þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
EXCHANGE ACT OF 1934
|
|
For the quarterly period ended March 31, 2011
|
¨
|
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 0-13721
|
|
HICKORY TECH CORPORATION
|
|
(Exact name of registrant as specified in its charter)
|
Minnesota
|
41-1524393
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
|
221 East Hickory Street
|
|
Mankato, Minnesota 56002-3248
|
|
(Address of principal executive offices and zip code)
|
|
(800) 326-5789
|
|
(Registrant’s telephone number, including area code)
|
|
||
Exhibits
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31
|
||||||||
(Dollars in thousands, except share and per share amounts)
|
2011
|
2010
|
||||||
Operating revenue:
|
||||||||
Equipment
|
$ | 8,195 | $ | 9,884 | ||||
Services
|
30,427 | 28,836 | ||||||
Total operating revenue
|
38,622 | 38,720 | ||||||
Costs and expenses:
|
||||||||
Cost of sales, excluding depreciation and amortization
|
6,999 | 8,475 | ||||||
Cost of services, excluding depreciation and amortization
|
14,735 | 14,178 | ||||||
Selling, general and administrative expenses
|
6,543 | 6,196 | ||||||
Depreciation
|
5,591 | 5,322 | ||||||
Amortization of intangibles
|
88 | 89 | ||||||
Total costs and expenses
|
33,956 | 34,260 | ||||||
Operating income
|
4,666 | 4,460 | ||||||
Other income and expense:
|
||||||||
Interest and other income
|
10 | 37 | ||||||
Interest expense
|
(1,068 | ) | (1,591 | ) | ||||
Total other (expense)
|
(1,058 | ) | (1,554 | ) | ||||
Income before income taxes
|
3,608 | 2,906 | ||||||
Income tax provision
|
1,466 | 1,479 | ||||||
Net income
|
$ | 2,142 | $ | 1,427 | ||||
Basic earnings per share
|
$ | 0.16 | $ | 0.11 | ||||
Weighted average common shares outstanding
|
13,329,603 | 13,154,781 | ||||||
Diluted earnings per share
|
$ | 0.16 | $ | 0.11 | ||||
Weighted average common and equivalent shares outstanding
|
13,341,871 | 13,159,326 | ||||||
Dividends per share
|
$ | 0.135 | $ | 0.13 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
|
CONSOLIDATED BALANCE SHEETS
|
||||||||
(Unaudited)
|
||||||||
(Dollars in thousands except share and per share amounts)
|
March 31, 2011
|
December 31, 2010
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 9,859 | $ | 73 | ||||
Receivables, net of allowance for doubtful accounts of $535 and $570
|
19,647 | 24,642 | ||||||
Inventories
|
4,959 | 5,205 | ||||||
Income taxes receivable
|
- | 3,814 | ||||||
Deferred income taxes, net
|
2,008 | 2,008 | ||||||
Prepaid expenses
|
2,719 | 2,026 | ||||||
Other
|
600 | 1,030 | ||||||
Total current assets
|
39,792 | 38,798 | ||||||
Investments
|
4,224 | 4,512 | ||||||
Property, plant and equipment
|
381,900 | 379,433 | ||||||
Accumulated depreciation
|
(228,639 | ) | (224,356 | ) | ||||
Property, plant and equipment, net
|
153,261 | 155,077 | ||||||
Other assets:
|
||||||||
Goodwill
|
27,303 | 27,303 | ||||||
Intangible assets, net
|
2,580 | 2,668 | ||||||
Deferred costs and other
|
1,717 | 1,830 | ||||||
Total other assets
|
31,600 | 31,801 | ||||||
Total assets
|
$ | 228,877 | $ | 230,188 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Extended term payable
|
$ | 6,958 | $ | 8,254 | ||||
Accounts payable
|
2,182 | 2,840 | ||||||
Accrued expenses and other
|
6,962 | 7,929 | ||||||
Accrued income taxes
|
611 | - | ||||||
Financial derivative instruments
|
740 | 1,079 | ||||||
Deferred revenue
|
5,468 | 5,073 | ||||||
Current maturities of long-term obligations
|
62,368 | 4,892 | ||||||
Total current liabilities
|
85,289 | 30,067 | ||||||
Long-term liabilities:
|
||||||||
Debt obligations, net of current maturities
|
56,418 | 114,067 | ||||||
Accrued income taxes
|
562 | 562 | ||||||
Deferred income taxes
|
27,046 | 26,868 | ||||||
Deferred revenue
|
1,283 | 1,397 | ||||||
Accrued employee benefits and deferred compensation
|
16,041 | 15,923 | ||||||
Total long-term liabilities
|
101,350 | 158,817 | ||||||
Total liabilities
|
186,639 | 188,884 | ||||||
Commitments and contingencies
|
||||||||
Shareholders' equity:
|
||||||||
Common stock, no par value, $.10 stated value
|
||||||||
Shares authorized: 100,000,000
|
||||||||
Shares issued and outstanding: 13,366,179 in 2011 and 13,298,626 in 2010
|
1,337 | 1,330 | ||||||
Additional paid-in capital
|
14,641 | 14,328 | ||||||
Retained earnings
|
30,186 | 29,841 | ||||||
Accumulated other comprehensive (loss)
|
(3,926 | ) | (4,195 | ) | ||||
Total shareholders' equity
|
42,238 | 41,304 | ||||||
Total liabilities and shareholders' equity
|
$ | 228,877 | $ | 230,188 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31
|
||||||||
(Dollars in thousands)
|
2011
|
2010
|
||||||
OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 2,142 | $ | 1,427 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
5,679 | 5,411 | ||||||
Accrued patronage refunds
|
(97 | ) | (124 | ) | ||||
Stock based compensation
|
254 | 352 | ||||||
Other
|
122 | 263 | ||||||
Changes in operating assets and liabilities, net of effect from acquired net assets
|
||||||||
Receivables
|
5,036 | (648 | ) | |||||
Prepaids
|
(693 | ) | (687 | ) | ||||
Inventories
|
246 | (1,830 | ) | |||||
Accounts payable and accrued expenses
|
(1,427 | ) | (1,283 | ) | ||||
Deferred revenue, billings and deposits
|
280 | (1,218 | ) | |||||
Income taxes
|
4,427 | 447 | ||||||
Other
|
928 | 181 | ||||||
Net cash provided by operating activities
|
16,897 | 2,291 | ||||||
INVESTING ACTIVITIES:
|
||||||||
Additions to property, plant and equipment
|
(3,742 | ) | (3,429 | ) | ||||
Acquisition, adjustment to purchase price
|
- | 120 | ||||||
Proceeds from sale of assets
|
69 | 33 | ||||||
Net cash (used in) investing activities
|
(3,673 | ) | (3,276 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Borrowings on extended term payable arrangement
|
11,382 | 14,909 | ||||||
Payments on extended term payable arrangement
|
(12,678 | ) | (10,274 | ) | ||||
Borrowings on credit facility
|
16,000 | 800 | ||||||
Payments on credit facility and capital lease obligations
|
(16,173 | ) | (5,161 | ) | ||||
Proceeds from issuance of common stock
|
66 | 59 | ||||||
Change in cash overdraft
|
(238 | ) | - | |||||
Dividends paid
|
(1,797 | ) | (1,706 | ) | ||||
Net cash (used in) financing activities
|
(3,438 | ) | (1,373 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
9,786 | (2,358 | ) | |||||
Cash and cash equivalents at beginning of the period
|
73 | 2,420 | ||||||
Cash and cash equivalents at the end of the period
|
$ | 9,859 | $ | 62 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$ | 1,078 | $ | 1,804 | ||||
Net cash paid (received) for income taxes
|
$ | (2,961 | ) | $ | 1,032 | |||
Non-cash investing and financing activities:
|
||||||||
Property, plant and equipment acquired with capital leases
|
$ | - | $ | 35 | ||||
Change in other comprehensive income (loss) from financial derivatives and post-retirement benefits
|
$ | 269 | $ | 228 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
|
Three Months Ended March 31
|
||||||||
(Dollars in thousands, except share and earnings per share amounts)
|
2011
|
2010
|
||||||
Net Income
|
$ | 2,142 | $ | 1,427 | ||||
Weighted average shares outstanding
|
13,329,603 | 13,154,781 | ||||||
Stock options (dilutive only)
|
10,667 | 4,545 | ||||||
Stock subscribed (ESPP)
|
1,601 | - | ||||||
Total dilutive shares outstanding
|
13,341,871 | 13,159,326 | ||||||
Earnings per share:
|
||||||||
Basic
|
$ | 0.16 | $ | 0.11 | ||||
Diluted
|
$ | 0.16 | $ | 0.11 | ||||
Dividends per share
|
$ | 0.135 | $ | 0.13 |
Shares outstanding on record date
|
2011
|
2010
|
||||||
First quarter (February 15)
|
13,311,817 | 13,120,514 |
Unrecognized
|
Unrecognized
|
Unrecognized
|
Unrealized
|
Accumulated Other
|
||||||||||||||||
Net Actuarial
|
Prior Service
|
Transition
|
Gain/(Loss)
|
Comprehensive
|
||||||||||||||||
(Dollars in thousands)
|
Loss (1)
|
Credit (1)
|
Asset (1)
|
on Derivatives
|
Income/(Loss)
|
|||||||||||||||
December 31, 2010
|
$ | (3,651 | ) | $ | 180 | $ | (73 | ) | $ | (651 | ) | (4,195 | ) | |||||||
2011 Q1 Activity
|
204 | 204 | ||||||||||||||||||
Q1 Net Periodic Benefit Cost
|
64 | (8 | ) | 9 | 65 | |||||||||||||||
March 31, 2011
|
$ | (3,587 | ) | $ | 172 | $ | (64 | ) | $ | (447 | ) | $ | (3,926 | ) | ||||||
(1) Amounts pertain to our post-retirement benefit plans.
|
|
As of March 31, 2011
|
As of December 31, 2010
|
||||||||||||||||
Gross Carrying
|
Accumulated
|
Gross Carrying
|
Accumulated
|
|||||||||||||||
(Dollars in thousands) |
Useful Lives
|
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Definite-Lived Intangible Assets
|
||||||||||||||||||
Customer relationships
|
1 - 8 years
|
$ | 5,299 | $ | 4,585 | $ | 5,299 | $ | 4,532 | |||||||||
Other intangibles
|
1 - 5 years
|
2,830 | 964 | 2,830 | 929 | |||||||||||||
Total
|
$ | 8,129 | $ | 5,549 | $ | 8,129 | $ | 5,461 |
(Dollars in thousands)
|
Corporate and
|
|||||||||||||||
Three Months Ended March 31, 2011
|
Business
|
Telecom
|
Eliminations
|
Consolidated
|
||||||||||||
Revenue from unaffiliated customers
|
$ | 21,285 | $ | 17,337 | $ | - | $ | 38,622 | ||||||||
Intersegment revenue
|
161 | 412 | (573 | ) | - | |||||||||||
Total operating revenue
|
21,446 | 17,749 | (573 | ) | 38,622 | |||||||||||
Depreciation and amortization
|
1,654 | 4,003 | 22 | 5,679 | ||||||||||||
Operating income (loss)
|
1,983 | 2,901 | (218 | ) | 4,666 | |||||||||||
Interest expense
|
- | 18 | 1,050 | 1,068 | ||||||||||||
Income tax provision (benefit)
|
806 | 1,168 | (508 | ) | 1,466 | |||||||||||
Net Income (loss)
|
1,178 | 1,716 | (752 | ) | 2,142 | |||||||||||
Total assets
|
84,127 | 129,109 | 15,641 | 228,877 | ||||||||||||
Property, plant and equipment, net
|
56,107 | 97,008 | 146 | 153,261 | ||||||||||||
Additions to property, plant and equipment
|
1,812 | 1,930 | - | 3,742 |
(Dollars in thousands)
|
Corporate and
|
|||||||||||||||
Three Months Ended March 31, 2010
|
Business
|
Telecom
|
Eliminations
|
Consolidated
|
||||||||||||
Revenue from unaffiliated customers
|
$ | 21,354 | $ | 17,366 | $ | - | $ | 38,720 | ||||||||
Intersegment revenue
|
133 | 429 | (562 | ) | - | |||||||||||
Total operating revenue
|
21,487 | 17,795 | (562 | ) | 38,720 | |||||||||||
Depreciation and amortization
|
1,364 | 4,016 | 31 | 5,411 | ||||||||||||
Operating income (loss)
|
1,907 | 2,825 | (272 | ) | 4,460 | |||||||||||
Interest expense
|
- | 25 | 1,566 | 1,591 | ||||||||||||
Income tax provision (benefit)
|
810 | 1,398 | (729 | ) | 1,479 | |||||||||||
Net Income (loss)
|
1,122 | 1,406 | (1,101 | ) | 1,427 | |||||||||||
Total assets
|
76,249 | 138,233 | 6,653 | 221,135 | ||||||||||||
Property, plant and equipment, net
|
47,598 | 103,776 | 252 | 151,626 | ||||||||||||
Additions to property, plant and equipment
|
2,064 | 1,365 | - | 3,429 |
Weighted Average
|
||||||||
Shares
|
Exercise Price
|
|||||||
Outstanding at January 1, 2011
|
343,250 | $ | 12.45 | |||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
- | - | ||||||
Expired
|
(35,000 | ) | 7.21 | |||||
Outstanding at March 31, 2011
|
308,250 | $ | 11.82 | |||||
Exercisable at March 31, 2011
|
308,250 | $ | 11.82 |
Range of
|
Stock Options
|
Stock Options
|
Weighted Average
|
Weighted Average Remaining
|
||||||||||||||
Exercise Prices
|
Outstanding
|
Exercisable
|
Exercise Price
|
Contractual Life
|
||||||||||||||
$6.00 - $8.00 | 15,000 | 15,000 | $ | 6.95 | 5.42 | |||||||||||||
$8.00 - $12.00 | 156,950 | 156,950 | 10.22 | 2.68 | ||||||||||||||
$12.00 - $16.00 | 126,000 | 126,000 | 13.97 | 0.73 | ||||||||||||||
$16.00 - $21.00 | 10,300 | 10,300 | 16.98 | 0.67 | ||||||||||||||
308,250 | 308,250 | $ | 11.82 | 1.95 | ||||||||||||||
Aggregate intrinsic value:
|
$ | 56,300 |
·
|
Level 1 – quoted prices in active markets for identical assets and liabilities.
|
·
|
Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
·
|
Level 3 – unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.
|
(Dollars in thousands) |
Gain Reported in Accumulated
|
|
Amount of Gain/Proceeds
|
|||||||
Derivative Instruments in
|
Other Comprehensive Loss
|
Location of Gain/Proceeds Reclassified
|
Recognized in Income on Derivative
|
|||||||
Cash Flow Hedging Relationships
|
2011
|
2010
|
from Accumulated Other Comprehensive Income into Income
|
2011
|
2010
|
|||||
Interest Rate Contracts
|
$204
|
$168
|
Interest Expense
|
$-
|
$-
|
Three Months Ended March 31 | |||||||
(Dollars in thousands)
|
2011 | 2010 | |||||
Components of net periodic benefit cost
|
|||||||
Service cost
|
$ |
127
|
$ |
113
|
|||
Interest cost
|
200
|
181
|
|||||
Amortization of transition obligation
|
15
|
15
|
|||||
Amortization of prior service cost
|
(14)
|
(14)
|
|||||
Recognized net actuarial loss
|
107
|
98
|
|||||
Net periodic benefit cost
|
$ |
435
|
$ |
393
|
|||
Employer's contributions for current premiums:
|
March 31, 2011
|
||||||
Contributions made for the three months ended March 31, 2011
|
$ |
88
|
|||||
Expected contributions for remainder of 2011
|
259
|
||||||
Total estimated employer contributions for fiscal year 2011
|
$ |
347
|
BUSINESS SECTOR
|
||||||||||||
Three Months Ended March 31
|
%
|
|||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Change
|
|||||||||
Operating revenue before intersegment eliminations
|
||||||||||||
Equipment
|
$ | 8,195 | $ | 9,884 | -17 | % | ||||||
Support Services
|
2,229 | 1,857 | 20 | % | ||||||||
Equipment
|
10,424 | 11,741 | -11 | % | ||||||||
Fiber and Data
|
10,861 | 9,613 | 13 | % | ||||||||
Intersegment
|
161 | 133 | 21 | % | ||||||||
Total operating revenue
|
$ | 21,446 | $ | 21,487 | 0 | % | ||||||
Total Business revenue before intersegment eliminations
|
||||||||||||
Unaffiliated customers
|
$ | 21,285 | $ | 21,354 | ||||||||
Intersegment
|
161 | 133 | ||||||||||
21,446 | 21,487 | |||||||||||
Cost of sales (excluding depreciation and amortization)
|
6,999 | 8,475 | -17 | % | ||||||||
Cost of services (excluding depreciation and amortization)
|
7,499 | 6,699 | 12 | % | ||||||||
Selling, general and administrative expenses
|
3,311 | 3,042 | 9 | % | ||||||||
Depreciation and amortization
|
1,654 | 1,364 | 21 | % | ||||||||
Total Business costs and expenses
|
19,463 | 19,580 | -1 | % | ||||||||
Operating income
|
$ | 1,983 | $ | 1,907 | 4 | % | ||||||
Net income
|
$ | 1,178 | $ | 1,122 | 5 | % | ||||||
Capital expenditures
|
$ | 1,812 | $ | 2,064 | -12 | % |
BUSINESS PRODUCT LINE REPORTING
|
||||||||||||||||||||||||
Three Months Ended March 31
|
Three Months Ended March 31
|
|||||||||||||||||||||||
Equipment
|
%
|
Fiber and Data
|
%
|
|||||||||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Operating revenue before intersegment eliminations:
|
||||||||||||||||||||||||
Equipment
|
$ | 8,195 | $ | 9,884 | -17 | % | $ | - | $ | - | 0 | % | ||||||||||||
Service
|
2,229 | 1,857 | 20 | % | 10,861 | 9,613 | 13 | % | ||||||||||||||||
Intersegment
|
- | - | 161 | 133 | 21 | % | ||||||||||||||||||
Total operating revenue
|
$ | 10,424 | $ | 11,741 | -11 | % | $ | 11,022 | $ | 9,746 | 13 | % | ||||||||||||
Cost of sales (excluding depreciation and amortization)
|
6,999 | 8,475 | -17 | % | - | - | 0 | % | ||||||||||||||||
Cost of services (excluding depreciation and amortization)
|
1,678 | 1,719 | -2 | % | 5,821 | 4,980 | 17 | % | ||||||||||||||||
Selling, general and administrative expenses
|
1,181 | 1,123 | 5 | % | 2,130 | 1,919 | 11 | % | ||||||||||||||||
Depreciation and amortization
|
68 | 73 | -7 | % | 1,586 | 1,291 | 23 | % | ||||||||||||||||
Total costs and expenses
|
9,926 | 11,390 | -13 | % | 9,537 | 8,190 | 16 | % | ||||||||||||||||
Operating income
|
$ | 498 | $ | 351 | 42 | % | $ | 1,485 | $ | 1,556 | -5 | % | ||||||||||||
Net income
|
$ | 295 | $ | 224 | 32 | % | $ | 883 | $ | 898 | -2 | % | ||||||||||||
Capital expenditures
|
$ | 6 | $ | 85 | -93 | % | $ | 1,806 | $ | 1,979 | -9 | % |
TELECOM SECTOR
|
||||||||||||
Three Months Ended March 31
|
%
|
|||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Change
|
|||||||||
Operating revenue before intersegment eliminations
|
||||||||||||
Local Service
|
$ | 3,693 | $ | 3,864 | -4 | % | ||||||
Network Access
|
5,812 | 6,128 | -5 | % | ||||||||
Long Distance
|
729 | 820 | -11 | % | ||||||||
Broadband
|
5,054 | 4,433 | 14 | % | ||||||||
Directory
|
872 | 917 | -5 | % | ||||||||
Bill Processing
|
737 | 775 | -5 | % | ||||||||
Intersegment
|
412 | 429 | -4 | % | ||||||||
Other
|
440 | 429 | 3 | % | ||||||||
Total Telecom operating revenue
|
$ | 17,749 | $ | 17,795 | 0 | % | ||||||
Total Telecom revenue before intersegment eliminations
|
||||||||||||
Unaffiliated customers
|
$ | 17,337 | $ | 17,366 | ||||||||
Intersegment
|
412 | 429 | ||||||||||
17,749 | 17,795 | |||||||||||
Cost of services (excluding depreciation and amortization)
|
7,761 | 8,004 | -3 | % | ||||||||
Selling, general and administrative expenses
|
3,084 | 2,950 | 5 | % | ||||||||
Depreciation and amortization
|
4,003 | 4,016 | 0 | % | ||||||||
Total Telecom costs and expenses
|
14,848 | 14,970 | -1 | % | ||||||||
Operating Income
|
$ | 2,901 | $ | 2,825 | 3 | % | ||||||
Net income
|
$ | 1,716 | $ | 1,406 | 22 | % | ||||||
Capital expenditures
|
$ | 1,930 | $ | 1,365 | 41 | % | ||||||
Key metrics
|
||||||||||||
Business access lines
|
23,932 | 24,902 | -4 | % | ||||||||
Residential access lines
|
26,678 | 29,596 | -10 | % | ||||||||
Total access lines
|
50,610 | 54,498 | -7 | % | ||||||||
Long distance customers
|
33,513 | 35,731 | -6 | % | ||||||||
Digital Subscriber Line customers
|
20,032 | 19,494 | 3 | % | ||||||||
Digital TV customers
|
10,591 | 9,789 | 8 | % |
|
Three Months Ended March 31
|
|||||||
(Dollars in thousands) |
2011
|
2010
|
||||||
Net cash provided by (used for):
|
||||||||
Operating activities
|
$ | 16,897 | $ | 2,291 | ||||
Investing activities
|
(3,673 | ) | (3,276 | ) | ||||
Financing activities
|
(3,438 | ) | (1,373 | ) | ||||
Increase in cash and cash equivalents
|
9,786 | (2,358 | ) |
HICKORY TECH CORPORATION
|
By: /s/ John W. Finke
|
John W. Finke, President and Chief Executive Officer
|
By: /s/ David A. Christensen_
|
David A. Christensen, Senior Vice President and Chief Financial Officer
|
To Executive:
|
Carol Wirsbinski
|
|
Eagan, MN 55123
|
HICKORYTECH CORPORATION |
By: /s/ John W. Finke
|
Its: President and Chief Executive Officer
|
/s/ Carol Wirsbinski
|
Carol Wirsbinski |
|
1.
|
Right to Payment. If the Executive’s employment with the Company or its Successor is terminated within two (2) years following an Event (as defined in Paragraph 2 below) for any reason other than a reason specified in Paragraph 3(a) through (d) below, then the Executive shall be entitled to receive the Benefits set out in Paragraph 4 below. If a subsequent Event occurs, and if the Executive is an employee of the Company or its Successor, without limiting any rights the Executive may have, Executive shall have all rights provided by the first sentence of this Paragraph 1 relating to such subsequent event.
|
2.
|
Change of Control Events. An “Event” shall be deemed to have occurred if:
|
|
(a)
|
A majority of the directors of the Company shall be persons other than persons
|
|
(1)
|
for whose election proxies shall have been solicited by the Board of Directors of the Company; or
|
|
(2)
|
who are then serving as directors and who were initially appointed or elected by the Board of Directors to fill vacancies on the Board of Directors caused by death or resignation (but not by removal), or to fill newly created directorships created by the Board of Directors;
|
|
(b)
|
30% or more of the outstanding voting stock of the Company or all or substantially all of the assets or stock of the Company is acquired or beneficially owned (as defined in Rule 13d-3 under the Securities and Exchange Act of 1934, as amended, or any successor rule thereto), directly or indirectly, by any Person (other than by the Company, a subsidiary of the Company, an employee benefit plan (or related trust) sponsored or maintained by the Company or one or more of its subsidiaries, or by the Employee or a group of persons, including the Employee, acting in concert) or group of Persons, acting in concert, whether by acquisition of assets, merger, consolidation, statutory share exchange (other than a merger, consolidation or statutory share exchange described in clause (c)(i) or (ii), below), tender offer, exchange offer, or otherwise;
|
|
(c)
|
The Company is merged into or consolidated with another corporation (other than a subsidiary of the Company) or a statutory share exchange for the Company’s outstanding voting stock of any class is consummated unless (i) a majority of the voting power of the voting stock of the surviving corporation is, immediately following the merger, consolidation or statutory share exchange, beneficially owned, directly or indirectly, by the Employee (or a group of Persons, including the Employee, acting in concert) or (ii) immediately following the merger, consolidation or statutory share exchange, more than 50% of the voting power of the voting stock of the surviving corporation is beneficially owned, directly or indirectly, by the persons who beneficially owned voting stock of the Company immediately prior to such merger, consolidation or statutory share exchange in substantially the same proportion as their ownership of the voting stock of the Company immediately prior to such merger, consolidation or statutory share exchange; or
|
|
(d)
|
The shareholders of the Company approve the complete liquidation or dissolution of the Company.
|
3.
|
Termination Not Entitling Executive to Benefits. The Executive shall not be entitled to the Benefits set out in Paragraph 4 if his or her employment is terminated during the two (2) year period following an Event for any of the following reasons:
|
|
(a)
|
Death. The Executive’s death.
|
|
(b)
|
Disability. The Executive’s disability. “Disability” shall mean the inability of the Executive to perform the duties and responsibilities of his or her employment by reasons of illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of ninety (90) calendar days or more. A period of inability shall be “uninterrupted” unless and until the Executive is no longer considered disabled by the Company’s Long Term Disability Insurer.
|
|
(1)
|
The determination of whether the Executive is suffering from a “disability” as defined herein shall be made. The determination of whether the Executive is disabled shall be on the same basis as the Company provided Long-Term Disability benefit, which is a fully insured benefit provided by an independent third party. If the Executive meets the disability criteria for long term disability benefits under this Company provided benefit, the Executive will also be considered disabled under this Agreement.
|
|
(2)
|
The Executive agrees to make himself or herself available for and to submit to examinations by such physicians as may be requested by the Company or the Company’s Long Term Disability Insurer. The Executive’s failure to submit to examinations by such physicians as may be requested shall disqualify Executive from receiving Benefits under this Agreement.
|
|
(c)
|
Voluntary Termination. The Executive’s voluntary retirement or voluntary termination of employment. However, the Executive’s retirement or termination of employment shall not be considered voluntary if, following the Event and subject to the provisions for notification set forth below, one or more of the following has occurred without Executive’s express written consent and results in a material negative change to Executive:
|
|
(1)
|
There has been a failure to provide the Executive with substantially equivalent reporting responsibilities, titles, offices or positions, or Executive has been removed from, or has not been re-elected to, any of such positions, which has the effect of materially diminishing the Executive’s responsibility or authority;
|
|
(2)
|
There has been a failure to provide the Executive with: (a) the same base salary, or (b) substantially equivalent (or greater) total salary opportunity, or (c) employee benefits which are, in the aggregate, substantially equivalent to those provided to the Executive at the time of the Event;
|
|
(3)
|
There has been a failure to provide the Executive with substantially equivalent office space or administrative support; or
|
|
(4)
|
Executive has been required to perform his or her services in a location that is more than fifty (50) miles from the Executive’s regularly assigned office location at the time of the Event, or Executive is required to undertake substantially more job -related traveling.
|
|
(d)
|
Involuntary Termination For Cause. The Executive’s involuntary termination “for cause.” “For cause” shall mean:
|
|
(1)
|
A persistent failure by the Executive to perform the duties and responsibilities of his or her job, which failure is willful and deliberate on the Executive’s part and is not remedied within a reasonable period of time after the Executive’s receipt of written notice from the Company or its Successor specifying the act or omission constituting such failure;
|
|
(2)
|
A criminal act or acts undertaken by the Executive and intended to result in substantial gain or personal enrichment of the Executive at the expense of the Company or its Successor;
|
|
(3)
|
Unlawful conduct or gross misconduct that is willful and deliberate on the Executive’s part and that, in either event, is materially injurious to the Company or its Successor; or
|
|
(4)
|
The conviction of the Executive of a felony.
|
|
(e)
|
Subsequent Occurrences. If the Executive’s employment is terminated under circumstances in which Executive would be entitled to Benefits as defined in Paragraph 4, and thereafter there is an occurrence that would have justified the termination of the Executive’s employment with no entitlement to Benefits (such as the Executive’s death, disability, voluntary termination, or involuntary termination for cause [all as defined above in this Paragraph]), that subsequent occurrence shall not disqualify the Executive (or the Executive’s legal representative) from receiving or continuing to receive the Benefits provided under this Agreement. If the Executive’s employment is terminated under circumstances in which the Executive would be entitled to Benefits as defined in Paragraph 4, and thereafter the executive is re-employed by the Company, the Executive would be entitled to continue to receive payments provided under this Agreement.
|
4.
|
Benefits. If the Executive’s employment is terminated under circumstances entitling the Executive to Benefits, the Executive shall receive the following:
|
|
(a)
|
Lump Sum Payment. The Executive shall be entitled to a lump sum cash payment in the amount of One Month’s Salary times 24. One Month’s Salary shall be determined by taking the sum of: (i) the Executive’s then-current annual base salary for the year in which the termination occurs; (ii) the bonus that the Executive would have earned under the HickoryTech Annual Executive Incentive Plan for the year in which the termination occurs had “target” goals been achieved; and (iii) the target bonus dollar amount awarded to the Executive under the Long-Term Executive Incentive Program for the performance period that begins in the year in which the termination occurs; and dividing that sum by twelve (12). The foregoing sum shall be determined without regard to any reduction in pay under subparagraph 3(c). This lump sum payment shall be made by the Company or its Successor at the time of the Executive’s termination of employment, and shall be subject to withholding of all taxes and other amounts required by law to be withheld or paid to others.
|
|
(b)
|
Section 280G Parachute Tax. In the event it shall be determined that any payment or distribution by the Company or other amount with respect to the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, (a “Payment”) is (or will be) subject to the excise tax imposed by Section 280G of the Internal Revenue Code or any interest or penalties are (or will be) incurred by the Executive with respect to the excise tax imposed by Section 280G of the Internal Revenue Code with respect to the Company (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), and if a reduction in the Payment sufficient to avoid the Excise Tax would result in an increase in the total amount of Payment net of all applicable taxes, then, and only then, the Payment shall be reduced to the amount that, when combined with all other payments and transfers of property required to be taken into account under Section 280G of the Internal Revenue Code, is $1 less than the smallest sum that would subject the Executive to the Excise Tax.
|
|
(c)
|
Continued Insurance Coverage. The Executive shall be entitled to continuation of his or her Company-provided insurance coverage (health, life, dental, accidental death and dismemberment, and any other applicable insured health and welfare benefit programs, excluding short and long-term disability) for two years after the Executive’s employment termination, at the same levels and coverages and on the same terms and conditions as if the Executive were still an active employee of the Company or its Successor throughout such period, including the right (if provided to active employees) to elect spousal or family coverage. In the event that the participation of the Executive in any such insurance plan or program is barred, the Company or its Successor, at its sole cost and expense, shall arrange to provide the Executive with benefits substantially similar to those which the Executive would otherwise be entitled to receive under such plans and programs. Notwithstanding the foregoing, however, the Company or its Successor shall not be required to provide any continuation coverage under this subparagraph 4(c) to the extent that such coverage is duplicative of any coverage the Executive is receiving under any other policy provided at the expense of the Company.
|
|
(d)
|
Continuation of any other benefits or perquisites being received by the Executive at the time of the Executive’s employment termination will be negotiated with the Company or its Successor.
|
5.
|
Benefits Offset By Other Severance Payments. The lump sum payment provided in subparagraph 4(a) shall be in addition to any salary or other remuneration otherwise payable to the Executive on account of the Executive’s employment by the Company or its Successor. This payment shall be in lieu of any severance payments under any other agreement resulting from his or her termination of employment with the Company or its Successor.
|
6.
|
No Duty to Mitigate. The Executive shall not be required to mitigate the amount of any payment or other benefit provided for in Paragraph 4 by seeking other employment or otherwise, nor (except as specifically provided in subparagraph 4(c) above) shall the amount of any payment or other benefit provided for in Paragraph 4 be reduced by any compensation earned by the Executive as the result of employment after the Executive’s employment termination.
|
7.
|
Definition of Certain Terms.
|
|
(a)
|
Successor. “Successor” means any Person that succeeds to the business of the Company through merger, consolidation, or acquisition, including any Person acquiring all or substantially all of the assets or stock of the Company.
|
|
(b)
|
Person. “Person” means an individual, partnership, corporation, estate, trust, or other entity.
|
8.
|
Successors and Assigns.
|
|
(a)
|
This Agreement shall be binding upon and inure to the benefit of the legal representatives, successors, and assigns of the parties hereto; provided, however, that the Executive shall not have any right to assign, pledge, or otherwise dispose of or transfer any interest in this Agreement or any payments hereunder, whether directly or indirectly or in whole or in part, without the written consent of the Company or its Successor.
|
|
(b)
|
The Company will require any Successor, by agreement in form and substance satisfactory to the Executive, to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
|
9.
|
Attorneys’ Fees, Costs and Interest. If the Executive (or the Executive’s legal representative) successfully challenges, in whole or in part, the refusal of the Company or its Successor to provide Benefits under this Agreement or to abide by any other provision of this Agreement, then the Company or its Successor shall pay to the Executive (or the Executive’s legal representative):
|
|
(a)
|
All legal fees, costs, disbursements, and expenses incurred as a result of the refusal to provide Benefits or to abide by the other provisions of the Agreement; and
|
|
(b)
|
Interest on any funds (or on the fair market value of any benefits) that were wrongfully withheld by the Company or its Successor, calculated by reference to the prime rate as in effect during the applicable period.
|
10.
|
Governing Law. This Agreement shall be construed in accordance with the laws of the State of Minnesota, without giving effect to principles of conflicts of laws.
|
11.
|
Notices. All notices, requests, and demands given to or made pursuant hereto shall be in writing and be either hand-delivered or mailed to any such party at its address which:
|
|
(a)
|
In the case of the Company shall be:
|
|
(b)
|
In the case of the Executive shall be:
|
12.
|
Severability. In the event that any portion of this Agreement may be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the other portions of this Agreement, and any court of competent jurisdiction may so modify the objectionable provision as to make it valid, reasonable, and enforceable.
|
13.
|
Incentive Compensation Plan and Stock Options. In the case of a payment being due as described in Paragraph 1, the Executive’s benefits under the Annual Award of the HickoryTech Corporation Executive Incentive Plan shall become immediately payable and any outstanding stock options and unvested restricted shares shall be immediately vested. Any Restricted Stock or Performance Stock Awards under the Long Term Executive Incentive Program which are payable due to achievement of Performance Objectives through the year in which the payment under this Agreement becomes due will be paid and fully vested immediately upon the audited close of the fiscal year financials, but in no case later than March 15 of the year following when the payment becomes due under this Agreement. The Long Term Executive Incentive Program Awards that are not earned based on results at the close of the fiscal year in which the payment under this Agreement becomes due will not be payable. Awards issued to the Executive shall immediately have all restrictions removed.
|
14.
|
Amendment or Termination of this Agreement.
|
|
(a)
|
Prior to the Occurrence of an Event. Prior to the occurrence of an Event, the Company, by resolution of the Compensation Committee of the Board of Directors, has the unilateral power to amend or terminate this Agreement at any time and for any reason, and may do so without the Executive’s consent. Notwithstanding the foregoing, however:
|
|
(1)
|
No such amendment or termination of this Agreement shall be effective with respect to the Executive until two weeks following the date that Executive is provided with written notice of the change.
|
|
(2)
|
No such amendment or termination of this Agreement shall be effective with respect to the Executive, unless otherwise agreed by the Executive, if an Event occurs during the one-year period following the date of adoption of the resolution amending or terminating this Agreement.
|
|
(b)
|
After the Occurrence of an Event. After the occurrence of an Event, the Company, by resolution of the Compensation Committee of the Board of Directors, may amend or terminate this Agreement, but no such amendment or termination of this Agreement shall be effective unless the Executive consents thereto in writing. Any waiver by an Executive of rights of any benefits due under this agreement for any reason (rehire or other) must be express and in writing.
|
EXECUTIVE | HICKORYTECH CORPORATION |
/s/ Carol Wirsbinski
|
By: /s/ John W. Finke
|
Carol Wirsbinski
|
Its: President and Chief Executive Officer |
|
1.
|
"Adjusted Cash Flow" means EBITDA less CAPEX.
|
2.
|
"Annual Award" means the total annual cash award earned under the provisions of this Plan.
|
3.
|
"Board of Directors" or "Board" means the Board of Directors of the Company.
|
4.
|
"Chair" means the Chair of the Board of the Company.
|
5.
|
"Committee" or "Compensation Committee" means a committee appointed by and responsible to the Board to administer this Plan, among other things, and whose members shall be ineligible to participate in this Plan.
|
6.
|
"Company" means Hickory Tech Corporation, a Minnesota corporation and any successor thereto, including all Subsidiaries.
|
7.
|
"EBITDA" means earnings before interest expense, income taxes, depreciation, and amortization, and it includes employee Team Award expense.
|
8.
|
"EBITDA Minus CAPEX" means EBITDA minus the capital and expenditures for property, plant and equipment, and capitalized software and any other capitalized expenditures approved by the Compensation Committee to be included in this definition.
|
9.
|
"Net Income" means after-tax net income as defined by Generally Accepted Accounting Principles.
|
10.
|
"Participant" means an executive of the Company who has been selected to participate in the Plan.
|
11.
|
"Performance Account" means an account maintained in the name of a Participant with credits in Company stock.
|
12.
|
"Plan" means the HickoryTech Executive Incentive Plan, as stated herein and as further amended from time to time.
|
13.
|
"Plan Year" means any fiscal year of the Company for which the Plan is in effect.
|
14.
|
"Retirement" means termination for any reason (other than death or permanent and total disability) after attaining age 55 with ten years of service or after attaining age 62 irrespective of service.
|
15.
|
"Revenue" means after-elimination operating revenue as defined by Generally Accepted Accounting Principles.
|
16.
|
"Subsidiary" means a corporation, the majority of whose stock is owned by the Company.
|
17.
|
"Trustee" means Trustee for the Trust under the HickoryTech Corporation Executive Plan. This Trust holds shares of Company Stock for the eligible Participants’ Performance Award Accounts.
|
A.
|
Annual Award Opportunity
|
Position
|
Base Salary
|
Target Award %
|
Target Award
|
||||||||||
Executive A
|
$
|
150,000
|
40
|
%
|
$
|
60,000
|
|||||||
Executive B
|
$
|
120,000
|
30
|
%
|
$
|
36,000
|
|||||||
Executive C
|
$
|
98,000
|
25
|
%
|
$
|
24,500
|
1.
|
Annual Award make-up will reflect the impact of the Participant's position and performance on the operating results of the Company. As such, award make-up may vary among positions.
|
Percent of Award Relating to Organizational Performance
|
|||||||||
Position
|
Corporate Financial Results
|
Subsidiary or Division Financial Results
|
|||||||
Executive A
|
100
|
%
|
--
|
||||||
Executive B
|
25
|
%
|
75
|
%
|
|||||
Executive C
|
45
|
%
|
55
|
%
|
|
2.
|
Each award segment will be determined separately, and the resulting awards will be aggregated into a total award.
|
|
3.
|
Organizational performance will reflect equally on Participant awards.
|
D.
|
Organizational Goals
|
1.
|
Organizational goals will be established in the areas of financial achievement or operational achievement. These areas will be weighted and the weightings will be reviewed annually and may be adjusted at the time of review.
|
2.
|
Goals will be established prior to the start of the fiscal year for purposes of the Plan and approved by the Board of Directors. Such goals will relate to, but may not necessarily be, the Company's annual operating budget goals.
|
|
a.
|
Organizational performance will be evaluated in terms of actual versus planned results for each result area.
|
|
(i)
|
The target award for each result area will be reduced 3% for each 1% by which actual performance is less than planned performance. No award will be paid for a results area if actual performance is less than 85% of planned performance.
|
(ii)
|
The target award for each organizational results area, except for the EBITDA results area, will be increased 3% for each 1% by which actual performance exceeds planned performance.
|
(iii)
|
The target award for the EBITDA results area will be increased 3% for each 1% by which actual performance exceeds planned performance up to 101%. The target award for the EBITDA results area will be increased by 10% for each 1% by which actual performance exceeds planned performance for EBITDA achievement over 101%.
|
|
b.
|
The sum of awards for all results areas will be payable as the organizational award.
|
|
c.
|
Award calculations will be interpolated where actual results are other than even percentages of the planned amount.
|
|
d.
|
There will be a cap, or maximum, for award payments as a result of actual performance that exceeds the planned amount. This cap shall be 200% payout maximum for each award segment.
|
(Assume $20,000 target organizational award) | |||||||||||||||
Net Income
|
Revenue
|
EBITDA
|
Total Award | ||||||||||||
(45%)
|
(30%)
|
(25%)
|
|||||||||||||
Target Award
|
$
|
9,000
|
$
|
6,000
|
$
|
5,000
|
|||||||||
Actual % of Plan
|
95
|
%
|
250
|
%
|
110.7
|
%
|
|||||||||
Adjustment to Target
|
85
|
%
|
200
|
%
|
200
|
%
|
|||||||||
Award
|
$
|
7,650
|
$
|
12,000
|
$
|
10,000
|
$
|
29,650
|
|||||||
(148%
|
) |
|
e.
|
A review of the award payouts will be made by the Compensation Committee. In the event that a one-time occurrence affects the year-end organization's performance, the Compensation Committee may review and adjust award payouts, if determined appropriate.
|
Executive A | Executive B | Executive C | |||||||||||
Organization Award I
|
$
|
45,000
|
$
|
--
|
$
|
2,500
|
|||||||
Organization Award II
|
$
|
--
|
$
|
19,500
|
$
|
5,000
|
|||||||
Total Award
|
$
|
45,000
|
$
|
19,500
|
$
|
7,500
|
1.
|
Board Approval
|
2.
|
Time and Manner of Payment
|
|
1.
|
A deceased Participant's Performance Account shall be distributed beginning no later than March 15 of the following calendar year, according to the provisions in Section VI (F), to the Participant's designated beneficiary. A Participant may, by written notice to the Company in the form of Attachment B, designate a beneficiary to receive any payments made after his death. The Participant may select as his beneficiary any person or entity, including a trust. The Participant may designate multiple, successive or contingent beneficiaries and may change his designation at any time. If a Participant dies without having any valid beneficiary designation in effect, his estate shall be the beneficiary.
|
2.
|
The Performance Account value for a Participant who terminates employment by reason of Retirement or who becomes permanently and totally disabled, shall be distributed beginning no later than March 15 of the calendar year following such termination or disability, according to the provisions of Section VI (F).
|
1.
|
If a Participant's employment with the Company is terminated for any reason other than his death, retirement, or permanent and total disability, such Participant’s participation in the Plan immediately ceases, and any applicable Performance Award shall be distributed beginning no later than 90 days following such termination of employment, according to the provisions of Section VI (F).
|
2.
|
If a Participant becomes ineligible for the Plan based on a change of position within the Company where the new position is not eligible for participation in the Plan, any applicable Participant’s Performance Account value shall be distributed commencing no later than March 15 of the calendar year following such change.
|
1.
|
A Performance Account will be distributed in three, approximately equal annual installments, commencing as specified in Section VI (D) or (E) above.
|
2.
|
The Performance Account will be paid out in shares of company stock following the Participant’s termination of employment with the company.
|
1.
|
If a Change of Control in the Company occurs, as defined in a Participant’s Change of Control Agreement, the target Annual Award for the calendar year in which the Change of Control occurs will become immediately payable. The full target Annual Award will be automatically and immediately payable to the Participant.
|
2.
|
If a payment becomes due to a Participant under a Change of Control Agreement, the Annual Award would become immediately payable at the target annual award amount. The full target Annual Award will be automatically and immediately payable to the Participant.
|
3.
|
If a payment shall become due to the Participant under a Change of Control Agreement, all applicable Performance Awards shall immediately become distributable to the Participant. Performance Awards will be paid to the Participant within thirty (30) days after the date of the Participant’s payment being due under a Change of Control Agreement and will be subject to all normal withholding of state and federal taxes.
|
4.
|
The provisions of this Section VI (G), shall take precedence over all other provisions of this Plan.
|
|
All payments and distributions shall be subject to applicable withholding requirements.
|
|
1.
|
Fiscal-year performance goals may not be altered, amended, suspended or discontinued during any Plan Year with respect to that Plan Year without the approval of the Compensation Committee.
|
|
2.
|
Amendment or termination may not adversely affect the value of any earned Annual Awards.
|
J.
|
Headings
|
o
|
Target $ __________ $_________ $_______
|
o
|
% of Plan __________ __________ _______
|
o
|
Factor __________ __________ _________
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011 of Hickory Tech Corporation;
|
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
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d)
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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
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5.
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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 the registrant’s Board of Directors (or persons performing the equivalent functions):
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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
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b)
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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.
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Exhibit 31.2
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1.
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I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011 of Hickory Tech Corporation;
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2.
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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;
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3.
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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;
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4.
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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:
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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;
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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;
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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
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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 the registrant’s Board of Directors (or persons performing the equivalent functions):
|
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.
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|
Exhibit 32.1
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of HickoryTech.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of HickoryTech.
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