10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from     to      .

Commission file number   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)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   þNo   ¨

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

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

Large accelerated filer  ¨      Accelerated filer  þ      Non-accelerated filer  ¨      Smaller reporting company  ¨

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

The total number of shares of the Registrant's common stock outstanding as of April 26, 2013: 13,592,661.

TABLE OF CONTENTS

Item 1.	Financial Statements	3
	Consolidated Statements of Income (unaudited) for the Three Months Ended March 31, 2013 and 2012	3
	Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2013 and 2012	4
	Consolidated Balance Sheets (unaudited) as of March 31, 2013 and December 31, 2012	5
	Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2013 and 2012	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	30

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibit Listing	32
	Signatures	33
	Exhibits	34

2

Part I Financial Information

Item 1.  Financial Statements

HICKORY TECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Three Months Ended
	March 31
(Dollars in thousands, except share and per share amounts)	2013			2012
Operating revenue:
Equipment	$	15,364		$	15,299
Services		33,405			31,645
Total operating revenue		48,769			46,944
Costs and expenses:
Cost of sales, excluding depreciation and amortization		13,222			13,466
Cost of services, excluding depreciation and amortization		16,599			15,326
Selling, general and administrative expenses		7,449			6,706
Asset impairment		633			-
Depreciation and amortization		7,009			6,194
Total costs and expenses		44,912			41,692
Operating income		3,857			5,252
Other income and expense:
Interest and other income		2			20
Interest expense		(1,139	)		(1,411	)
Total other (expense)		(1,137	)		(1,391	)
Income before income taxes		2,720			3,861
Income tax provision		1,094			1,567
Net income	$	1,626		$	2,294
Basic earnings per share	$	0.12		$	0.17
Weighted average common shares outstanding		13,556,515			13,349,791
Diluted earnings per share	$	0.12		$	0.17
Weighted average common and equivalent shares outstanding		13,578,429			13,405,357
Dividends per share	$	0.145		$	0.14
The accompanying notes are an integral part of the consolidated financial statements.

3

HICKORY TECH CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
	Three Months Ended
	March 31
(Dollars in thousands)	2013			2012
Net income	$	1,626		$	2,294
Other comprehensive income:
Interest rate swaps:
Changes in designated interest rate swaps		(5	)		-
Income tax benefit		2			-
Unrealized holding (loss) on interest rate swaps		(3	)		-
Post-retirement benefit plan:
Amounts included in net periodic benefit cost:
Net actuarial loss		120			135
Prior service credit		(236	)		(19	)
Transition obligation		-			15
Income tax expense (benefit)		46			(52	)
Change in post-retirement benefit plan		(70	)		79
Other comprehensive (loss) income		(73	)		79
Comprehensive income	$	1,553		$	2,373
The accompanying notes are an integral part of the consolidated financial statements.

4

HICKORY TECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 31,			December 31,
(Dollars in thousands except share and per share amounts)	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	4,306		$	8,305
Receivables, net of allowance for doubtful accounts of $272 and $278		24,660			22,530
Inventories		7,254			8,379
Income taxes receivable		96			596
Deferred income taxes, net		1,735			1,887
Prepaid expenses		3,204			2,092
Other		724			1,399
Total current assets		41,979			45,188
Investments		3,396			3,213
Property, plant and equipment		442,402			437,623
Accumulated depreciation		(261,067	)		(254,664	)
Property, plant and equipment, net		181,335			182,959
Other assets:
Goodwill		29,028			29,028
Intangible assets, net		4,548			4,811
Deferred costs and other		3,139			3,105
Total other assets		36,715			36,944
Total assets	$	263,425		$	268,304
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	4,032		$	5,818
Extended term payable		10,418			8,115
Deferred revenue		5,606			7,362
Accrued expenses and other		7,655			10,881
Current maturities of long-term obligations		1,648			1,648
Total current liabilities		29,359			33,824
Long-term liabilities:
Debt obligations, net of current maturities		134,723			135,133
Accrued income taxes		236			236
Deferred revenue		1,223			1,085
Financial derivative instruments		2,179			2,432
Accrued employee benefits and deferred compensation		12,688			12,481
Deferred income taxes		34,217			34,265
Total long-term liabilities		185,266			185,632
Total liabilities		214,625			219,456
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, $.10 stated value
Shares authorized: 100,000,000
Shares issued and outstanding: 13,552,582 in 2013 and 13,519,131 in 2012		1,355			1,352
Additional paid-in capital		16,316			15,950
Retained earnings		30,643			30,987
Accumulated other comprehensive income		486			559
Total shareholders' equity		48,800			48,848
Total liabilities and shareholders' equity	$	263,425		$	268,304
The accompanying notes are an integral part of the consolidated financial statements.

5

HICKORY TECH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Three Months Ended
	March 31
(Dollars in thousands)	2013			2012
OPERATING ACTIVITIES:
Net income	$	1,626		$	2,294
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization		7,009			6,194
Asset impairment		633			-
Accrued patronage refunds		(177	)		(161	)
Stock based compensation		219			114
Loss on financial derivative instruments		28			47
Excess tax benefit		(95	)		-
Other		677			353
Changes in operating assets and liabilities, net of effect from acquired net assets
Receivables		(2,181	)		4,998
Prepaid expenses		(1,112	)		(580	)
Inventories		1,210			3,950
Accounts payable and accrued expenses		(5,323	)		(2,256	)
Deferred revenue, billings and deposits		(1,618	)		(485	)
Income taxes		500			1,556
Other		635			233
Net cash provided by operating activities		2,031			16,257
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(5,789	)		(4,955	)
Broadband stimulus grant received		-			1,321
Redemption of investments		-			1,415
Acquisition of IdeaOne Telecom		-			(26,337	)
Net cash (used in) investing activities		(5,789	)		(28,556	)
FINANCING ACTIVITIES:
Borrowings on extended term payable arrangement		16,406			11,137
Payments on extended term payable arrangement		(14,103	)		(9,442	)
Borrowings on credit facility		-			22,000
Payments on credit facility and capital lease obligations		(410	)		(1,938	)
Proceeds from issuance of common stock		269			86
Stock repurchase		(528	)		-
Dividends paid		(1,970	)		(1,877	)
Excess tax benefit		95			-
Net cash (used in) provided by financing activities		(241	)		19,966
Net (decrease) increase in cash and cash equivalents		(3,999	)		7,667
Cash and cash equivalents at beginning of the period		8,305			13,057
Cash and cash equivalents at the end of the period	$	4,306		$	20,724
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,493		$	1,358
Net cash paid for income taxes	$	355		$	11
Non-cash investing and financing activities:
Property, plant and equipment acquired with capital leases	$	-		$	14
The accompanying notes are an integral part of the consolidated financial statements.

6

HICKORY TECH CORPORATION

March 31, 2013

Item 1.   Notes to Consolidated Financial Statements (Unaudited)

Note 1.   Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements of HickoryTech Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to such rules and regulations. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments (consisting only of normal and recurring accruals) considered necessary for the fair presentation of the financial statements and present fairly the results of operations, financial position and cash flows for the interim periods presented as required by Regulation S-X, Rule 10-01. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with the audited consolidated financial statements and notes thereto contained in our Form 10-K for the year ended December 31, 2012.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.

Our consolidated financial statements report the financial condition and results of operations for HickoryTech Corporation and its subsidiaries in three business segments: Fiber and Data, Equipment and Telecom. Intercompany transactions have been eliminated from the consolidated financial statements.

Cost of Sales (excluding depreciation and amortization)

Cost of sales for the Equipment Segment is primarily for equipment and materials associated with the installation of products for customers. Labor associated with installation work is not included in this category, but is included in cost of services (excluding depreciation and amortization) described below.

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products for all segments. These operating costs include all costs of performing services and providing related products including engineering, customer service, billing and collections, network monitoring and transport costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, advertising and all other general and administrative costs associated with the operations of the business.

Recent Accounting Developments

In February 2013, the FASB issued ASU 2013-02 to improve the disclosure of reclassifications out of accumulated other comprehensive income. The Update requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. Also, an entity is required to present significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income (only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period) either on the face of the statement where net income is presented or in the notes. The adoption of this guidance did not have a material impact on our disclosures or consolidated financial statements.

We reviewed other recently issued accounting pronouncements and determined they are either not applicable to our business or that no material effect is expected on our financial position, results of operations or disclosures.

7

Note 2.  Earnings and Dividends per Share

Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Shares used in the diluted earnings per share calculation are based on the weighted average number of shares outstanding during the period 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 awarded 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.

	Three Months Ended March 31
(Dollars in thousands, except share and earnings per share amounts)	2013		2012
Net income	$	1,626	$	2,294
Weighted average shares outstanding		13,556,515		13,349,791
Stock options (dilutive only)		4,788		16,737
Stock subscribed (ESPP)		-		1,162
Retention awards		8,349		15,588
Stock subscribed (LTEIP)		8,777		22,079
Total dilutive shares outstanding		13,578,429		13,405,357
Earnings per share:
Basic and diluted	$	0.12	$	0.17
Dividends per share	$	0.145	$	0.14

Options to purchase 82,150 and 87,950 shares for the three months ended March 31, 2013 and 2012, respectively were not included in the computation of EPS, because their effect on earnings per share would have been anti-dilutive.

Cash dividends are based on the number of common shares outstanding at their respective record dates. The number of shares outstanding as of the record date for the first quarter of 2013 and 2012, respectively, are as follows:

Shares outstanding on record date	2013		2012
First quarter (February 15)		13,586,903		13,409,941

Dividends per share are based on the quarterly dividend per share as declared by the HickoryTech Board of Directors. HickoryTech paid dividends of $0.145 and $0.14 per share in the first quarter of 2013 and 2012, respectively. During the first three months of 2013 and 2012, shareholders have elected to reinvest $78,000 and $71,000, respectively, of dividends into HickoryTech common stock pursuant to the HickoryTech Corporation Dividend Reinvestment Plan.

In March 2013, we acquired and retired 52,647 shares of HickoryTech common stock.

Note 3. Acquisition

On March 1, 2012, we acquired IdeaOne Telecom Group, LLC for cash consideration of $26,337,000 expanding our business and broadband services in the Fargo, North Dakota market. The acquisition was funded with existing liquidity through cash reserves of $4,337,000 and $22,000,000 of term loan debt which is integrated with our senior credit facility. In addition, we assumed and paid liabilities of the acquired company using additional cash reserves of $1,843,000 on the closing date of the acquisition.

8

Note 4. Long-Lived Assets

We review long-lived assets, including intangible assets subject to amortization, for impairment if certain events or changes in circumstances indicate impairment may be present. Impairment exists if the carrying value of a long-lived asset exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposal of the asset at the date it is tested. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized.

In the first quarter of 2013, an impairment test was performed in response to indicators that the carrying amount of certain customer relationship intangible assets and property, plant and equipment related to providing wireless internet to customers in the Fargo, North Dakota market may not be recoverable due to our decision to phase out this service. During the impairment review, we determined the carrying value of these particular intangibles, property and equipment were impaired. Fair value was calculated using the income approach of valuation. The income approach utilizes the discounted cash flow method.  It requires the use of estimates and judgments about the future income expected to be derived from the use or ownership of an asset.

In the three months ended March 31, 2013, we recorded an impairment charge of $633,000 within our Fiber and Data Segment.  There were no such charges in 2012.

Note 5.  Goodwill and Other Intangible Assets

We have goodwill in all three of our operating units: Fiber and Data Segment goodwill resulted from our acquisition of IdeaOne Telecom in 2012, CP Telecom in 2009 and Enventis Telecom in 2005. Equipment Segment goodwill resulted from our acquisition of Enventis Telecom and Telecom Segment goodwill resulted from our acquisition of Heartland Telecommunications in 1997. The tax deductible portion of goodwill is $26,964,000. Our acquisition of IdeaOne Telecom resulted in goodwill of $1,725,000 which is deductible for tax purposes.

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	5,384	$	5,384
Equipment	$	596	$	596
Telecom	$	23,048	$	23,048

The components of intangible assets are as follows:

(Dollars in thousands)		As of March 31, 2013				As of December 31, 2012
		Gross Carrying		Accumulated		Gross Carrying		Accumulated
Useful Lives		Amount		Amortization		Amount		Amortization
Definite-lived intangible assets
Customer relationships	1 - 8 years	$	8,459	$	5,543	$	8,499	$	5,368
Other intangibles	1 - 5 years		2,930		1,298		2,930		1,250
Total		$	11,389	$	6,841	$	11,429	$	6,618

In the first quarter of 2013, we reduced the carrying value of the customer relationships by $40,000.  This impairment loss was directly related to our decision to no longer provide wireless internet service in the Fargo, North Dakota market. See Note 4 "Long-Lived Assets."

Amortization expense related to the definite-lived intangible assets was $223,000 and $138,000 for the three months ended March 31, 2013 and 2012, respectively. Total estimated amortization expense for the remaining nine months of 2013 and the five years subsequent to 2013 is as follows: 2013 (April 1 – December 31) – $660,000; 2014 - $749,000; 2015 - $616,000; 2016 - $565,000; 2017 - $554,000; 2018 - $554,000.

9

Note 6.   Fair Value of Financial Instruments

Fair value of financial and non-financial assets and liabilities is the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants. The three levels of the fair value hierarchy for assessing the inputs used in fair value measurements are as follows:

· 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 and require the entity to develop its own assumptions

The highest priority is given to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority is given to unobservable inputs (Level 3).

The carrying value of cash and cash equivalents, net accounts receivables, payables, and other short-term monetary assets and liabilities was estimated by management to approximate fair value due to the relatively short period of time to maturity for these instruments.

Our long-term debt credit agreement allows us to select short-term LIBOR repricing options, which we have elected. Therefore, the carrying amounts of our long-term debt approximate its fair value. The fair value estimate of our interest rate swaps represents the net present value of future cash flows based on projections of the three-month LIBOR rate over the life of each swap. It also incorporates credit valuation adjustments to appropriately reflect both our own non-performance risk and the non-performance risk of the respective counterparties.

The fair value and carrying value of our cash equivalents, investments and long-term debt, after deducting current maturities, and our interest rate swaps are as follows at March 31, 2013 and December 31, 2012:

(Dollars in thousands)			March 31, 2013					December 31, 2012
	Input Level			Carrying Amount		Fair Value			Carrying Amount		Fair Value
Cash equivalents (1)		1		$	76	$	76		$	-	$	-
Investments		2		$	3,396	$	3,396		$	3,213	$	3,213
Long-term debt		2		$	134,723	$	134,723		$	135,133	$	135,133
Interest rate swaps		2		$	2,179	$	2,179		$	2,432	$	2,432
(1) Cash equivalents are a money market account included in cash and cash equivalents on the balance sheet.

Note 7.   Debt and Other Obligations

Our long-term obligations as of March 31, 2013 were $134,723,000, excluding current maturities of $1,420,000 on debt and $228,000 on current maturities of capital leases. Long-term obligations as of December 31, 2012 were $135,133,000 excluding current maturities of $1,420,000 on debt and $228,000 of capital leases.

On August 11, 2011, we entered into a $150,000,000 credit agreement with a syndicate of nine banks that matures on December 31, 2016. The credit facility is comprised of a $30,000,000 revolving credit component ($29,980,000 available to borrow as of March 31, 2013; $20,000 is reserved for outstanding letters of credit) and a $120,000,000 term loan component ($116,200,000 outstanding as of March 31, 2013). On March 1, 2012 we borrowed an additional $22,000,000 of incremental term loan debt ($19,780,000 outstanding as of March 31, 2013) as an extension of our existing credit facility to fund our acquisition of IdeaOne Telecom.

The term loans are structured in a Term Loan B facility. Under the terms of our credit facility we are required to make quarterly principal payments of $300,000 on the initial Term Loan and quarterly principal payments of $55,000 on the Incremental Term Loan. The revolving credit component does not require quarterly principal payments.

The term loan component has a provision whereby we periodically receive patronage capital refunds from our lender. Patronage refunds are recorded as an offset to interest expense and amounted to $177,000 in the first three months of 2013 compared to $161,000 in the first three months of 2012.

10

At March 31, 2013 we are in full compliance with specified financial ratios and tests required by our credit facility. The credit facility includes allowances for continued payment of dividends and specific limits on common stock repurchases.

Our obligations under the credit facility are secured by a first-priority lien on the property and assets, tangible and intangible, of HickoryTech and its current subsidiaries, which includes total assets except for the Equipment Segment accounts receivable and inventory. We have also given a first-priority pledge of the capital stock of our current subsidiaries to secure the credit facility. The credit facility contains certain restrictions that, among other things, limit or restrict our ability to create liens or encumbrances; incur additional debt; issue stock; make asset sales, transfers, or dispositions; and engage in mergers and acquisitions; pay dividends or purchase/redeem Company stock over specified maximum values.

The credit facility requires us to enter in or maintain effective interest rate protection agreements on at least 50% of the Term Loans' outstanding balance for a period ending August 2013 to manage our exposure to interest rate fluctuations. We currently have interest rate swap agreements, effectively fixing the LIBOR rate portion of the interest rate on $72,000,000 of our variable interest debt. Additional information on our interest-rate swap agreements can be found under Note 8 "Financial Derivative Instruments."

Note 8.  Financial Derivative Instruments

We utilize interest-rate swap agreements to manage our exposure to interest rate fluctuations on a portion of our variable-interest rate debt. We have effectively changed our exposure to varying cash flows on the variable-rate portion of our debt into fixed-rate cash flows, therefore reducing the impact of interest rate changes on future cash interest payments. We do not enter into derivative instruments for any purpose other than to manage interest rate exposure. We do not engage in interest rate speculation using derivative instruments.

We account for derivatives in accordance with FASB ASC Topic 815, "Derivatives and Hedging." ASC 815 requires all derivative instruments be recorded on the balance sheet as either an asset or a liability measured at its fair value, and that changes in the derivatives' fair value be recognized in earnings unless specific hedge accounting criteria are met. If a derivative is designated as a hedge, the effective portion of changes in the fair value of derivatives is recorded as a component of accumulated other comprehensive income (loss) in shareholders' equity, net of tax, which is subsequently, reclassified into earnings when the underlying hedged transaction is recognized in earnings. Amounts related to our derivatives will be reclassified from accumulated other comprehensive income to interest expense as interest payments are accrued or made on our variable rate debt. The estimated amount expected to be reclassified as an increase to interest expense within the next twelve months is $49,000 at March 31, 2013. The ineffective portion of the fair value of derivates is recognized directly in earnings. Hedge ineffectiveness is attributable to the swaps having a non-zero fair value at the time they were designated. If we were to terminate our interest rate swap positions, any related balance in accumulated other comprehensive income (loss) would immediately be recognized in earnings or reclassified into earnings as the interest payments are made dependent on the facts and circumstances of the termination. The changes in the fair value of derivatives that are not designated as hedges are recognized immediately in earnings. As of January 1, 2013 our interest rate swaps were designated as cash flow hedging instruments. As of December 31, 2012 our interest rate swaps were not designated as hedging instruments.

Listed below are the interest rate swap agreements we had outstanding as of March 31, 2013 which were designated as cash flow hedges of interest rate risk and have the effect of locking our interest rates on a portion of our existing variable interest rate debt.

Interest Rate Swap Agreement Effective Dates	Notional 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	%

11

The following tables present the fair value of our derivative instruments included in our Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012.

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	2,179	$	-
Total	$	-	$	-	$	2,179	$	-

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Not Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	-	$	2,432
Total	$	-	$	-	$	-	$	2,432

The tables below illustrate the effect of derivative instruments on consolidated operations for the periods ended March 31, 2013 and 2012, respectively. Our derivative instruments were designated as cash flow hedges for the period ended March 31, 2013. For the period ended March 31, 2012 our derivative instruments were not designated as hedges.

Derivatives Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	26	$	-	Interest expense	$	21	$	-	Interest expense	$	7	$	-
Total	$	26	$	-		$	21	$	-		$	7	$	-

Derivatives Not Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	-	$	-	Interest expense	$	-	$	-	Interest expense	$	-	$	47
Total	$	-	$	-		$	-	$	-		$	-	$	47

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Note 9.   Extended Term Payable

Enterprise Integration Services, Inc., a wholly owned subsidiary of HickoryTech, has an $18,000,000 wholesale financing agreement with a financing company to fund equipment purchases from certain approved vendors. Advances under this financing arrangement are collateralized by the inventory and accounts receivable of our Equipment Segment and a guarantee of an amount up to $2,500,000 by HickoryTech. The agreement requires Enterprise Integration Services, Inc. to maintain specific levels of collateral relative to the outstanding balance due, provide selected monthly financial information, and make all payments when due or on demand in the event of a collateral shortfall, among other requirements. A default on the financing agreement by Enterprise Integration Services, Inc. would require HickoryTech to perform under the guarantee. The financing agreement provides 60 day, interest-free payment terms for working capital and can be terminated at any time by either party. The balance outstanding under the financing arrangement was $10,418,000 and $8,115,000 at March 31, 2013 and December 31, 2012, respectively. The balance fluctuates on a quarterly basis dependent on timing of customer orders. These balances are classified as current liabilities in the accompanying Consolidated Balance Sheets and are not considered part of our debt financing.

Note 10.  Employee Post-Retirement Benefits

HickoryTech provides post-retirement health care and life insurance benefits for eligible employees. We are currently not funding these post-retirement benefits, but have accrued these liabilities. We are required to recognize the funded status of our post-retirement benefit plans on our consolidated balance sheet and recognize as a component of accumulated other comprehensive income (loss), net of tax, the gains or losses and prior service costs or credit that arise during the period but are not recognized as components of net periodic benefit cost. Employees hired on or after January 1, 2007 are not eligible for post-retirement health care and life insurance benefits.

	Three Months Ended
	March 31
(Dollars in thousands)	2013			2012
Components of net periodic benefit cost
Service cost	$	67		$	150
Interest cost		120			188
Expected return on plan assets		-			-
Amortization of transition obligation		-			15
Amortization of prior service credits		(236	)		(19	)
Recognized actuarial loss		120			135
Net periodic benefit cost	$	71		$	469

Note 11.  Inventories

The inventory value in the Fiber and Data Segment and the Telecom Segment are comprised of raw materials to be consumed in capital projects and finished goods to be used in the delivery of services at the customer premise. The inventory value in the Equipment Segment is primarily comprised of finished goods in our warehouse or in transit to customer locations. The inventory level in the Equipment Segment is subject to the fluctuations in the equipment sales activity and the timing of individual customer orders and installations.

Inventory balances by segment are as follows:

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	522	$	665
Equipment	$	5,069	$	6,201
Telecom	$	1,663	$	1,513

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Note 12.  Accumulated Other Comprehensive Income (Loss)

The table below illustrates the effect on certain line items of net income of the amounts reclassified out of each component of accumulated other comprehensive income ("AOCI") for the three months ended March 31, 2013.

(Dollars in thousands)	Amounts Reclassified			Affected Line Item in the Statement
Details about AOCI Components	from AOCI			Where Net Income is Presented
Gains and losses on cash flow hedges
Interest rate contracts	$	21		Interest expense
		(8	)	Income tax provision
	$	13		Net of tax
Amortization of benefit pension items
Prior service costs	$	236		Selling, general and administrative expenses
Actuarial gains (losses)		(120	)	Selling, general and administrative expenses
		116		Total before tax
		(46	)	Income tax provision
	$	70		Net of tax
Total reclassifications of period	$	83		Net of tax

Note 13.  Income Taxes

The effective income tax rate from operations for the first quarter of 2013 and 2012 was 40.2% and 40.6%, respectively. The effective tax rate from operations differs from the federal statutory rate primarily due to state income taxes.

As of March 31, 2013, we had unrecognized tax benefits totaling $232,000 (net of tax) excluding interest. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $207,000. Due to expirations of statute of limitations it is reasonably possible that the total amount of unrecognized tax benefits will not decrease during the next 12 months.

We file consolidated income tax returns in the United States federal jurisdiction and combined or separate income tax returns in various state jurisdictions. In general, we are no longer subject to United States federal income tax examinations for the years prior to 2009 except to the extent of losses utilized in subsequent years.

Note 14.  Stock Compensation

Our stock award plans provide for granting non-qualified stock options, stock awards and restricted stock awards to employees. We recognize stock compensation charges related to stock award plans based on management's best estimates and assumptions that the performance and service requirements of the plan will be achieved. Such compensation charges are recorded based upon the grant date fair value or settlement date fair value (as applicable) of our stock and are recognized over the requisite service period specified by the specific award plans. Share-based compensation expense includes amounts recognized related to the Company Employee Stock Purchase Plan. This plan allows participating employees to acquire shares of common stock at 85% of the average closing price for the five days previous to the purchase date. Stock-based compensation expense was $219,000 and $114,000, respectively, in the three months ended March 31, 2013 and 2012. This includes compensation expense for share-based payment awards granted prior to, but not vested as of March 31, 2013. As of March 31, 2013, we had not yet recognized compensation expense related to non-vested awards totaling $1,789,000. The weighted average period over which this compensation expense will be recognized is 2.63 years.

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1993 Stock Award Plan

Long-Term Executive Incentive Program

We carry obligations of $614,000 and $1,028,000 as of March 31, 2013 and December 31, 2012 respectively, related to liability classified awards under the LTEIP that will be settled in company common stock in future periods.

Non-vested restricted stock activity for the quarter ended March 31, 2013 is depicted in the table below. Granted shares represent non-vested shares issued to settle an obligation under the LTEIP plan during the period.

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		32,447		$	3.43
Granted/settled		68,699		$	9.83
Vested		(44,099	)	$	5.12
Forfeited		-		$	-
Non-vested at end of period		57,047		$	9.83

Employee Stock Retention

Under this program, designated employees can earn shares of common stock if they complete a requisite service period which typically ranges from 11 to 36 months. Compensation expense related to the Employee Stock Retention program is recognized over the requisite service period.

Retention stock activity for the quarter ended March 31, 2013 was as follows:

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		11,150		$	10.28
Granted		27,500		$	8.76
Vested		-		$	-
Forfeited		(800	)	$	10.57
Non-vested at end of period		37,850		$	9.13

Stock Option

Stock options granted may be exercised no later than ten years after the date of grant, with one-third of the options vesting each year. The fair value of each option award is estimated on the date of the grant using a Black-Scholes option valuation model.

A summary of stock option activity is as follows:

				Weighted Average
	Options			Exercise Price
Outstanding at January 1		143,817		$	9.95
Granted		-		$	-
Exercised		(21,667	)	$	8.44
Forfeited		-		$	-
Expired		(15,000	)	$	8.93
Outstanding at March 31		107,150		$	10.40
Exercisable at March 31		100,483		$	10.49

In the first quarter of 2013, we received $183,000 in cash related to stock options exercised during the period.

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Note 15.  Quarterly Segment Financial Summary

Our operations are conducted in three segments: (i) Fiber and Data, (ii) Equipment and (iii) Telecom.

Our Fiber and Data Segment serves wholesale, enterprise and commercial business customers with advanced data, Internet, voice and VoIP services. With our IP network and communication expertise, we are able to provide both custom and broad network solutions which can be extended beyond our regional network through partnerships and interconnections to provide end-to-end national connectivity. The Fiber and Data Segment includes revenue from Ethernet, Private Line, MPLS, Data Center, Dedicated Internet and our Hosted VoIP SingleLink services. We own, lease or utilize long-term indefeasible rights of use ("IRU") agreements for the operation of our network. Fiber and Data services are marketed throughout our core regions: northern Minnesota and the Minneapolis-Saint Paul metropolitan area, southern Minnesota, Des Moines, Iowa and Fargo, North Dakota.

Our Equipment Segment provides equipment solutions and support for a broad spectrum of business customers ranging in size from medium to large enterprise. Our equipment business plans, designs and implements networks utilizing emerging technology including: TelePresence Video, Unified Communications and Data Center solutions in collaboration with industry-leading partners. We provide a comprehensive set of services including: Advisory, Implementation, Development and Support. Our Total Care support team provides a proactive approach to monitor and support customer networks, unified communications environment and data centers as well as a single-point-of-contact for the support of applications, systems and infrastructure. Equipment sales and services are marketed primarily in our Minnesota core regions and specifically the Minneapolis-Saint Paul metropolitan area.

Our Telecom Segment provides bundled residential and business services including high-speed Internet, broadband services, digital TV, local voice and long distance services in our legacy telecom service area. Telecom is comprised of the operation of both incumbent local exchange carrier ("ILEC") and competitive local exchange carrier ("CLEC") operations. Our ILEC operations provide services in 13 south central Minnesota communities and 13 rural northwest Iowa communities. Our CLEC operation provides services in south central Minnesota and near Des Moines, Iowa. We own our network in both the ILEC and CLEC exchanges. The Telecom Segment, through National Independent Billing, Inc. ("NIBI"), also provides data processing and related billing services to HickoryTech and external communication providers including wireline, wireless and entertainment providers.

Segment information for the three months ended March 31, 2013 and 2012 is as follows:

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2013	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	16,471	$	17,237	$	15,061	$	-		$	48,769
Intersegment revenue		213		-		573		(786	)		-
Total operating revenue		16,684		17,237		15,634		(786	)		48,769
Asset impairment		633		-		-		-			633
Depreciation and amortization		2,796		85		4,121		7			7,009
Operating income (loss)		1,638		821		1,605		(207	)		3,857
Interest expense		-		-		8		1,131			1,139
Income tax provision (benefit)		677		337		655		(575	)		1,094
Net income (loss)		961		485		943		(763	)		1,626
Total assets		113,326		23,365		116,917		9,817			263,425
Property, plant and equipment, net		94,153		1,904		85,184		94			181,335
Additions to property, plant and equipment		2,943		558		2,248		40			5,789

16

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2012	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	13,219	$	17,421	$	16,304	$	-		$	46,944
Intersegment revenue		193		-		410		(603	)		-
Total operating revenue		13,412		17,421		16,714		(603	)		46,944
Depreciation and amortization		1,966		71		4,133		24			6,194
Operating income (loss)		2,345		820		2,187		(100	)		5,252
Interest expense		-		-		13		1,398			1,411
Income tax provision (benefit)		950		334		883		(600	)		1,567
Net income (loss)		1,395		486		1,299		(886	)		2,294
Total assets		101,996		16,144		122,512		26,812			267,464
Property, plant and equipment, net		83,055		1,389		90,475		101			175,020
Additions to property, plant and equipment		1,965		73		1,596		-			3,634

Note 16.  Commitments and Contingencies

We are involved in certain contractual disputes in the ordinary course of business, but do not believe the resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows.

In August 2010, we were awarded a National Telecommunications Information Administration (NTIA) Broadband Technology Opportunities Program (BTOP) grant to extend our middle mile fiber-optic network across greater Minnesota with the potential to connect health care facilities, schools, libraries, higher education institutions and public offices with an advanced high-capacity broadband network. This project involves approximately $24,000,000 of capital expenditures of which $16,800,000 is to be funded by the NTIA grant. Our investment in the project will be approximately $7,200,000 or 30% of the estimated total project cost. We began capitalizing costs associated with this project in 2010 and began receiving grant funds in June 2011.

The following table provides an overview of the capital expenditures incurred on or received from the program.

	Project Activity						Project Total
(Dollars in thousands)	YTD March 31, 2013		2012		2011
Capital expenditures incurred	$	233	$	7,081	$	12,664	$	19,978
NTIA reimbursements received	$	-	$	5,745	$	6,945	$	12,690
Capital expenditures pending reimbursement	$	1,275	$	1,100	$	1,920

The project is required to be complete by August 2013 and based on our projections we expect to comply with this deadline.

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

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 contains certain safe harbor provisions regarding forward-looking statements. This Quarterly Report on Form 10-Q may include forward-looking statements. These statements may include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities and growth rates, acquisition and divestiture opportunities, business strategies, business and competitive outlook, and other similar forecasts and statements of expectation. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "targets," "projects," "will," "may," "continues," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from such statements. Factors that might cause such a difference include, but are not limited to, those contained in Item 1A of Part II, "Risk Factors" of this quarterly report on Form 10-Q and Item 1A of Part I, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2012, which is incorporated herein by reference.

Because of these risks, uncertainties, and assumptions and the fact that any forward-looking statements made by us and our management are based on estimates, projections, beliefs, and assumptions of management, they are not guarantees of future performance and you should not place undue reliance on them. In addition, forward-looking statements speak only as of the date they are made. With the exception of the requirements set forth in the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we do not undertake any obligations to update any forward-looking information, whether as a result of new information, future events or otherwise.

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. A description of the accounting policies that we consider particularly important for the portrayal of our results of operations and financial position, and which may require a higher level of judgment by our management, is contained under the caption, "Critical Accounting Policies," in the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2012.

Results of Operations

We conduct our operations in three business segments: (i) Fiber and Data, (ii) Equipment and (iii) Telecom. An overall description of our three business segments can be found in Note 15 "Quarterly Segment Financial Summary."

Executive Summary

First quarter of 2013 total consolidated revenue of $48.8 million represents an increase of 4% over the first quarter of 2012. Our Fiber and Data Segment, posted revenue of $16.5 million in the first quarter of 2013, an increase of approximately $3.3 million or 25% compared to 2012, offsetting the $1.2 million decline in our Telecom Segment. The revenue growth was attributable to continued success in selling advanced business communications services coupled with growth in the Fargo market due to our acquisition of IdeaOne Telecom which was completed on March 1, 2012.  Equipment Segment revenue decreased 1% in the first quarter of 2013 compared to 2012. Equipment sales remained flat year-over-year due to the non-recurring nature of this revenue stream and we experienced a slight decline in our support services revenue. Telecom services revenue declined 8% in the first quarter of 2013 reflecting a decline in legacy voice, switched access services and bill processing. Expected declines in legacy services and the impacts of access reform drove network access revenue to fall $202,000 or 4% and a decline of $466,000 or 14% in local service revenue. We believe the introduction of the Connect America Fund (CAF), a support mechanism intending to replace some of carriers' lost revenue due to access reform, has stabilized the network access revenue decline. The introduction of our competitive residential bundles is also expected to help moderate the revenue decline in our Telecom Segment. As a direct result of the bundles we experienced growth in both our DSL and digital TV customer bases and experienced stable broadband revenue in the first quarter of 2013 compared to the same period in 2012.

18

Total costs and expenses including depreciation and amortization increased 8% in the first quarter of 2013 as compared to 2012. The increased costs of supporting the growth described above in the Fiber and Data Segment is partly offset by moderate declines in Telecom Segment costs as we focus on effective cost management in Telecom operations in light of our declining legacy services. Depreciation and amortization increased $815,000 or 13% in the first quarter compared to 2012. This is driven by strategic investments in our network and the acquired IdeaOne plant and intangible assets. In the first quarter of 2013, we recorded an impairment charge of $633,000 related to certain assets associated with providing wireless internet services in the Fargo, North Dakota market based on our assessment of the timing and their intended use. We were notified in March of 2013 that our access to a spectrum license essential to providing this service would be terminated. At that time, we decided to no longer offer this service and to transition the customers to another provider by July 1, 2013. The impairment charge represents the excess of the carrying value over the remaining estimated fair value of the assets supporting the wireless service. There were no such charges in 2012.

First quarter net income of $1.6 million, or $.12 per diluted share, compares to $2.3 million or $.17 per diluted share during the same period in 2012.

19

Fiber and Data Segment

The following table provides a breakdown of the Fiber and Data Segment operating results.

Fiber and Data
	Three Months Ended
	March 31				%
(Dollars in thousands)	2013		2012		Change
Operating revenue before intersegment eliminations:
Services	$	16,471	$	13,219		25	%
Intersegment		213		193		10	%
Total operating revenue	$	16,684	$	13,412		24	%
Cost of services
(excluding depreciation and amortization)	$	8,257	$	6,595		25	%
Selling, general and administrative expenses		3,360		2,506		34	%
Asset impairment		633		-		100	%
Depreciation and amortization		2,796		1,966		42	%
Total costs and expenses		15,046		11,067		36	%
Operating income	$	1,638	$	2,345		-30	%
Net income	$	961	$	1,395		-31	%
Capital expenditures	$	2,943	$	1,965		50	%

The financial results of this segment reflect IdeaOne Telecom's operations beginning on March 1, 2012.

Revenue

Fiber and Data. We serve wholesale, enterprise and commercial business customers.  We provide fiber-based transport and access services to regional and national service providers, wireless carriers and other service providers by delivering custom network solutions. We also provide advanced data services (such as ethernet, private line, MPLS and data center services), Internet, voice and VoIP services, through our extensive regional fiber network and community access rings supported by a 24x7x365 network operations center. Our services can be extended beyond our regional network through our relationships and interconnections with other carriers for end-to-end national connectivity. This revenue stream is generally based on multi-year contracts with retail businesses, regional and national service providers and wireless carriers building a solid monthly recurring revenue base.

Fiber and Data revenue of $16,684,000 in the first quarter of 2013 is $3,272,000 or 24% higher compared to 2012. The growth is a result of continued demand for our advanced business communications services; especially in the areas of high-capacity Ethernet, fiber-based wireless backhaul and MPLS services. The growth also reflects success from our expansion into the Fargo market, accelerated through our acquisition of IdeaOne Telecom, completed on March 1, 2012.  We continue to experience success in each of our customer segment groups: wholesale, enterprise and commercial. As the demands of commercial and enterprise-size businesses evolve, we continue to focus our attention on providing competitive, high-quality and innovative communication solutions.

20

Cost of Services (excluding Depreciation and Amortization)

Cost of services was $1,662,000 or 25% higher in the first quarter of 2013 compared to 2012, in line with the growth in revenue discussed above. The higher costs of services can be attributed to a $587,000 increase in circuit-related costs to support the increased demand for our transport products and services, a $460,000 increase in wages and benefits driven by increased staffing levels due to our focus on growing this segment and a $121,000 increase in maintenance contracts related to the deployment of new infrastructure and customer premise equipment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $854,000 or 34% higher in the first quarter of 2013 versus 2012. The main contributors include an increase in wages and benefits of $333,000 due to an increased sales force focused on enterprise and commercial-sized business and a $219,000 increase in corporate expense as our concentration and resources have continued to shift toward growth in this segment.

Asset Impairment

In the first quarter of 2013 we were informed by a vendor that they intended to terminate an agreement which was essential for us to provide wireless internet services to customers in our Fargo market.  At that time we decided to eliminate wireless internet from our services in Fargo.  Based on these circumstances we performed an impairment analysis specifically related to assets supporting that service offering.  This analysis consisted of two parts:

1. An analysis of property, plant and equipment compared the carrying value of these assets to the expected future cash flows to be generated through their remaining time in service and resulted in recognizing an impairment loss of $593,000;

2. An analysis of a related intangible asset – customer relationships – compared the carrying value of the intangibles to the discounted present value of anticipated future revenue streams from this customer base and resulted in recognizing an impairment loss of $40,000.

The total impairment loss recognized in the period ended March 31, 2013 was $633,000.

Depreciation and Amortization

First quarter 2013 depreciation and amortization expense was $830,000 or 42% higher than first quarter 2012. The additional depreciation expense reflected in 2013 following our March 2012 acquisition of IdeaOne Telecom is the primary contributor to the increase, accounting for approximately 74% of the increase. Organic investments in our network to increase our customer reach, add capacity and enhance our reliability and services drives the remainder of the increase.

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Equipment Segment

The following table provides a breakdown of the Equipment Segment operating results.

Equipment
	Three Months Ended
	March 31				%
(Dollars in thousands)	2013		2012		Change
Operating revenue before intersegment eliminations:
Equipment	$	15,364	$	15,299		0	%
Services		1,873		2,122		-12	%
Total operating revenue	$	17,237	$	17,421		-1	%
Cost of sales
(excluding depreciation and amortization)	$	13,222	$	13,466		-2	%
Cost of services
(excluding depreciation and amortization)		1,695		1,712		-1	%
Selling, general and administrative expenses		1,414		1,352		5	%
Depreciation and amortization		85		71		20	%
Total costs and expenses		16,416		16,601		-1	%
Operating income	$	821	$	820		0	%
Net income	$	485	$	486		0	%
Capital expenditures	$	558	$	73		664	%

Revenue

Equipment.We are a Master Unified Communications and Gold Certified Cisco partner providing Cisco equipment solutions and support for a broad spectrum of business customers ranging in size from medium to large enterprise. Our equipment business solutions team plans, designs and implements networks utilizing emerging technological advancements including TelePresence Video, Unified Communications and Data Center solutions. We also utilize relationships with other industry-leading vendors to provide integrated communication solutions for our clients to meet their emerging networking needs. Equipment sales are non-recurring in nature making this revenue dependent upon attracting new sales from existing and new customers, as well as leveraging relationships with our current customer base by adding more value through enhanced product and service offerings.

Equipment revenue was similar in the first quarter of 2013 compared to 2012. In each period, we experienced high success in selling unified communications products, data center products and cloud computing solutions to several of our existing large and enterprise customers in support of their initiatives.

Equipment Services. We provide a comprehensive set of services to support equipment solutions, including:  advisory, planning and design, implementation, development and support. Maintenance contracts ("Smartnet" contracts) are offered in collaboration with Cisco systems. Our Total Care support team provides a proactive approach to monitoring and supporting customer networks, unified communications environments and data centers as well as a single-point-of-contact for the support of applications, systems and infrastructure.

22

Equipment services revenue decreased $249,000 or 12% in the first quarter of 2013 compared to the first quarter in 2012. The decrease is due to a $248,000 decline in maintenance revenue primarily driven by our receipt of Cisco rebates that rewarded us for high maintenance contract renewal rates in 2012 which did not re-occur in 2013. We continue to experience a high success rate for renewals but did not achieve the renewal rates required to receive the Cisco rebates. This revenue is directly correlated with equipment installations and therefore is cyclical, as contracts typically range from three to five years in duration. Our focus remains on analyzing and improving our support and professional services revenue in order to grow recurring revenue streams within this segment.

Cost of Sales

Cost of sales decreased 2% in the first quarter of 2013 compared to the corresponding period in 2012, generally in line with the similar level of equipment revenue between the two periods.  Labor associated with installation of the equipment is included in cost of services (excluding depreciation and amortization) described below.

Cost of Services (excluding Depreciation and Amortization)

Cost of services was $17,000 or 1% lower in 2013 when compared to 2012. The primary contributors to the decline were lower contract labor expense of $57,000 as we are able to utilize our internal work force. Other expense savings also contributed to the overall decline which were partially offset by an increase of $50,000 in wages and benefits and an increase of $19,000 in equipment maintenance.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $62,000 or 5% higher in the first quarter of 2013 when compared to the same period in 2012. Although revenue in the first quarter of 2013 was comparable to the same period in 2012, commission expense was $103,000 higher driven by the timing of when we recognize commissions versus the timing of revenue recognition. We also experienced an increase of $30,000 in wages and benefits both of which were partially offset by a decrease of $74,000 in corporate expense.

Depreciation and Amortization

Depreciation expense was $14,000 or 20% higher in the first quarter of 2013 compared to the same period in 2012, driven by expansion of office space.

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Telecom Segment

The following table provides a breakdown of the Telecom Segment operating results.

Telecom
	Three Months Ended
	March 31				%
(Dollars in thousands)	2013		2012		Change
Operating revenue before intersegment eliminations:
Local service	$	2,963	$	3,429		-14	%
Network access		4,701		4,903		-4	%
Broadband		5,005		5,002		0	%
Directory		730		782		-7	%
Long distance		572		648		-12	%
Bill processing		813		1,205		-33	%
Intersegment		573		410		40	%
Other		277		335		-17	%
Total Telecom operating revenue	$	15,634	$	16,714		-6	%
Total Telecom revenue before intersegment eliminations
Unaffiliated customers	$	15,061	$	16,304
Intersegment		573		410
		15,634		16,714
Cost of services (excluding depreciation and amortization)		7,375		7,561		-2	%
Selling, general and administrative expenses		2,533		2,833		-11	%
Depreciation and amortization		4,121		4,133		0	%
Total Telecom costs and expenses		14,029		14,527		-3	%
Operating income	$	1,605	$	2,187		-27	%
Net income	$	943	$	1,299		-27	%
Capital expenditures	$	2,248	$	1,596		41	%
Key metrics
Business access lines		20,016		21,954		-9	%
Residential access lines		21,744		23,679		-8	%
Total access lines		41,760		45,633		-8	%
Long distance customers		29,741		31,498		-6	%
Digital subscriber line customers		20,327		19,451		5	%
Digital TV customers		10,910		10,247		6	%

Revenue

Local Service. We receive recurring revenue for local residential and business voice services, enhanced calling features and miscellaneous local services.  We also receive reciprocal compensation revenue based on interconnection agreements with wireless carriers who use our network to terminate calls.

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Local service revenue was $466,000 or 14% lower in the first quarter of 2013 compared to 2012. As expected, we continue to experience local access line loss due to competition and alternative communication options that exist in the markets we serve and products we provide. The decline also reflects the impact of access reform driven by provisions of FCC Order 11-161, issued November 2011. The Order mandated the elimination of reciprocal compensation from wireless carriers. The demands of business customers are also evolving, as wireless alternatives and VoIP services are replacing traditional access lines. These services are offered by our Fiber and Data Segment and our competitors. We expect a portion of Telecom's local access revenue will continue to shift to services offered in our other segment. We anticipate continuing modest erosion of access lines due to market forces and the substitution of the traditional access lines with wireless and VoIP services. To moderate our losses in the legacy services we provide, we introduced competitive residential bundles to reduce our customer churn and attract new customers.

Network Access.We provide access services to other communications carriers to terminate or originate long distance calls on our network. We also bill subscriber line charges to our customers for access to the public switched network. Network access revenue is derived from several federally administered pooling arrangements designed to provide support and distribute funding to ILECs.

Network access revenue was $202,000 or 4% lower in the first quarter of 2013 compared to 2012. Contributing to the decline are diminishing access lines, lower minutes of use on our network and competition from wireless carriers and cable providers. The introduction of the Connect America Fund (CAF), a support mechanism intending to replace some of the carriers' lost revenue due to access reform, has stabilized the decline in this revenue stream. As anticipated, minutes of use revenue, end-user revenue, and transport revenue were down in the first quarter of 2013 but were partially offset by an increase in support received from the CAF fund.

Broadband.We provide residential and business broadband services for monthly recurring revenue. Broadband services include: DSL/high-speed Internet access, digital TV services, and business ethernet and data services.

Broadband revenue was $3,000 higher in the first quarter of 2013 compared to the first quarter of 2012. Although our digital TV and DSL customer bases have grown 6% and 5%, respectively compared to last year, broadband products and services continue to be impacted by price compression as a result of market conditions, competitive pressures and our own pricing strategies. We continue to lead with a competitive multi-service bundle which provides discounts and incentives for our customers when bundling digital TV, Internet and voice services. Additional savings are offered when customers opt into a six month or one- or two-year agreement. Our multi-service bundles have been well received in the markets we serve, with approximately 90% of our bundle subscribers taking advantage of the savings associated with the two-year agreement.

Directory.We receive monthly recurring revenue from subscribers for yellow page advertising in our telephone directories.

Directory revenue was $52,000 or 7% lower in the first quarter of 2013 compared to 2012. We expect this revenue stream to continue to trend down as businesses preference is shifting from printed directory advertising to online media platforms.

Long Distance.We charge our end-user customers for toll or long distance service on either a per-call or flat-rate basis. Services include the provision of directory assistance, operator service and long distance private lines. We offer regional, nationwide and unlimited long distance plans.

Long distance revenue was $76,000 or 12% lower in the first quarter of 2013 compared to 2012. The decrease is the result of our declining customer base which is down 6% from last year, lower billable minutes as customers opt for unlimited option calling plans and lower rates due to competition from our peers and wireless alternatives.

Bill Processing.We provide data processing and billing services to other communication service providers. We collect a combination of monthly recurring revenue, software license fees, and contract and integration services revenue. Our SuiteSolution® product offers communication providers a billing and customer management software system using the latest in database and screen presentation technology.

Bill processing revenue was $392,000 or 33% lower in the first quarter of 2013 compared to 2012. Timing of customer implementations is driving the year-over-year decline. We currently anticipate higher levels of customer implementations in the second half of 2013.

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Other Revenue. Other revenue consists primarily of sales of wholesale contract services, late fees applied to subscriber billings, and add, move, and change revenue on customer premise equipment.

Other revenue was $58,000 or 17% lower in the first quarter of 2013 compared to 2012 which is primarily attributed to a decline in customer premise equipment revenue.

Cost of Services (excluding Depreciation and Amortization)

Cost of services (excluding depreciation and amortization) were $186,000 or 2% lower in the first quarter of 2013 when compared to the first quarter of 2012. The decline is primarily attributable to:  (1) a decrease of $118,000 in access expenses which is directly correlated to lower long distance revenue and (2) a decrease of $109,000 in wages and benefits due to a reduction in our workforce and savings in post-retirement benefits as a result of a plan amendment.  A combination of other expense savings also contributed to the overall decline. The expense decreases were partially offset by an increase of $160,000 in circuit related expenses primarily due to elevated off-net costs and an increase of $120,000 in programming costs related to our video product as a result of higher subscriber fees and a growing customer base.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $300,000 or 11% lower in the first quarter of 2013 compared to the first quarter of 2012. The decline is primarily attributable to:  (1) a decrease of $146,000 in wages and benefits due to savings in post-retirement benefits as a result of a plan amendment and (2) a $71,000 decrease in corporate expense as more focus and resources shift toward the Fiber and Data Segment.

Depreciation and Amortization

Depreciation and amortization expense was similar in the first quarter of 2013 as in the first quarter of 2012.

Consolidated Results

Interest Expense

Consolidated interest expense was $272,000 or 19% lower in the first quarter of 2013 compared to the same period in 2012 driven by a reduction in our outstanding debt balance. The outstanding balance of our debt obligations (long-term and current portion) declined $5,522,000 from $141,893,000 at March 31, 2012 to $136,371,000 as of March 31, 2013. The March 31, 2013 debt balance has decreased $410,000 since December 31, 2012.

Income Taxes

Our effective income tax rate for the first quarter of 2013 and 2012 was 40.2% and 40.6%, respectively. The effective tax rate from operations differs from the federal statutory rate primarily due to state income taxes.

Liquidity and Capital Resources

Working Capital

Working capital (i.e. current assets minus current liabilities) was $12,620,000 as of March 31, 2013 compared to working capital of $11,364,000 as of December 31, 2012. The ratio of current assets to current liabilities was 1.4 as of March 31, 2013 and 1.3 as of December 31, 2012.

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Capital Structure

The total capital structure (long-term and current maturities of long-term debt obligations plus shareholders' equity) was $185,171,000 at March 31, 2013, reflecting 26% equity and 74% debt. This compares to a total capital structure of $185,629,000 at December 31, 2012, reflecting 26% equity and 74% debt. In the communications industry, the capacity for debt financing is most often based on multiples of operating cash flows. Specifically, our current use of the senior credit facility is in a ratio of approximately 2.95 times debt to Earnings before Interest, Tax, Depreciation and Amortization, ("EBITDA") as defined in our credit agreement; well within the acceptable limit for our agreement of 3.25 times debt to EBITDA and well within the levels experienced in our industry.

We employ an extended term payable financing arrangement for the equipment provisioning portion of our Equipment Segment and view this arrangement as a structured accounts payable that is paid within 60 days with no separate interest charge. As such, the extended term payable financing amount of $10,418,000 and $8,115,000 as of March 31, 2013 and December 31, 2012, respectively, is not considered to be part of our capital structure and has been excluded from the references above regarding debt and total capital. See Note 9 "Extended Term Payable."

Internal operations of our business continue to be our primary source of liquidity. We have invested in capital expenditures, paid interest, taxes, dividends and debt obligations. We have not changed our equity capitalization and new equity was not a source of liquidity during this period. Cash and cash equivalents at March 31, 2013 of $4,306,000 decreased $3,999,000 compared to $8,305,000 at December 31, 2012, primarily due to timing of our expenditures. In the first quarter of 2013, we repurchased $528,000 of our common stock.

Cash Flows

Management believes we will have the ability to meet our current and long-term liquidity and capital requirements through operating cash flows, cash and cash equivalents, borrowings available under our credit facility and other internal and available external resources. For temporary increases in cash demand we use our cash inflow and utilize our senior credit facility for more significant fluctuations in liquidity driven by growth initiatives. These sources coupled with our access to a $30,000,000 revolving credit facility (presently unused) provide further assurance against interruption in our business plans due to financing. Our expected primary uses of cash include ongoing operating requirements, capital expenditures, scheduled principal and interest payments on our credit facility, temporary financing of trade accounts receivable and the payment of dividends as they are declared.

While it is difficult for us to predict the impact general economic conditions may have on our business, we believe that we will be able to meet our current and long-term cash requirements through our operating cash flows. We are in full compliance with our debt covenants and anticipate that we will be able to plan for and match future liquidity needs with future internal and available external resources. Our senior debt agreement will be the sole external source of financing for the foreseeable future.

We feel we can adjust the timing or the number of strategic and growth initiatives accordingly to correspond to any limitation we may face or be imposed by our capital structure or sources of financing. We do not anticipate our capital structure will limit future growth initiatives over the next 12 months.

Cash generated from operations represents the amount of cash generated by our daily operations after the payment of operating obligations. This continues to be our primary source of funds. Cash generated from operations in the first three months of 2013 was $2,031,000, a decrease of $14,226,000 compared to the first three months of 2012. In both years cash generated from operations was primarily attributable to net income plus non-cash expenses including depreciation and amortization. The difference in the change in operating assets and liabilities of $15,305,000 from 2013 to 2012 is primarily driven by changes in our receivables, inventory and accounts payable and accrued expenses balances. The change in receivables and inventory is primarily driven by the timing and volume of equipment orders associated with our Equipment Segment.  Accounts payable and other accrued expenses are also down due to timing related to items such as accrued payroll and incentive compensation, and payoff of inventory items purchased near year-end.

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Cash used for investing activities was $5,789,000, down $22,767,000 compared to the first quarter of 2012.  The change is due to our 2012 acquisition of IdeaOne Telecom for an adjusted purchase price of $26,337,000.  A portion of this purchase was funded using cash reserves and the remainder with additional term loan debt. Capital expenditures increased $2,155,000 or 59% when comparing 2013 to 2012 after netting out the $1,321,000 we received from the National Telecommunications Information Administration (NTIA) Broadband Technology Opportunities Program (BTOP) grant in 2012. This increase is primarily due to timing of projects within the year, and does not represent an expected level throughout the entire year.

Capital spending continues to be our primary recurring investing activity allowing us to expand and enhance our network, remain competitive and enhance and expand our service offerings. We continue to focus our spending on strategic investments in success-based and network expansion projects, such as last mile builds to customer premises, fiber connections to cellular towers and expansion in key strategic locations, along with required network maintenance spending. Investment in our network and business services will continue to support growth and customer demand in wireless backhaul transport services optimizing long-term revenue opportunities. We expect our 2013 capital spending to range between $24,000,000 and $28,000,000.

In 2013, construction is concluding on our Greater Minnesota Broadband Collaborative project which is being funded in part by the NTIA BTOP grant. The project extends our fiber-optic network across greater Minnesota to provide governmental, educational and healthcare organizations the opportunity to connect to a high-capacity broadband network. As of March 31, 2013 100% of the backbone routes have been completed and we are currently in the process of building last mile builds connecting our network directly to the end customer. As of March 31, 2013 approximately $20,000,000 of the $24,000,0000 total estimated project cost has been expended and $14,000,000 has been reimbursed or is pending reimbursement by the NTIA BTOP grant. The project is required to be complete by August 2013 and we are on schedule to comply with this deadline.

Financing activities primarily consist of borrowings and payments on our credit facility and the payment of dividends to our shareholders. Cash used in financing activities was $241,000 in 2013 compared to cash provided by financing activities of $19,966,000 in 2012. This significant decrease is due to an Incremental Term credit facility of $22,000,000 we obtained to purchase IdeaOne Telecom, as an extension of our senior credit facility. In the first three months of 2013 and 2012, we used $1,970,000 and $1,877,000 in cash to make dividend payments to our shareholders, respectively. In March 2013, our Board of Directors declared a second quarter dividend of $.145 per share. We expect to pay similar dividends in the future; however, this will be dependent upon many factors, such as: operating results, capital requirements, debt compliance and other factors.

Our long-term obligations, including current maturities of debt and capital leases as of March 31, 2013 and December 31, 2012 were $136,371,000 and $136,781,000, respectively. Our credit facility requires us to comply with specified financial ratios and tests. The financial ratios required by our credit facility are not calculated in accordance with accounting principles generally accepted in the United States ("non-GAAP financial measures"). The non-GAAP financial measures are presented below for the purpose of demonstrating compliance with our debt covenants:

(Dollars in thousands)
Leverage Ratio:	March 31, 2013
(A)       Total debt (including outstanding letters of credit)	$	136,391
(B)        Adjusted EBITDA as defined by our credit agreement
Three months ended 3-31-13		11,501
Three months ended 12-31-12		12,048
Three months ended 9-30-12		11,429
Three months ended 6-30-12		11,233
Total adjusted EBITDA as defined by our credit agreement	$	46,211
Total leverage ratio (A)/(B)		2.95
Maximum leverage ratio allowed		3.25

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Debt Service Coverage Ratio:	March 31, 2013
(A)  Adjusted EBITDA as defined by our credit agreement, minus	$	46,211
Income taxes		(4,910	)
	$	41,301
(B)  the sum of (i) all scheduled principal payments to be made on debt and (ii) interest expense		7,113
Debt service coverage ratio (A)/(B)		5.8
Minimum debt service ratio allowed		2.5

New Accounting Pronouncements

The financial statement impact relating to new accounting standards that have not yet been adopted by us can be found under Note 1 "Basis of Presentation and Consolidation."

Reconciliation of Non-GAAP Financial Measures

In addition to the results reported in accordance with US GAAP, we also use certain non-GAAP measures including EBITDA (as defined in our credit agreement) to evaluate operating performance and to facilitate the comparison of our historical results and trends. These non-GAAP measures are also used to manage and evaluate the operating performance of our reportable segments. These financial measures should not be considered in isolation or as a substitute for net income (loss) as a measure of performance and net cash provided by operating activities as a measure of liquidity. Reconciliations to the most directly comparable GAAP measure are provided below.

	Three Months Ended March 31
(Dollars in thousands)	2013		2012
Net income	$	1,626	$	2,294
Add:
Depreciation and amortization		7,009		6,194
Interest expense		1,139		1,411
Income taxes		1,094		1,567
EBITDA	$	10,868	$	11,466
Asset impairment		633		-
Adjusted EBITDA as defined in our credit agreement	$	11,501	$	11,466

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We do not have operations subject to risks of foreign currency fluctuations. We do, however, use financial derivative instruments to manage exposure to interest rate fluctuations. Our objective for holding derivatives is to minimize interest rate risks using the most effective methods to eliminate or reduce the impact of these exposures. Variable rate debt instruments are subject to interest rate risk. For any portion of our debt not covered with interest rate swap agreements, our earnings are affected by changes in interest rates as a portion of its long-term debt has variable interest rates based on LIBOR. If interest rates for the portion of our long-term debt based on variable rates had averaged 10% more for the quarter ended March 31, 2013, our interest expense would have increased $145,000.

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Item 4.  Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this Quarterly Report, that our disclosure controls and procedures were not effective as a result of the previously identified material weaknesses in internal control over financial reporting, the nature of which is summarized below.

Previously Reported Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.  In connection with management's assessment of our internal control over financial reporting, we had identified material weaknesses in our internal control over financial reporting as of December 31, 2012 as described below.

· The Company did not have effective controls to provide reasonable assurance as to the selection and application of generally accepted accounting principles ("GAAP") to account for interest rate swap financial derivative instruments.  This material weakness resulted in adjustments to interest expense, income taxes, and other comprehensive income.  The restatement of certain periods of the Company's financial statements is included in our Form 10K/A for the year ended December 31, 2011.

· The Company did not have effective controls to provide reasonable assurance as to the selection and application of GAAP around complex and/or non-routine transactions, including accounting for its share-based compensation arrangements.  The Company lacked adequate technical expertise to apply proper accounting methods within the provisions of FASB ASC 718, "Compensation – Stock Compensation," for our share-based compensation plans.

As a result of the material weaknesses described above, management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2012 based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

For additional information regarding the material weaknesses identified by management, see "Item 9A. Controls and Procedures" in the Company's Annual Report on Form 10K for the year ended December 31, 2012 filed on March 7, 2013 with the Securities and Exchange Commission.

Remediation Efforts in 2013

Promptly following the identification of the material weaknesses as described above, management, with the oversight of the Audit Committee, began taking steps to remediate the material weaknesses.  We have taken the following actions thus far in 2013:

· Engaged a third party specialist for advice and consultation with consideration of the latest interpretation of the FASB rules for all current and future hedge accounting.  Services include assisting management with preparation of hedge designation documentation, consultation and support for all hedge accounting transactions, and assisting management with their periodic testing of hedge effectiveness.

· Provided training and education regarding hedge accounting requirements with GAAP for all relevant personnel involved in derivatives transactions.

· Determined the Company will hire additional personnel knowledgeable regarding GAAP.

· Engaged third party advisors that are knowledgeable regarding GAAP and internal controls to review the Company's financial reporting controls in areas which involve significant judgments and estimates, which involve application of complex accounting methods under GAAP, or which could have a material impact on the accuracy of our financial statements, in order to provide input to management regarding ways to strengthen the Company's control procedures in these areas.

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In addition to the above steps, management intends to continue its remediation efforts by:

· Providing training and education relating to accounting for share-based payments for all relevant personnel involved in computing and recording share-based compensation cost.

· Providing ongoing training and education relating to GAAP around complex and non-routine transactions specifically identified through regular review of emerging issues and Company business activities.

· Completing our review with the assistance of a third party advisor of the Company's financial reporting controls and implementing recommended control procedures to strengthen the Company's control procedures in areas which involve significant judgments and estimates, which involve application of complex accounting methods under GAAP, or which could have a material impact on the accuracy of our financial statements.

Management intends to complete these remediation steps in 2013.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, except for the remediation steps to address the material weaknesses in its internal control over financial reporting described above.

Under the direction of the Audit Committee, management will continue to review and make any changes it deems necessary to the overall design of the Company's internal control over financial reporting, including implementing improvements in policies and procedures.

We are committed to a strong internal control environment, and believe that, when fully implemented, the remediation actions described above will represent significant improvements in the Company's accounting function. The Company anticipates that it will complete its testing of the additional internal control processes designed to remediate these material weaknesses during the balance of 2013. We will continue to assess the effectiveness of our remediation efforts in connection with management's future evaluations of internal control over financial reporting.

Part II  Other Information

Item 1.  Legal Proceedings

Other than routine litigation incidental to our business there are no pending material legal proceedings to which we are a party or to which any of our property is subject.

Item 1A.  Risk Factors

There have not been any material changes to the risk factors previously disclosed in Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

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

On August 18, 2011, we announced that our Board of Directors approved a stock repurchase plan to repurchase up to $3,000,000 of our common stock with no specified expiration date. During the three months ended March 31, 2013, we acquired and retired 52,647 common shares for $526,914 in block transactions handled through market makers. In 2011, we repurchased 36,248 common shares for $324,180 of our common stock.

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Details of the first quarter of 2013 transactions are below.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Dollar Value that May Yet be Purchased Under Plan
January 1 - 31, 2013		-	$	-		-	$	2,675,820
February 1 - 28, 2013		-		-		-	$	2,675,820
March 1 - 31, 2013		52,647		10.01		52,647	$	2,148,906
Total		52,647	$	10.01		52,647	$	2,148,906

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

None.

Item 5.  Other Information

None.

Item 6.  Exhibit Listing

Exhibit Number	Description
10.1	HickoryTech Corporation Long-Term Executive Incentive Program (Amended and Restated January 1, 2013)
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

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Signatures

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

Dated: May 1, 2013

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

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EX-10.1

Exhibit 10.1

HICKORYTECH CORPORATION

LONG-TERM EXECUTIVE INCENTIVE PROGRAM

(Amended and Restated January 1, 2013)

HickoryTech Corporation, a Minnesota corporation (the "Company"), has established, effective January 1, 2005, the HickoryTech Corporation Long-Term Executive Incentive Program (the "Program").

Shares issued under this Program are granted under the 1993 Stock Award Plan, which was authorized by shareholders in 1993 and amended by shareholders in 2000.

1.Purpose
This Long-Term Executive Incentive Program is designed to drive shareholder value through alignment of executive pay with corporate strategic goals and to ensure alignment between executive actions and HickoryTech's long-term strategic plan.

2.Definitions

As used in this Program, the following terms are defined as indicated unless the context clearly requires a different meaning.

a. Retirement: 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.

b. Participant:  An executive of the Company who has been selected to participate in the Program.

3.GenderExcept where otherwise indicated by the context, any masculine terminology when used in this document shall also include the feminine gender.

4.Summary of Program

a. Eligible Participants:  Executives who, by virtue of their position, exert a significant impact on the Company's performance are eligible to participate in this Program.  Participation is at the recommendation of the President/CEO, with the approval of the Compensation Committee. Eligible Participants whose employment begins after the start of a Program Period will be eligible for a prorated award based on the date of hire or promotion to such position.

b. Program Period:  This Program provides for restricted shares to be granted to eligible Participants if pre-established strategic objectives are achieved.  These strategic objectives are to be achieved over a two or three year performance period.  If the objectives are not obtained, no award will be granted.

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This Program will have overlapping performance periods of two or three years.  The Compensation Committee will recommend, for Board approval, the number of years in each Program Period in advance of the Program Period beginning.  The overlapping performance periods provide for multiple two or three year Programs to run concurrently.

c. Performance Objectives:  Performance Objectives will be established prior to the beginning of each Program Period.  The objectives will support the Company's long-term strategic plan and will be recommended for Board approval by the Compensation Committee.  Each Performance Objective will be assigned a weighting.

d. Award Determination:  The Award under this Program will be determined at the end of the Program Period, based on the level of achievement of each objective, using linear interpolation between the performance levels of Threshold, Target and Maximum.  The Threshold is 75% performance achievement, the Target is 100% performance achievement, and the Maximum is 125% performance achievement.No Award will be provided for performance less than 75% of an objective.  There will be a cap or maximum of 125% for each Performance Objective. The results of each performance measure will be determined separately and the resulting award will be aggregated into a total award.

e. Disposition and Vesting of Awards:  Awards granted under this Program will be granted in restricted shares of HickoryTech Stock.  One-half of the restricted shares will vest 30 days after grant, and the remaining one-half will vest on the first anniversary of grant.Award grants will be made in shares of restricted stock as soon as practicable following the end of the Program Period, but no later than March 15 of the year following the close of the Program Period.  Unvested restricted shares will be held by the Company until vested.  Once vested, all restrictions will lapse. A review of the Award payouts will be made by the Compensation Committee.  The Committee will have the discretion to review and adjust award payouts, if deemed appropriate.

f. Restrictions:  All certificates for restricted shares issued under the Program shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Program or the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state laws.  The Committee may cause a legend or legends to be placed on any such certificate to make appropriate reference to such restrictions.  HickoryTech shall retain possession of all certificates for restricted shares until the restrictions lapse.

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g. Program Period Award Opportunity:  An at-target range of the potential award that can be earned under each Program Period will be established for each Participant, based on their position prior to the beginning of the Program Period.  The at-target potential value of the award will be converted into a share value by dividing the at-target dollar award value by the share price at the end of the Program Period.  The share price used in the conversion is determined utilizing the provisions of 1993 Stock Award Plan, based on the date the Board meets and approves any awards earned under the Program Period.  All awards earned under the Program are paid in restricted shares of HickoryTech stock.

5.Restricted Share Dividends and Voting Rights Dividends will be paid to the Participant on the restricted shares once they are granted.  Dividends will be paid to the Participant as if they had full ownership of the shares for both vested and unvested restricted shares.  Participants will also have the right to vote both vested and unvested restricted shares.

6.Effect of a Participant's Death, Retirement or Disability

Upon death, retirement or permanent and total disability of a Participant, all unvested shares that have been granted will immediately vest.  They will be paid out within 90 days of retirement, or death, or receipt of the required documentation in the event of total disability.

Additionally, if the Participant was a participant in Program Periods that have been initiated, but not yet completed at the time of their retirement, death or disability, and if the Participant has been in the Program Period for at least one year following the Program Period's initiation, the Participant will remain eligible for a prorated portion of any payouts earned under such Program Period based on achievement of the pre-established Performance Objectives at the close of the Program Period.  Any award earned will be prorated based on the portion of time the Participant was active in the Program Period.  (For example, if the Participant retired, died or became disabled in the second year of a three year Program Period, they would receive 2/3 of any Award earned through achievement of the pre-established Performance Objectives.) If the Participant has been in the Program Period for less than one year following the Program Period's initiation at the time of their retirement, death or disability, the Board has the sole discretion to grant a prorated payout earned under the Program Period to such Participant under the Plan.

Any shares granted to a Participant who had partial participation in the Program Period through retirement, death or disability, will be immediately vested upon grant.

A deceased Participant's granted but unvested restricted shares will be paid 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 the Participant's 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.

3

7.Effect of Other Termination of Employment

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 Program immediately ceases and he would lose eligibility for payouts under the Program.  Any shares vested at the time of termination will be paid out to the Participant no later than 90 days following such termination.  All unvested shares will be forfeited.

8.Payment in the Event of a Change of Control of the Company

In the case of a Change of Control of the Company and a payment being due, as described in the Participant's Change of Control Agreement:

a) All unvested shares will become immediately vested.

b) Any restricted stock awards which are payable based on achievement of Performance Objectives through the year in which payment under the Change of Control 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 payment becomes due.

c) Awards that are not earned under this Program based on results at the close of the fiscal year in which the payment becomes due under the Change of Control Agreement becomes due will not be payable.

The Provisions of this Section 8 shall take precedence over all other provisions of this Program.

9.Tax Withholding

All payments and distributions shall be subject to applicable withholding requirements.  Participants receiving shares under the Program must pay the Company, in cash, an amount sufficient to cover any required withholding taxes.

In lieu of cash, the Compensation Committee may permit a Participant to cover withholding obligations through a reduction in the number of shares delivered to such Participant.  The use of stock to satisfy withholding obligations is subject to certain restrictions if the Participant is an officer of the Company or holder of at least ten percent of the Company's stock.

10.Administration of the Program

This Program will be administered by the Compensation Committee of the Board of Directors, which consists of outside directors, appointed by and accountable to the Board and whose members are not eligible for awards under the Program.  The Committee has full authority to, among other things, (i) interpret and administer the Program; (ii) establish rules and regulations appropriate for proper administration of the Program; (iii) select participants and make awards; (iv) establish the terms and conditions of awards, and; (v) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the

4

Program.  Unless otherwise expressly provided in the Program, all designations, determinations, interpretations and other decisions under or with respect to the Program or any award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant and any holder or beneficiary of any award. The Committee may establish rules and regulations from time to time that are not inconsistent with the provisions of this Program.

11.Board Approval

Awards earned under this Program are payable only with the approval of the Board of Directors.  In the event of a Change of Control, as defined in the Participant's Change of Control Agreement, and to the extent provided in Section 8(a); awards will be payable without the Board of Directors' approval required.

12.Amendment and Termination

The Board of Directors may amend this Program in any respect at any time and may terminate the Program in whole or in part at any time, subject to the following.

a. Performance Objectives may not be altered, amended, suspended or discontinued during any Program Period with respect to that Program Period without the recommendation of the Compensation Committee.

b. Amendment or termination of the Program may not adversely affect the value of any earned Awards under this Program.

13.Denial of Award Payout

Any Participant who voluntarily terminates employment or who is involuntarily discharged for any reason whatsoever prior to the last day of a Program Period will not be entitled to any Award for the Program Period unless such exception is approved by the Committee.  In the event of a Change of Control in the Company, Section 8 will apply.

14.Status of Participant's Claims

This Program does not create any lien on or security interest in any property of the Company, and no person may assert any rights under the Program superior to the rights of an unsecured general creditor of the Company.

15.Non-alienability

Rights under this Program are not subject to voluntary or involuntary assignment or alienation.  Any attempted assignment or alienation will be disregarded by the Company.

5

16.Severability

If any provision of this Program is determined to be invalid or illegal, the remaining provisions shall be effective and shall be interpreted as if the invalid or illegal provision did not exist, unless the continuance of the Program in such circumstances would defeat its purpose.

17.Employment Rights

Nothing in the Program shall confer upon any Participant the right to continue in the employment of the Company or any subsidiary or affect any right, which the Company or any subsidiary may have to terminate the employment of the Participant with or without cause.

18.Headings

All headings in this document are for reference only and are not to be utilized to construe its terms.

19.Governing Law

This Program is governed in all respects by the internal law, not the law of conflicts, of the State of Minnesota.  The State of Minnesota will govern all questions concerning the Program.

6

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, John W. Finke, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013 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.

Date:  May 1, 2013

/s/ John W. Finke

John W. Finke

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, David A. Christensen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013 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.

Date:  May 1, 2013

/s/ David A. Christensen

David A. Christensen

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C., SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hickory Tech Corporation on Form 10-Q for the period ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John W. Finke, Chief Executive Officer of HickoryTech, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

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

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

/s/ John W. Finke

John W. Finke

President and Chief Executive Officer

May 1, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C., SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hickory Tech Corporation on Form 10-Q for the period ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David A. Christensen, Chief Financial Officer of HickoryTech, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

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

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

/s/ David A. Christensen

David A. Christensen

Senior Vice President and Chief Financial Officer

May 1, 2013

XML

Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Carrying (Reported) Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt	$ 134,723		$ 135,133
Interest rate swaps	2,179		2,432
Cash equivalents (1)	76	[1]	0	[1]
Investments	3,396		3,213
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents (1)	76	[1]	0	[1]
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long term debt	134,723		135,133
Investments	3,396		3,213
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]
Interest rate swaps	$ 2,179		$ 2,432

[1] Cash equivalents are a money market account included in cash and cash equivalents on the balance sheet.

XML

Quarterly Segment Financial Summary (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Segment Reporting Information	3
Revenue from unaffiliated customers	$ 48,769	$ 46,944
Intersegment revenue	0	0
Total operating revenue	48,769	46,944
Asset Impairment Charges	633	0
Depreciation and amortization	7,009	6,194
Operating income	3,857	5,252
Interest expense	1,139	1,411
Income tax provision (benefit)	1,094	1,567
Net income (loss)	1,626	2,294
Total assets	263,425	267,464	268,304
Property, plant and equipment, net	181,335	175,020	182,959
Additions to property, plant and equipment	5,789	3,634
Fiber and Data Segment [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	16,471	13,219
Intersegment revenue	213	193
Total operating revenue	16,684	13,412
Asset Impairment Charges	633
Depreciation and amortization	2,796	1,966
Operating income	1,638	2,345
Interest expense	0	0
Income tax provision (benefit)	677	950
Net income (loss)	961	1,395
Total assets	113,326	101,996
Property, plant and equipment, net	94,153	83,055
Additions to property, plant and equipment	2,943	1,965
Equipment Segment [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	17,237	17,421
Intersegment revenue	0	0
Total operating revenue	17,237	17,421
Asset Impairment Charges	0
Depreciation and amortization	85	71
Operating income	821	820
Interest expense	0	0
Income tax provision (benefit)	337	334
Net income (loss)	485	486
Total assets	23,365	16,144
Property, plant and equipment, net	1,904	1,389
Additions to property, plant and equipment	558	73
Telecom Segment [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	15,061	16,304
Intersegment revenue	573	410
Total operating revenue	15,634	16,714
Asset Impairment Charges	0
Depreciation and amortization	4,121	4,133
Operating income	1,605	2,187
Interest expense	8	13
Income tax provision (benefit)	655	883
Net income (loss)	943	1,299
Total assets	116,917	122,512
Property, plant and equipment, net	85,184	90,475
Additions to property, plant and equipment	2,248	1,596
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers	0	0
Intersegment revenue	(786)	(603)
Total operating revenue	(786)	(603)
Asset Impairment Charges	0
Depreciation and amortization	7	24
Operating income	(207)	(100)
Interest expense	1,131	1,398
Income tax provision (benefit)	(575)	(600)
Net income (loss)	(763)	(886)
Total assets	9,817	26,812
Property, plant and equipment, net	94	101
Additions to property, plant and equipment	$ 40	$ 0

XML

Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Taxes [Abstract]
Effective income tax rate (in hundredths)	40.20%	40.60%
Unrecognized tax benefits excluding interest	$ 232,000
Unrecognized tax benefits that would impact effective tax rate	207,000
Unrecognized tax benefits that may decrease due to expirations of statute of limitations	$ 0

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

Capital expenditures incurred and reimbursements pending or received from the Broadband Technology Opportunities Program grant [Table Text Block]

The following table provides an overview of the capital expenditures incurred on or received from the program.

	Project Activity						Project Total
(Dollars in thousands)	YTD March 31, 2013		2012		2011
Capital expenditures incurred	$	233	$	7,081	$	12,664	$	19,978
NTIA reimbursements received	$	-	$	5,745	$	6,945	$	12,690
Capital expenditures pending reimbursement	$	1,275	$	1,100	$	1,920

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets [Abstract]

Components of Goodwill

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	5,384	$	5,384
Equipment	$	596	$	596
Telecom	$	23,048	$	23,048

Components of other intangible assets

The components of intangible assets are as follows:

(Dollars in thousands)		As of March 31, 2013				As of December 31, 2012
		Gross Carrying		Accumulated		Gross Carrying		Accumulated
Useful Lives		Amount		Amortization		Amount		Amortization
Definite-lived intangible assets
Customer relationships	1 - 8 years	$	8,459	$	5,543	$	8,499	$	5,368
Other intangibles	1 - 5 years		2,930		1,298		2,930		1,250
Total		$	11,389	$	6,841	$	11,429	$	6,618

XML

Extended Term Payable (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Guarantor Obligations [Line Items]
Extended term payable	$ 10,418,000	$ 8,115,000
Guarantor Obligations Financing Agreement Terms	The agreement requires Enterprise Integration Services, Inc. to maintain specific levels of collateral relative to the outstanding balance due, provide selected monthly financial information, and make all payments when due or on demand in the event of a collateral shortfall, among other requirements. A default on the financing agreement by Enterprise Integration Services, Inc. would require HickoryTech to perform under the guarantee. The financing agreement provides 60 day, interest-free payment terms for working capital and can be terminated at any time by either party.
Enterprise Integration Services Inc [Member]
Guarantor Obligations [Line Items]
Wholesale Financiang Agreement Total Amount Available	18,000,000
Payment Guarantee [Member]
Guarantor Obligations [Line Items]
Guarantor Obligations Amount	$ 2,500,000

XML

Long-Lived Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Long-Lived Assets [Abstract]
Asset Impairment Charges	$ 633	$ 0

XML

Stock Compensation (Details) (USD $)	3 Months Ended			3 Months Ended
	Mar. 31, 2013 Employee Stock Purchase Plan [Member]	Mar. 31, 2013 LTEIP Restricted Stock [Member]	Dec. 31, 2012 LTEIP Restricted Stock [Member]	Mar. 31, 2013 Stock Award Plan [Member]	Mar. 31, 2012 Stock Award Plan [Member]	Mar. 31, 2013 Stock Options [Member]	Mar. 31, 2013 Retention Awards [Member]	Mar. 31, 2013 Retention Awards [Member] Minimum [Member]	Mar. 31, 2013 Retention Awards [Member] Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of fair market value at which employees acquire shares under Employee Stock Purchase Plan (in hundredths)	85.00%
Compensation expense not yet recognized				$ 1,789,000
Period for recognition total compensation cost not yet recognized				2 years 7 months 20 days				11 months	36 months
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Non-vested at Beginning of Year (in shares)		32,447					11,150
Granted/Settled (in shares)		68,699					27,500
Vested (in shares)		(44,099)					0
Forfeited (in shares)		0					(800)
Non-vested at End of Year (in shares)		57,047					37,850
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Non-vested at Beginning of Year (in dollars per share)		$ 3.43					$ 10.28
Granted (in dollars per share)		$ 9.83					$ 8.76
Vested (in dollars per share)		$ 5.12					$ 0
Forfeited (in dollars per share)		$ 0					$ 10.57
Non-vested at End of Year (in dollars per share)		$ 9.83					$ 9.13
Portion of options vesting each year						.33
Period within which stock options will be exercised						10 years
Long Term Executive Incentive Program [Abstract]
Number Of Days Average Share Price Used For Award Conversion	5 days
Performance Shares Related Liability		614,000	1,028,000
Share-based Compensation Expense				219,000	114,000
Proceeds from Stock Options Exercised						$ 183,000
Number of options, shares [Roll Forward]
Outstanding at beginning of period (in shares)						143,817
Granted (in shares)						0
Exercised (in shares)						(21,667)
Forfeited (in shares)						0
Expired (in shares)						(15,000)
Outstanding at end of period (in shares)						107,150
Exercisable at end of period (in shares)						100,483
Weighted Average Exercise Price [Roll Forward]
Outstanding at start of period (in dollars per share)						$ 9.95
Granted (in dollars per share)						$ 0
Exercised (in dollars per share)						$ 8.44
Forfeited (in dollars per share)						$ 0
Expired (in dollars per share)						$ 8.93
Outstanding at end of period (in dollars per share)						$ 10.40
Exercisable at end of period (in dollars per share)						$ 10.49

XML

Acquisitions

3 Months Ended

Mar. 31, 2013

Acquisitions [Abstract]

Acquisitions [Text Block]

Note 3. Acquisition

On March 1, 2012, we acquired IdeaOne Telecom Group, LLC for cash consideration of $26,337,000 expanding our business and broadband services in the Fargo, North Dakota market. The acquisition was funded with existing liquidity through cash reserves of $4,337,000 and $22,000,000 of term loan debt which is integrated with our senior credit facility. In addition, we assumed and paid liabilities of the acquired company using additional cash reserves of $1,843,000 on the closing date of the acquisition.

XML

Employee Post-Retirement Benefits (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Components of net periodic benefit cost
Service cost	$ 67	$ 150
Interest cost	120	188
Expected return on plan assets	0	0
Amortization of transition obligation	0	15
Amortization of prior service credits	(236)	(19)
Recognized actuarial loss	120	135
Net periodic benefit cost	$ 71	$ 469

XML

Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventory balances by segment are as follows:

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	522	$	665
Equipment	$	5,069	$	6,201
Telecom	$	1,663	$	1,513

XML

Employee Post-Retirement Benefits (Tables)

3 Months Ended

Mar. 31, 2013

Employee Post-Retirement Benefits [Abstract]

Employee Post-Retirement Benefits

	Three Months Ended
	March 31
(Dollars in thousands)	2013			2012
Components of net periodic benefit cost
Service cost	$	67		$	150
Interest cost		120			188
Expected return on plan assets		-			-
Amortization of transition obligation		-			15
Amortization of prior service credits		(236	)		(19	)
Recognized actuarial loss		120			135
Net periodic benefit cost	$	71		$	469

XML

Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fiber and Data Segment [Member]
Segment Reporting Information [Line Items]
Raw Materials	$ 522	$ 665
Equipment Segment [Member]
Segment Reporting Information [Line Items]
Inventory Finished Goods With Title	5,069	6,201
Telecom Segment [Member]
Segment Reporting Information [Line Items]
Raw Materials	$ 1,663	$ 1,513

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss) [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The table below illustrates the effect on certain line items of net income of the amounts reclassified out of each component of accumulated other comprehensive income ("AOCI") for the three months ended March 31, 2013.

(Dollars in thousands)	Amounts Reclassified			Affected Line Item in the Statement
Details about AOCI Components	from AOCI			Where Net Income is Presented
Gains and losses on cash flow hedges
Interest rate contracts	$	21		Interest expense
		(8	)	Income tax provision
	$	13		Net of tax
Amortization of benefit pension items
Prior service costs	$	236		Selling, general and administrative expenses
Actuarial gains (losses)		(120	)	Selling, general and administrative expenses
		116		Total before tax
		(46	)	Income tax provision
	$	70		Net of tax
Total reclassifications of period	$	83		Net of tax

XML

Stock Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Stock Compensation [Abstract]

Nonvested Restricted Stock Activity Under LTEIP

Non-vested restricted stock activity for the quarter ended March 31, 2013 is depicted in the table below. Granted shares represent non-vested shares issued to settle an obligation under the LTEIP plan during the period.

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		32,447		$	3.43
Granted/settled		68,699		$	9.83
Vested		(44,099	)	$	5.12
Forfeited		-		$	-
Non-vested at end of period		57,047		$	9.83

Nonvested Stock Retention

Retention stock activity for the quarter ended March 31, 2013 was as follows:

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		11,150		$	10.28
Granted		27,500		$	8.76
Vested		-		$	-
Forfeited		(800	)	$	10.57
Non-vested at end of period		37,850		$	9.13

Stock options activity

A summary of stock option activity is as follows:

				Weighted Average
	Options			Exercise Price
Outstanding at January 1		143,817		$	9.95
Granted		-		$	-
Exercised		(21,667	)	$	8.44
Forfeited		-		$	-
Expired		(15,000	)	$	8.93
Outstanding at March 31		107,150		$	10.40
Exercisable at March 31		100,483		$	10.49

XML

Earnings and Cash Dividends per Common Share

3 Months Ended

Mar. 31, 2013

Earnings and Cash Dividends per Common Share [Abstract]

Earnings and Cash Dividends per Common Share

Note 2.  Earnings and Dividends per Share

Basic earnings per share ("EPS") is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Shares used in the diluted earnings per share calculation are based on the weighted average number of shares outstanding during the period 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 awarded 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.

	Three Months Ended March 31
(Dollars in thousands, except share and earnings per share amounts)	2013		2012
Net income	$	1,626	$	2,294
Weighted average shares outstanding		13,556,515		13,349,791
Stock options (dilutive only)		4,788		16,737
Stock subscribed (ESPP)		-		1,162
Retention awards		8,349		15,588
Stock subscribed (LTEIP)		8,777		22,079
Total dilutive shares outstanding		13,578,429		13,405,357
Earnings per share:
Basic and diluted	$	0.12	$	0.17
Dividends per share	$	0.145	$	0.14

Options to purchase 82,150 and 87,950 shares for the three months ended March 31, 2013 and 2012, respectively were not included in the computation of EPS, because their effect on earnings per share would have been anti-dilutive.

Cash dividends are based on the number of common shares outstanding at their respective record dates. The number of shares outstanding as of the record date for the first quarter of 2013 and 2012, respectively, are as follows:

Shares outstanding on record date	2013		2012
First quarter (February 15)		13,586,903		13,409,941

Dividends per share are based on the quarterly dividend per share as declared by the HickoryTech Board of Directors. HickoryTech paid dividends of $0.145 and $0.14 per share in the first quarter of 2013 and 2012, respectively. During the first three months of 2013 and 2012, shareholders have elected to reinvest $78,000 and $71,000, respectively, of dividends into HickoryTech common stock pursuant to the HickoryTech Corporation Dividend Reinvestment Plan.

In March 2013, we acquired and retired 52,647 shares of HickoryTech common stock.

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Quarterly Segment Financial Summary (Tables)

3 Months Ended

Mar. 31, 2013

Quarterly Segment Financial Summary [Abstract]

Segment information

Segment information for the three months ended March 31, 2013 and 2012 is as follows:

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2013	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	16,471	$	17,237	$	15,061	$	-		$	48,769
Intersegment revenue		213		-		573		(786	)		-
Total operating revenue		16,684		17,237		15,634		(786	)		48,769
Asset impairment		633		-		-		-			633
Depreciation and amortization		2,796		85		4,121		7			7,009
Operating income (loss)		1,638		821		1,605		(207	)		3,857
Interest expense		-		-		8		1,131			1,139
Income tax provision (benefit)		677		337		655		(575	)		1,094
Net income (loss)		961		485		943		(763	)		1,626
Total assets		113,326		23,365		116,917		9,817			263,425
Property, plant and equipment, net		94,153		1,904		85,184		94			181,335
Additions to property, plant and equipment		2,943		558		2,248		40			5,789

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2012	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	13,219	$	17,421	$	16,304	$	-		$	46,944
Intersegment revenue		193		-		410		(603	)		-
Total operating revenue		13,412		17,421		16,714		(603	)		46,944
Depreciation and amortization		1,966		71		4,133		24			6,194
Operating income (loss)		2,345		820		2,187		(100	)		5,252
Interest expense		-		-		13		1,398			1,411
Income tax provision (benefit)		950		334		883		(600	)		1,567
Net income (loss)		1,395		486		1,299		(886	)		2,294
Total assets		101,996		16,144		122,512		26,812			267,464
Property, plant and equipment, net		83,055		1,389		90,475		101			175,020
Additions to property, plant and equipment		1,965		73		1,596		-			3,634

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Debt and Other Obligations (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Long-term Debt	$ 134,723,000		$ 135,133,000
Long-term Debt, Current Maturities	1,420,000		1,420,000
Capital Lease Obligations, Current	228,000		228,000
Credit Facility, Maximum Borrowing Capacity	150,000,000
Debt Instrument, Maturity Date	Dec. 31, 2016
Accrued Patronage Refunds	177,000	161,000
Interest Rate Swap Agreement [Member]
Debt Instrument [Line Items]
Amount of interest rate swaps	72,000,000
Minimum [Member] | Interest Rate Swap Agreement [Member]
Debt Instrument [Line Items]
Percentage of credit facility required to be covered with interest rate swaps (in hundredths)	50.00%
Period of time interest rate protection must exist on term loans (in years)	2 years
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit Facility, Maximum Borrowing Capacity	30,000,000
Debt Instrument, Unused Borrowing Capacity, Amount	29,980,000
Term Loan B Facility [Member]
Debt Instrument [Line Items]
Credit Facility, Maximum Borrowing Capacity	120,000,000
Credit Facility, Amount Outstanding	116,200,000
Debt Instrument, Periodic Payment, Principal	300,000
Incremental Term [Member]
Debt Instrument [Line Items]
Credit Facility, Maximum Borrowing Capacity	22,000,000
Credit Facility, Amount Outstanding	19,780,000
Debt Instrument, Periodic Payment, Principal	55,000
Letter of Credit [Member]
Debt Instrument [Line Items]
Credit Facility, Amount Outstanding	$ 20,000

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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating revenue:
Equipment	$ 15,364	$ 15,299
Services	33,405	31,645
Total operating revenue	48,769	46,944
Costs and expenses:
Cost of sales, excluding depreciation and amortization	13,222	13,466
Cost of services, excluding depreciation and amortization	16,599	15,326
Selling, general and administrative expenses	7,449	6,706
Asset Impairment Charges	633	0
Depreciation and amortization	7,009	6,194
Total costs and expenses	44,912	41,692
Operating income	3,857	5,252
Other income and expense:
Interest and other income	2	20
Interest expense	(1,139)	(1,411)
Total other (expense)	(1,137)	(1,391)
Income before income taxes	2,720	3,861
Income tax provision	1,094	1,567
Net income	$ 1,626	$ 2,294
Basic earnings per share	$ 0.12	$ 0.17
Weighted average common shares outstanding	13,556,515	13,349,791
Diluted earnings per share	$ 0.12	$ 0.17
Weighted average common and equivalent shares outstanding	13,578,429	13,405,357
Dividends per share	$ 0.145	$ 0.14

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Accumulated Other Comprehensive Income Loss [Line Items]
Interest expense	$ 1,139	$ 1,411
Selling, general and administrative expenses	7,449	6,706
Income tax provision	1,094	1,567
Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Net of tax	83
Gains and Losses on Cash Flow Hedges [Member] | Interest Rate Contract [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Interest expense	21
Income tax provision	(8)
Net of tax	13
Amortization of Benefit Pension Items [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Selling, general and administrative expenses	116
Income tax provision	(46)
Net of tax	70
Amortization of Benefit Pension Items [Member] | Prior Service Costs [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Selling, general and administrative expenses	236
Amortization of Benefit Pension Items [Member] | Actuarial Gains (Losses) [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Selling, general and administrative expenses	$ (120)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
OPERATING ACTIVITIES:
Net income	$ 1,626	$ 2,294
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,009	6,194
Asset Impairment	633	0
Accrued patronage refunds	(177)	(161)
Stock based compensation	219	114
Loss on financial derivative instruments	28	47
Excess Tax Benefit	(95)	0
Other	677	353
Changes in operating assets and liabilities, net of effect from acquired net assets
Receivables	(2,181)	4,998
Prepaid expenses	(1,112)	(580)
Inventories	1,210	3,950
Accounts payable and accrued expenses	(5,323)	(2,256)
Deferred revenue, billings and deposits	(1,618)	(485)
Income taxes	500	1,556
Other	635	233
Net cash provided by operating activities	2,031	16,257
INVESTING ACTIVITIES:
Additions to property, plant and equipment	(5,789)	(4,955)
Broadband stimulus grant received	0	1,321
Redemption of investments	0	1,415
Acquisition of IdeaOne Telecom	0	(26,337)
Net cash (used in) investing activities	(5,789)	(28,556)
FINANCING ACTIVITIES:
Borrowings on extended term payable arrangement	16,406	11,137
Payments on extended term payable arrangement	(14,103)	(9,442)
Borrowings on credit facility	0	22,000
Payments on credit facility and capital lease obligations	(410)	(1,938)
Proceeds from issuance of common stock	269	86
Stock repurchase	(528)	0
Dividends paid	(1,970)	(1,877)
Excess Tax Benefit	95	0
Net cash (used in) provided by financing activities	(241)	19,966
Net increase (decrease) in cash and cash equivalents	(3,999)	7,667
Cash and cash equivalents at beginning of the period	8,305	13,057
Cash and cash equivalents at the end of the period	4,306	20,724
Supplemental disclosure of cash flow information:
Cash paid for interest	1,493	1,358
Net cash paid (received) for income taxes	355	11
Non-cash investing and financing activities:
Property, plant and equipment acquired with capital leases	$ 0	$ 14

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Earnings and Cash Dividends per Common Share (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Feb. 15, 2013	Dec. 31, 2012	Feb. 15, 2012
Earnings per share, basic and diluted [Abstract]
Net income	$ 1,626,000	$ 2,294,000
Weighted average shares outstanding basic (in shares)	13,556,515	13,349,791
Total dilutive shares outstanding	13,578,429	13,405,357
Earnings per share, basic and diluted (in dollars per share)	$ 0.12	$ 0.17
Dividends per share (in dollars per share)	$ 0.145	$ 0.14
Antidilutive securities excluded from computation of earnings per share (in shares)	82,150	87,950
Shares outstanding on record date (in shares)	13,552,582		13,586,903	13,519,131	13,409,941
Dividends reinvested	$ 78,000	$ 71,000
Stock repurchased and retired during the period (in shares)	52,647
Stock Options (dilutive only) [Member]
Earnings per share, basic and diluted [Abstract]
Incremental common shares attributable to share-based payment arrangements (in shares)	4,788	16,737
Stock subscribed (ESPP) [Member]
Earnings per share, basic and diluted [Abstract]
Incremental common shares attributable to share-based payment arrangements (in shares)	0	1,162
Stock Subscribed LTEIP [Member]
Earnings per share, basic and diluted [Abstract]
Incremental common shares attributable to share-based payment arrangements (in shares)	8,777	22,079
Retention Awards [Member]
Earnings per share, basic and diluted [Abstract]
Incremental common shares attributable to share-based payment arrangements (in shares)	8,349	15,588

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 16.  Commitments and Contingencies

We are involved in certain contractual disputes in the ordinary course of business, but do not believe the resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows.

In August 2010, we were awarded a National Telecommunications Information Administration (NTIA) Broadband Technology Opportunities Program (BTOP) grant to extend our middle mile fiber-optic network across greater Minnesota with the potential to connect health care facilities, schools, libraries, higher education institutions and public offices with an advanced high-capacity broadband network. This project involves approximately $24,000,000 of capital expenditures of which $16,800,000 is to be funded by the NTIA grant. Our investment in the project will be approximately $7,200,000 or 30% of the estimated total project cost. We began capitalizing costs associated with this project in 2010 and began receiving grant funds in June 2011.

The following table provides an overview of the capital expenditures incurred on or received from the program.

	Project Activity						Project Total
(Dollars in thousands)	YTD March 31, 2013		2012		2011
Capital expenditures incurred	$	233	$	7,081	$	12,664	$	19,978
NTIA reimbursements received	$	-	$	5,745	$	6,945	$	12,690
Capital expenditures pending reimbursement	$	1,275	$	1,100	$	1,920

The project is required to be complete by August 2013 and based on our projections we expect to comply with this deadline.

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Acquisitions (Details) (IdeaOne Telecom [Member], USD $)	Mar. 01, 2012
IdeaOne Telecom [Member]
Business Acquisition [Line Items]
Business Acquisition, Cost of Acquired Entity, Cash Paid	$ 4,337,000
Business Acquisition, Cost of Acquired Entity, Liabilities Incurred	22,000,000
Business Combination, Liabilities Assumed and Paid	1,843,000
Business Acquisition, Cost of Acquired Entity, Purchase Price, Total	$ 26,337,000

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Earnings and Cash Dividends per Common Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings and Cash Dividends per Common Share [Abstract]

Earnings and cash dividends per common share

	Three Months Ended March 31
(Dollars in thousands, except share and earnings per share amounts)	2013		2012
Net income	$	1,626	$	2,294
Weighted average shares outstanding		13,556,515		13,349,791
Stock options (dilutive only)		4,788		16,737
Stock subscribed (ESPP)		-		1,162
Retention awards		8,349		15,588
Stock subscribed (LTEIP)		8,777		22,079
Total dilutive shares outstanding		13,578,429		13,405,357
Earnings per share:
Basic and diluted	$	0.12	$	0.17
Dividends per share	$	0.145	$	0.14

Shares outstanding on record date

Cash dividends are based on the number of common shares outstanding at their respective record dates. The number of shares outstanding as of the record date for the first quarter of 2013 and 2012, respectively, are as follows:

Shares outstanding on record date	2013		2012
First quarter (February 15)		13,586,903		13,409,941

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Basis of Presentation and Consolidation

3 Months Ended

Mar. 31, 2013

Basis of Presentation and Consolidation [Abstract]

Basis of Presentation and Consolidation

Note 1.   Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements of HickoryTech Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to such rules and regulations. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments (consisting only of normal and recurring accruals) considered necessary for the fair presentation of the financial statements and present fairly the results of operations, financial position and cash flows for the interim periods presented as required by Regulation S-X, Rule 10-01. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with the audited consolidated financial statements and notes thereto contained in our Form 10-K for the year ended December 31, 2012.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.

Our consolidated financial statements report the financial condition and results of operations for HickoryTech Corporation and its subsidiaries in three business segments: Fiber and Data, Equipment and Telecom. Intercompany transactions have been eliminated from the consolidated financial statements.

Cost of Sales (excluding depreciation and amortization)

Cost of sales for the Equipment Segment is primarily for equipment and materials associated with the installation of products for customers. Labor associated with installation work is not included in this category, but is included in cost of services (excluding depreciation and amortization) described below.

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products for all segments. These operating costs include all costs of performing services and providing related products including engineering, customer service, billing and collections, network monitoring and transport costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, advertising and all other general and administrative costs associated with the operations of the business.

Recent Accounting Developments

In February 2013, the FASB issued ASU 2013-02 to improve the disclosure of reclassifications out of accumulated other comprehensive income. The Update requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. Also, an entity is required to present significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income (only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period) either on the face of the statement where net income is presented or in the notes. The adoption of this guidance did not have a material impact on our disclosures or consolidated financial statements.

We reviewed other recently issued accounting pronouncements and determined they are either not applicable to our business or that no material effect is expected on our financial position, results of operations or disclosures.

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STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net Income (Loss)	$ 1,626	$ 2,294
Interest rate swaps:
Changes in designated interest rate swaps	(5)	0
Income tax (expense) benefit	2	0
Unrealized holding gains (loss) on interest rate swaps	(3)	0
Amount Included In Net Periodic Benefit Cost [Abstract]
Net actuarial loss	120	135
Prior service credit	(236)	(19)
Transition asset	0	15
Income tax expense (benefit)	46	(52)
Change in post-retirement benefit plan	(70)	79
Other comprehensive income (loss)	(73)	79
Comprehensive Income	$ 1,553	$ 2,373

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Inventories

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Inventories

Note 11.  Inventories

The inventory value in the Fiber and Data Segment and the Telecom Segment are comprised of raw materials to be consumed in capital projects and finished goods to be used in the delivery of services at the customer premise. The inventory value in the Equipment Segment is primarily comprised of finished goods in our warehouse or in transit to customer locations. The inventory level in the Equipment Segment is subject to the fluctuations in the equipment sales activity and the timing of individual customer orders and installations.

Inventory balances by segment are as follows:

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	522	$	665
Equipment	$	5,069	$	6,201
Telecom	$	1,663	$	1,513

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Document and Entity Information (USD $)	3 Months Ended
	Mar. 31, 2013	Apr. 26, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	HICKORY TECH CORP
Entity Central Index Key	0000766561
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 138,257,395
Entity Common Stock, Shares Outstanding		13,592,661
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 12.  Accumulated Other Comprehensive Income (Loss)

The table below illustrates the effect on certain line items of net income of the amounts reclassified out of each component of accumulated other comprehensive income ("AOCI") for the three months ended March 31, 2013.

(Dollars in thousands)	Amounts Reclassified			Affected Line Item in the Statement
Details about AOCI Components	from AOCI			Where Net Income is Presented
Gains and losses on cash flow hedges
Interest rate contracts	$	21		Interest expense
		(8	)	Income tax provision
	$	13		Net of tax
Amortization of benefit pension items
Prior service costs	$	236		Selling, general and administrative expenses
Actuarial gains (losses)		(120	)	Selling, general and administrative expenses
		116		Total before tax
		(46	)	Income tax provision
	$	70		Net of tax
Total reclassifications of period	$	83		Net of tax

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CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 4,306	$ 8,305
Receivables, net of allowance for doubtful accounts of $272 and $278	24,660	22,530
Inventories	7,254	8,379
Income taxes receivable	96	596
Deferred income taxes, net	1,735	1,887
Prepaid expenses	3,204	2,092
Other	724	1,399
Total current assets	41,979	45,188
Investments	3,396	3,213
Property, plant and equipment	442,402	437,623
Accumulated depreciation	(261,067)	(254,664)
Property, plant and equipment, net	181,335	182,959
Other assets:
Goodwill	29,028	29,028
Intangible assets, net	4,548	4,811
Deferred costs and other	3,139	3,105
Total other assets	36,715	36,944
Total assets	263,425	268,304
Current liabilities:
Accounts payable	4,032	5,818
Extended term payable	10,418	8,115
Deferred revenue	5,606	7,362
Accrued expenses and other	7,655	10,881
Current maturities of long-term obligations	1,648	1,648
Total current liabilities	29,359	33,824
Long-term liabilities:
Debt obligations, net of current maturities	134,723	135,133
Accrued income taxes	236	236
Deferred revenue	1,223	1,085
Financial derivative instruments	2,179	2,432
Accrued employee benefits and deferred compensation	12,688	12,481
Deferred income taxes	34,217	34,265
Total long-term liabilities	185,266	185,632
Total liabilities	214,625	219,456
Shareholders' equity:
Shares issued and outstanding: 13,552,582 in 2013 and 13,519,131 in 2012	1,355	1,352
Additional paid-in capital	16,316	15,950
Retained earnings	30,643	30,987
Accumulated other comprehensive (loss)	486	559
Total shareholders' equity	48,800	48,848
Total liabilities and shareholders' equity	$ 263,425	$ 268,304

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2013

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 6.   Fair Value of Financial Instruments

Fair value of financial and non-financial assets and liabilities is the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants. The three levels of the fair value hierarchy for assessing the inputs used in fair value measurements are as follows:

· 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 and require the entity to develop its own assumptions

The highest priority is given to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority is given to unobservable inputs (Level 3).

The carrying value of cash and cash equivalents, net accounts receivables, payables, and other short-term monetary assets and liabilities was estimated by management to approximate fair value due to the relatively short period of time to maturity for these instruments.

Our long-term debt credit agreement allows us to select short-term LIBOR repricing options, which we have elected. Therefore, the carrying amounts of our long-term debt approximate its fair value. The fair value estimate of our interest rate swaps represents the net present value of future cash flows based on projections of the three-month LIBOR rate over the life of each swap. It also incorporates credit valuation adjustments to appropriately reflect both our own non-performance risk and the non-performance risk of the respective counterparties.

The fair value and carrying value of our cash equivalents, investments and long-term debt, after deducting current maturities, and our interest rate swaps are as follows at March 31, 2013 and December 31, 2012:

(Dollars in thousands)			March 31, 2013					December 31, 2012
	Input Level			Carrying Amount		Fair Value			Carrying Amount		Fair Value
Cash equivalents (1)		1		$	76	$	76		$	-	$	-
Investments		2		$	3,396	$	3,396		$	3,213	$	3,213
Long-term debt		2		$	134,723	$	134,723		$	135,133	$	135,133
Interest rate swaps		2		$	2,179	$	2,179		$	2,432	$	2,432
(1) Cash equivalents are a money market account included in cash and cash equivalents on the balance sheet.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

Note 5.  Goodwill and Other Intangible Assets

We have goodwill in all three of our operating units: Fiber and Data Segment goodwill resulted from our acquisition of IdeaOne Telecom in 2012, CP Telecom in 2009 and Enventis Telecom in 2005. Equipment Segment goodwill resulted from our acquisition of Enventis Telecom and Telecom Segment goodwill resulted from our acquisition of Heartland Telecommunications in 1997. The tax deductible portion of goodwill is $26,964,000. Our acquisition of IdeaOne Telecom resulted in goodwill of $1,725,000 which is deductible for tax purposes.

(Dollars in thousands)	March 31, 2013		December 31, 2012
Fiber and Data	$	5,384	$	5,384
Equipment	$	596	$	596
Telecom	$	23,048	$	23,048

The components of intangible assets are as follows:

(Dollars in thousands)		As of March 31, 2013				As of December 31, 2012
		Gross Carrying		Accumulated		Gross Carrying		Accumulated
Useful Lives		Amount		Amortization		Amount		Amortization
Definite-lived intangible assets
Customer relationships	1 - 8 years	$	8,459	$	5,543	$	8,499	$	5,368
Other intangibles	1 - 5 years		2,930		1,298		2,930		1,250
Total		$	11,389	$	6,841	$	11,429	$	6,618

In the first quarter of 2013, we reduced the carrying value of the customer relationships by $40,000.  This impairment loss was directly related to our decision to no longer provide wireless internet service in the Fargo, North Dakota market. See Note 4 "Long-Lived Assets."

Amortization expense related to the definite-lived intangible assets was $223,000 and $138,000 for the three months ended March 31, 2013 and 2012, respectively. Total estimated amortization expense for the remaining nine months of 2013 and the five years subsequent to 2013 is as follows: 2013 (April 1 – December 31) – $660,000; 2014 - $749,000; 2015 - $616,000; 2016 - $565,000; 2017 - $554,000; 2018 - $554,000.

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Basis of Presentation and Consolidation (Policies)

3 Months Ended

Mar. 31, 2013

Basis of Presentation and Consolidation [Abstract]

Cost of Sales, Policy [Policy Text Block]

Cost of Sales (excluding depreciation and amortization)

Cost of sales for the Equipment Segment is primarily for equipment and materials associated with the installation of products for customers. Labor associated with installation work is not included in this category, but is included in cost of services (excluding depreciation and amortization) described below.

Cost of Services, Policy [Policy Text Block]

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products for all segments. These operating costs include all costs of performing services and providing related products including engineering, customer service, billing and collections, network monitoring and transport costs.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, advertising and all other general and administrative costs associated with the operations of the business.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

Note 13.  Income Taxes

The effective income tax rate from operations for the first quarter of 2013 and 2012 was 40.2% and 40.6%, respectively. The effective tax rate from operations differs from the federal statutory rate primarily due to state income taxes.

As of March 31, 2013, we had unrecognized tax benefits totaling $232,000 (net of tax) excluding interest. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $207,000. Due to expirations of statute of limitations it is reasonably possible that the total amount of unrecognized tax benefits will not decrease during the next 12 months.

We file consolidated income tax returns in the United States federal jurisdiction and combined or separate income tax returns in various state jurisdictions. In general, we are no longer subject to United States federal income tax examinations for the years prior to 2009 except to the extent of losses utilized in subsequent years.

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Extended Term Payable

3 Months Ended

Mar. 31, 2013

Extended Term Payable [Abstract]

Extended Term Payable [Text Block]

Note 9.   Extended Term Payable

Enterprise Integration Services, Inc., a wholly owned subsidiary of HickoryTech, has an $18,000,000 wholesale financing agreement with a financing company to fund equipment purchases from certain approved vendors. Advances under this financing arrangement are collateralized by the inventory and accounts receivable of our Equipment Segment and a guarantee of an amount up to $2,500,000 by HickoryTech. The agreement requires Enterprise Integration Services, Inc. to maintain specific levels of collateral relative to the outstanding balance due, provide selected monthly financial information, and make all payments when due or on demand in the event of a collateral shortfall, among other requirements. A default on the financing agreement by Enterprise Integration Services, Inc. would require HickoryTech to perform under the guarantee. The financing agreement provides 60 day, interest-free payment terms for working capital and can be terminated at any time by either party. The balance outstanding under the financing arrangement was $10,418,000 and $8,115,000 at March 31, 2013 and December 31, 2012, respectively. The balance fluctuates on a quarterly basis dependent on timing of customer orders. These balances are classified as current liabilities in the accompanying Consolidated Balance Sheets and are not considered part of our debt financing.

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Debt and Other Obligations

3 Months Ended

Mar. 31, 2013

Debt and Other Obligations [Abstract]

Debt and Other Obligations [Text Block]

Note 7.   Debt and Other Obligations

Our long-term obligations as of March 31, 2013 were $134,723,000, excluding current maturities of $1,420,000 on debt and $228,000 on current maturities of capital leases. Long-term obligations as of December 31, 2012 were $135,133,000 excluding current maturities of $1,420,000 on debt and $228,000 of capital leases.

On August 11, 2011, we entered into a $150,000,000 credit agreement with a syndicate of nine banks that matures on December 31, 2016. The credit facility is comprised of a $30,000,000 revolving credit component ($29,980,000 available to borrow as of March 31, 2013; $20,000 is reserved for outstanding letters of credit) and a $120,000,000 term loan component ($116,200,000 outstanding as of March 31, 2013). On March 1, 2012 we borrowed an additional $22,000,000 of incremental term loan debt ($19,780,000 outstanding as of March 31, 2013) as an extension of our existing credit facility to fund our acquisition of IdeaOne Telecom.

The term loans are structured in a Term Loan B facility. Under the terms of our credit facility we are required to make quarterly principal payments of $300,000 on the initial Term Loan and quarterly principal payments of $55,000 on the Incremental Term Loan. The revolving credit component does not require quarterly principal payments.

The term loan component has a provision whereby we periodically receive patronage capital refunds from our lender. Patronage refunds are recorded as an offset to interest expense and amounted to $177,000 in the first three months of 2013 compared to $161,000 in the first three months of 2012.

At March 31, 2013 we are in full compliance with specified financial ratios and tests required by our credit facility. The credit facility includes allowances for continued payment of dividends and specific limits on common stock repurchases.

Our obligations under the credit facility are secured by a first-priority lien on the property and assets, tangible and intangible, of HickoryTech and its current subsidiaries, which includes total assets except for the Equipment Segment accounts receivable and inventory. We have also given a first-priority pledge of the capital stock of our current subsidiaries to secure the credit facility. The credit facility contains certain restrictions that, among other things, limit or restrict our ability to create liens or encumbrances; incur additional debt; issue stock; make asset sales, transfers, or dispositions; and engage in mergers and acquisitions; pay dividends or purchase/redeem Company stock over specified maximum values.

The credit facility requires us to enter in or maintain effective interest rate protection agreements on at least 50% of the Term Loans' outstanding balance for a period ending August 2013 to manage our exposure to interest rate fluctuations. We currently have interest rate swap agreements, effectively fixing the LIBOR rate portion of the interest rate on $72,000,000 of our variable interest debt. Additional information on our interest-rate swap agreements can be found under Note 8 "Financial Derivative Instruments."

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Financial Derivative Instruments

3 Months Ended

Mar. 31, 2013

Financial Derivative Instruments [Abstract]

Financial Derivative Instruments

Note 8.  Financial Derivative Instruments

We utilize interest-rate swap agreements to manage our exposure to interest rate fluctuations on a portion of our variable-interest rate debt. We have effectively changed our exposure to varying cash flows on the variable-rate portion of our debt into fixed-rate cash flows, therefore reducing the impact of interest rate changes on future cash interest payments. We do not enter into derivative instruments for any purpose other than to manage interest rate exposure. We do not engage in interest rate speculation using derivative instruments.

We account for derivatives in accordance with FASB ASC Topic 815, "Derivatives and Hedging." ASC 815 requires all derivative instruments be recorded on the balance sheet as either an asset or a liability measured at its fair value, and that changes in the derivatives' fair value be recognized in earnings unless specific hedge accounting criteria are met. If a derivative is designated as a hedge, the effective portion of changes in the fair value of derivatives is recorded as a component of accumulated other comprehensive income (loss) in shareholders' equity, net of tax, which is subsequently, reclassified into earnings when the underlying hedged transaction is recognized in earnings. Amounts related to our derivatives will be reclassified from accumulated other comprehensive income to interest expense as interest payments are accrued or made on our variable rate debt. The estimated amount expected to be reclassified as an increase to interest expense within the next twelve months is $49,000 at March 31, 2013. The ineffective portion of the fair value of derivates is recognized directly in earnings. Hedge ineffectiveness is attributable to the swaps having a non-zero fair value at the time they were designated. If we were to terminate our interest rate swap positions, any related balance in accumulated other comprehensive income (loss) would immediately be recognized in earnings or reclassified into earnings as the interest payments are made dependent on the facts and circumstances of the termination. The changes in the fair value of derivatives that are not designated as hedges are recognized immediately in earnings. As of January 1, 2013 our interest rate swaps were designated as cash flow hedging instruments. As of December 31, 2012 our interest rate swaps were not designated as hedging instruments.

Listed below are the interest rate swap agreements we had outstanding as of March 31, 2013 which were designated as cash flow hedges of interest rate risk and have the effect of locking our interest rates on a portion of our existing variable interest rate debt.

Interest Rate Swap Agreement Effective Dates	Notional 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	%

The following tables present the fair value of our derivative instruments included in our Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012.

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	2,179	$	-
Total	$	-	$	-	$	2,179	$	-

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Not Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	-	$	2,432
Total	$	-	$	-	$	-	$	2,432

The tables below illustrate the effect of derivative instruments on consolidated operations for the periods ended March 31, 2013 and 2012, respectively. Our derivative instruments were designated as cash flow hedges for the period ended March 31, 2013. For the period ended March 31, 2012 our derivative instruments were not designated as hedges.

Derivatives Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	26	$	-	Interest expense	$	21	$	-	Interest expense	$	7	$	-
Total	$	26	$	-		$	21	$	-		$	7	$	-

Derivatives Not Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	-	$	-	Interest expense	$	-	$	-	Interest expense	$	-	$	47
Total	$	-	$	-		$	-	$	-		$	-	$	47

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Employee Post-Retirement Benefits

3 Months Ended

Mar. 31, 2013

Employee Post-Retirement Benefits [Abstract]

Employee Post-Retirement Benefits

Note 10.  Employee Post-Retirement Benefits

HickoryTech provides post-retirement health care and life insurance benefits for eligible employees. We are currently not funding these post-retirement benefits, but have accrued these liabilities. We are required to recognize the funded status of our post-retirement benefit plans on our consolidated balance sheet and recognize as a component of accumulated other comprehensive income (loss), net of tax, the gains or losses and prior service costs or credit that arise during the period but are not recognized as components of net periodic benefit cost. Employees hired on or after January 1, 2007 are not eligible for post-retirement health care and life insurance benefits.

	Three Months Ended
	March 31
(Dollars in thousands)	2013			2012
Components of net periodic benefit cost
Service cost	$	67		$	150
Interest cost		120			188
Expected return on plan assets		-			-
Amortization of transition obligation		-			15
Amortization of prior service credits		(236	)		(19	)
Recognized actuarial loss		120			135
Net periodic benefit cost	$	71		$	469

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Basis of Presentation and Consolidation (Details)	3 Months Ended
	Mar. 31, 2013
Basis of Presentation and Consolidation [Abstract]
Number of business segments	3

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Quarterly Segment Financial Summary

3 Months Ended

Mar. 31, 2013

Quarterly Segment Financial Summary [Abstract]

Quarterly Segment Financial Summary

Note 15.  Quarterly Segment Financial Summary

Our operations are conducted in three segments: (i) Fiber and Data, (ii) Equipment and (iii) Telecom.

Our Fiber and Data Segment serves wholesale, enterprise and commercial business customers with advanced data, Internet, voice and VoIP services. With our IP network and communication expertise, we are able to provide both custom and broad network solutions which can be extended beyond our regional network through partnerships and interconnections to provide end-to-end national connectivity. The Fiber and Data Segment includes revenue from Ethernet, Private Line, MPLS, Data Center, Dedicated Internet and our Hosted VoIP SingleLink services. We own, lease or utilize long-term indefeasible rights of use ("IRU") agreements for the operation of our network. Fiber and Data services are marketed throughout our core regions: northern Minnesota and the Minneapolis-Saint Paul metropolitan area, southern Minnesota, Des Moines, Iowa and Fargo, North Dakota.

Our Equipment Segment provides equipment solutions and support for a broad spectrum of business customers ranging in size from medium to large enterprise. Our equipment business plans, designs and implements networks utilizing emerging technology including: TelePresence Video, Unified Communications and Data Center solutions in collaboration with industry-leading partners. We provide a comprehensive set of services including: Advisory, Implementation, Development and Support. Our Total Care support team provides a proactive approach to monitor and support customer networks, unified communications environment and data centers as well as a single-point-of-contact for the support of applications, systems and infrastructure. Equipment sales and services are marketed primarily in our Minnesota core regions and specifically the Minneapolis-Saint Paul metropolitan area.

Our Telecom Segment provides bundled residential and business services including high-speed Internet, broadband services, digital TV, local voice and long distance services in our legacy telecom service area. Telecom is comprised of the operation of both incumbent local exchange carrier ("ILEC") and competitive local exchange carrier ("CLEC") operations. Our ILEC operations provide services in 13 south central Minnesota communities and 13 rural northwest Iowa communities. Our CLEC operation provides services in south central Minnesota and near Des Moines, Iowa. We own our network in both the ILEC and CLEC exchanges. The Telecom Segment, through National Independent Billing, Inc. ("NIBI"), also provides data processing and related billing services to HickoryTech and external communication providers including wireline, wireless and entertainment providers.

Segment information for the three months ended March 31, 2013 and 2012 is as follows:

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2013	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	16,471	$	17,237	$	15,061	$	-		$	48,769
Intersegment revenue		213		-		573		(786	)		-
Total operating revenue		16,684		17,237		15,634		(786	)		48,769
Asset impairment		633		-		-		-			633
Depreciation and amortization		2,796		85		4,121		7			7,009
Operating income (loss)		1,638		821		1,605		(207	)		3,857
Interest expense		-		-		8		1,131			1,139
Income tax provision (benefit)		677		337		655		(575	)		1,094
Net income (loss)		961		485		943		(763	)		1,626
Total assets		113,326		23,365		116,917		9,817			263,425
Property, plant and equipment, net		94,153		1,904		85,184		94			181,335
Additions to property, plant and equipment		2,943		558		2,248		40			5,789

(Dollars in thousands)							Corporate and
Three Months Ended March 31, 2012	Fiber and Data		Equipment		Telecom		Eliminations			Consolidated
Revenue from unaffiliated customers	$	13,219	$	17,421	$	16,304	$	-		$	46,944
Intersegment revenue		193		-		410		(603	)		-
Total operating revenue		13,412		17,421		16,714		(603	)		46,944
Depreciation and amortization		1,966		71		4,133		24			6,194
Operating income (loss)		2,345		820		2,187		(100	)		5,252
Interest expense		-		-		13		1,398			1,411
Income tax provision (benefit)		950		334		883		(600	)		1,567
Net income (loss)		1,395		486		1,299		(886	)		2,294
Total assets		101,996		16,144		122,512		26,812			267,464
Property, plant and equipment, net		83,055		1,389		90,475		101			175,020
Additions to property, plant and equipment		1,965		73		1,596		-			3,634

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value of Financial Instruments [Abstract]

Fair Value

The fair value and carrying value of our cash equivalents, investments and long-term debt, after deducting current maturities, and our interest rate swaps are as follows at March 31, 2013 and December 31, 2012:

(Dollars in thousands)			March 31, 2013					December 31, 2012
	Input Level			Carrying Amount		Fair Value			Carrying Amount		Fair Value
Cash equivalents (1)		1		$	76	$	76		$	-	$	-
Investments		2		$	3,396	$	3,396		$	3,213	$	3,213
Long-term debt		2		$	134,723	$	134,723		$	135,133	$	135,133
Interest rate swaps		2		$	2,179	$	2,179		$	2,432	$	2,432
(1) Cash equivalents are a money market account included in cash and cash equivalents on the balance sheet.

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Commitments and Contingencies (Details) (USD $)	3 Months Ended	12 Months Ended		32 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2013
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 NTIA Grant	16,800,000
Estimated Investment on Project	7,200,000
Estimated Investment On Project Percentage	30.00%
Capital expenditure incurred	233,000	7,081,000	12,664,000	19,978,000
Capital expenditure pending reimbursement from NTIA	1,275,000	1,100,000	1,920,000	1,275,000
NTIA reimbursements received	$ 0	$ 5,745,000	$ 6,945,000	$ 12,690,000
Project Completion Date	Jul. 31, 2013

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Financial Derivative Instruments (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Financial Derivative Instruments [Abstract]
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimated Net Amount to be Transferred	$ 49,000
Derivatives, Fair Value [Line Items]
Derivative Assets	0		0
Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	2,179,000		0
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	26,000	0
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	21,000	0
Amount of Gain or (Loss) Recognized in Income On Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	7,000	0
Designated as Hedging Instrument [Member] | Interest Expense [Member]
Derivatives, Fair Value [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	21,000	0
Amount of Gain or (Loss) Recognized in Income On Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	7,000	0
Designated as Hedging Instrument [Member] | Derivative Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets	0		0
Designated as Hedging Instrument [Member] | Derivative Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	2,179,000		0
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	0		2,432,000
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	0	0
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	0	0
Amount of Gain or (Loss) Recognized in Income On Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	0	47,000
Not Designated as Hedging Instrument [Member] | Interest Expense [Member]
Derivatives, Fair Value [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	0	0
Amount of Gain or (Loss) Recognized in Income On Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	0	47,000
Not Designated as Hedging Instrument [Member] | Derivative Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets	0		0
Not Designated as Hedging Instrument [Member] | Derivative Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	0		2,432,000
Interest Rate Swap September 2014 [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 [Line Items]
Coverage Amount	24,000,000
Variable Interest Rate (in hundredths)	1.91%
Interest Rate Swap September 2015 [Member]
Interest-Rate Swap Agreement [Line Items]
Coverage Amount	$ 24,000,000
Variable Interest Rate (in hundredths)	2.14%

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Receivables, allowance for doubtful accounts	$ 272	$ 278
Shareholders' equity:
Common stock, no par value	$ 0	$ 0
Common stock, stated value	$ 0.10	$ 0.10
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	13,552,582	13,519,131
Common stock, outstanding	13,552,582	13,519,131

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Long-Lived Assets

3 Months Ended

Mar. 31, 2013

Long-Lived Assets [Abstract]

Long-Lived Assets [Text Block]

Note 4. Long-Lived Assets

We review long-lived assets, including intangible assets subject to amortization, for impairment if certain events or changes in circumstances indicate impairment may be present. Impairment exists if the carrying value of a long-lived asset exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposal of the asset at the date it is tested. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized.

In the first quarter of 2013, an impairment test was performed in response to indicators that the carrying amount of certain customer relationship intangible assets and property, plant and equipment related to providing wireless internet to customers in the Fargo, North Dakota market may not be recoverable due to our decision to phase out this service. During the impairment review, we determined the carrying value of these particular intangibles, property and equipment were impaired. Fair value was calculated using the income approach of valuation. The income approach utilizes the discounted cash flow method.  It requires the use of estimates and judgments about the future income expected to be derived from the use or ownership of an asset.

In the three months ended March 31, 2013, we recorded an impairment charge of $633,000 within our Fiber and Data Segment.  There were no such charges in 2012.

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Financial Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Financial Derivative Instruments [Abstract]

Interest rate swap agreements

Listed below are the interest rate swap agreements we had outstanding as of March 31, 2013 which were designated as cash flow hedges of interest rate risk and have the effect of locking our interest rates on a portion of our existing variable interest rate debt.

Interest Rate Swap Agreement Effective Dates	Notional 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	%

Effect of derivative instruments on consolidated operations

Derivatives Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	26	$	-	Interest expense	$	21	$	-	Interest expense	$	7	$	-
Total	$	26	$	-		$	21	$	-		$	7	$	-

Derivatives Not Designated as Cash Flow Hedges	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
For the Quarters ended March 31,	2013		2012			2013		2012			2013		2012
Interest rate derivatives
Pay-fixed swaps	$	-	$	-	Interest expense	$	-	$	-	Interest expense	$	-	$	47
Total	$	-	$	-		$	-	$	-		$	-	$	47

Fair Value of Derivative Instruments [Table Text Block]

The following tables present the fair value of our derivative instruments included in our Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012.

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	2,179	$	-
Total	$	-	$	-	$	2,179	$	-

	Derivative Assets				Derivative Liabilities
	Fair Value as of
	March 31,		December 31,		March 31,		December 31,
Derivatives Not Designated as Cash Flow Hedges	2013		2012		2013		2012
Interest rate derivatives
Balance sheet location	Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments		Financial Derivative Instruments
Pay-fixed swaps	$	-	$	-	$	-	$	2,432
Total	$	-	$	-	$	-	$	2,432

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Goodwill and Other Intangible Assets (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Goodwill and Other Intangible Assets [Abstract]
Number of business segments	3
Goodwill [Line Items]
Goodwill	$ 29,028,000		$ 29,028,000
Goodwill tax deductible amount	26,964,000
Goodwill Allocation	1,725,000
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	11,389,000		11,429,000
Accumulated Amortization	6,841,000		6,618,000
Amortization of intangibles	223,000	138,000
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Future amortization expense for remainder of fiscal year	660,000
2014	749,000
2015	616,000
2016	565,000
2017	554,000
2018	554,000
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	8,459,000		8,499,000
Accumulated Amortization	5,543,000		5,368,000
Asset Impairment Charges	40,000
Customer relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	8 years
Customer relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	1 year
Other intangibles [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,930,000		2,930,000
Accumulated Amortization	1,298,000		1,250,000
Other intangibles [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years
Other intangibles [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	1 year
Fiber and Data Segment [Member]
Goodwill [Line Items]
Goodwill	5,384,000		5,384,000
Equipment Segment [Member]
Goodwill [Line Items]
Goodwill	596,000		596,000
Telecom [Member]
Goodwill [Line Items]
Goodwill	$ 23,048,000		$ 23,048,000

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Stock Compensation

3 Months Ended

Mar. 31, 2013

Stock Compensation [Abstract]

Stock Compensation

Note 14.  Stock Compensation

Our stock award plans provide for granting non-qualified stock options, stock awards and restricted stock awards to employees. We recognize stock compensation charges related to stock award plans based on management's best estimates and assumptions that the performance and service requirements of the plan will be achieved. Such compensation charges are recorded based upon the grant date fair value or settlement date fair value (as applicable) of our stock and are recognized over the requisite service period specified by the specific award plans. Share-based compensation expense includes amounts recognized related to the Company Employee Stock Purchase Plan. This plan allows participating employees to acquire shares of common stock at 85% of the average closing price for the five days previous to the purchase date. Stock-based compensation expense was $219,000 and $114,000, respectively, in the three months ended March 31, 2013 and 2012. This includes compensation expense for share-based payment awards granted prior to, but not vested as of March 31, 2013. As of March 31, 2013, we had not yet recognized compensation expense related to non-vested awards totaling $1,789,000. The weighted average period over which this compensation expense will be recognized is 2.63 years.

1993 Stock Award Plan

Long-Term Executive Incentive Program

We carry obligations of $614,000 and $1,028,000 as of March 31, 2013 and December 31, 2012 respectively, related to liability classified awards under the LTEIP that will be settled in company common stock in future periods.

Non-vested restricted stock activity for the quarter ended March 31, 2013 is depicted in the table below. Granted shares represent non-vested shares issued to settle an obligation under the LTEIP plan during the period.

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		32,447		$	3.43
Granted/settled		68,699		$	9.83
Vested		(44,099	)	$	5.12
Forfeited		-		$	-
Non-vested at end of period		57,047		$	9.83

Employee Stock Retention

Under this program, designated employees can earn shares of common stock if they complete a requisite service period which typically ranges from 11 to 36 months. Compensation expense related to the Employee Stock Retention program is recognized over the requisite service period.

Retention stock activity for the quarter ended March 31, 2013 was as follows:

				Weighted Average
	Shares			Fair Value
Non-vested at beginning of period		11,150		$	10.28
Granted		27,500		$	8.76
Vested		-		$	-
Forfeited		(800	)	$	10.57
Non-vested at end of period		37,850		$	9.13

Stock Option

Stock options granted may be exercised no later than ten years after the date of grant, with one-third of the options vesting each year. The fair value of each option award is estimated on the date of the grant using a Black-Scholes option valuation model.

A summary of stock option activity is as follows:

				Weighted Average
	Options			Exercise Price
Outstanding at January 1		143,817		$	9.95
Granted		-		$	-
Exercised		(21,667	)	$	8.44
Forfeited		-		$	-
Expired		(15,000	)	$	8.93
Outstanding at March 31		107,150		$	10.40
Exercisable at March 31		100,483		$	10.49

In the first quarter of 2013, we received $183,000 in cash related to stock options exercised during the period.