Earnings and Cash Dividends per Common Share

9 Months Ended

Sep. 30, 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 unvested restricted stock issued under the LTEIP, which contain the right to receive 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 September 30				Nine Months Ended September 30
(Dollars in thousands, except share and earnings per share amounts)	2013		2012		2013		2012
Net income	$	1,862	$	1,741	$	5,809	$	5,773
Weighted average shares outstanding		13,543,062		13,427,883		13,543,479		13,394,224
Stock options (dilutive only)		6,770		15,316		5,725		14,628
Stock subscribed (ESPP)		-		550		-		282
Retention awards		20,115		20,006		21,366		22,417
Stock subscribed (LTEIP)		22,630		21,388		23,628		21,091
Total dilutive shares outstanding		13,592,577		13,485,143		13,594,198		13,452,642
Earnings per share:
Basic and diluted	$	0.14	$	0.13	$	0.43	$	0.43
Dividends per share	$	0.145	$	0.14	$	0.435	$	0.42

Options to purchase 72,950 and 78,900 shares for the three months ended September 30, 2013 and 2012, respectively, and 82,150 and 78,900 shares for the nine months ended September 30, 2013 and 2012, respectively, were not included in the computation of diluted 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 three quarters 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
Second quarter (May 15)		13,559,043		13,479,677
Third quarter (August 15)		13,544,964		13,494,599

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 third quarter of 2013 and 2012, respectively. During the first nine months of 2013 and 2012, shareholders have elected to reinvest $229,000 and $223,000, respectively, of dividends into HickoryTech common stock pursuant to the HickoryTech Corporation Dividend Reinvestment Plan.

In the nine months ended September 30, 2013, we acquired and retired 124,285 shares of HickoryTech common stock. There were no share repurchases or retirements during the three months ended September 30, 2013.