases of equipment	$	1,122		$	6,514

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

INTELIQUENT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF THE BUSINESS

Organization — Inteliquent, Inc. (the Company) provides U.S. and international voice telecommunications services primarily on a wholesale basis. The Company offers these services using an all-IP network, which enables the Company to deliver global connectivity for a variety of media, historically including voice, data and video. The Company’s solutions enable carriers and other providers to deliver telecommunications traffic or other services where they do not have their own network or elect not to use their own network. These solutions are sometimes called “off-net” services.

On April 30, 2013, the Company sold its global data business to Global Telecom & Technology, Inc. (GTT) for $54.5 million, subject to certain adjustments. The total consideration consisted of $52.5 million in cash, subject to net working capital adjustments, and $2.0 million of non-cash commercial IP Transit and point-to-point Ethernet data network services to be provided to the Company by GTT free-of-charge for a three-year period. The $2.0 million of non-cash commercial services was calculated based upon the discounted present value of the market cost of such services as of the date on which the commercial services agreement was signed with GTT. In addition, the Company recorded in its condensed consolidated statement of income, as part of its gain amount on the sale of its global data business, approximately $2.4 million for divestiture-related costs, including legal and advisory services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation — The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, the condensed consolidated statements of income for the three and six months ended June 30, 2013 and 2012, the condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 and 2012, and the condensed consolidated statements of cash flows for the six months ended June 30, 2013 and 2012 are unaudited. The condensed consolidated balance sheet data as of December 31, 2012 was derived from the audited consolidated financial statements which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Certain prior-year amounts that are related to the Company’s discontinued operations have been reclassified to conform to the current period presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission applicable to interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the unaudited interim condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared on the same basis as the audited consolidated statements and reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.

The carrying amounts of our cash and equivalents, receivables and accounts payable approximate fair value due to their short-term nature.

Changes in Presentation — On April 30, 2013, the Company sold its global data business to GTT for $54.5 million, subject to certain adjustments. The Company determined that the appropriate level in which to assess discontinued operations was at its reporting unit level. As such, the Company’s Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) reporting units of the global data business consist of results of operations and cash flows that can be clearly distinguished from the rest of the entity and are therefore reflected in the condensed consolidated statements of income and in the condensed consolidated balance sheets as discontinued operations. Historical information related to these reporting units have been reclassified accordingly. The Americas reporting unit of the global data business does not consist of results of operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. This reporting unit does not qualify for discontinued operations accounting treatment. Therefore, the Americas reporting unit of the global data business is reported in continuing operations in the condensed consolidated statements of income and in the condensed consolidated balance sheets. Refer to Note 9, “Dispositions and Discontinued Operations”, for more information regarding the sale of the global data business.

7

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. At June 30, 2013, the Company had $19.9 million of cash in banks and $36.8 million in three money market mutual funds. At December 31, 2012, the Company had $30.7 million of cash in banks and $0.8 million in two money market mutual funds.

Property and Equipment — Property and equipment is recorded at cost. These values are depreciated over the estimated useful lives of the individual assets using the straight-line method. Any gains and losses from the disposition of property and equipment are included in operations as incurred. The estimated useful life for network equipment and tools and test equipment is five years. The estimated useful life for computer equipment, computer software and furniture and fixtures is three years. Leasehold improvements are amortized on a straight-line basis over an estimated useful life of five years or the life of the lease, whichever is less. The impairment of long-lived assets is periodically evaluated when events or changes in circumstances indicate that a potential impairment has occurred.

Revenue Recognition — The Company generates revenue from sales of its voice services. The Company maintains tariffs and executed service agreements with each of its customers in which specific fees and rates are determined. Voice revenue is recorded each month on an accrual basis based upon minutes of traffic switched by the Company’s network by each customer, which is referred to as minutes of use. The rates charged per minute are determined by contracts between the Company and its customers, or by filed and effective tariffs.

IP Transit and Ethernet services revenues related to the Company’s Americas reporting unit are recorded each month on an accrual basis based upon bandwidth used by each customer. The rates charged are the total of a monthly fee for bandwidth (the Committed Traffic Rate) plus additional charges for the sustained peak bandwidth used monthly in excess of the Committed Traffic Rate.

Earnings (Loss) per Share — Basic earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding adjusted by the number of additional shares that would have been outstanding during the period had the potentially dilutive securities been issued. Because the Company has capital that is made up of both common shares and participating securities (non-vested shares), it is required to utilize the two-class method to calculate basic and diluted earnings (loss) per share. During the three and six months periods ended June 30, 2013, the Company distributed more cash, in the form of a dividend, than its current earnings for these periods, which resulted in negative undistributed earnings.

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings (loss) per share of common stock based upon the two-class method:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Numerator:
Income from continuing operations	$	34,352		$	10,673		$	46,588		$	22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361
Denominator:
Weighted average common shares outstanding		31,629			31,791			31,585			31,728
Effect of dilutive securities:
Stock options		—			387			—			390
Denominator for diluted earnings per share		31,629			32,178			31,585			32,118
Earnings per share – continuing operations
Basic — as reported	$	1.05		$	0.34		$	1.44		$	0.71
Diluted — as reported	$	1.05		$	0.34		$	1.44		$	0.70
Loss per share – discontinued operations
Basic — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Diluted — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Earnings per share – net income
Basic — as reported	$	1.02		$	0.12		$	1.24		$	0.33
Diluted — as reported	$	1.02		$	0.12		$	1.24		$	0.32

Outstanding share-based awards of 4.3 million, 2.7 million, 4.3 million and 2.7 million were outstanding during the three months ended June 30, 2013 and June 30, 2012 and the six months ended June 30, 2013 and June 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

8

The undistributed losses allocable to participating securities were $9.3 million and $2.4 million for the three months and six months ended June 30, 2013, respectively. The undistributed earnings allocable to participating securities were $0.1 million and $0.4 million for the three months and six months ended June 30, 2012, respectively.

Accounting for Stock-Based Compensation — The fair value of stock options is determined using the Black-Scholes valuation model. This model takes into account the exercise price of the stock option, the fair value of the common stock underlying the stock option as measured on the date of grant and an estimation of the volatility of the common stock underlying the stock option. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight line method. The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. Actual results, and future changes in estimates, may differ from the Company’s current estimates.

The amount of non-cash share-based expense recorded in the three months ended June 30, 2013 and 2012 was $2.0 million and $2.9 million, respectively. The amount of non-cash share-based expense recorded in the six months ended June 30, 2013 and 2012 was $3.9 million and $6.0 million, respectively.

Compensation expense for non-vested shares is measured based upon the quoted closing market price for the stock on the date of grant. The compensation cost is recognized on a straight-line basis over the vesting period. See Note 5, “Stock Options and Non-Vested Shares.”

Stock Repurchase — On August 7, 2012, the Company announced that its Board of Directors authorized the repurchase of up to $50.0 million of its outstanding common stock as part of a stock repurchase program. During the six months ended June 30, 2013, the Company repurchased approximately 0.3 million shares for $1.6 million under the program at an average cost of $5.80 per share. The Company funded the purchase of the common shares using cash on hand. The stock repurchase was accounted for under the cost method, whereby the entire cost of the repurchased shares was recorded to treasury stock.

Foreign Currency Translation — As a result of the sale of global data business, the Company now operates only within the United States and is no longer exposed to any significant foreign currency risk.

Recent Accounting Pronouncements — Effective January 1, 2013, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). ASU 2013-02 requires entities to disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The Company has complied with this disclosure requirement, and as a result, the amendment did not change the items reported in its other comprehensive income (loss) or when an item of its other comprehensive income (loss) is reclassified to net income.

3. LEGAL PROCEEDINGS

From time to time, the Company is a party to legal proceedings arising in the normal course of its business. Aside from the matters discussed below, the Company does not believe that it is a party to any pending legal action that could reasonably be expected to have a material effect on its business or operating results, financial position or cash flows.

Customer Dispute

The Company has a dispute with a carrier to which it provides certain voice services. The carrier is one of the Company’s largest customers and claims the Company has been improperly billing a certain tariffed rate element. The customer alleges that the improper billings total approximately $6 million. The Company has not been provided with sufficient information to allow the Company to understand how the customer calculated the disputed amount, believes the entire claim is without merit and intends to vigorously contest it. However, the Company cannot predict the final outcome and impact of this dispute. The Company establishes accruals only for those matters where it determines that a loss is probable and the amount of loss can be reasonably estimated. The Company does not currently believe a loss is probable in connection with this dispute.

9

Federal Securities Class Action

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company reported a $75.3 million impairment of goodwill and intangibles charge, a $13.2 million impairment of fixed assets charge, and a net loss of $78.1 million, in each case for the year ended December 31, 2012. As also previously disclosed, during the second quarter of 2013, the Board of Directors of the Company determined that an internal investigation of whether such impairment charge was overstated should be undertaken by the Audit Committee with the assistance of independent outside professionals. During the same time period, the Board of Directors also determined that the Audit Committee, with the assistance of independent outside professionals, should conduct an internal investigation of the Company’s financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013.

As a result of the then-ongoing investigation, on August 12, 2013, the Company submitted to the Securities and Exchange Commission a Notification of Late Filing pursuant to Rule 12b-25 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in respect of this Quarterly Report on Form 10-Q. On August 13, 2013, the Company received a deficiency letter from The Nasdaq Stock Market LLC, stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) for failure to timely file this Quarterly Report on Form 10-Q. The Company believes that it has regained compliance with Nasdaq’s continued listing standards with the filing of this Quarterly Report on Form 10-Q and that it will not be required to submit any further plan of compliance to Nasdaq. However, as of the date of this filing, the Company has not yet received definitive correspondence from Nasdaq indicating that no further action by the Company is required. The late filing of this Quarterly Report on Form 10-Q has adversely affected the Company’s eligibility to use Registration Statements on Form S-3 for registration of its securities with the Securities and Exchange Commission. Use of Form S-3 requires, among other things, that the issuer be current and timely in its reports under the Exchange Act for at least twelve months. Because of the Company’s inability to use Form S-3, the Company will have to meet more demanding requirements to register additional securities, which could make it more difficult for the Company to effect public offering transactions, and the Company’s range of available financing alternatives could also be narrowed.

On August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

On August 9, 2013, a federal securities class action lawsuit was filed against the Company in the United States District Court for the Northern District of Illinois (Costas Stamatiades, individually and on behalf of All Other Persons Similarly Situated v. Inteliquent, Inc., f/k/a Neutral Tandem Inc., G. Edward Evans, Robert Junkroski, and David Zwick, 13-CV-5701). The plaintiff alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder relating to the matters addressed in the Audit Committee’s internal investigation. As of the date of this filing, the Company has not been formally served with the complaint, and intends to vigorously defend itself in this lawsuit. No reasonable estimate of the loss, if any, associated with this litigation is possible.

4. INCOME TAXES

Income taxes are computed using an effective tax rate, which is subject to ongoing review and evaluation by the Company. The Company’s estimated effective income tax rate was 2.1% and 8.5% for the three and six months ended June 30, 2013, respectively, compared to 21.6% and 22.9% for the same respective periods last year.

The difference in the effective tax rate for the three and six months ended June 30, 2013 as compared to the three and six months ended June 30, 2012 is due primarily to the effect of the treatment of the sale of the global data business for tax purposes.

10

The Company has recorded a valuation allowance against the capital loss created by the sale of its global data business and its prior year’s Illinois EDGE Credit. The Company believes it is more likely than not that these assets will not be realized in the foreseeable future. The realization of deferred tax assets is dependent upon whether the Company can generate future taxable income in the appropriate jurisdiction to utilize the assets. The amount of the deferred tax assets considered realizable is subject to adjustment in future periods.

5. STOCK OPTIONS AND NON-VESTED SHARES

In 2003, the Company established the 2003 Stock Option and Stock Incentive Plan (2003 Plan), which provided for the issuance of up to 4.7 million options and non-vested shares to eligible employees, officers and independent contractors of the Company. In 2007, the Company adopted the 2007 Equity Incentive Plan (2007 Plan) and ceased awarding equity grants under the 2003 Plan. As of June 30, 2013, the Company had granted a total of 3.5 million options and 0.8 million non-vested shares that remained outstanding under the 2007 Plan. Awards for 0.3 million shares, representing approximately 1.0% of the Company’s outstanding common stock as of June 30, 2013, remained available for additional grants under the 2007 Plan.

The Company records stock-based compensation expense in connection with any grant of options and non-vested shares to its employees. The Company calculates the expense associated with its stock options and non-vested shares by determining the fair value of the options and non-vested shares.

Options

All options granted under the 2003 Plan and the 2007 Plan have an exercise price equal to the market value of the underlying common stock on the date of the grant. During the three months ended June 30, 2013, the Company did not grant any options. During the six months ended June 30, 2013, the Company granted 0.7 million options at a weighted-average exercise price of $3.40. During both the three and six months ended June 30, 2012, the Company granted less than 0.1 million options at a weighted-average exercise price of $11.75.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following table summarizes the assumptions used for estimating the fair value of options for the six months ended June 30, 2013 and June 30, 2012:

	June 30, 2013	June 30, 2012
Expected life	7.3 years	7.2 years
Risk-free interest rate	1.3%	1.6%
Expected dividends	—	—
Volatility	45.0%	50.5%

The weighted-average fair value of options granted, as determined by using the Black-Scholes valuation model, during the six months ended June 30, 2013 and 2012 was $1.64 and $6.91, respectively. The total grant date fair value of options that vested during the six months ended June 30, 2013 and 2012 was approximately $0.8 million and $3.0 million, respectively. The total intrinsic value (market value of stock option less option exercise price) of stock options exercised was $0.5 million and $0.3 million during the six months ended June 30, 2013 and 2012, respectively.

The following table summarizes activity under the Company’s stock option plan for the six months ended June 30, 2013:

	Shares (000)			Weighted- Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted- Average Remaining Term (yrs)
Options outstanding — January 1, 2013		3,092		$	14.68
Granted		716			3.40
Exercised		(148	)		1.48
Cancelled		(155	)		14.78
Options outstanding — June 30, 2013		3,505		$	11.82	$	3,273		6.71
Vested or expected to vest — June 30, 2013		3,473		$	11.90	$	3,180		6.69
Exercisable — June 30, 2013		2,321		$	15.20	$	366		5.51

The unrecognized compensation cost associated with options outstanding at June 30, 2013 and December 31, 2012 was $3.0 million and $3.6 million, respectively. The weighted average remaining term that the compensation will be recorded was 2.4 years and 1.8 years as of June 30, 2013 and December 31, 2012, respectively.

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Non-vested Shares

During the three and six months ended June 30, 2013, the Company granted 0.2 million and 0.3 million non-vested shares, respectively, to members of the Company’s executive management team as well as various employees within the Company. No shares were issued during the three months ended June 30, 2012. During the six months ended June 30, 2012, the Company granted 0.3 million non-vested shares to members of the Company’s executive management team as well as various employees within the Company. The non-vested shares were issued as part of the 2007 Plan. The shares typically vest over a four-year period. The fair value of the non-vested shares is determined using the Company’s closing stock price on the grant date. Compensation cost, measured using the grant date fair value, is recognized over the requisite service period on a straight-line basis.

A summary of the Company’s non-vested share activity and related information for the six months ended June 30, 2013 is as follows:

	Shares (000)			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested shares outstanding — January 1, 2013		846		$	11.31
Granted		274			4.57
Vested		(277	)		10.13
Cancelled		(78	)		7.46
Non-vested shares outstanding — June 30, 2013		765		$	9.76	$	4,399
Non-vested shares vested or expected to vest — June 30, 2013		715		$	9.76	$	4,111

The aggregate intrinsic value represents the total pre-tax intrinsic value based on the Company’s closing stock price of $5.75 on June 28, 2013. The amount changes based upon the fair market value of the Company’s common stock.

The unrecognized compensation cost associated with non-vested shares at June 30, 2013 and December 31, 2012 was $6.2 million and $8.4 million, respectively. The weighted average remaining term that the compensation will be recorded was 1.9 years and 2.3 years as of June 30, 2013 and December 31, 2012, respectively.

6. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Reporting establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis. The Company operates in one industry segment, which is to provide voice interconnection services via the Company’s international telecommunications network to fulfill customer agreements. Therefore, the Company has concluded that it has one operating segment.

7. CREDIT FACILITY

On March 5, 2013, the Company entered into a $15 million revolving credit facility. The credit facility has a term of three years and an interest rate of LIBOR + 3.25%. The Company may borrow under the revolving credit facility and use the funds for general corporate purposes. There were no obligations outstanding under the revolving credit facility at any time during the period ended June 30, 2013. As a result of the Company’s failure to provide financial statements within 45 days of the end of the quarter ended June 30, 2013, the Company was in technical default under the terms of the credit facility agreement. The Company believes it will cure the default and be in full compliance with the credit agreement when it files this Form 10-Q.

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in the balance of Accumulated Other Comprehensive Income (Loss) (AOCI) for the three months and six months ended June 30, 2013 and 2012 are summarized in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2013			2012			2013			2012
Beginning balance	$	(5,078	)	$	(1,644	)	$	(4,904	)	$	(4,346	)
Other comprehensive income (loss) before reclassifications		145			(5,297	)		(29	)		(2,595	)
Less: Amounts reclassified from AOCI
Foreign currency adjustments		(4,933	)		—			(4,933	)		—
Net other comprehensive income (loss)		5,078			(5,297	)		4,904			(2,595	)
Ending balance	$	—		$	(6,941	)	$	—		$	(6,941	)

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9. DISPOSITIONS AND DISCONTINUED OPERATIONS

On April 30, 2013, the Company sold its global data business to GTT and, as a result, no longer provides data services. The transaction consisted of the Americas, EMEA and APAC reporting units’ data assets and liabilities. The Americas reporting unit of the global data business does not qualify for discontinued operations because it does not constitute a separate component of the Company. Therefore, the Americas reporting unit of the global data business is reported in continuing operations in the condensed consolidated statements of income. The EMEA and APAC reporting units of the global data business are reflected in the condensed consolidated statements of income and in the condensed consolidated balance sheets as discontinued operations. Historical information related to these reporting units has been reclassified accordingly.

The Company sold its global data business for $54.5 million which consisted of $52.5 million in cash, subject to net working capital adjustments, and $2.0 million of non-cash commercial services to be provided by GTT to the Company over a three-year period. After an initial net working capital reduction of $3.3 million, the Company received $51.2 million of cash and non-cash services from GTT. Transaction costs and additional net working capital adjustment amounted to approximately $2.4 million and $1.0 million, respectively, reducing cash and non-cash consideration to approximately $47.8 million. Of this amount, $37.9 million was allocated to the sale of the Americas reporting unit of the global data business and the remaining amount of $9.9 million was allocated to the EMEA and APAC reporting units of the global data business. The Company based its allocation of the $47.8 million amounts based upon the relative percentage of the fair value of the net total assets and total liabilities of the Americas reporting unit and the EMEA and APAC reporting units, to the total fair value of the net total assets and total liabilities of these three reporting units combined.

Dispositions Not Qualifying for Discontinued Operations

The net book basis of the assets and liabilities for the Americas reporting unit of the global data business at the date of sale was approximately $14.7 million. The purchase price allocation of $37.9 million for this portion of the global data business, less its net book basis of assets and liabilities, yielded a gain from sale of $23.2 million.

Discontinued Operations

The net book basis of the assets and liabilities for the EMEA and APAC reporting units of the global data business at the date of sale was approximately $10.1 million. In addition, the Company is entitled to approximately $1.0 million of cash that remained with the EMEA and APAC reporting units of the global data business at the time of the transaction. The purchase price allocation of $9.9 million for this portion of the global data business plus the additional $1.0 million of cash, less its net book basis assets and liabilities, yielded a gain from discontinued operations of $0.8 million.

The following table displays summarized activity in the Company’s condensed consolidated statements of income for discontinued operations during the three and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2013			2012		2013			2012
Revenue	$	3,115		$	10,010	$	13,493		$	19,820
Operating loss		1,705			5,192		6,308			10,012
Loss before income taxes		1,698			5,813		6,807			10,432
Provision for income tax		—			1,154		227			1,660
Loss from discontinued operations		1,698			6,967		7,034			12,092
Gain on disposal of discontinued operations	$	(794	)	$	—	$	(794	)	$	—

The following table displays a summary of the assets and liabilities of discontinued operations as of December 31, 2012.

(In thousands)	December 31, 2012
Assets
Accounts receivable	$	12,075
Prepaid expenses		4,798
Property and equipment – net		9,401
Other assets		650
	$	26,924
Liabilities
Accounts payable	$	4,840
Accrued liabilities		16,109
Other liabilities		1,453
	$	22,402

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10. SUBSEQUENT EVENTS

Internal Investigation

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company reported a $75.3 million impairment of goodwill and other intangibles charge, a $13.2 million impairment of fixed assets charge, and a net loss of $78.1 million, in each case for the year ended December 31, 2012.During the second quarter of 2013, the Board of Directors of the Company determined that an internal investigation of whether such impairment charge was overstated should be undertaken by the Audit Committee with the assistance of independent outside professionals. During the same time period, the Board of Directors also determined that the Audit Committee, with the assistance of independent outside professionals, should conduct an internal investigation of the Company’s financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013.

On August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

Chief Financial Officer Transition

On August 23, 2013, David Zwick informed the Board of Directors of the Company of his decision to step down as the Company’s Chief Financial Officer and Executive Vice President effective immediately. The Company and Mr. Zwick are in the process of negotiating an employment separation agreement and release. If Mr. Zwick and the Company enter into such an agreement, the final terms will be disclosed in a future Form 8-K filing.

On August 23, 2013, the Company’s Board of Directors appointed Eric Carlson as interim principal financial officer and interim principal accounting officer and is currently identifying a candidate to succeed Mr. Zwick as the Company’s Chief Financial Officer on a permanent basis. Mr. Carlson, 51, joined the Company in May 2004 and has served as Controller since that time. Mr. Carlson holds a Bachelor of Science in Accounting from Eastern Illinois University and a Master of Business Administration in Finance from Northern Illinois University. Mr. Carlson is a certified public accountant and a member of AICPA and the Illinois CPA Society.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. All statements, other than statements of historical fact, included in this quarterly report on Form 10-Q are forward-looking statements. The words “anticipates,” “believes,” “expects,” “efforts,” “estimates,” “projects,” “proposed,” “plans,” “intends,” “may,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that might cause such differences include, but are not limited to: the effects of competition, including direct connects and downward pricing pressure resulting from such competition; risks associated with the sale of our global data business, including issues regarding separating our network, IT and billing systems from the network and systems sold to the buyer, and that the cost savings and other benefits we hope to receive may not materialize in part or at all; our ability to maintain relationships with business providers following the sale of our global data business; our ability to focus on the growth and performance of our voice business following the sale of our global data business; our regular review of strategic alternatives; the impact of current and future regulation, including intercarrier compensation reform enacted by the Federal Communications Commission; the risks associated with our ability to successfully develop and market new voice services, many of which are beyond our control and all of which could delay or negatively affect our ability to offer or market new services; the ability to develop and provide other new services; technological developments; the ability to obtain and protect intellectual property rights; the impact of current or future litigation; the potential impact of any future acquisitions, mergers or divestitures; natural or man-made disasters; the ability to attract, develop and retain executives and other qualified employees; changes in general economic or market conditions; matters arising out of or related to the impairment charge and financial forecasting practices that were subject to investigation by the Audit Committee; the possibility that the Securities and Exchange Commission may disagree with the Audit Committee’s findings and may require a restatement of financial statements or additional or different remediation; any other proceedings which may be brought against the Company by the Securities and Exchange Commission or other governmental agencies; the outcome of current and potential shareholder derivative actions filed against certain of the Company’s officers and directors; the possibility of additional private litigation related to the impairment charge and financial forecasting practices that were subject to investigation by the Audit Committee and related matters; and other important factors included in our reports filed with the Securities and Exchange Commission, particularly in the “Risk Factors” section of our Annual Report on Form 10-K for the period ended December 31, 2012 and included elsewhere in this report. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

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Internal Investigation

        As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company reported a $75.3 million impairment of goodwill and other intangibles charge, a $13.2 million impairment of fixed assets charge, and a net loss of $78.1 million, in each case for the year ended December 31, 2012. During the second quarter of 2013, the Board of Directors of the Company determined that an internal investigation of whether such impairment charge was overstated should be undertaken by the Audit Committee with the assistance of independent outside professionals. During the same time period, the Board of Directors also determined that the Audit Committee, with the assistance of independent outside professionals, should conduct an internal investigation of the Company’s financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013.

On August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

Overview

We provide U.S. and international voice telecommunications services primarily on a wholesale basis. We offer these services using an all-IP network, which enables us to deliver global connectivity for a variety of media, including voice, and historically data and video. Our solutions enable carriers and other providers to deliver telecommunications traffic or other services where they do not have their own network or elect not to use their own network. These solutions are sometimes called “off-net” services. We also provide our solutions to customers, such as content providers, who typically do not have their own network. We were incorporated in Delaware on April 19, 2001 and commenced operations in 2004. See Note 9, “Dispositions and Discontinued Operations”, for a description of the sale of our global data business.

Voice Services

We provide voice interconnection services primarily to competitive carriers, including wireless, wireline, cable and broadband telephony companies. Competitive carriers use our tandem switches to interconnect and exchange local and long distance traffic between their networks without the need to establish direct switch-to-switch connections. Competitive carriers are carriers that are not Incumbent Local Exchange Carriers, or ILECs, such as AT&T, Verizon and CenturyLink.

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Prior to the introduction of our local voice service, competitive carriers generally had two alternatives for exchanging traffic between their networks. The two alternatives were exchanging traffic through the ILEC tandems or directly connecting individual switches, commonly referred to as “direct connects.” Given the cost and complexity of establishing direct connects, competitive carriers often elected to utilize the ILEC tandem as the method of exchanging traffic. The ILECs typically required competitive carriers to interconnect to multiple ILEC tandems with each tandem serving a restricted geographic area. In addition, as the competitive telecommunications market grew, the process of establishing interconnections at multiple ILEC tandems became increasingly difficult to manage and maintain, causing delays and inhibiting the growth of competitive carriers while the purchase of ILEC tandem services became an increasingly significant component of a competitive carrier’s costs.

The tandem switching services offered by ILECs consist of local transit services, which are provided in connection with local calls, and switched access services, which are provided in connection with long distance calls. Under certain interpretations of the Telecommunications Act of 1996 and implementing regulations, ILECs are required to provide local transit services to competitive carriers. ILECs generally set per minute rates and other charges for tandem transit services according to rate schedules approved by state public utility commissions, although the methodology used to review these rate schedules varies from state to state. ILECs are also required to offer switched access services to competing telecommunications carriers under the Telecommunications Act of 1996 and implementing regulations. ILECs generally set per minute rates and other charges for switched access services according to mandated rate schedules set by the Federal Communications Commission for interstate calls and by state public utility commissions for intrastate calls. In November 2011, the FCC released an order setting forth a multi-year transition plan that will reduce, and ultimately lead to elimination of, terminating switched access charges.

A loss of ILEC market share to competitive carriers escalated competitive tensions and resulted in an increased demand for tandem switching. Growth in intercarrier traffic switched through ILEC tandems created switch capacity shortages known in the industry as ILEC “tandem exhaust,” where overloaded ILEC tandems became a bottleneck for competitive carriers. This increased call blocking and gave rise to service quality issues for competitive carriers.

We founded our company to solve these interconnection problems and better facilitate the exchange of traffic among competitive carriers and non-carriers. With the introduction of our services, we believe we became the first carrier to provide alternative tandem services capable of alleviating the ILEC tandem exhaust problem. Our solution enables competitive carriers to exchange traffic between their networks without using an ILEC tandem for both local and long distance calls. By utilizing our managed tandem service, our customers benefit from a simplified interconnection network solution that reduces costs, increases network reliability, decreases competitive tension and adds network diversity and redundancy. We have signed agreements with major competitive carriers and non-carriers, and we operated in 189 markets as of June 30, 2013.

Our business originally connected only local traffic among carriers within a single metropolitan market. In 2006, we installed a national IP backbone network connecting our major local markets. In 2008, we began offering terminating switched access services and originating switched access services. Switched access services are provided in connection with long distance calls. Our terminating switched access services allows interexchange carriers to send calls to us, and we then terminate those calls to the appropriate terminating carrier in the local market in which we operate. Our originating switched access service allows the originating carrier in the local market in which we operate to send calls to us that we then deliver to the appropriate interexchange carrier that has been selected to carry that call. In both instances, the interexchange carrier is our customer, which means that it is financially responsible for the call. Finally, we began offering international voice services as we began interconnection with non-US carriers. As a result of the foregoing, our service offerings now include the capability of switching and carrying local, long distance and international voice traffic.

On April 30, 2013, we announced that we sold all assets and liabilities of our global data business to GTT for $54.5 million, subject to certain adjustments. The total consideration consisted of $52.5 million in cash and $2.0 million of non-cash commercial services to be provided by GTT to us.

Revenue. We generate revenue from sales of our voice services. Revenue is recorded each month based upon documented minutes of traffic switched or data traffic carried for which service is provided, when collection is probable. Voice revenue is recorded each month on an accrual basis based upon minutes of traffic switched by our network for each customer, which we refer to as minutes of use. The rates charged per minute are determined by contracts between us and our customers or by filed and effective tariffs.

Minutes of use of voice traffic increase as we increase our number of customers, increase the penetration of existing markets, either with new customers or with existing customers, and increase our service offerings. The minutes of use decrease due to direct connection between existing customers, consolidation between customers, a customer using a different interconnection provider or a customer experiencing a decrease in the volume of traffic it carries.

The average fee per minute of voice traffic varies depending on market forces and type of service, such as switched access or local transit. The market rate in each market is based upon competitive conditions along with the switched access or local transit rates offered by the ILECs. Depending on the markets we enter, we may enter into contracts with our customers with either a higher or lower fee per minute than our current average.

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Our service solution incorporates other components beyond switching. In addition to switching, we generally provision trunk circuits between our customers’ switches and our network locations at our own expense and at no direct cost to our customers. We also provide quality of service monitoring, call records and traffic reporting and other services to our customers as part of our service solution. Our per-minute fees are intended to incorporate all of these services.

While generally not seasonal in nature, our voice revenues are affected by certain events such as holidays, the unpredictable timing of direct connects between our customers, and installation and implementation delays. These factors can cause our revenue to both increase or decrease unexpectedly.

Operating Expense. Operating expense includes network and facilities expenses, operations expenses, sales and marketing expenses, general and administrative expenses, depreciation and amortization, gain (loss) on disposal of fixed assets and gain on sale of Americas data assets.

Network and Facilities Expense. Our network and facilities expense includes transport capacity, or circuits, signaling network costs, facility rents and utilities, together with other costs that directly support our voice services. Prior to the sale of the global data business, our network and facilities expense included transport capacity, or circuits, facility rents and utilities, together with other costs that directly supported our data services. We do not defer or capitalize any costs associated with the start-up of a new point of presence (POP). The start-up of an additional POP can take between three months to six months. During this time, we typically incur facility rent, utilities, payroll and related benefit costs along with initial non-recurring installation costs. Revenues generally follow sometime after the sixth month.

Network transport costs typically occur on a repeating monthly basis, which we refer to as recurring transport costs, or on a one-time basis, which we refer to as non-recurring transport costs. Recurring transport costs primarily include monthly usage and other charges from telecommunication carriers and are related to the circuits utilized by us to connect to our customers. As our voice traffic increases, we must utilize additional circuits. Non-recurring transport costs primarily include the initial installation of such circuits. Facility rents include the leases on our POPs, which expire through February 2025. Additionally, we pay the cost of the utilities for all of our POP locations.

Operations Expense. Operations expense includes payroll and benefits for our POP location personnel, as well as individuals located at our offices who are directly responsible for maintaining and expanding our voice network. Other primary components of operations expenses include repair and maintenance, property taxes, property insurance and supplies.

Sales and Marketing Expense. Sales and marketing expense represents the smallest component of our operating expenses and primarily includes personnel costs, sales bonuses, marketing programs and other costs related to travel and voice customer meetings.

General and Administrative Expense. General and administrative expense consists primarily of compensation and related costs for voice personnel and facilities associated with our executive, finance, human resource and legal departments along with fees for professional services. Professional services principally consist of outside legal, audit, tax and transaction costs.

Depreciation and Amortization Expense. Depreciation and amortization expense for voice-related fixed assets is applied using the straight-line method over the estimated useful lives of the assets after they are placed in service, which are five years for network equipment and test equipment, and three years for computer equipment, computer software and furniture and fixtures. Leasehold improvements are amortized on a straight-line basis over an estimated useful life of five years or the life of the respective leases, whichever is shorter.

Loss (Gain) on Disposal of Assets. We dispose of network equipment in connection with converting to new technology and computer equipment to replace old or damaged units. When there is a carrying value of these assets, we record the write-off of these amounts to loss on disposal. In some cases, this equipment is sold to a third party. When the proceeds from the sale of equipment identified for disposal exceeds the asset’s carrying value, we record a gain on disposal, such as the gain on the sale of the Americas reporting unit of the global data business.

Other Income. Other income includes interest income.

Provision for Income Taxes. Income tax provision includes U.S. federal, state and local income taxes and is based on pre-tax income or loss. In determining the estimated annual effective income tax rate, we analyze various factors, including projections of our annual earnings and taxing jurisdictions in which earnings will be generated, the impact of state and local income taxes and our ability to use tax credits and net operating loss carryforwards.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the periods presented. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which we filed with the Securities and Exchange Commission on March 18, 2013, includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results.

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There have been no other changes to the critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues or expenses during the first six months of 2013.

Results of Operations

The following table sets forth our results of operations for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2013			2012			2013			2012
Revenue	$	53,449		$	58,262		$	112,737		$	119,149
Operating expense:
Network and facilities expense (excluding depreciation and amortization)		24,053			22,966			48,689			46,935
Operations		7,508			8,674			15,306			17,468
Sales and marketing		1,526			1,997			3,560			4,178
General and administrative		4,535			5,702			9,034			10,951
Depreciation and amortization		3,699			5,371			8,212			10,690
Loss (gain) on disposal of fixed assets		223			(4	)		223			(113	)
Gain on disposal of Americas data assets		(23,171	)		—			(23,171	)		—
Total operating expense		18,373			44,706			61,853			90,109
Income from operations		35,076			13,556			50,884			29,040
Total other income		(17	)		(50	)		(51	)		(91	)
Income from continuing operations before income taxes		35,093			13,606			50,935			29,131
Provision for income taxes		741			2,933			4,347			6,678
Income from continuing operations		34,352			10,673			46,588			22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Revenue. Revenue decreased to $53.4 million in the three months ended June 30, 2013 from $58.3 million in the three months ended June 30, 2012, a decrease of 8.3%. The decrease in revenue of $4.9 million was due primarily to a $4.0 million decrease in data revenue and a $0.9 million decrease in revenue generated from our voice business. On April 30, 2013, we sold our global data business. As a result, we recorded activity with respect to our global data business for only the month of April in the results for the three months ended June 30, 2013. Results of operations for the three months ended June 30, 2012 include activity for the full three-month period. The sale of the Americas reporting unit of the global data business does not qualify for discontinued operations and is reflected in continuing operations in the condensed consolidated statement of income. Data revenue generated by our Americas reporting unit for April 2013 was $2.7 million compared to $6.7 million for three months ended June 30, 2012.

The decrease in voice revenue is primarily due to a decrease in minutes of use from 32.8 billion minutes in the three months ended June 30, 2012 compared to 29.4 billion minutes for the three months ended June 30, 2013, a decrease of 10.2%. The decrease in minutes was partially offset by an increase in the average fee per minute from $0.00155 for the three months ended June 30, 2012 to $0.00169 for the three months ended June 30, 2013.

Operating Expenses. Operating expenses for the three months ended June 30, 2013 of $18.4 million decreased $26.3 million, or 58.9%, from $44.7 million for the three months ended June 30, 2012. The components making up operating expenses are discussed further below.

On April 30, 2013, we sold our global data business. The sale of the Americas reporting unit of the global data business does not qualify for discontinued operations treatment and, as a result, we recorded activity for only one month in the second quarter of 2013 within the results of operations for the three months ended June 30, 2013. Results of operations for the three months ended June 30, 2012 include activity for the full three-month period.

Network and Facilities Expenses. Network and facilities expenses increased to $24.1 million in the three months ended June 30, 2013, or 45.0% of revenue, from $23.0 million in the three months ended June 30, 2012, or 39.4% of revenue. The network and facilities expenses for our voice services increased by $1.6 million due to changes in the mix of the voice services we provide, partially offset by lower Americas reporting unit data costs as a result of only one month of activity recorded during the three months ended June 30, 2013. Data network and facilities expenses generated by our Americas reporting unit for April 2013 were $1.2 million compared to $2.8 million for the three months ended June 30, 2012.

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Operations Expenses. Operations expenses decreased to $7.5 million in the three months ended June 30, 2013, or 14.0% of revenue, from $8.7 million in the three months ended June 30, 2012, or 14.9% of revenue. The decrease of $1.2 million in our operations expenses primarily resulted from a decrease of $0.7 million in maintenance charges, a decrease of $0.3 million in non-cash share-based compensation and a decrease of approximately $0.1 million in consulting fees.

Sales and Marketing Expense. Sales and marketing expense decreased to $1.5 million in the three months ended June 30, 2013, or 2.9% of revenue, compared to $2.0 million in the three months ended June 30, 2012, or 3.4% of revenue. The decrease of $0.5 million in sales and marketing expenses for the three months ended June 30, 2013 was primarily due to a $0.2 million decrease in compensation related charges and a $0.1 million decrease in advertising expense. Sales expense generated by our Americas reporting unit for April 2013 was $0.6 million compared to $0.7 million for the three months ended June 30, 2012.

General and Administrative Expense. General and administrative expense decreased to $4.5 million in the three months ended June 30, 2013, or 8.5% of revenue, compared with $5.7 million in the three months ended June 30, 2012, or 9.8% of revenue. The decrease of $1.2 million in our general and administrative expense was primarily due to a decrease of $0.8 million in legal and accounting fees and a decrease of $0.2 million in compensation-related charges. The Company anticipates general and administrative expenses will increase during 2013 as a result of increased legal and consulting fees related to the Audit Committee’s internal investigation. See “Internal Investigation” above.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased to $3.7 million in the three months ended June 30, 2013, or 6.9% of revenue, compared to $5.4 million in the three months ended June 30, 2012, or 9.2% of revenue. The decrease of $1.7 million in our depreciation and amortization expense resulted from a lower depreciable base of assets resulting from the impairment charges we recorded during the fourth quarter of 2012.

Gain on Disposal of Americas Data Assets. Gain on disposition of Americas data assets was $23.2 million for the three months ended June 30, 2013.

Other Income. Other income was less than $0.1 million for each of the three months ended June 30, 2012 and 2013.

Provision for Income Taxes. Provision for income taxes of $0.7 million for the three months ended June 30, 2013 reflected a decrease of $2.2 million compared to $2.9 million for the three months ended June 30, 2012. The effective tax rate for the three months ended June 30, 2013 and 2012 was 2.1% and 21.6%, respectively. The difference in the effective tax rate for the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 was a result of financial reporting gain of $23.2 million on the sale of the global data business on April 30, 2013. For tax purposes there was a $7.8 million loss on the sale of the global data business.

Income from Continuing Operations. We had income from continuing operations before income taxes of $35.1 million for the three months ended June 30, 2013, compared with income from continuing operations before income taxes of $13.6 million for the three months ended June 30, 2012. After taxes, we had income from continuing operations of $34.4 million, or $1.05 per diluted share, for the three months ended June 30, 2013, compared to income from continuing operations of $10.7 million, or $0.34 per diluted share, for the three months ended June 30, 2012.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Revenue. Revenue decreased to $112.7 million for the six months ended June 30, 2013 from $119.1 million for the six months ended June 30, 2012, a decrease of 5.4%. The decrease in revenue of $6.4 million was due primarily to a $4.0 million decrease in revenue generated from our voice business and a $2.7 million decrease in data revenue. On April 30, 2013, we sold our global data business. As a result, we recorded activity with respect to our global data business for only four months within the results for the six months ended June 30, 2013. Results of operations for the six months ended June 30, 2012 include activity for the full six-month period. The sale of the Americas reporting unit of the global data business does not qualify for discontinued operations and is reflected in continuing operations in the condensed consolidated statement of income. Data revenue generated by our Americas reporting unit for the first four months of 2013 was $10.4 million compared to $13.1 million for six months ended June 30, 2012.

The decrease in voice revenue is primarily due to decrease in minutes of use from 67.0 billion minutes in the six months ended June 30, 2012 compared to 60.1 billion minutes in the six months ended June 30, 2013, a decrease of 10.4%. The decrease in minutes was partially offset by an increase in the average fee per minute from $0.00156 for the six months ended June 30, 2012 to $0.00167 for the six months ended June 30, 2013.

Operating Expenses. Operating expenses for the six months ended June 30, 2013 of $61.9 million decreased $28.2 million, or 31.4%, from $90.1 million for the six months ended June 30, 2012. The components making up operating expenses are discussed further below.

On April 30, 2013, we sold our global data business. The sale of the Americas reporting unit of the global data business does not qualify for discontinued operations treatment. As a result, within the results of operations for the six months ended June 30, 2013, we only recorded activity for the first four months of 2013. Results of operations for the six months ended June 30, 2012 include activity for the full six-month period.

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Network and Facilities Expenses. Network and facilities expenses increased to $48.7 million in the six months ended June 30, 2013, or 43.2% of revenue, from $46.9 million in the six months ended June 30, 2012, or 39.4% of revenue. The network and facilities expenses for our voice services increased by $3.4 million due to changes in the mix of the voice services we provide, partially offset by our lower Americas reporting unit data cost. Data network and facilities expenses generated by our Americas reporting unit for the first four months of 2013 were $4.5 million compared to $5.7 million for the six months ended June 30, 2012.

Operations Expenses. Operations expenses decreased to $15.3 million in the six months ended June 30, 2013, or 13.6% of revenue, from $17.5 million in the six months ended June 30, 2012, or 14.7% of revenue. The decrease of $2.2 million in our operations expenses primarily resulted from a decrease of $0.9 million in maintenance charges, a decrease of $0.7 million non-cash share-based compensation and a decrease of $0.4 million in salaries and wages.

Sales and Marketing Expense. Sales and marketing expense decreased to $3.6 million in the six months ended June 30, 2013, or 3.2% of revenue, compared to $4.2 million in the six months ended June 30, 2012, or 3.5% of revenue. The decrease of $0.6 million in sales and marketing expenses for the six months ended June 30, 2013 was primarily due to a decrease of $0.3 million in marketing and advertising expenses and a decrease of $0.2 million in compensation-related charges. Sales expense generated by our Americas reporting unit for the first four months of 2013 was $1.5 million compared to $1.4 million for the six months ended June 30, 2012.

General and Administrative Expense. General and administrative expense decreased $2.0 million to $9.0 million for the six months ended June 30, 2013, or 8.0% of revenue, compared with $11.0 million in the six months ended June 30, 2012, or 9.2% of revenue. The decrease of $2.0 million in our general and administrative expense was primarily due to a decrease of $1.2 million in non-cash compensation, a decrease of $1.0 million in professional and legal fees and a decrease of $0.2 million in directors’ fees, partially offset by an increase in bad debt expense of $0.4 million. The Company anticipates general and administrative expenses will increase during 2013 as a result of increased legal and consulting fees related to the Audit Committee’s internal investigation. See “Internal Investigation” above.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased to $8.2 million in the six months ended June 30, 2013, or 7.3% of revenue, compared to $10.7 million in the six months ended June 30, 2012, or 9.0% of revenue. The decrease of $2.5 million in our depreciation and amortization expense resulted from a lower depreciable base of assets resulting from the impairment charges we recorded during the fourth quarter of 2012.

Gain on Disposal of Americas Data Assets. Gain on disposition of Americas data assets was $23.2 million for the six months ended June 30, 2013.

Other Income. Other income was less than $0.1 million for each of the six months ended June 30, 2012 and 2013.

Provision for Income Taxes. Provision for income taxes of $4.3 million for the six months ended June 30, 2013 reflected a decrease of $2.4 million compared to $6.7 million for the six months ended June 30, 2012. The effective tax rate for the six months ended June 30, 2013 and 2012 was 8.5% and 22.9%, respectively. The difference in the effective tax rate for the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 was a result of financial reporting gain of $23.2 million on the sale of the global data business on April 30, 2013. For tax purposes there was a $7.8 million loss on the sale of the global data business.

Income from Continuing Operations. We had income from continuing operations before income taxes of $50.9 million for the six months ended June 30, 2013, compared with income from continuing operations before income taxes of $29.1 million for the six months ended June 30, 2012. After taxes, we had income from continuing operations of $46.6 million, or $1.44 per diluted share, for the six months ended June 30, 2013, compared to income from continuing operations of $22.5 million, or $0.70 per diluted share, for the six months ended June 30, 2012.

Liquidity and Capital Resources

At June 30, 2013, we had $56.7 million in cash and cash equivalents and $0.1 million in restricted cash. In comparison, at December 31, 2012, we had $31.5 million in cash and cash equivalents and $1.0 million in restricted cash. Cash and cash equivalents include highly liquid money market mutual funds. The restricted cash balance is pledged as collateral for certain commercial letters of credit. During the three months ended June 30, 2013, we received net proceeds of $46.8 million from the sale of the global data business and we paid a special dividend of $40.7 million to our shareholders. We do not expect either of these events to have an effect on our liquidity.

	Six Months Ended
(in thousands)	June 30, 2013			June 30, 2012
Net cash flows from operating activities	$	30,413		$	35,646
Net cash flows from investing activities		39,684			(14,762	)
Net cash flows from financing activities		(44,864	)		(708	)

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Cash flows from operating activities

Net cash provided by operating activities was $30.4 million for the first six months of 2013 compared to $35.6 million for the same period last year. Operating cash inflows are largely attributable to payments from customers. Operating cash outflows are largely attributable to personnel related expenditures and network maintenance costs. The decrease in operating cash flow reflected an increase in accounts receivable, partially offset by an increase in accounts payable and a decrease in other current assets.

Cash flows from investing activities

Net cash provided by investing activities was $39.7 million for the first six months of 2013, compared to net cash used in investing activities of $14.8 million for the same period last year. The change in cash flows from investing activities was primarily a result of the sale of our global data business. Additionally, we reduced the amount of equipment purchased to support the voice business and reduced the amount of our restricted cash.

For the full-year 2013, capital expenditures are expected to be approximately $12 to $16 million. These capital expenditures are mainly due to our investment in and maintenance of the voice network but also include $3.1 million of investment in the data network through April 30, 2013. We plan to fund our capital expenditures with cash generated through our ongoing operations.

Cash flows from financing activities

Net cash used for financing activities was $44.9 million for the first six months of 2013, compared to net cash used for financing activities of $0.7 million for the same period last year. The changes in cash flows used for financing activities primarily relate to a payment of $1.25 and $0.06 of special dividend and regular quarterly dividend, respectively, per outstanding share of common stock, or $42.7 million in aggregate, during the second quarter of 2013. During this time, we also repurchased approximately 0.3 million common shares at an average price of $5.80 per share, for a total cost of $1.6 million. We purchased the common shares using cash on hand.

We regularly review acquisitions and strategic opportunities, which may require additional debt or equity financing. We currently do not have any pending agreements with respect to any acquisitions or strategic opportunities which would require additional debt or equity financing.

Dividends

On May 20, 2013, we announced our intention to declare a special dividend of $1.25 per share and to initiate a quarterly dividend of $0.0625 per share of our common stock. The quarterly dividend of $2.0 million was paid on June 24, 2013 while our special dividend of $40.7 million was paid on June 28, 2013. In respect to the quarterly dividend, the expected future use of cash on an annualized basis would be approximately $8.1 million based upon a full-year dividend rate of $0.25 per share and the July 31, 2013 outstanding common share balance of 32,326,705.

Investments

As of June 30, 2013, we had $36.8 million in cash and cash equivalents invested in three money market mutual funds. As of December 31, 2012, we had $0.8 million in cash and cash equivalents invested in two money market mutual funds.

Credit Facility

On March 5, 2013, we entered into a $15 million revolving credit facility. The credit facility has a term of three years and an interest rate of LIBOR + 3.25%. We have no plans to draw on the facility at this time and remain debt-free. The facility serves to increase our financial flexibility and further strengthens our liquidity position. As a result of the Company’s failure to provide financial statements within 45 days of the end of the quarter ended June 30, 2013, the Company was in technical default under the terms of the credit facility agreement. We believe we will cure the default and be in full compliance with the credit agreement when we file this Form 10-Q. The Company’s ability to access debt and equity markets could be adversely affected if the Company is unable to maintain compliance with the financial and operating covenants included in its credit facility.

Sale of Global Data Business

On April 30, 2013, we announced that we sold all assets and liabilities of our global data business to GTT for $54.5 million, subject to certain adjustments. The total consideration consisted of $52.5 million in cash and $2.0 million of non-cash commercial services to be provided to us by GTT over the next three years.

Effect of Inflation

Inflation generally affects us by increasing our cost of labor and equipment. We do not believe that inflation had any material effect on our results of operations for the three and six months ended June 30, 2013 and 2012.

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Item 3. Qualitative and Quantitative Disclosure about Market Risk

Interest rate exposure

We had cash, cash equivalents and restricted cash of $56.8 million at June 30, 2013. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into investments for speculative purposes.

Based upon our overall interest rate exposure at June 30, 2013, we do not believe that a hypothetical 10 percent change in interest rates over a one-year period would have a material impact on our earnings, fair values or cash flows from interest rate risk sensitive instruments discussed above.

Foreign currency

As a result of the sale of the global data business, the Company now operates only within the United States and is no longer exposed to any foreign currency risk.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and interim principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and interim principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission reports, is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to the Company’s management, including our chief executive officer and interim principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2013, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 3 “Legal Proceedings” in Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for information on legal proceedings.

Item 1A. Risk Factors

There have been no material changes in the risk factors outlined in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, except for the supplemental risk factors included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and the following, which should be read in conjunction with the risk factors and information disclosed in such Annual Report and Quarterly Report on Form 10-Q.

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The matters relating to the internal investigation by our Audit Committee of our impairment charge for the year ended December 31, 2012 and our financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013 have required us to incur substantial costs and divert management resources, have resulted in litigation, and may result in additional litigation, which could have a material adverse effect on our business, financial condition and results of operations.

On August 8, 2013, we announced that our Audit Committee, with the assistance of independent outside professionals, was conducting an internal investigation concerning (i) whether our impairment charge for the year ended December 31, 2012 was overstated and (ii) our financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013. As described elsewhere in this report, on August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

The now-completed internal investigation has required us to incur significant costs and has diverted management resources from our business. A complaint has been filed pertaining to the matters addressed in the Audit Committee’s investigation. We may incur significant costs and further divert management resources in connection with the conduct and resolution of this and other potential future litigation. Any such litigation could cause our customers, suppliers and investors to lose confidence in the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock repurchase activity during the three months ended June 30, 2013 was as follows:

Period	Total Number of Shares Purchased (000)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (000)		Maximum Dollar Value that May Yet be Purchased under the Programs(1) ($000)
April 1, 2013 - April 30, 2013		—	$	—		—	$	50,000
May 1, 2013 - May 31, 2013		—	$	—		—	$	50,000
June 1, 2013 - June 30, 2013		268	$	5.80		268	$	48,435
Total		268				268

(1) In August 2012, our Board approved the repurchase of up to $50.0 million of our outstanding common stock as part of a stock repurchase program. We may repurchase shares through open market, negotiated or block transactions. Our stock repurchase activities are conducted in compliance with the safe harbor provisions of Rule 10b-18 of the Exchange Act. The stock repurchase program does not obligate us to repurchase any dollar amount or number of shares of our common stock, and the program may be extended, modified, suspended or discontinued at any time. As of June 30, 2013, $48.4 million remained available for further purchases under this repurchase program.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits

Exhibit 2.1	Equity Purchase Agreement, dated as of April 30, 2013, by and among the Company and Global Technology & Telecom, Inc., previously filed as Exhibit 2.1 with the Company’s Current Report on Form 8-K filed on May 6, 2013 and incorporated herein by reference.
Exhibit 3.1	Amended and Restated Certificate of Incorporation of Inteliquent, Inc.
Exhibit 3.2	Amended and Restated By-laws, previously filed as Exhibit 3.2 with the Company’s Current Report on Form 8-K filed on July 1, 2013 and incorporated herein by reference.

Exhibit 10.1	Letter Agreement, dated as of May 17, 2013, between the Company and Clinton Group, Inc., previously filed as Exhibit 10.1 with the Company’s Current Report on Form 8-K filed on May 20, 2013 and incorporated herein by reference.
Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1	Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INTELIQUENT, INC.
Date: August 27, 2013	By:	/S/    G. EDWARD EVANS
		G. Edward Evans, Chief Executive Officer (Principal Executive Officer)
Date: August 27, 2013	By:	/S/    ERIC R. CARLSON
		Eric R. Carlson, Vice President and Controller (Principal Financial and Accounting Officer)

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

INTELIQUENT, INC.

a Delaware corporation

ARTICLE ONE

NAME

The name of the Corporation is Inteliquent, Inc. (the “Corporation”).

ARTICLE TWO

REGISTERED OFFICE AND AGENT

The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle. The name of the Corporation’s registered agent at such address shall be Corporation Service Company.

ARTICLE THREE

PURPOSE

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

ARTICLE FOUR

CAPITAL STOCK

PART A. AUTHORIZED SHARES

The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 200,000,000 shares, consisting of:

1. 50,000,000 shares of initially undesignated Preferred Stock, par value $0.001 per share (the “Preferred Stock”); and

2. 150,000,000 shares of Common Stock, par value $0.001 per share (the “Common Stock”).

The Preferred Stock and the Common Stock shall have the rights, preferences and limitations set forth below.

The Preferred Stock and the Common Stock shall have the rights, preferences and limitations set forth below.

PART B. PREFERRED STOCK

The Board of Directors is authorized, subject to limitations prescribed by law, to provide by resolution or resolutions for the issuance of shares of Preferred Stock in one or more series, to establish the number of shares to be included in each such series, and to fix the voting powers (if any), designations, powers, preferences, and relative, participating, optional or other rights, if any, of the shares of each such series, and any qualifications, limitations or restrictions thereof. Irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote, without the separate vote of the holders of the Preferred Stock as a class.

PART C. COMMON STOCK

Section 1. General. Except as (1) otherwise required by law or (2) expressly provided in this Amended and Restated Certificate of Incorporation, each share of Common Stock shall have the same powers, rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters.

Section 2. Voting Rights. Except as otherwise provided by the Delaware General Corporation Law or this Amended and Restated Certificate of Incorporation and subject to the rights of holders of any series of Preferred Stock, all of the voting power of the stockholders of the Corporation shall be vested in the holders of the Common Stock, and each holder of Common Stock shall have one vote for each share held by such holder on all matters voted upon by the stockholders of the Corporation.

Section 3. Dividends. Subject to the rights of the holders of Preferred Stock, and to the other provisions of this Amended and Restated Certificate of Incorporation, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends and other distributions in cash, securities or other property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.

Section 4. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the Corporation’s debts and subject to the rights of the holders of shares of Preferred Stock upon such dissolution, liquidation or winding up, the remaining net assets of the Corporation shall be distributed among holders of shares of Common Stock equally on a per share basis. A merger or consolidation of the Corporation with or into any other corporation or other

2

entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation of the Corporation and the distribution of assets to its stockholders) shall not be deemed to be a voluntary or involuntary liquidation or dissolution or winding up of the Corporation within the meaning of this Section 4.

Section 5. Conversion Rights. The Common Stock shall not be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same class of the Corporation’s capital stock.

Section 6. Preemptive Rights. No holder of Common Stock shall have any preemptive rights with respect to the Common Stock or any other securities of the Corporation, or to any obligations convertible (directly or indirectly) into securities of the Corporation whether now or hereafter authorized.

ARTICLE FIVE

DURATION

The Corporation is to have perpetual existence.

ARTICLE SIX

BOARD OF DIRECTORS

Section 1. Number of Directors. Subject to any rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, the number of directors which shall constitute the Board of Directors initially shall be six (6) and, thereafter, shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the total number of directors then in office.

Section 2. Election, Classes of the Board of Directors and Term of Office. The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors; provided that, whenever the holders of any class or series of capital stock of the Corporation are entitled to elect one or more directors pursuant to the provisions of this Amended and Restated Certificate of Incorporation (including, but not limited to, any duly authorized certificate of designation), such directors shall be elected by a plurality of the votes of such class or series present in person or represented by proxy at the meeting and entitled to vote in the election of such directors. The directors shall be elected and shall hold office only in this manner, except as provided in Section 3 of this ARTICLE SIX. Elections of directors need not be by written ballot unless the by-laws of the Corporation shall so provide.

Section 3. Newly-Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or any other cause may be filled, so long as there is at least one remaining director, only by the Board of Directors,

3

provided that a quorum is then in office and present, or by a majority of the directors then in office, if less than a quorum is then in office, or by the sole remaining director. Directors elected to fill a newly created directorship or other vacancies shall hold office until the next election of the class for which such directors shall have been chosen and until their respective successor has been duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 4. Removal of Directors. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director may be removed from office at any time for cause, at a meeting called for that purpose, but only by the affirmative vote of the holders of at least 66-2/3% of the voting power of all outstanding shares of Common Stock entitled to vote generally in the election of directors, voting together as a single class.

Section 5. Rights of Holders of Preferred Stock. Notwithstanding the provisions of this ARTICLE SIX, whenever the holders of one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately or together by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorship shall be governed by the rights of such Preferred Stock as set forth in the certificate of designations governing such series.

Section 6. By-Laws. The Board of Directors is expressly authorized to adopt, amend, alter, change or repeal the by-laws of the Corporation. Notwithstanding anything contained in this Amended and Restated Certificate of Incorporation to the contrary, the by-laws of the Corporation shall not be amended, altered, changed or repealed by the stockholders, and no provision inconsistent therewith shall be adopted by the stockholders, without the affirmative vote of the holders of 66-2/3% of the voting power of all outstanding shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Section 7. Cumulative Voting Denied. Except as may otherwise be set forth in the resolution or resolutions of the Board of Directors providing the issue of a series of Preferred Stock, and then only with respect to such series of Preferred Stock, cumulative voting in the election of directors is specifically denied.

ARTICLE SEVEN

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 1. Limitation of Liability.

(a) To the fullest extent permitted by the Delaware General Corporation Law as it now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty owed to the Corporation or its stockholders.

4

(b) Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

Section 2. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement, without limitation, as a witness) in any actual or threatended action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Board of Directors of the Corporation or an officer of the Corporation as an employee or agent of the Corporation or as a director, officer, partner, member, trustee, administrator, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other enterprise, including service with respect to an employee benefit plan or any trust associated therewith (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”), penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 3 of this ARTICLE SEVEN with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 2 of this ARTICLE SEVEN shall be a contract right and shall include the obligation of the Corporation to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an “advance of expenses”); provided, however, that an advance of expenses incurred by an indemnitee shall be made only upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 2 or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same or lesser scope and effect as the foregoing indemnification of directors and officers.

Section 3. Procedure for Indemnification. Any indemnification of a director or officer of the Corporation or advance of expenses (including attoneys’ fees, costs and charges) under Section 2 of this ARTICLE SEVEN shall be made promptly, and in any event within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the director

5

or officer has delivered the undertaking contemplated by Section 2 of this ARTICLE SEVEN), upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this ARTICLE SEVEN is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved the request. If the Corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the director or officer has delivered the undertaking contemplated by Section 2 of this ARTICLE SEVEN), the right to indemnification or advances as granted by this ARTICLE SEVEN shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 2 of this ARTICLE SEVEN, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. The procedure for indemnification of other employees and agents for whom indemnification is provided pursuant to Section 2 of this ARTICLE SEVEN shall be the same procedure set forth in this Section 3 for directors or officers, unless otherwise set forth in the action of the Board of Directors providing indemnification for such employee or agent.

Section 4. Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expenses, liability or loss under the Delaware General Corporation Law.

Section 5. Service for Subsidiaries. Any person serving as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture or other enterprise, at least 50% of whose equity interests are owned by the Corporation (a “subsidiary” for this ARTICLE SEVEN) shall be conclusively presumed to be serving in such capacity at the request of the Corporation.

6

Section 6. Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this ARTICLE SEVEN in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this ARTICLE SEVEN shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.

Section 7. Non-Exclusivity of Rights. The rights to indemnification and to the advance of expenses conferred in this ARTICLE SEVEN shall not be exclusive of any other right which any person may have or hereafter acquire under this Amended and Restated Certificate of Incorporation or under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

Section 8. Merger or Consolidation. For purposes of this ARTICLE SEVEN, references to the “Corporation” shall include, in addition to the resulting Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this ARTICLE SEVEN with respect to the resulting or surviving Corporation as he or she would have with respect to such constituent Corporation if its separate existence had continued.

Section 9. Savings Clause. If this ARTICLE SEVEN or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person entitled to indemnification under Section 2 of this ARTICLE SEVEN as to all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification is available to such person pursuant to this ARTICLE SEVEN to the fullest extent permitted by any applicable portion of this ARTICLE SEVEN that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE EIGHT

ACTION BY WRITTEN CONSENT/SPECIAL MEETINGS OF STOCKHOLDERS

For so long as the Corporation’s Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) the stockholders of the Corporation may not take any action by written consent in lieu of a meeting, and must take any actions at a duly called annual or special meeting of stockholders and the power of stockholders to consent in writing without a meeting is specifically denied and (ii) special meetings of stockholders of the Corporation may be called only by the chairman of the Board of Directors, the President of the Corporation or pursuant to a resolution adopted by the affirmative vote of the majority of the total number of directors then in office.

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ARTICLE NINE

AMENDMENT

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed herein and by the laws of the state of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation. Notwithstanding any other provision of this Amended and Restated Certificate of Incorporation or the by-laws of the Corporation, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law or otherwise, the affirmative vote of the holders of at least 66-2/3% of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt any provision inconsistent with, to amend, alter, change or repeal any provision of, or to adopt a by-law inconsistent with, ARTICLES SIX, SEVEN, EIGHT and NINE of this Amended and Restated Certificate of Incorporation.

ARTICLE TEN

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Corporation expressly elects to be governed by Section 203 of the Delaware General Corporation Law.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, G. Edward Evans, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Inteliquent, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2013	/S/ G. EDWARD EVANS
	G. Edward Evans
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Eric R. Carlson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Inteliquent, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 27, 2013	/S/    ERIC R. CARLSON
	Eric R. Carlson
	Vice President and Controller
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of Inteliquent, Inc. (the “Company”) for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned Chief Executive Officer and Principal Financial Officer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    G. EDWARD EVANS	/S/    ERIC R. CARLSON
Chief Executive Officer	Vice President and Controller
Date: August 27, 2013	(Principal Financial and Accounting Officer)
	Date: August 27, 2013

The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Form 10-Q or as a separate disclosure document of the Company or the certifying officers.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2013

Principles of Consolidation

Principles of Consolidation — The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, the condensed consolidated statements of income for the three and six months ended June 30, 2013 and 2012, the condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 and 2012, and the condensed consolidated statements of cash flows for the six months ended June 30, 2013 and 2012 are unaudited. The condensed consolidated balance sheet data as of December 31, 2012 was derived from the audited consolidated financial statements which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Certain prior-year amounts that are related to the Company’s discontinued operations have been reclassified to conform to the current period presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission applicable to interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the unaudited interim condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared on the same basis as the audited consolidated statements and reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.

The carrying amounts of our cash and equivalents, receivables and accounts payable approximate fair value due to their short-term nature.

Changes in Presentation

Changes in Presentation — On April 30, 2013, the Company sold its global data business to GTT for $54.5 million, subject to certain adjustments. The Company determined that the appropriate level in which to assess discontinued operations was at its reporting unit level. As such, the Company’s Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) reporting units of the global data business consist of results of operations and cash flows that can be clearly distinguished from the rest of the entity and are therefore reflected in the condensed consolidated statements of income and in the condensed consolidated balance sheets as discontinued operations. Historical information related to these reporting units have been reclassified accordingly. The Americas reporting unit of the global data business does not consist of results of operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. This reporting unit does not qualify for discontinued operations accounting treatment. Therefore, the Americas reporting unit of the global data business is reported in continuing operations in the condensed consolidated statements of income and in the condensed consolidated balance sheets. Refer to Note 9, “Dispositions and Discontinued Operations”, for more information regarding the sale of the global data business.

Cash and Cash Equivalents

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. At June 30, 2013, the Company had $19.9 million of cash in banks and $36.8 million in three money market mutual funds. At December 31, 2012, the Company had $30.7 million of cash in banks and $0.8 million in two money market mutual funds.

Property and Equipment

Property and Equipment — Property and equipment is recorded at cost. These values are depreciated over the estimated useful lives of the individual assets using the straight-line method. Any gains and losses from the disposition of property and equipment are included in operations as incurred. The estimated useful life for network equipment and tools and test equipment is five years. The estimated useful life for computer equipment, computer software and furniture and fixtures is three years. Leasehold improvements are amortized on a straight-line basis over an estimated useful life of five years or the life of the lease, whichever is less. The impairment of long-lived assets is periodically evaluated when events or changes in circumstances indicate that a potential impairment has occurred.

Revenue Recognition

Revenue Recognition — The Company generates revenue from sales of its voice services. The Company maintains tariffs and executed service agreements with each of its customers in which specific fees and rates are determined. Voice revenue is recorded each month on an accrual basis based upon minutes of traffic switched by the Company’s network by each customer, which is referred to as minutes of use. The rates charged per minute are determined by contracts between the Company and its customers, or by filed and effective tariffs.

IP Transit and Ethernet services revenues related to the Company’s Americas reporting unit are recorded each month on an accrual basis based upon bandwidth used by each customer. The rates charged are the total of a monthly fee for bandwidth (the Committed Traffic Rate) plus additional charges for the sustained peak bandwidth used monthly in excess of the Committed Traffic Rate.

Earnings (Loss) per Share

Earnings (Loss) per Share — Basic earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding adjusted by the number of additional shares that would have been outstanding during the period had the potentially dilutive securities been issued. Because the Company has capital that is made up of both common shares and participating securities (non-vested shares), it is required to utilize the two-class method to calculate basic and diluted earnings (loss) per share. During the three and six months periods ended June 30, 2013, the Company distributed more cash, in the form of a dividend, than its current earnings for these periods, which resulted in negative undistributed earnings.

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings (loss) per share of common stock based upon the two-class method:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Numerator:
Income from continuing operations	$	34,352		$	10,673		$	46,588		$	22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361
Denominator:
Weighted average common shares outstanding		31,629			31,791			31,585			31,728
Effect of dilutive securities:
Stock options		—			387			—			390
Denominator for diluted earnings per share		31,629			32,178			31,585			32,118
Earnings per share – continuing operations
Basic — as reported	$	1.05		$	0.34		$	1.44		$	0.71
Diluted — as reported	$	1.05		$	0.34		$	1.44		$	0.70
Loss per share – discontinued operations
Basic — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Diluted — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Earnings per share – net income
Basic — as reported	$	1.02		$	0.12		$	1.24		$	0.33
Diluted — as reported	$	1.02		$	0.12		$	1.24		$	0.32

Outstanding share-based awards of 4.3 million, 2.7 million, 4.3 million and 2.7 million were outstanding during the three months ended June 30, 2013 and June 30, 2012 and the six months ended June 30, 2013 and June 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

The undistributed losses allocable to participating securities were $9.3 million and $2.4 million for the three months and six months ended June 30, 2013, respectively. The undistributed earnings allocable to participating securities were $0.1 million and $0.4 million for the three months and six months ended June 30, 2012, respectively.

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation — The fair value of stock options is determined using the Black-Scholes valuation model. This model takes into account the exercise price of the stock option, the fair value of the common stock underlying the stock option as measured on the date of grant and an estimation of the volatility of the common stock underlying the stock option. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight line method. The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. Actual results, and future changes in estimates, may differ from the Company’s current estimates.

The amount of non-cash share-based expense recorded in the three months ended June 30, 2013 and 2012 was $2.0 million and $2.9 million, respectively. The amount of non-cash share-based expense recorded in the six months ended June 30, 2013 and 2012 was $3.9 million and $6.0 million, respectively.

Compensation expense for non-vested shares is measured based upon the quoted closing market price for the stock on the date of grant. The compensation cost is recognized on a straight-line basis over the vesting period. See Note 5, “Stock Options and Non-Vested Shares.”

Stock Repurchase

Stock Repurchase — On August 7, 2012, the Company announced that its Board of Directors authorized the repurchase of up to $50.0 million of its outstanding common stock as part of a stock repurchase program. During the six months ended June 30, 2013, the Company repurchased approximately 0.3 million shares for $1.6 million under the program at an average cost of $5.80 per share. The Company funded the purchase of the common shares using cash on hand. The stock repurchase was accounted for under the cost method, whereby the entire cost of the repurchased shares was recorded to treasury stock.

Foreign Currency Translation

Foreign Currency Translation — As a result of the sale of global data business, the Company now operates only within the United States and is no longer exposed to any significant foreign currency risk.

Recent Accounting Pronouncements

Recent Accounting Pronouncements — Effective January 1, 2013, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). ASU 2013-02 requires entities to disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The Company has complied with this disclosure requirement, and as a result, the amendment did not change the items reported in its other comprehensive income (loss) or when an item of its other comprehensive income (loss) is reclassified to net income.

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue	$ 53,449	$ 58,262	$ 112,737	$ 119,149
Operating expense:
Network and facilities expense (excluding depreciation and amortization)	24,053	22,966	48,689	46,935
Operations	7,508	8,674	15,306	17,468
Sales and marketing	1,526	1,997	3,560	4,178
General and administrative	4,535	5,702	9,034	10,951
Depreciation and amortization	3,699	5,371	8,212	10,690
Loss (gain) on disposal of fixed assets	223	(4)	223	(113)
Gain on disposal of Americas data assets	(23,171)		(23,171)
Total operating expense	18,373	44,706	61,853	90,109
Income from operations	35,076	13,556	50,884	29,040
Other expense (income):
Interest income	(13)	(49)	(52)	(90)
Other (income) expense	(4)	(1)	1	(1)
Total other income	(17)	(50)	(51)	(91)
Income from continuing operations before income taxes	35,093	13,606	50,935	29,131
Provision for income taxes	741	2,933	4,347	6,678
Income from continuing operations	34,352	10,673	46,588	22,453
Loss from discontinued operations, net of income tax provision	1,698	6,967	7,034	12,092
Gain on disposal of discontinued operations	(794)		(794)
Net income	$ 33,448	$ 3,706	$ 40,348	$ 10,361
Earnings per share - continuing operations:
Basic	$ 1.05	$ 0.34	$ 1.44	$ 0.71
Diluted	$ 1.05	$ 0.34	$ 1.44	$ 0.70
Loss per share - discontinued operations:
Basic	$ (0.03)	$ (0.22)	$ (0.20)	$ (0.38)
Diluted	$ (0.03)	$ (0.22)	$ (0.20)	$ (0.38)
Earnings per share - net income:
Basic	$ 1.02	$ 0.12	$ 1.24	$ 0.33
Diluted	$ 1.02	$ 0.12	$ 1.24	$ 0.32
Weighted average number of shares outstanding:
Basic	31,629	31,791	31,585	31,728
Diluted	31,629	32,178	31,585	32,118
Dividends paid per share:	$ 1.31		$ 1.31

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INCOME TAXES

6 Months Ended

Jun. 30, 2013

INCOME TAXES

4. INCOME TAXES

Income taxes are computed using an effective tax rate, which is subject to ongoing review and evaluation by the Company. The Company’s estimated effective income tax rate was 2.1% and 8.5% for the three and six months ended June 30, 2013, respectively, compared to 21.6% and 22.9% for the same respective periods last year.

The difference in the effective tax rate for the three and six months ended June 30, 2013 as compared to the three and six months ended June 30, 2012 is due primarily to the effect of the treatment of the sale of the global data business for tax purposes.

The Company has recorded a valuation allowance against the capital loss created by the sale of its global data business and its prior year’s Illinois EDGE Credit. The Company believes it is more likely than not that these assets will not be realized in the foreseeable future. The realization of deferred tax assets is dependent upon whether the Company can generate future taxable income in the appropriate jurisdiction to utilize the assets. The amount of the deferred tax assets considered realizable is subject to adjustment in future periods.

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Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Summary Of Significant Accounting Policies [Line Items]
Income from continuing operations		$ 34,352	$ 10,673	$ 46,588	$ 22,453
Loss from discontinued operations, net of income tax provision		1,698	6,967	7,034	12,092
Gain on disposal of discontinued operations	(800)	(794)		(794)
Net income		$ 33,448	$ 3,706	$ 40,348	$ 10,361	$ (78,100)
Weighted average common shares outstanding		31,629	31,791	31,585	31,728
Stock options			387		390
Denominator for diluted earnings per share		31,629	32,178	31,585	32,118
Earnings per share - continuing operations
Basic - as reported		$ 1.05	$ 0.34	$ 1.44	$ 0.71
Diluted - as reported		$ 1.05	$ 0.34	$ 1.44	$ 0.70
Loss per share - discontinued operations
Basic - as reported		$ (0.03)	$ (0.22)	$ (0.20)	$ (0.38)
Diluted - as reported		$ (0.03)	$ (0.22)	$ (0.20)	$ (0.38)
Earnings per share - net income
Basic - as reported		$ 1.02	$ 0.12	$ 1.24	$ 0.33
Diluted - as reported		$ 1.02	$ 0.12	$ 1.24	$ 0.32

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2013

Earnings (Loss) Per Share

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings (loss) per share of common stock based upon the two-class method:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Numerator:
Income from continuing operations	$	34,352		$	10,673		$	46,588		$	22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361
Denominator:
Weighted average common shares outstanding		31,629			31,791			31,585			31,728
Effect of dilutive securities:
Stock options		—			387			—			390
Denominator for diluted earnings per share		31,629			32,178			31,585			32,118
Earnings per share – continuing operations
Basic — as reported	$	1.05		$	0.34		$	1.44		$	0.71
Diluted — as reported	$	1.05		$	0.34		$	1.44		$	0.70
Loss per share – discontinued operations
Basic — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Diluted — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Earnings per share – net income
Basic — as reported	$	1.02		$	0.12		$	1.24		$	0.33
Diluted — as reported	$	1.02		$	0.12		$	1.24		$	0.32

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Stock Options and Non-Vested Shares - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended					6 Months Ended	3 Months Ended	6 Months Ended			12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 28, 2013	Dec. 31, 2012	Jun. 30, 2013 2003 Plan	Jun. 30, 2013 2007 Plan	Jun. 30, 2013 Non-Vested Shares	Jun. 30, 2013 Non-Vested Shares Y	Jun. 30, 2012 Non-Vested Shares	Jun. 30, 2013 Non-Vested Shares Equity Other Than Stock Options	Dec. 31, 2012 Non-Vested Shares Equity Other Than Stock Options	Jun. 30, 2013 Stock Options	Dec. 31, 2012 Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock options and non-vested shares						4,700,000
Granted options outstanding		3,505,000			3,092,000		3,500,000
Non-vested granted shares remaining outstanding		765,000			846,000		800,000
Additional outstanding shares available for grant							300,000
Shares available for grant as a percentage of the Company's outstanding common stock							1.00%
Options granted	100,000	700,000	100,000
Weighted-average exercise price	$ 11.75	$ 3.40	$ 11.75
Weighted-average fair value of options granted		$ 1.64	$ 6.91
Total grant date fair value of options granted		$ 0.8	$ 3.0
Total intrinsic value of stock options exercised		0.5	0.3
Unrecognized compensation cost											$ 6.2	$ 8.4	$ 3.0	$ 3.6
Weighted average remaining term recorded for options, in years											1 year 10 months 24 days	2 years 3 months 18 days	2 years 4 months 24 days	1 year 9 months 18 days
Shares granted, non vested		274,000						200,000	300,000	300,000
Non-vested shares, vesting period, years									4
Closing stock price				$ 5.75

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Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax [Line Items]
Estimated effective income tax rate	2.10%	21.60%	8.50%	22.90%

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Dispositions and Discontinued Operations - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 30, 2013	Jun. 30, 2013	Jun. 30, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of business	$ 54,500,000
Proceed from sale of business, cash	52,500,000		9,709,000
Sale of business non-cash consideration	2,000,000
Period of free service provided	3 years
Proceeds from business after working capital adjustment	3,300,000
Proceeds from sale of business from cash and non cash services	51,200,000
Transaction costs from sale of business	2,400,000
Working capital adjustment	1,000,000
Proceeds from sale of business net of working capital adjustment and transaction cost	47,800,000
Book value of asset held for sale	14,700,000
Gain on sale of asset held for sale	23,200,000	23,171,000	23,171,000
Book value of divested business	10,100,000
Disposal group including discontinued operation cash and cash equivalents	1,000,000
Gain on sale of the global data business	800,000	794,000	794,000
Americas
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of asset held for sale	37,900,000
EMEA and APAC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of discontinued operations	$ 9,900,000

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Segment and Geographic Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013 Segment
Segment Reporting Information [Line Items]
Number of operating segments	1

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Legal Proceedings - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Related Party Transaction [Line Items]
Value customers seeks in a dispute			$ 6,000,000
Impairment of goodwill and intangibles					75,300,000
Impairment of fixed assets					13,200,000
Net income	$ 33,448,000	$ 3,706,000	$ 40,348,000	$ 10,361,000	$ (78,100,000)

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating
Net income	$ 40,348	$ 10,361
Adjustments to reconcile net cash flows from operating activities:
Depreciation and amortization	9,455	15,095
Deferred income taxes	(1,884)	(13)
Loss (gain) on disposal of fixed assets	490	(109)
Gain on disposal of Americas data assets	(23,171)
Gain on disposal of discontinued operations	(794)
Non-cash share-based compensation	3,930	6,027
Loss on intercompany foreign exchange transactions	56	297
Excess tax deficiency associated with share-based payments	504	120
Changes in assets and liabilities:
Receivables	(3,860)	4,568
Other current assets	1,933	(3,927)
Other noncurrent assets	(44)	120
Accounts payable	198	(1,366)
Accrued liabilities	3,252	4,295
Noncurrent liabilities		178
Net cash provided by operating activities	30,413	35,646
Investing
Purchase of equipment	(7,982)	(14,869)
Proceeds from sale of equipment	28	107
Proceeds from disposition of discontinued operations, net of transaction costs	9,709
Proceeds from disposition of Americas data assets, net of transaction costs	37,092
Decrease in restricted cash	837
Net cash provided by (used for) investing activities	39,684	(14,762)
Financing
Proceeds from the exercise of stock options	220	69
Restricted shares withheld to cover employee taxes paid	(365)	(657)
Dividends paid	(42,650)
Payments made for repurchase of common stock	(1,565)
Excess tax deficiency associated with share-based payments	(504)	(120)
Net cash used for financing activities	(44,864)	(708)
Effect of exchange rate changes on cash	6	(256)
Net Increase In Cash And Cash Equivalents	25,239	19,920
Cash And Cash Equivalents - Beginning	31,479	90,279
Cash And Cash Equivalents - End	56,718	110,199
Supplemental Disclosure Of Cash Flow Information:
Cash paid for taxes	1,187	9,536
Supplemental Disclosure Of Noncash Flow Items:
Investing Activity - Accrued purchases of equipment	$ 1,122	$ 6,514

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation — The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, the condensed consolidated statements of income for the three and six months ended June 30, 2013 and 2012, the condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 and 2012, and the condensed consolidated statements of cash flows for the six months ended June 30, 2013 and 2012 are unaudited. The condensed consolidated balance sheet data as of December 31, 2012 was derived from the audited consolidated financial statements which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Certain prior-year amounts that are related to the Company’s discontinued operations have been reclassified to conform to the current period presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission applicable to interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the unaudited interim condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013 and 2012 have been prepared on the same basis as the audited consolidated statements and reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of its statement of financial position, results of operations and cash flows. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the operating results for any subsequent quarter, for the full fiscal year or any future periods.

The carrying amounts of our cash and equivalents, receivables and accounts payable approximate fair value due to their short-term nature.

Changes in Presentation — On April 30, 2013, the Company sold its global data business to GTT for $54.5 million, subject to certain adjustments. The Company determined that the appropriate level in which to assess discontinued operations was at its reporting unit level. As such, the Company’s Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) reporting units of the global data business consist of results of operations and cash flows that can be clearly distinguished from the rest of the entity and are therefore reflected in the condensed consolidated statements of income and in the condensed consolidated balance sheets as discontinued operations. Historical information related to these reporting units have been reclassified accordingly. The Americas reporting unit of the global data business does not consist of results of operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. This reporting unit does not qualify for discontinued operations accounting treatment. Therefore, the Americas reporting unit of the global data business is reported in continuing operations in the condensed consolidated statements of income and in the condensed consolidated balance sheets. Refer to Note 9, “Dispositions and Discontinued Operations”, for more information regarding the sale of the global data business.

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. At June 30, 2013, the Company had $19.9 million of cash in banks and $36.8 million in three money market mutual funds. At December 31, 2012, the Company had $30.7 million of cash in banks and $0.8 million in two money market mutual funds.

Property and Equipment — Property and equipment is recorded at cost. These values are depreciated over the estimated useful lives of the individual assets using the straight-line method. Any gains and losses from the disposition of property and equipment are included in operations as incurred. The estimated useful life for network equipment and tools and test equipment is five years. The estimated useful life for computer equipment, computer software and furniture and fixtures is three years. Leasehold improvements are amortized on a straight-line basis over an estimated useful life of five years or the life of the lease, whichever is less. The impairment of long-lived assets is periodically evaluated when events or changes in circumstances indicate that a potential impairment has occurred.

Revenue Recognition — The Company generates revenue from sales of its voice services. The Company maintains tariffs and executed service agreements with each of its customers in which specific fees and rates are determined. Voice revenue is recorded each month on an accrual basis based upon minutes of traffic switched by the Company’s network by each customer, which is referred to as minutes of use. The rates charged per minute are determined by contracts between the Company and its customers, or by filed and effective tariffs.

IP Transit and Ethernet services revenues related to the Company’s Americas reporting unit are recorded each month on an accrual basis based upon bandwidth used by each customer. The rates charged are the total of a monthly fee for bandwidth (the Committed Traffic Rate) plus additional charges for the sustained peak bandwidth used monthly in excess of the Committed Traffic Rate.

Earnings (Loss) per Share — Basic earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding. Diluted earnings (loss) per share is computed based on the weighted average number of common shares and participating securities outstanding adjusted by the number of additional shares that would have been outstanding during the period had the potentially dilutive securities been issued. Because the Company has capital that is made up of both common shares and participating securities (non-vested shares), it is required to utilize the two-class method to calculate basic and diluted earnings (loss) per share. During the three and six months periods ended June 30, 2013, the Company distributed more cash, in the form of a dividend, than its current earnings for these periods, which resulted in negative undistributed earnings.

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings (loss) per share of common stock based upon the two-class method:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2013			2012			2013			2012
Numerator:
Income from continuing operations	$	34,352		$	10,673		$	46,588		$	22,453
Loss from discontinued operations, net of income tax provision		1,698			6,967			7,034			12,092
Gain on disposal of discontinued operations		(794	)		—			(794	)		—
Net income	$	33,448		$	3,706		$	40,348		$	10,361
Denominator:
Weighted average common shares outstanding		31,629			31,791			31,585			31,728
Effect of dilutive securities:
Stock options		—			387			—			390
Denominator for diluted earnings per share		31,629			32,178			31,585			32,118
Earnings per share – continuing operations
Basic — as reported	$	1.05		$	0.34		$	1.44		$	0.71
Diluted — as reported	$	1.05		$	0.34		$	1.44		$	0.70
Loss per share – discontinued operations
Basic — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Diluted — as reported	$	(0.03	)	$	(0.22	)	$	(0.20	)	$	(0.38	)
Earnings per share – net income
Basic — as reported	$	1.02		$	0.12		$	1.24		$	0.33
Diluted — as reported	$	1.02		$	0.12		$	1.24		$	0.32

Outstanding share-based awards of 4.3 million, 2.7 million, 4.3 million and 2.7 million were outstanding during the three months ended June 30, 2013 and June 30, 2012 and the six months ended June 30, 2013 and June 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

The undistributed losses allocable to participating securities were $9.3 million and $2.4 million for the three months and six months ended June 30, 2013, respectively. The undistributed earnings allocable to participating securities were $0.1 million and $0.4 million for the three months and six months ended June 30, 2012, respectively.

Accounting for Stock-Based Compensation — The fair value of stock options is determined using the Black-Scholes valuation model. This model takes into account the exercise price of the stock option, the fair value of the common stock underlying the stock option as measured on the date of grant and an estimation of the volatility of the common stock underlying the stock option. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight line method. The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. Actual results, and future changes in estimates, may differ from the Company’s current estimates.

The amount of non-cash share-based expense recorded in the three months ended June 30, 2013 and 2012 was $2.0 million and $2.9 million, respectively. The amount of non-cash share-based expense recorded in the six months ended June 30, 2013 and 2012 was $3.9 million and $6.0 million, respectively.

Compensation expense for non-vested shares is measured based upon the quoted closing market price for the stock on the date of grant. The compensation cost is recognized on a straight-line basis over the vesting period. See Note 5, “Stock Options and Non-Vested Shares.”

Stock Repurchase — On August 7, 2012, the Company announced that its Board of Directors authorized the repurchase of up to $50.0 million of its outstanding common stock as part of a stock repurchase program. During the six months ended June 30, 2013, the Company repurchased approximately 0.3 million shares for $1.6 million under the program at an average cost of $5.80 per share. The Company funded the purchase of the common shares using cash on hand. The stock repurchase was accounted for under the cost method, whereby the entire cost of the repurchased shares was recorded to treasury stock.

Foreign Currency Translation — As a result of the sale of global data business, the Company now operates only within the United States and is no longer exposed to any significant foreign currency risk.

Recent Accounting Pronouncements — Effective January 1, 2013, the Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). ASU 2013-02 requires entities to disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The Company has complied with this disclosure requirement, and as a result, the amendment did not change the items reported in its other comprehensive income (loss) or when an item of its other comprehensive income (loss) is reclassified to net income.

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STOCK OPTIONS AND NON-VESTED SHARES

6 Months Ended

Jun. 30, 2013

STOCK OPTIONS AND NON-VESTED SHARES

5. STOCK OPTIONS AND NON-VESTED SHARES

In 2003, the Company established the 2003 Stock Option and Stock Incentive Plan (2003 Plan), which provided for the issuance of up to 4.7 million options and non-vested shares to eligible employees, officers and independent contractors of the Company. In 2007, the Company adopted the 2007 Equity Incentive Plan (2007 Plan) and ceased awarding equity grants under the 2003 Plan. As of June 30, 2013, the Company had granted a total of 3.5 million options and 0.8 million non-vested shares that remained outstanding under the 2007 Plan. Awards for 0.3 million shares, representing approximately 1.0% of the Company’s outstanding common stock as of June 30, 2013, remained available for additional grants under the 2007 Plan.

The Company records stock-based compensation expense in connection with any grant of options and non-vested shares to its employees. The Company calculates the expense associated with its stock options and non-vested shares by determining the fair value of the options and non-vested shares.

Options

All options granted under the 2003 Plan and the 2007 Plan have an exercise price equal to the market value of the underlying common stock on the date of the grant. During the three months ended June 30, 2013, the Company did not grant any options. During the six months ended June 30, 2013, the Company granted 0.7 million options at a weighted-average exercise price of $3.40. During both the three and six months ended June 30, 2012, the Company granted less than 0.1 million options at a weighted-average exercise price of $11.75.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following table summarizes the assumptions used for estimating the fair value of options for the six months ended June 30, 2013 and June 30, 2012:

	June 30, 2013	June 30, 2012
Expected life	7.3 years	7.2 years
Risk-free interest rate	1.3%	1.6%
Expected dividends	—	—
Volatility	45.0%	50.5%

The weighted-average fair value of options granted, as determined by using the Black-Scholes valuation model, during the six months ended June 30, 2013 and 2012 was $1.64 and $6.91, respectively. The total grant date fair value of options that vested during the six months ended June 30, 2013 and 2012 was approximately $0.8 million and $3.0 million, respectively. The total intrinsic value (market value of stock option less option exercise price) of stock options exercised was $0.5 million and $0.3 million during the six months ended June 30, 2013 and 2012, respectively.

The following table summarizes activity under the Company’s stock option plan for the six months ended June 30, 2013:

	Shares (000)			Weighted- Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted- Average Remaining Term (yrs)
Options outstanding — January 1, 2013		3,092		$	14.68
Granted		716			3.40
Exercised		(148	)		1.48
Cancelled		(155	)		14.78
Options outstanding — June 30, 2013		3,505		$	11.82	$	3,273		6.71
Vested or expected to vest — June 30, 2013		3,473		$	11.90	$	3,180		6.69
Exercisable — June 30, 2013		2,321		$	15.20	$	366		5.51

The unrecognized compensation cost associated with options outstanding at June 30, 2013 and December 31, 2012 was $3.0 million and $3.6 million, respectively. The weighted average remaining term that the compensation will be recorded was 2.4 years and 1.8 years as of June 30, 2013 and December 31, 2012, respectively.

Non-vested Shares

During the three and six months ended June 30, 2013, the Company granted 0.2 million and 0.3 million non-vested shares, respectively, to members of the Company’s executive management team as well as various employees within the Company. No shares were issued during the three months ended June 30, 2012. During the six months ended June 30, 2012, the Company granted 0.3 million non-vested shares to members of the Company’s executive management team as well as various employees within the Company. The non-vested shares were issued as part of the 2007 Plan. The shares typically vest over a four-year period. The fair value of the non-vested shares is determined using the Company’s closing stock price on the grant date. Compensation cost, measured using the grant date fair value, is recognized over the requisite service period on a straight-line basis.

A summary of the Company’s non-vested share activity and related information for the six months ended June 30, 2013 is as follows:

	Shares (000)			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested shares outstanding — January 1, 2013		846		$	11.31
Granted		274			4.57
Vested		(277	)		10.13
Cancelled		(78	)		7.46
Non-vested shares outstanding — June 30, 2013		765		$	9.76	$	4,399
Non-vested shares vested or expected to vest — June 30, 2013		715		$	9.76	$	4,111

The aggregate intrinsic value represents the total pre-tax intrinsic value based on the Company’s closing stock price of $5.75 on June 28, 2013. The amount changes based upon the fair market value of the Company’s common stock.

The unrecognized compensation cost associated with non-vested shares at June 30, 2013 and December 31, 2012 was $6.2 million and $8.4 million, respectively. The weighted average remaining term that the compensation will be recorded was 1.9 years and 2.3 years as of June 30, 2013 and December 31, 2012, respectively.

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LEGAL PROCEEDINGS

6 Months Ended

Jun. 30, 2013

LEGAL PROCEEDINGS

3. LEGAL PROCEEDINGS

From time to time, the Company is a party to legal proceedings arising in the normal course of its business. Aside from the matters discussed below, the Company does not believe that it is a party to any pending legal action that could reasonably be expected to have a material effect on its business or operating results, financial position or cash flows.

Customer Dispute

The Company has a dispute with a carrier to which it provides certain voice services. The carrier is one of the Company’s largest customers and claims the Company has been improperly billing a certain tariffed rate element. The customer alleges that the improper billings total approximately $6 million. The Company has not been provided with sufficient information to allow the Company to understand how the customer calculated the disputed amount, believes the entire claim is without merit and intends to vigorously contest it. However, the Company cannot predict the final outcome and impact of this dispute. The Company establishes accruals only for those matters where it determines that a loss is probable and the amount of loss can be reasonably estimated. The Company does not currently believe a loss is probable in connection with this dispute.

Federal Securities Class Action

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company reported a $75.3 million impairment of goodwill and intangibles charge, a $13.2 million impairment of fixed assets charge, and a net loss of $78.1 million, in each case for the year ended December 31, 2012. As also previously disclosed, during the second quarter of 2013, the Board of Directors of the Company determined that an internal investigation of whether such impairment charge was overstated should be undertaken by the Audit Committee with the assistance of independent outside professionals. During the same time period, the Board of Directors also determined that the Audit Committee, with the assistance of independent outside professionals, should conduct an internal investigation of the Company’s financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013.

As a result of the then-ongoing investigation, on August 12, 2013, the Company submitted to the Securities and Exchange Commission a Notification of Late Filing pursuant to Rule 12b-25 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in respect of this Quarterly Report on Form 10-Q. On August 13, 2013, the Company received a deficiency letter from The Nasdaq Stock Market LLC, stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) for failure to timely file this Quarterly Report on Form 10-Q. The Company believes that it has regained compliance with Nasdaq’s continued listing standards with the filing of this Quarterly Report on Form 10-Q and that it will not be required to submit any further plan of compliance to Nasdaq. However, as of the date of this filing, the Company has not yet received definitive correspondence from Nasdaq indicating that no further action by the Company is required. The late filing of this Quarterly Report on Form 10-Q has adversely affected the Company’s eligibility to use Registration Statements on Form S-3 for registration of its securities with the Securities and Exchange Commission. Use of Form S-3 requires, among other things, that the issuer be current and timely in its reports under the Exchange Act for at least twelve months. Because of the Company’s inability to use Form S-3, the Company will have to meet more demanding requirements to register additional securities, which could make it more difficult for the Company to effect public offering transactions, and the Company’s range of available financing alternatives could also be narrowed.

On August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

On August 9, 2013, a federal securities class action lawsuit was filed against the Company in the United States District Court for the Northern District of Illinois (Costas Stamatiades, individually and on behalf of All Other Persons Similarly Situated v. Inteliquent, Inc., f/k/a Neutral Tandem Inc., G. Edward Evans, Robert Junkroski, and David Zwick, 13-CV-5701). The plaintiff alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder relating to the matters addressed in the Audit Committee’s internal investigation. As of the date of this filing, the Company has not been formally served with the complaint, and intends to vigorously defend itself in this lawsuit. No reasonable estimate of the loss, if any, associated with this litigation is possible.

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Estimated Fair Value of Options (Detail)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Share based Compensation Arrangement Assumptions Used to Estimate Fair Values of Share Options Granted [Line Items]
Expected life	7 years 3 months 18 days	7 years 2 months 12 days
Risk-free interest rate	1.30%	1.60%
Expected dividends
Volatility	45.00%	50.50%

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Credit Facility - Additional Information (Detail) (Issuance of Debt, Revolving Credit Facility, USD $) In Millions, unless otherwise specified	1 Months Ended
	Mar. 05, 2013
Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 15
Credit facility, maturity term	3 years
LIBOR
Credit Facility [Line Items]
Credit facility, interest rate	3.25%

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Subsequent Event - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Subsequent Event [Line Items]
Impairment of goodwill and intangibles					$ 75,300,000
Impairment of fixed assets					13,200,000
Net income	$ 33,448,000	$ 3,706,000	$ 40,348,000	$ 10,361,000	$ (78,100,000)

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Receivables, allowance	$ 0	$ 423
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized shares	50,000	50,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	150,000	150,000
Common stock, shares issued	32,328	32,345
Common stock, shares outstanding	32,328	32,345
Treasury stock, shares, at cost	3,351	3,083

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2013

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in the balance of Accumulated Other Comprehensive Income (Loss) (AOCI) for the three months and six months ended June 30, 2013 and 2012 are summarized in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2013			2012			2013			2012
Beginning balance	$	(5,078	)	$	(1,644	)	$	(4,904	)	$	(4,346	)
Other comprehensive income (loss) before reclassifications		145			(5,297	)		(29	)		(2,595	)
Less: Amounts reclassified from AOCI
Foreign currency adjustments		(4,933	)		—			(4,933	)		—
Net other comprehensive income (loss)		5,078			(5,297	)		4,904			(2,595	)
Ending balance	$	—		$	(6,941	)	$	—		$	(6,941	)

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 33,448	$ 3,706	$ 40,348	$ 10,361
Other comprehensive income (loss):
Foreign currency adjustments	5,078	(5,297)	4,904	(2,595)
Total other comprehensive income (loss)	5,078	(5,297)	4,904	(2,595)
Comprehensive income (loss)	$ 38,526	$ (1,591)	$ 45,252	$ 7,766

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 56,718	$ 31,479
Receivables - net of allowance of $0 and $423, respectively	30,271	30,759
Deferred income taxes - current		1,210
Prepaid expenses	1,451	6,405
Other current assets	2,118
Current assets of discontinued operations		26,924
Total current assets	90,558	96,777
Property and equipment - net	26,903	44,116
Restricted cash	125	962
Deferred income taxes - noncurrent	5,804	2,710
Other assets	2,277	1,035
Total assets	125,667	145,600
Current liabilities:
Accounts payable	5,411	7,546
Accrued liabilities:
Taxes payable	3,431	2,160
Circuit cost	6,285	8,821
Rent	1,872	1,829
Payroll and related items	3,276	2,687
Other	2,052	1,062
Current liabilities of discontinued operations		22,402
Total current liabilities	22,327	46,507
Shareholders' equity:
Preferred stock - par value of $.001; 50,000 authorized shares; no shares issued and outstanding at June 30, 2013 and December 31, 2012
Common stock - par value of $.001; 150,000 authorized shares; 32,328 shares and 32,345 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	33	32
Less treasury stock, at cost; 3,351 shares and 3,083 shares at June 30, 2013 and December 31, 2012, respectively	(51,668)	(50,103)
Additional paid-in capital	202,540	199,331
Accumulated other comprehensive loss		(4,904)
Retained earnings	(47,565)	(45,263)
Total shareholders' equity	103,340	99,093
Total liabilities and shareholders' equity	$ 125,667	$ 145,600

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Stock Option Plan Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Options outstanding beginning		3,092
Shares, Granted		716
Shares, Exercised		(148)
Shares, Cancelled		(155)
Shares, Options outstanding ending		3,505
Shares, Vested or expected to vest		3,473
Shares, Exercisable		2,321
Weighted Average Exercise Price, Options outstanding beginning		$ 14.68
Weighted Average Exercise Price, Granted	$ 11.75	$ 3.40	$ 11.75
Weighted Average Exercise Price, Exercised		$ 1.48
Weighted Average Exercise Price, Canceled		$ 14.78
Weighted Average Exercise Price, Options outstanding ending		$ 11.82
Weighted Average Exercise Price, Vested or expected to vest		$ 11.90
Weighted Average Exercise Price, Exercisable		$ 15.20
Aggregate Intrinsic Value, Options outstanding ending		$ 3,273
Aggregate Intrinsic Value, Vested or expected to vest		3,180
Aggregate Intrinsic Value, Exercisable		$ 366
Weighted Average Remaining Term, Options outstanding ending, years		6 years 8 months 16 days
Weighted Average Remaining Term, Vested or expected to vest, years		6 years 8 months 9 days
Weighted Average Remaining Term, Exercisable, years		5 years 6 months 4 days

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	1 Months Ended		3 Months Ended		6 Months Ended
	Apr. 30, 2013	Aug. 07, 2012	Jun. 30, 2013 Investment	Jun. 30, 2012	Jun. 30, 2013 Investment	Jun. 30, 2012	Dec. 31, 2012 Investment
Summary Of Significant Accounting Policies [Line Items]
Proceeds from sale of business	$ 54.5
Maximum term for investments to be considered cash equivalents, days					90
Cash in banks			19.9		19.9		30.7
Money market mutual funds			36.8		36.8		0.8
Number of money market mutual fund invested			2		2		2
Undistributed earnings allocable to participating securities			(9.3)	0.1	(2.4)	0.4
Share-based expense			2.0	2.9	3.9	6.0
Stock repurchase program, repurchase authorized		50.0
Stock repurchase program, shares repurchased					0.3
Stock repurchase program, shares repurchased amount					$ 1.6
Stock repurchased during period, average cost per share					$ 5.80
Common Stock
Summary Of Significant Accounting Policies [Line Items]
Anti-dilutive securities not included in the computation of diluted earnings per share			4.3	2.7	4.3	2.7
Network Equipment And Tools And Test Equipment
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives, years					5 years
Furniture and fixtures
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives, years					3 years
Leasehold Improvements
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives, years					Five years or the life of the lease, whichever is less

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Summarized Activity in Condensed Consolidated Statements of Income for Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		$ 3,115	$ 10,010	$ 13,493	$ 19,820
Operating loss		1,705	5,192	6,308	10,012
Loss before income taxes		1,698	5,813	6,807	10,432
Provision for income tax			1,154	227	1,660
Loss from discontinued operations		1,698	6,967	7,034	12,092
Gain on disposal of discontinued operations	$ (800)	$ (794)		$ (794)

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Summary of Assets and Liabilities of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Assets
Accounts receivable	$ 12,075
Prepaid expenses	4,798
Property and equipment - net	9,401
Other assets	650
Assets of Disposal Group, Including Discontinued Operation, Total	26,924
Liabilities
Accounts payable	4,840
Accrued liabilities	16,109
Other liabilities	1,453
Liabilities of Disposal Group, Including Discontinued Operation, Total	$ 22,402

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CREDIT FACILITY

6 Months Ended

Jun. 30, 2013

CREDIT FACILITY

7. CREDIT FACILITY

On March 5, 2013, the Company entered into a $15 million revolving credit facility. The credit facility has a term of three years and an interest rate of LIBOR + 3.25%. The Company may borrow under the revolving credit facility and use the funds for general corporate purposes. There were no obligations outstanding under the revolving credit facility at any time during the period ended June 30, 2013. As a result of the Company’s failure to provide financial statements within 45 days of the end of the quarter ended June 30, 2013, the Company was in technical default under the terms of the credit facility agreement. The Company believes it will cure the default and be in full compliance with the credit agreement when it files this Form 10-Q.

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Non-Vested Share Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Non-vested shares outstanding beginning	846
Shares, Granted	274
Shares, Vested	(277)
Shares, Cancelled	(78)
Shares, Non-vested shares outstanding ending	765
Shares, Non-vested shares vested or expected to vest	715
Weighted Average Grant Date Fair Value, Non-vested shares outstanding beginning	$ 11.31
Weighted Average Grant Date Fair Value, Granted	$ 4.57
Weighted Average Grant Date Fair Value, Vested	$ 10.13
Weighted Average Grant Date Fair Value, Cancelled	$ 7.46
Weighted Average Grant Date Fair Value, Non-vested shares outstanding ending	$ 9.76
Weighted Average Grant Date Fair Value, Non-vested shares vested or expected to vest	$ 9.76
Aggregate Intrinsic Value, Non-vested shares outstanding ending	$ 4,399
Aggregate Intrinsic Value, Non-vested shares vested or expected to vest	$ 4,111

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

SUBSEQUENT EVENTS

10. SUBSEQUENT EVENTS

Internal Investigation

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, the Company reported a $75.3 million impairment of goodwill and other intangibles charge, a $13.2 million impairment of fixed assets charge, and a net loss of $78.1 million, in each case for the year ended December 31, 2012.During the second quarter of 2013, the Board of Directors of the Company determined that an internal investigation of whether such impairment charge was overstated should be undertaken by the Audit Committee with the assistance of independent outside professionals. During the same time period, the Board of Directors also determined that the Audit Committee, with the assistance of independent outside professionals, should conduct an internal investigation of the Company’s financial forecasting practices during the fourth quarter of 2012 and the first quarter of 2013.

On August 23, 2013, the Company announced that the Audit Committee completed its investigation. With the assistance of independent outside professionals, the Audit Committee found that no restatement of the Company’s previously issued financial statements nor any action relating to the Company’s previous financial forecasts is required.

Chief Financial Officer Transition

On August 23, 2013, David Zwick informed the Board of Directors of the Company of his decision to step down as the Company’s Chief Financial Officer and Executive Vice President effective immediately. The Company and Mr. Zwick are in the process of negotiating an employment separation agreement and release. If Mr. Zwick and the Company enter into such an agreement, the final terms will be disclosed in a future Form 8-K filing.

On August 23, 2013, the Company’s Board of Directors appointed Eric Carlson as interim principal financial officer and interim principal accounting officer and is currently identifying a candidate to succeed Mr. Zwick as the Company’s Chief Financial Officer on a permanent basis. Mr. Carlson, 51, joined the Company in May 2004 and has served as Controller since that time. Mr. Carlson holds a Bachelor of Science in Accounting from Eastern Illinois University and a Master of Business Administration in Finance from Northern Illinois University. Mr. Carlson is a certified public accountant and a member of AICPA and the Illinois CPA Society.

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SEGMENT AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2013

SEGMENT AND GEOGRAPHIC INFORMATION

6. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Reporting establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis. The Company operates in one industry segment, which is to provide voice interconnection services via the Company’s international telecommunications network to fulfill customer agreements. Therefore, the Company has concluded that it has one operating segment.

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DESCRIPTION OF THE BUSINESS

6 Months Ended

Jun. 30, 2013

DESCRIPTION OF THE BUSINESS

1. DESCRIPTION OF THE BUSINESS

Organization — Inteliquent, Inc. (the Company) provides U.S. and international voice telecommunications services primarily on a wholesale basis. The Company offers these services using an all-IP network, which enables the Company to deliver global connectivity for a variety of media, historically including voice, data and video. The Company’s solutions enable carriers and other providers to deliver telecommunications traffic or other services where they do not have their own network or elect not to use their own network. These solutions are sometimes called “off-net” services.

On April 30, 2013, the Company sold its global data business to Global Telecom & Technology, Inc. (GTT) for $54.5 million, subject to certain adjustments. The total consideration consisted of $52.5 million in cash, subject to net working capital adjustments, and $2.0 million of non-cash commercial IP Transit and point-to-point Ethernet data network services to be provided to the Company by GTT free-of-charge for a three-year period. The $2.0 million of non-cash commercial services was calculated based upon the discounted present value of the market cost of such services as of the date on which the commercial services agreement was signed with GTT. In addition, the Company recorded in its condensed consolidated statement of income, as part of its gain amount on the sale of its global data business, approximately $2.4 million for divestiture-related costs, including legal and advisory services.

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (5,078)	$ (1,644)	$ (4,904)	$ (4,346)
Other comprehensive income (loss) before reclassifications	145	(5,297)	(29)	(2,595)
Less Amounts reclassified from AOCI: Foreign currency adjustments	(4,933)		(4,933)
Total other comprehensive income (loss)	5,078	(5,297)	4,904	(2,595)
Ending Balance		$ (6,941)		$ (6,941)

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STOCK OPTIONS AND NON-VESTED SHARES (Tables)

6 Months Ended

Jun. 30, 2013

Estimated Fair Value of Options

The following table summarizes the assumptions used for estimating the fair value of options for the six months ended June 30, 2013 and June 30, 2012:

	June 30, 2013	June 30, 2012
Expected life	7.3 years	7.2 years
Risk-free interest rate	1.3%	1.6%
Expected dividends	—	—
Volatility	45.0%	50.5%

Stock Option Plan Activity

The following table summarizes activity under the Company’s stock option plan for the six months ended June 30, 2013:

	Shares (000)			Weighted- Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted- Average Remaining Term (yrs)
Options outstanding — January 1, 2013		3,092		$	14.68
Granted		716			3.40
Exercised		(148	)		1.48
Cancelled		(155	)		14.78
Options outstanding — June 30, 2013		3,505		$	11.82	$	3,273		6.71
Vested or expected to vest — June 30, 2013		3,473		$	11.90	$	3,180		6.69
Exercisable — June 30, 2013		2,321		$	15.20	$	366		5.51

Non-Vested Share Activity

A summary of the Company’s non-vested share activity and related information for the six months ended June 30, 2013 is as follows:

	Shares (000)			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value ($000)
Non-vested shares outstanding — January 1, 2013		846		$	11.31
Granted		274			4.57
Vested		(277	)		10.13
Cancelled		(78	)		7.46
Non-vested shares outstanding — June 30, 2013		765		$	9.76	$	4,399
Non-vested shares vested or expected to vest — June 30, 2013		715		$	9.76	$	4,111

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DISPOSITIONS AND DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2013

DISPOSITIONS AND DISCONTINUED OPERATIONS

9. DISPOSITIONS AND DISCONTINUED OPERATIONS

On April 30, 2013, the Company sold its global data business to GTT and, as a result, no longer provides data services. The transaction consisted of the Americas, EMEA and APAC reporting units’ data assets and liabilities. The Americas reporting unit of the global data business does not qualify for discontinued operations because it does not constitute a separate component of the Company. Therefore, the Americas reporting unit of the global data business is reported in continuing operations in the condensed consolidated statements of income. The EMEA and APAC reporting units of the global data business are reflected in the condensed consolidated statements of income and in the condensed consolidated balance sheets as discontinued operations. Historical information related to these reporting units has been reclassified accordingly.

The Company sold its global data business for $54.5 million which consisted of $52.5 million in cash, subject to net working capital adjustments, and $2.0 million of non-cash commercial services to be provided by GTT to the Company over a three-year period. After an initial net working capital reduction of $3.3 million, the Company received $51.2 million of cash and non-cash services from GTT. Transaction costs and additional net working capital adjustment amounted to approximately $2.4 million and $1.0 million, respectively, reducing cash and non-cash consideration to approximately $47.8 million. Of this amount, $37.9 million was allocated to the sale of the Americas reporting unit of the global data business and the remaining amount of $9.9 million was allocated to the EMEA and APAC reporting units of the global data business. The Company based its allocation of the $47.8 million amounts based upon the relative percentage of the fair value of the net total assets and total liabilities of the Americas reporting unit and the EMEA and APAC reporting units, to the total fair value of the net total assets and total liabilities of these three reporting units combined.

Dispositions Not Qualifying for Discontinued Operations

The net book basis of the assets and liabilities for the Americas reporting unit of the global data business at the date of sale was approximately $14.7 million. The purchase price allocation of $37.9 million for this portion of the global data business, less its net book basis of assets and liabilities, yielded a gain from sale of $23.2 million.

Discontinued Operations

The net book basis of the assets and liabilities for the EMEA and APAC reporting units of the global data business at the date of sale was approximately $10.1 million. In addition, the Company is entitled to approximately $1.0 million of cash that remained with the EMEA and APAC reporting units of the global data business at the time of the transaction. The purchase price allocation of $9.9 million for this portion of the global data business plus the additional $1.0 million of cash, less its net book basis assets and liabilities, yielded a gain from discontinued operations of $0.8 million.

The following table displays summarized activity in the Company’s condensed consolidated statements of income for discontinued operations during the three and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2013			2012		2013			2012
Revenue	$	3,115		$	10,010	$	13,493		$	19,820
Operating loss		1,705			5,192		6,308			10,012
Loss before income taxes		1,698			5,813		6,807			10,432
Provision for income tax		—			1,154		227			1,660
Loss from discontinued operations		1,698			6,967		7,034			12,092
Gain on disposal of discontinued operations	$	(794	)	$	—	$	(794	)	$	—

The following table displays a summary of the assets and liabilities of discontinued operations as of December 31, 2012.

(In thousands)	December 31, 2012
Assets
Accounts receivable	$	12,075
Prepaid expenses		4,798
Property and equipment – net		9,401
Other assets		650
	$	26,924
Liabilities
Accounts payable	$	4,840
Accrued liabilities		16,109
Other liabilities		1,453
	$	22,402

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Description of the Business - Additional Information (Detail) (USD $)	1 Months Ended	6 Months Ended
	Apr. 30, 2013	Jun. 30, 2013
Business Acquisition [Line Items]
Proceeds from sale of business	$ 54,500,000
Proceed from sale of business, cash	52,500,000	9,709,000
Sale of business non-cash consideration	2,000,000
Period of free service provided	3 years
Divestiture related costs included in gain on sale of business	$ 2,400,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2013

Changes In Accumulated Other Comprehensive Income (Loss)

Changes in the balance of Accumulated Other Comprehensive Income (Loss) (AOCI) for the three months and six months ended June 30, 2013 and 2012 are summarized in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2013			2012			2013			2012
Beginning balance	$	(5,078	)	$	(1,644	)	$	(4,904	)	$	(4,346	)
Other comprehensive income (loss) before reclassifications		145			(5,297	)		(29	)		(2,595	)
Less: Amounts reclassified from AOCI
Foreign currency adjustments		(4,933	)		—			(4,933	)		—
Net other comprehensive income (loss)		5,078			(5,297	)		4,904			(2,595	)
Ending balance	$	—		$	(6,941	)	$	—		$	(6,941	)

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	IQNT
Entity Registrant Name	INTELIQUENT, INC.
Entity Central Index Key	0001292653
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		32,326,705

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DISPOSITIONS AND DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2013

Summarized Activity in Company's Condensed Consolidated Statements of Income and Summary of Assets and Liabilities for Discontinued Operations

The following table displays summarized activity in the Company’s condensed consolidated statements of income for discontinued operations during the three and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2013			2012		2013			2012
Revenue	$	3,115		$	10,010	$	13,493		$	19,820
Operating loss		1,705			5,192		6,308			10,012
Loss before income taxes		1,698			5,813		6,807			10,432
Provision for income tax		—			1,154		227			1,660
Loss from discontinued operations		1,698			6,967		7,034			12,092
Gain on disposal of discontinued operations	$	(794	)	$	—	$	(794	)	$	—

The following table displays a summary of the assets and liabilities of discontinued operations as of December 31, 2012.

(In thousands)	December 31, 2012
Assets
Accounts receivable	$	12,075
Prepaid expenses		4,798
Property and equipment – net		9,401
Other assets		650
	$	26,924
Liabilities
Accounts payable	$	4,840
Accrued liabilities		16,109
Other liabilities		1,453
	$	22,402