Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts to reflect estimated losses resulting from the inability of our customers to make required payments. To estimate the appropriate allowance for doubtful accounts, we consider specific accounts, historical write-offs, changes in customer financial condition and credit worthiness and concentrations of credit risk. Specific accounts receivable are written off once we determine the account is uncollectible. Accounts receivable are presented net of a valuation allowance as shown in the following table:

	Year Ended December 31
(Dollars in thousands)	2012			2011			2010
Balance at beginning of period	$	436		$	570		$	643
Additions charged to costs and expenses		290			299			1,010
Deductions		(448	)		(433	)		(1,083	)
Balance at end of period	$	278		$	436		$	570

Inventories

Inventory balances by segment are as follows:

(Dollars in thousands)	December 31, 2012		December 31, 2011
Fiber and Data	$	665	$	950
Equipment	$	6,201	$	6,631
Telecom	$	1,513	$	1,716

Components of property, plant and equipment

Property, plant and equipment are recorded at original cost of acquisition or construction. The costs of additions, replacements and major improvements are capitalized while maintenance and repairs are charged to expense as incurred. We have determined that interest cost associated with capital projects to be immaterial and no interest cost has been capitalized.

							Estimated
(Dollars in thousands)	2012			2011			Useful Lives
Land	$	1,102		$	1,074
Buildings		21,142			22,271		28-40 years
Leasehold improvements		4,680			4,073		3-39 years
Network and outside plant facilities		366,097			329,230		3-50 years
Furniture, fixtures and equipment		37,756			35,510		3-15 years
Construction in progress		6,846			4,982
		437,623			397,140
Less: Accumulated depreciation and amortization		(254,664	)		(242,886	)
Property, plant and equipment, net	$	182,959		$	154,254

Schedule of capitalized software costs

During 2012, 2011 and 2010, we capitalized $1,602,000, $755,000, and $176,000, respectively, of costs associated with software purchased or developed for internal use. The 2012 costs primarily relate to the purchase of applications related to enterprise software for contract management. The 2011 costs primarily relate to the purchase of web content management and document management systems. The 2010 costs primarily relate to licenses for database software. Capitalized internal software costs, net of accumulated amortization are included in property, plant and equipment at December 31, 2012, 2011 and 2010, respectively. Amortization expense relating to these costs amounted to $936,000, $675,000 and $568,000 in 2012, 2011 and 2010, respectively. The components of capitalized software for internal use are summarized below:

(Dollars in thousands)	2012		2011		2010
Capitalized software for internal use	$	11,578	$	9,976	$	9,385
Accumulated amortization		8,515		7,579		7,068
Net capitalized software for internal use	$	3,063	$	2,397	$	2,317

Earnings Per Share, Basic and Diluted

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the year. Shares used in the diluted earnings per share calculation are based on the weighted average number of shares outstanding during the year increased by potentially dilutive common equivalent shares. Potentially dilutive common shares include stock options, stock subscribed under the HickoryTech Corporation Amended and Restated Employee Stock Purchase Plan (ESPP), retention stock awards and stock awards subscribed under the Long-Term Executive Incentive Program (LTEIP). Dilution is determined using the treasury stock method. The Company does not use the two-class method to report its earnings per share. The two-class method includes an earnings allocation formula that determines earnings per share for common stock and restricted stock issued under the LTEIP, which participate in dividends. However, the application of this method would result in an immaterial change in earnings per share and is therefore not presented.

(Dollars in thousands, except share and earnings per share amounts)	2012		2011		2010
Net income	$	8,298	$	8,401	$	12,592
Weighted average shares outstanding		13,409,743		13,296,668		13,188,674
Stock options (dilutive only)		12,254		12,531		3,321
Stock subscribed (ESPP)		2,185		-		-
Retention awards		31,416		23,899		7,305
Stock subscribed (LTEIP)		72,441		86,549		39,813
Total dilutive shares outstanding		13,528,039		13,419,647		13,239,113
Earnings per share:
Basic	$	0.62	$	0.63	$	0.95
Diluted	$	0.61	$	0.63	$	0.95
Dividends per share	$	0.565	$	0.545	$	0.525