þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2012
|
¨
|
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
|
33
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
(Dollars in thousands, except share and per share amounts)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Operating revenue:
|
||||||||||||||||
Equipment
|
$ | 10,740 | $ | 9,035 | $ | 26,039 | $ | 17,230 | ||||||||
Services
|
33,117 | 31,073 | 64,762 | 61,500 | ||||||||||||
Total operating revenue
|
43,857 | 40,108 | 90,801 | 78,730 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Cost of sales, excluding depreciation and amortization
|
9,292 | 7,924 | 22,758 | 14,923 | ||||||||||||
Cost of services, excluding depreciation and amortization
|
15,905 | 14,771 | 31,231 | 29,506 | ||||||||||||
Selling, general and administrative expenses
|
7,441 | 6,729 | 14,147 | 13,272 | ||||||||||||
Depreciation and amortization
|
6,732 | 5,682 | 12,926 | 11,361 | ||||||||||||
Total costs and expenses
|
39,370 | 35,106 | 81,062 | 69,062 | ||||||||||||
Operating income
|
4,487 | 5,002 | 9,739 | 9,668 | ||||||||||||
Other income and expense:
|
||||||||||||||||
Interest and other income
|
14 | 14 | 34 | 24 | ||||||||||||
Interest expense
|
(1,482 | ) | (1,015 | ) | (2,846 | ) | (2,083 | ) | ||||||||
Total other (expense)
|
(1,468 | ) | (1,001 | ) | (2,812 | ) | (2,059 | ) | ||||||||
Income before income taxes
|
3,019 | 4,001 | 6,927 | 7,609 | ||||||||||||
Income tax provision
|
1,210 | 1,307 | 2,796 | 2,773 | ||||||||||||
Net income
|
$ | 1,809 | $ | 2,694 | $ | 4,131 | $ | 4,836 | ||||||||
Basic earnings per share
|
$ | 0.13 | $ | 0.20 | $ | 0.31 | $ | 0.36 | ||||||||
Weighted average common shares outstanding
|
13,487,553 | 13,367,083 | 13,469,303 | 13,348,447 | ||||||||||||
Diluted earnings per share
|
$ | 0.13 | $ | 0.20 | $ | 0.31 | $ | 0.36 | ||||||||
Weighted average common and equivalent shares outstanding
|
13,500,046 | 13,380,186 | 13,483,967 | 13,360,949 | ||||||||||||
Dividends per share
|
$ | 0.14 | $ | 0.135 | $ | 0.28 | $ | 0.27 | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
STATEMENT OF COMPREHENSIVE INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Net Income
|
$ | 1,809 | $ | 2,694 | $ | 4,131 | $ | 4,836 | ||||||||
Other comprehensive income:
|
||||||||||||||||
Interest rate swaps:
|
||||||||||||||||
Changes in designated interest rate swaps
|
(117 | ) | (574 | ) | (164 | ) | (235 | ) | ||||||||
Income tax (expense) benefit
|
46 | 229 | 65 | 94 | ||||||||||||
Unrealized holding gains (loss) on interest rate swaps
|
(71 | ) | (345 | ) | (99 | ) | (141 | ) | ||||||||
Post-retirement benefit plan:
|
||||||||||||||||
Amounts included in net periodic benefit cost:
|
||||||||||||||||
Net actuarial loss
|
135 | 107 | 270 | 214 | ||||||||||||
Prior service credit
|
(19 | ) | (14 | ) | (38 | ) | (28 | ) | ||||||||
Transition asset
|
15 | 15 | 30 | 30 | ||||||||||||
Adjustment to post-retirement benefit plan
|
(1,034 | ) | - | (1,034 | ) | - | ||||||||||
Income tax expense
|
360 | (43 | ) | 308 | (86 | ) | ||||||||||
Change in post-retirement benefit plan
|
(543 | ) | 65 | (464 | ) | 130 | ||||||||||
Other comprehensive income (loss)
|
(614 | ) | (280 | ) | (563 | ) | (11 | ) | ||||||||
Comprehensive Income
|
$ | 1,195 | $ | 2,414 | $ | 3,568 | $ | 4,825 | ||||||||
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)
|
June 30, 2012
|
December 31, 2011
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 14,431 | $ | 13,057 | ||||
Short-term investments
|
2,998 | - | ||||||
Receivables, net of allowance for doubtful accounts of $215 and $436
|
21,403 | 25,317 | ||||||
Inventories
|
5,060 | 9,297 | ||||||
Income taxes receivable
|
639 | 498 | ||||||
Deferred income taxes, net
|
1,559 | 1,559 | ||||||
Prepaid expenses
|
2,202 | 1,801 | ||||||
Other
|
960 | 964 | ||||||
Total current assets
|
49,252 | 52,493 | ||||||
Investments
|
3,210 | 4,277 | ||||||
Property, plant and equipment
|
415,545 | 396,816 | ||||||
Accumulated depreciation
|
(241,395 | ) | (242,886 | ) | ||||
Property, plant and equipment, net
|
174,150 | 153,930 | ||||||
Other assets:
|
||||||||
Goodwill
|
29,028 | 27,303 | ||||||
Intangible assets, net
|
5,257 | 2,314 | ||||||
Deferred costs and other
|
3,689 | 3,669 | ||||||
Total other assets
|
37,974 | 33,286 | ||||||
Total assets
|
$ | 264,586 | $ | 243,986 | ||||
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 3,135 | $ | 4,661 | ||||
Extended term payable
|
8,191 | 6,920 | ||||||
Deferred revenue
|
5,658 | 6,251 | ||||||
Accrued expenses and other
|
8,781 | 10,175 | ||||||
Current maturities of long-term obligations
|
1,614 | 1,407 | ||||||
Total current liabilities
|
27,379 | 29,414 | ||||||
Long-term liabilities:
|
||||||||
Debt obligations, net of current maturities
|
139,874 | 118,828 | ||||||
Accrued income taxes
|
143 | 154 | ||||||
Deferred revenue
|
1,046 | 1,131 | ||||||
Financial derivative instruments
|
2,633 | 2,469 | ||||||
Accrued employee benefits and deferred compensation
|
19,724 | 18,166 | ||||||
Deferred income taxes
|
30,253 | 30,627 | ||||||
Total long-term liabilities
|
193,673 | 171,375 | ||||||
Total liabilities
|
221,052 | 200,789 | ||||||
Commitments and contingencies
|
||||||||
Shareholders' equity:
|
||||||||
Common stock, no par value, $.10 stated value
|
||||||||
Shares authorized: 100,000,000
|
||||||||
Shares issued and outstanding: 13,494,399 in 2012 and 13,396,176 in 2011
|
1,349 | 1,340 | ||||||
Additional paid-in capital
|
16,211 | 15,683 | ||||||
Retained earnings
|
32,160 | 31,797 | ||||||
Accumulated other comprehensive (loss)
|
(6,186 | ) | (5,623 | ) | ||||
Total shareholders' equity
|
43,534 | 43,197 | ||||||
Total liabilities and shareholders' equity
|
$ | 264,586 | $ | 243,986 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Six Months Ended June 30
|
||||||||
(Dollars in thousands)
|
2012
|
2011
|
||||||
OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 4,131 | $ | 4,836 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
12,926 | 11,361 | ||||||
Accrued patronage refunds
|
(345 | ) | (189 | ) | ||||
Stock based compensation
|
375 | 636 | ||||||
Other
|
773 | 474 | ||||||
Changes in operating assets and liabilities, net of effect from acquired net assets
|
||||||||
Receivables
|
4,070 | 455 | ||||||
Prepaid expenses
|
(401 | ) | (446 | ) | ||||
Inventories
|
4,350 | 405 | ||||||
Accounts payable and accrued expenses
|
(3,419 | ) | 143 | |||||
Deferred revenue, billings and deposits
|
(683 | ) | 355 | |||||
Income taxes
|
(138 | ) | 5,359 | |||||
Other
|
1,552 | 1,037 | ||||||
Net cash provided by operating activities
|
23,191 | 24,426 | ||||||
INVESTING ACTIVITIES:
|
||||||||
Additions to property, plant and equipment
|
(10,969 | ) | (8,616 | ) | ||||
Broadband stimulus grant received
|
1,426 | 125 | ||||||
Acquisition of IdeaOne Telecom
|
(28,180 | ) | - | |||||
Purchase of short-term investments
|
(2,998 | ) | - | |||||
Proceeds from sale of assets
|
- | 105 | ||||||
Net cash (used in) investing activities
|
(40,721 | ) | (8,386 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Borrowings on extended term payable arrangement
|
22,772 | 14,296 | ||||||
Payments on extended term payable arrangement
|
(21,501 | ) | (11,489 | ) | ||||
Borrowings on credit facility
|
22,000 | 25,700 | ||||||
Payments on credit facility and capital lease obligations
|
(761 | ) | (26,031 | ) | ||||
Proceeds from issuance of common stock
|
163 | 180 | ||||||
Change in cash overdraft
|
- | (238 | ) | |||||
Dividends paid
|
(3,769 | ) | (3,601 | ) | ||||
Net cash provided by (used in) financing activities
|
18,904 | (1,183 | ) | |||||
Net increase in cash and cash equivalents
|
1,374 | 14,857 | ||||||
Cash and cash equivalents at beginning of the period
|
13,057 | 73 | ||||||
Cash and cash equivalents at the end of the period
|
$ | 14,431 | $ | 14,930 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$ | 2,868 | $ | 2,164 | ||||
Net cash paid (received) for income taxes
|
$ | 2,934 | $ | (2,586 | ) | |||
Non-cash investing and financing activities:
|
||||||||
Property, plant and equipment acquired with capital leases
|
$ | 14 | $ | 64 | ||||
Change in other comprehensive (loss) from financial derivatives
|
||||||||
and post-retirement benefits
|
$ | (563 | ) | $ | (11 | ) | ||
The accompanying notes are an integral part of the consolidated financial statements.
|
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
(Dollars in thousands, except share and earnings per share amounts)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Net Income
|
$ | 1,809 | $ | 2,694 | $ | 4,131 | $ | 4,836 | ||||||||
Weighted average shares outstanding
|
13,487,553 | 13,367,083 | 13,469,303 | 13,348,447 | ||||||||||||
Stock options (dilutive only)
|
12,493 | 13,103 | 14,664 | 12,502 | ||||||||||||
Stock subscribed (ESPP)
|
- | - | - | - | ||||||||||||
Total dilutive shares outstanding
|
13,500,046 | 13,380,186 | 13,483,967 | 13,360,949 | ||||||||||||
Earnings per share:
|
||||||||||||||||
Basic and Diluted
|
$ | 0.13 | $ | 0.20 | $ | 0.31 | $ | 0.36 | ||||||||
Dividends per share
|
$ | 0.14 | $ | 0.135 | $ | 0.28 | $ | 0.27 |
Shares outstanding on record date
|
2012
|
2011
|
||||||
First quarter (February 15)
|
13,409,941 | 13,311,817 | ||||||
Second quarter (May 15)
|
13,479,677 | 13,358,971 |
(Dollars in thousands)
|
2012
|
||||
Property and equipment
|
$ | 23,077 | |||
Accounts receivable
|
310 | ||||
Identifiable intangible assets:
|
|||||
Customer relationships and contracts
|
|
3,200 | |||
Trade name
|
|
100 | |||
Goodwill
|
1,725 | ||||
Other assets
|
273 | ||||
Liabilities
|
(505 | ) | |||
Total cash consideration
|
$ | 28,180 |
(unaudited)
|
||||||||||||
(Dollars in thousands)
|
Revenue
|
Net Income
|
Diluted Earnings Per Share
|
|||||||||
Actual from March 1, 2012 to June 30, 2012
|
$ | 4,186 | $ | 279 | $ | 0.02 | ||||||
Supplemental pro forma for the six months ended June 30, 2012
|
$ | 92,918 | $ | 4,218 | $ | 0.31 | ||||||
Supplemental pro forma for the six months ended June 30, 2011
|
$ | 84,576 | $ | 4,970 | $ | 0.37 |
(Dollars in thousands)
|
June 30, 2012
|
December 31, 2011
|
||||||
Fiber and Data
|
$ | 5,384 | $ | 3,659 | ||||
Equipment
|
$ | 596 | $ | 596 | ||||
Telecom
|
$ | 23,048 | $ | 23,048 |
|
As of June 30, 2012
|
As of December 31, 2011
|
||||||||||||||||
Gross Carrying
|
Accumulated
|
Gross Carrying
|
Accumulated
|
|||||||||||||||
(Dollars in thousands)
|
Useful Lives
|
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Definite-Lived Intangible Assets
|
||||||||||||||||||
Customer relationships
|
1 - 8 years
|
$ | 8,499 | $ | 5,016 | $ | 5,299 | $ | 4,746 | |||||||||
Other intangibles
|
1 - 5 years
|
2,930 | 1,156 | 2,830 | 1,069 | |||||||||||||
Total
|
$ | 11,429 | $ | 6,172 | $ | 8,129 | $ | 5,815 |
|
June 30, 2012
|
December 31, 2011
|
||||||||||||||||||
(Dollars in thousands)
|
Input Level
|
Carrying Amount
|
Fair Value
|
Carrying Amount
|
Fair Value
|
|||||||||||||||
Short-term investments
|
1 | $ | 2,998 | $ | 2,998 | $ | - | $ | - | |||||||||||
Long-term debt
|
2 | $ | 139,874 | $ | 144,223 | $ | 118,828 | $ | 122,886 | |||||||||||
Interest rate swaps
|
2 | $ | 2,633 | $ | 2,633 | $ | 2,469 | $ | 2,469 |
Interest-Rate Swap Agreement Effective Dates
|
Coverage Amount
|
Rate
|
||||||
September 2011 - September 2014
|
$ | 24,000,000 | 1.66 | % | ||||
September 2011 - March 2015
|
$ | 24,000,000 | 1.91 | % | ||||
September 2011 - September 2015
|
$ | 24,000,000 | 2.14 | % |
(Dollars in thousands)
|
Gain (Loss) Reported in
|
Location of Gain/Proceeds Reclassified
|
Amount of Gain/Proceeds
|
||||||||
Derivative Instruments
|
Accumulated Other Comprehensive Loss
|
from Accumulated Other
|
Recognized in Income on Derivative
|
||||||||
Cash Flow Hedging Relationships
|
2012
|
2011
|
Comprehensive Income into Income
|
2012
|
2011
|
||||||
Interest Rate Contracts
|
$(99)
|
$(141)
|
Interest Expense
|
$-
|
$-
|
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Components of net periodic benefit cost
|
||||||||||||||||
Service cost
|
$ | 150 | $ | 127 | $ | 300 | $ | 254 | ||||||||
Interest cost
|
188 | 200 | 376 | 400 | ||||||||||||
Expected return on plan assets
|
- | - | - | - | ||||||||||||
Amortization of transition obligation
|
15 | 15 | 30 | 30 | ||||||||||||
Amortization of prior service cost
|
(19 | ) | (14 | ) | (38 | ) | (28 | ) | ||||||||
Recognized net actuarial loss
|
135 | 107 | 270 | 214 | ||||||||||||
Net periodic benefit cost
|
$ | 469 | $ | 435 | $ | 938 | $ | 870 | ||||||||
Employer's contributions for current premiums:
|
June 30, 2012 | |||||||||||||||
Contributions made for the six months ended June 30, 2012
|
$ | 168 | ||||||||||||||
Expected contributions for remainder of 2012
|
169 | |||||||||||||||
Total estimated employer contributions for fiscal year 2012
|
$ | 337 |
(Dollars in thousands)
|
June 30, 2012
|
December 31, 2011
|
||||||
Fiber and Data
|
$ | 1,302 | $ | 950 | ||||
Equipment
|
$ | 2,073 | $ | 6,631 | ||||
Telecom
|
$ | 1,685 | $ | 1,716 |
Weighted Average
|
||||||||
Options
|
Exercise Price
|
|||||||
Outstanding at January 1, 2012
|
247,650 | $ | 11.28 | |||||
Granted
|
- | - | ||||||
Exercised
|
(1,500 | ) | 10.22 | |||||
Forfeited
|
(4,050 | ) | 10.88 | |||||
Expired
|
(83,000 | ) | 13.95 | |||||
Outstanding at June 30, 2012
|
159,100 | $ | 9.90 | |||||
Exercisable at June 30, 2012
|
152,433 | $ | 9.94 |
Range of
|
Stock Options
|
Weighted Average
|
Weighted Average Remaining
|
|||||||||||
Exercise Prices
|
Outstanding
|
Exercise Price
|
Contractual Life
|
|||||||||||
$6.00 - $8.00 | 15,000 | $ | 6.95 | 4.17 | ||||||||||
$8.00 - $12.00 | 144,100 | 10.21 | 2.01 | |||||||||||
159,100 | $ | 9.90 | 2.21 | |||||||||||
Aggregate intrinsic value:
|
$ | 215,000 |
Range of
|
Stock Options
|
Weighted Average
|
Weighted Average Remaining
|
|||||||||||
Exercise Prices
|
Exercisable
|
Exercise Price
|
Contractual Life
|
|||||||||||
$6.00 - $8.00 | 15,000 | $ | 6.95 | 4.17 | ||||||||||
$8.00 - $12.00 | 137,433 | 10.27 | 1.68 | |||||||||||
152,433 | $ | 9.94 | 1.92 | |||||||||||
Aggregate intrinsic value:
|
$ | 201,000 |
(Dollars in thousands)
|
Corporate and
|
|||||||||||||||||||
Three Months Ended June 30, 2012
|
Fiber and Data
|
Equipment
|
Telecom
|
Eliminations
|
Consolidated
|
|||||||||||||||
Revenue from unaffiliated customers
|
$ | 15,177 | $ | 12,864 | $ | 15,816 | $ | - | $ | 43,857 | ||||||||||
Intersegment revenue
|
193 | - | 444 | (637 | ) | - | ||||||||||||||
Total operating revenue
|
15,370 | 12,864 | 16,260 | (637 | ) | 43,857 | ||||||||||||||
Depreciation and amortization
|
2,551 | 71 | 4,085 | 25 | 6,732 | |||||||||||||||
Operating income (loss)
|
2,284 | 399 | 1,993 | (189 | ) | 4,487 | ||||||||||||||
Interest expense
|
- | - | 9 | 1,473 | 1,482 | |||||||||||||||
Income tax provision (benefit)
|
925 | 160 | 809 | (684 | ) | 1,210 | ||||||||||||||
Net Income (loss)
|
1,359 | 239 | 1,186 | (975 | ) | 1,809 | ||||||||||||||
Total assets
|
103,611 | 14,753 | 121,064 | 25,158 | 264,586 | |||||||||||||||
Property, plant and equipment, net
|
84,216 | 1,433 | 88,424 | 77 | 174,150 | |||||||||||||||
Additions to property, plant and equipment
|
3,603 | 117 | 2,203 | - | 5,923 |
(Dollars in thousands)
|
Corporate and
|
|||||||||||||||||||
Three Months Ended June 30, 2011
|
Fiber and Data
|
Equipment
|
Telecom
|
Eliminations
|
Consolidated
|
|||||||||||||||
Revenue from unaffiliated customers
|
$ | 11,067 | $ | 11,746 | $ | 17,295 | $ | - | $ | 40,108 | ||||||||||
Intersegment revenue
|
186 | - | 404 | (590 | ) | - | ||||||||||||||
Total operating revenue
|
11,253 | 11,746 | 17,699 | (590 | ) | 40,108 | ||||||||||||||
Depreciation and amortization
|
1,556 | 71 | 4,033 | 22 | 5,682 | |||||||||||||||
Operating income (loss)
|
1,922 | 706 | 2,699 | (325 | ) | 5,002 | ||||||||||||||
Interest expense
|
- | 1 | 15 | 999 | 1,015 | |||||||||||||||
Income tax provision (benefit)
|
778 | 286 | 1,089 | (846 | ) | 1,307 | ||||||||||||||
Net Income (loss)
|
1,144 | 419 | 1,599 | (468 | ) | 2,694 | ||||||||||||||
Total assets
|
68,819 | 19,615 | 128,060 | 20,730 | 237,224 | |||||||||||||||
Property, plant and equipment, net
|
55,881 | 1,209 | 95,301 | 104 | 152,495 | |||||||||||||||
Additions to property, plant and equipment
|
2,417 | 87 | 2,309 | - | 4,813 | |||||||||||||||
Corporate and
|
||||||||||||||||||||
Six Months Ended June 30, 2012
|
Fiber and Data
|
Equipment
|
Telecom
|
Eliminations
|
Consolidated
|
|||||||||||||||
Revenue from unaffiliated customers
|
$ | 28,396 | $ | 30,285 | $ | 32,120 | $ | - | $ | 90,801 | ||||||||||
Intersegment revenue
|
386 | - | 854 | (1,240 | ) | - | ||||||||||||||
Total operating revenue
|
28,782 | 30,285 | 32,974 | (1,240 | ) | 90,801 | ||||||||||||||
Depreciation and amortization
|
4,517 | 142 | 8,218 | 49 | 12,926 | |||||||||||||||
Operating income (loss)
|
4,629 | 1,219 | 4,180 | (289 | ) | 9,739 | ||||||||||||||
Interest expense
|
- | - | 22 | 2,824 | 2,846 | |||||||||||||||
Income tax provision (benefit)
|
1,875 | 494 | 1,692 | (1,265 | ) | 2,796 | ||||||||||||||
Net Income (loss)
|
2,754 | 725 | 2,485 | (1,833 | ) | 4,131 | ||||||||||||||
Total assets
|
103,611 | 14,753 | 121,064 | 25,158 | 264,586 | |||||||||||||||
Property, plant and equipment, net
|
84,216 | 1,433 | 88,424 | 77 | 174,150 | |||||||||||||||
Additions to property, plant and equipment
|
5,568 | 190 | 3,799 | - | 9,557 | |||||||||||||||
Corporate and
|
||||||||||||||||||||
Six Months Ended June 30, 2011
|
Fiber and Data
|
Equipment
|
Telecom
|
Eliminations
|
Consolidated
|
|||||||||||||||
Revenue from unaffiliated customers
|
$ | 21,928 | $ | 22,170 | $ | 34,632 | $ | - | $ | 78,730 | ||||||||||
Intersegment revenue
|
347 | - | 816 | (1,163 | ) | - | ||||||||||||||
Total operating revenue
|
22,275 | 22,170 | 35,448 | (1,163 | ) | 78,730 | ||||||||||||||
Depreciation and amortization
|
3,142 | 139 | 8,036 | 44 | 11,361 | |||||||||||||||
Operating income (loss)
|
3,407 | 1,204 | 5,600 | (543 | ) | 9,668 | ||||||||||||||
Interest expense
|
- | 1 | 33 | 2,049 | 2,083 | |||||||||||||||
Income tax provision (benefit)
|
1,381 | 489 | 2,257 | (1,354 | ) | 2,773 | ||||||||||||||
Net Income (loss)
|
2,027 | 714 | 3,315 | (1,220 | ) | 4,836 | ||||||||||||||
Total assets
|
68,819 | 19,615 | 128,060 | 20,730 | 237,224 | |||||||||||||||
Property, plant and equipment, net
|
55,881 | 1,209 | 95,301 | 104 | 152,495 | |||||||||||||||
Additions to property, plant and equipment
|
4,223 | 93 | 4,239 | - | 8,555 |
Project Activity
|
||||||||||||
(Dollars in thousands)
|
YTD June 30, 2012
|
YTD December 31, 2011
|
Project Total
|
|||||||||
Capital Expenditures Incurred
|
$ | 1,617 | $ | 12,664 | $ | 14,281 | ||||||
NTIA Reimbursements Received
|
$ | 1,426 | $ | 6,945 | $ | 8,371 |
Fiber and Data
|
||||||||||||||||||||||||
Three Months Ended June 30
|
%
|
Six Months Ended June 30
|
%
|
|||||||||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
||||||||||||||||||
Operating revenue before intersegment eliminations:
|
||||||||||||||||||||||||
Services
|
$ | 15,177 | $ | 11,067 | 37 | % | $ | 28,396 | $ | 21,928 | 29 | % | ||||||||||||
Intersegment
|
193 | 186 | 4 | % | 386 | 347 | 11 | % | ||||||||||||||||
Total operating revenue
|
$ | 15,370 | $ | 11,253 | 37 | % | $ | 28,782 | $ | 22,275 | 29 | % | ||||||||||||
Cost of services (excluding depreciation and amortization)
|
7,489 | 5,680 | 32 | % | 14,084 | 11,501 | 22 | % | ||||||||||||||||
Selling, general and administrative expenses
|
3,046 | 2,095 | 45 | % | 5,552 | 4,225 | 31 | % | ||||||||||||||||
Depreciation and amortization
|
2,551 | 1,556 | 64 | % | 4,517 | 3,142 | 44 | % | ||||||||||||||||
Total costs and expenses
|
13,086 | 9,331 | 40 | % | 24,153 | 18,868 | 28 | % | ||||||||||||||||
Operating income
|
$ | 2,284 | $ | 1,922 | 19 | % | $ | 4,629 | $ | 3,407 | 36 | % | ||||||||||||
Net income
|
$ | 1,359 | $ | 1,144 | 19 | % | $ | 2,754 | $ | 2,027 | 36 | % | ||||||||||||
Capital expenditures
|
$ | 3,603 | $ | 2,417 | 49 | % | $ | 5,568 | $ | 4,223 | 32 | % |
Equipment
|
||||||||||||||||||||||||
Three Months Ended June 30
|
%
|
Six Months Ended June 30
|
%
|
|||||||||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
||||||||||||||||||
Operating revenue before intersegment eliminations:
|
||||||||||||||||||||||||
Equipment
|
$ | 10,740 | $ | 9,035 | 19 | % | $ | 26,039 | $ | 17,230 | 51 | % | ||||||||||||
Services
|
2,124 | 2,711 | -22 | % | 4,246 | 4,940 | -14 | % | ||||||||||||||||
Total operating revenue
|
$ | 12,864 | $ | 11,746 | 10 | % | $ | 30,285 | $ | 22,170 | 37 | % | ||||||||||||
Cost of sales (excluding depreciation and amortization)
|
9,292 | 7,924 | 17 | % | 22,758 | 14,923 | 53 | % | ||||||||||||||||
Cost of services (excluding depreciation and amortization)
|
1,627 | 1,696 | -4 | % | 3,339 | 3,374 | -1 | % | ||||||||||||||||
Selling, general and administrative expenses
|
1,475 | 1,349 | 9 | % | 2,827 | 2,530 | 12 | % | ||||||||||||||||
Depreciation and amortization
|
71 | 71 | 0 | % | 142 | 139 | 2 | % | ||||||||||||||||
Total costs and expenses
|
12,465 | 11,040 | 13 | % | 29,066 | 20,966 | 39 | % | ||||||||||||||||
Operating income
|
$ | 399 | $ | 706 | -43 | % | $ | 1,219 | $ | 1,204 | 1 | % | ||||||||||||
Net income
|
$ | 239 | $ | 419 | -43 | % | $ | 725 | $ | 714 | 2 | % | ||||||||||||
Capital expenditures
|
$ | 117 | $ | 87 | 34 | % | $ | 190 | $ | 93 | 104 | % |
Telecom
|
||||||||||||||||||||||||
Three Months Ended June 30
|
%
|
Six Months Ended June 30
|
%
|
|||||||||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Change
|
2012
|
2011
|
Change
|
||||||||||||||||||
Operating revenue before intersegment eliminations:
|
||||||||||||||||||||||||
Local Service
|
$ | 3,348 | $ | 3,595 | -7 | % | $ | 6,777 | $ | 7,288 | -7 | % | ||||||||||||
Network Access
|
4,749 | 5,764 | -18 | % | 9,652 | 11,576 | -17 | % | ||||||||||||||||
Broadband
|
4,977 | 5,090 | -2 | % | 9,979 | 10,144 | -2 | % | ||||||||||||||||
Directory
|
770 | 846 | -9 | % | 1,552 | 1,718 | -10 | % | ||||||||||||||||
Long Distance
|
636 | 727 | -13 | % | 1,284 | 1,456 | -12 | % | ||||||||||||||||
Bill Processing
|
1,035 | 850 | 22 | % | 2,240 | 1,587 | 41 | % | ||||||||||||||||
Intersegment
|
444 | 404 | 10 | % | 854 | 816 | 5 | % | ||||||||||||||||
Other
|
301 | 423 | -29 | % | 636 | 863 | -26 | % | ||||||||||||||||
Total Telecom operating revenue
|
$ | 16,260 | $ | 17,699 | -8 | % | $ | 32,974 | $ | 35,448 | -7 | % | ||||||||||||
Total Telecom revenue before intersegment eliminations
|
||||||||||||||||||||||||
Unaffiliated customers
|
$ | 15,816 | $ | 17,295 | $ | 32,120 | $ | 34,632 | ||||||||||||||||
Intersegment
|
444 | 404 | 854 | 816 | ||||||||||||||||||||
16,260 | 17,699 | 32,974 | 35,448 | |||||||||||||||||||||
Cost of services (excluding depreciation and amortization)
|
7,365 | 7,935 | -7 | % | 14,926 | 15,696 | -5 | % | ||||||||||||||||
Selling, general and administrative expenses
|
2,817 | 3,032 | -7 | % | 5,650 | 6,116 | -8 | % | ||||||||||||||||
Depreciation and amortization
|
4,085 | 4,033 | 1 | % | 8,218 | 8,036 | 2 | % | ||||||||||||||||
Total Telecom costs and expenses
|
14,267 | 15,000 | -5 | % | 28,794 | 29,848 | -4 | % | ||||||||||||||||
Operating Income
|
$ | 1,993 | $ | 2,699 | -26 | % | $ | 4,180 | $ | 5,600 | -25 | % | ||||||||||||
Net income
|
$ | 1,186 | $ | 1,599 | -26 | % | $ | 2,485 | $ | 3,315 | -25 | % | ||||||||||||
Capital expenditures
|
$ | 2,203 | $ | 2,309 | -5 | % | $ | 3,799 | $ | 4,239 | -10 | % | ||||||||||||
Key metrics
|
||||||||||||||||||||||||
Business access lines
|
20,764 | 23,628 | -12 | % | ||||||||||||||||||||
Residential access lines
|
23,209 | 26,000 | -11 | % | ||||||||||||||||||||
Total access lines
|
43,973 | 49,628 | -11 | % | ||||||||||||||||||||
Long distance customers
|
30,872 | 32,950 | -6 | % | ||||||||||||||||||||
Digital Subscriber Line customers
|
19,364 | 19,638 | -1 | % | ||||||||||||||||||||
Digital TV customers
|
10,110 | 10,494 | -4 | % |
(Dollars in thousands)
|
|||||
Leverage Ratio:
|
June 30, 2012
|
||||
(A)
|
Total debt (including outstanding letters of credit)
|
$ | 141,523 | ||
(B)
|
EBITDA per our credit agreement
|
||||
Three Months Ended 9-30-11
|
12,162 | ||||
Three Months Ended 12-31-11
|
10,069 | ||||
Three Months Ended 3-31-12
|
11,466 | ||||
IdeaOne Telecom Historical EBITDA (reflects eight months)
|
2,946 | ||||
Three Months Ended 6-30-12 (reflects four months of IdeaOne)
|
11,233 | ||||
Total EBITDA per our credit agreement
|
$ | 47,876 | |||
Total Leverage Ratio (A)/(B)
|
2.96 | ||||
Maximum leverage ratio allowed
|
3.5 |
Debt Service Coverage Ratio:
|
June 30, 2012
|
||||
(A)
|
EBITDA per our credit agreement, minus
|
$ | 47,876 | ||
Income Taxes
|
(5,988 | ) | |||
$ | 41,888 | ||||
|
|
||||
(B)
|
the sum of (i) all scheduled principal payments to be made on debt and (ii) interest expense
|
6,933 | |||
Debt Service Coverage Ratio (A)/(B)
|
6.0 | ||||
Minimum debt service ratio allowed
|
2.5 |
Three Months Ended June 30
|
Six Months Ended June 30
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Reconciliation of net income to EBITDA:
|
||||||||||||||||
Net income
|
$ | 1,809 | $ | 2,694 | $ | 4,131 | $ | 4,836 | ||||||||
Add:
|
||||||||||||||||
Depreciation and amortization
|
6,732 | 5,682 | 12,926 | 11,361 | ||||||||||||
Interest expense
|
1,482 | 1,015 | 2,846 | 2,083 | ||||||||||||
Income taxes
|
1,210 | 1,307 | 2,796 | 2,773 | ||||||||||||
EBITDA as defined in our credit agreement
|
$ | 11,233 | $ | 10,698 | $ | 22,699 | $ | 21,053 |
Exhibit Number
|
Description
|
||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted 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
|
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
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 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
|
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 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.
|
|
Exhibit 31.2
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 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
|
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 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.
|
|
Exhibit 32.1
|
(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 HickoryTech.
|
(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 HickoryTech.
|
Financial Derivative Instruments (Details) (USD $)
|
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Derivative, Fair Value [Line Items] | ||
Fair value of derivatives, net liability | $ 2,633,000 | $ 2,469,000 |
Interest Rate Swap Agreement [Member]
|
||
Interest-Rate Swap Agreement [Line Items] | ||
Coverage Amount | 72,000,000 | |
Interest Rate Swap September 2014 [Member] | Interest Rate Swap Agreement [Member] | Cash Flow Hedging [Member]
|
||
Interest-Rate Swap Agreement [Line Items] | ||
Coverage Amount | 24,000,000 | |
Variable Interest Rate (in hundredths) | 1.66% | |
Interest Rate Swap March 2015 [Member] | Interest Rate Swap Agreement [Member] | Cash Flow Hedging [Member]
|
||
Interest-Rate Swap Agreement [Line Items] | ||
Coverage Amount | 24,000,000 | |
Variable Interest Rate (in hundredths) | 1.91% | |
Interest Rate Swap September 2015 [Member] | Interest Rate Swap Agreement [Member] | Cash Flow Hedging [Member]
|
||
Interest-Rate Swap Agreement [Line Items] | ||
Coverage Amount | $ 24,000,000 | |
Variable Interest Rate (in hundredths) | 2.14% |
Commitments and Contingencies (Details) (USD $)
|
6 Months Ended | 12 Months Ended | 23 Months Ended |
---|---|---|---|
Jun. 30, 2012
|
Dec. 31, 2011
|
Jun. 30, 2012
|
|
National Telecommunications Information Administration Broadband Technology Opportunities Program grant [Abstract] | |||
Approximate amount of capital expenditure for advanced high-capacity broadband network pursuant to Broadband Technology Opportunities Program (BTOP) grant | $ 24,000,000 | ||
Approximate amount of reimbursement pursuant to Broadband Technology Opportunities Program (BTOP) grant | 16,800,000 | ||
Capital expenditure incurred | 1,617,000 | 12,664,000 | 14,281,000 |
NTIA reimbursements received | $ 1,426,000 | $ 6,945,000 | $ 8,371,000 |
Basis of Presentation and Consolidation (Details)
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Basis of Presentation and Consolidation [Abstract] | |
Number of business segments | 3 |
Goodwill and Other Intangible Assets (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Goodwill |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other intangible assets | The components of intangible assets are as follows:
|
Employee Post-Retirement Benefits (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Components of net periodic benefit cost | ||||
Service cost | $ 150 | $ 127 | $ 300 | $ 254 |
Interest cost | 188 | 200 | 376 | 400 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of transition obligation | 15 | 15 | 30 | 30 |
Amortization of prior service cost | (19) | (14) | (38) | (28) |
Recognized net actuarial loss | 135 | 107 | 270 | 214 |
Net periodic benefit cost | 469 | 435 | 938 | 870 |
Employer's contribution for current premium: | ||||
Defined Benefit Plan Payments Made By Employer | 168 | |||
Expected contributions for remainder of current year | 169 | 169 | ||
Estimated Employer Contributions For Current Fiscal Year | $ 337 |
Fair Value of Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Carrying (Reported) Amount [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short term investments | $ 2,998 | $ 0 |
Long term debt | 139,874 | 118,828 |
Interest rate swaps | 2,633 | 2,469 |
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short term investments | 2,998 | 0 |
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt | 144,223 | 122,886 |
Interest rate swaps | $ 2,633 | $ 2,469 |
Quarterly Segment Financial Summary (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
Dec. 31, 2011
|
|
Segment Reporting Information [Line Items] | |||||
Segment Reporting Information | 3 | ||||
Revenue from unaffiliated customers | $ 43,857 | $ 40,108 | $ 90,801 | $ 78,730 | |
Intersegment revenue | 0 | 0 | 0 | ||
Total operating revenue | 43,857 | 40,108 | 90,801 | 78,730 | |
Depreciation and amortization | 6,732 | 5,682 | 12,926 | 11,361 | |
Operating income | 4,487 | 5,002 | 9,739 | 9,668 | |
Interest expense | 1,482 | 1,015 | 2,846 | 2,083 | |
Income tax provision (benefit) | 1,210 | 1,307 | 2,796 | 2,773 | |
Net income (loss) | 1,809 | 2,694 | 4,131 | 4,836 | |
Total assets | 264,586 | 237,224 | 264,586 | 237,224 | 243,986 |
Property, plant and equipment, net | 174,150 | 152,495 | 174,150 | 152,495 | 153,930 |
Additions to property, plant and equipment | 5,923 | 4,813 | 9,557 | 8,555 | |
Fiber and Data Segment [Member]
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Segment Reporting Information [Line Items] | |||||
Revenue from unaffiliated customers | 15,177 | 11,067 | 28,396 | 21,928 | |
Intersegment revenue | 193 | 186 | 386 | 347 | |
Total operating revenue | 15,370 | 11,253 | 28,782 | 22,275 | |
Depreciation and amortization | 2,551 | 1,556 | 4,517 | 3,142 | |
Operating income | 2,284 | 1,922 | 4,629 | 3,407 | |
Interest expense | 0 | 0 | 0 | 0 | |
Income tax provision (benefit) | 925 | 778 | 1,875 | 1,381 | |
Net income (loss) | 1,359 | 1,144 | 2,754 | 2,027 | |
Total assets | 103,611 | 68,819 | 103,611 | 68,819 | |
Property, plant and equipment, net | 84,216 | 55,881 | 84,216 | 55,881 | |
Additions to property, plant and equipment | 3,603 | 2,417 | 5,568 | 4,223 | |
Equipment Segment [Member]
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Segment Reporting Information [Line Items] | |||||
Revenue from unaffiliated customers | 12,864 | 11,746 | 30,285 | 22,170 | |
Intersegment revenue | 0 | 0 | 0 | 0 | |
Total operating revenue | 12,864 | 11,746 | 30,285 | 22,170 | |
Depreciation and amortization | 71 | 71 | 142 | 139 | |
Operating income | 399 | 706 | 1,219 | 1,204 | |
Interest expense | 0 | 1 | 0 | 1 | |
Income tax provision (benefit) | 160 | 286 | 494 | 489 | |
Net income (loss) | 239 | 419 | 725 | 714 | |
Total assets | 14,753 | 19,615 | 14,753 | 19,615 | |
Property, plant and equipment, net | 1,433 | 1,209 | 1,433 | 1,209 | |
Additions to property, plant and equipment | 117 | 87 | 190 | 93 | |
Telecom Segment [Member]
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Segment Reporting Information [Line Items] | |||||
Revenue from unaffiliated customers | 15,816 | 17,295 | 32,120 | 34,632 | |
Intersegment revenue | 444 | 404 | 854 | 816 | |
Total operating revenue | 16,260 | 17,699 | 32,974 | 35,448 | |
Depreciation and amortization | 4,085 | 4,033 | 8,218 | 8,036 | |
Operating income | 1,993 | 2,699 | 4,180 | 5,600 | |
Interest expense | 9 | 15 | 22 | 33 | |
Income tax provision (benefit) | 809 | 1,089 | 1,692 | 2,257 | |
Net income (loss) | 1,186 | 1,599 | 2,485 | 3,315 | |
Total assets | 121,064 | 128,060 | 121,064 | 128,060 | |
Property, plant and equipment, net | 88,424 | 95,301 | 88,424 | 95,301 | |
Additions to property, plant and equipment | 2,203 | 2,309 | 3,799 | 4,239 | |
Corporate and Other [Member]
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Segment Reporting Information [Line Items] | |||||
Revenue from unaffiliated customers | 0 | 0 | 0 | 0 | |
Intersegment revenue | (637) | (590) | (1,240) | (1,163) | |
Total operating revenue | (637) | (590) | (1,240) | (1,163) | |
Depreciation and amortization | 25 | 22 | 49 | 44 | |
Operating income | (189) | (325) | (289) | (543) | |
Interest expense | 1,473 | 999 | 2,824 | 2,049 | |
Income tax provision (benefit) | (684) | (846) | (1,265) | (1,354) | |
Net income (loss) | (975) | (468) | (1,833) | (1,220) | |
Total assets | 25,158 | 20,730 | 25,158 | 20,730 | |
Property, plant and equipment, net | 77 | 104 | 77 | 104 | |
Additions to property, plant and equipment | $ 0 | $ 0 | $ 0 | $ 0 |
Acquisitions
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Acquisitions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions [Text Block] | Note 3. Acquisition On March 1, 2012, we acquired all of the membership units of IdeaOne Telecom Group, LLC. for cash consideration of $28,180,000 expanding our business and broadband services in the Fargo, North Dakota market. The acquisition was funded with existing liquidity through cash reserves of $6,180,000 and $22,000,000 of term loan debt which is integrated with our senior credit facility. The table below sets forth the provisional estimates of fair value of the assets acquired, liabilities assumed and goodwill. The difference between the fair value of the consideration transferred and net assets acquired resulted in goodwill of $1,725,000. The fair value of the property and equipment, intangible assets and other assets and liabilities was determined based on level 3 inputs.
Goodwill from our acquisition is a result of the value of acquired employees along with the expected synergies from the combination of IdeaOne Telecom and our operations. IdeaOne Telecom operations have been integrated with and goodwill is recorded within our Fiber and Data Segment. Goodwill resulting from this acquisition is deductible for tax purposes. Of the identified intangible assets above, customer relationships and contracts have useful lives between four and seven years and the trade name has a useful life of two years. Useful lives for identifiable intangible assets were estimated at the time of the acquisition based on the period of time from which we expect to derive benefits from the identifiable intangible assets. The identifiable intangible assets are amortized using the straight-line method, which reflects the pattern in which the assets are consumed. Acquisition related expenses of $510,000 were reflected in selling, general and administrative expenses in results for the fourth quarter ended December 31, 2011. In 2012, acquisition related expenses were insignificant and are reflected in selling, general and administrative expenses. The Company has expensed all acquisition related costs except those related to the incremental debt. The costs incurred related to the incremental term debt financing have been capitalized and are amortized over the life of the debt facility using the effective interest rate method. The amount of IdeaOne revenue and net income included in our Consolidated Statements of Operations for the six months ended June 30, 2012, and the following unaudited pro forma consolidated results of operations for the six months ended June 30, 2012 and 2011, have been prepared as if the acquisition of IdeaOne had occurred at January 1, 2011:
The proforma results are presented for illustrative purposes and are not intended to be indicative of the results that would have actually been obtained if the merger had occurred as of the date indicated, nor do the pro forma results intend to be a projection of future results that may be obtained. |