Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 2 – Acquisitions and Dispositions

Hector Communications Corporation Spin-Off Agreement

On December 31, 2012 NU Telecom completed a spin-off agreement with HCC. NU Telecom had originally acquired a one-third interest in HCC on November 3, 2006. HCC was equally owned by NU Telecom, Blue Earth Valley Communications, Inc. and Arvig Enterprises, Inc. Under the spin-off agreement, NU Telecom received all of the stock of SETC and other assets and investments and incurred $3.3 million of additional debt.

The preliminary allocation of the spin-off value of HCC is shown below:

Current Assets	$	439,664
Property, plant and equipment		9,847,787
Investments		2,412,938
Customer relationship intangible		9,900,000
Trade name intangible		570,000
Excess cost over net assets acquired (Goodwill)		10,268,806
Current liabilities		(300,621)
Deferred liabilities		(7,675,522)
Total price allocation		25,463,052
Less Cash Acquired		(18,150)
Total Consideration For Acquisition, Net	$	25,444,902

This spin-off was accounted for using the acquisition method of accounting for business combinations, and accordingly, the acquired assets were recorded at estimated fair values as of the date of acquisition. Based upon our preliminary spin-off value allocation, the excess of the purchase price and acquisition costs over the fair value of the net identifiable tangible assets acquired was $20,738,806, which is not deductible for income tax purposes. The Company recorded an intangible asset related to the acquired company’s customer relationships of $9,900,000 and trade name intangible of $570,000. The estimated useful life of the customer relationship intangible is 14 years and trade name intangible is 5 years.

The preliminary valuation allocation is subject to change based on pending operational true-ups related to accounts receivable and accounts payable.

Pro Forma Financial Information

Under the spin-off agreement, NU Telecom received all of the stock of SETC and other assets and investments. The following pro forma results presented are for three and nine months ended September 30, 2012 as if the spin-off had been completed on January 1, 2012. The Company provided these pro forma condensed Statements of Income to facilitate analysis of the 2012 Statement of Income.

	THREE MONTHS ENDED SEPTEMBER 30, 2012
									New Ulm
		Actual		Actual					Telecom, Inc.
		New Ulm		Sleepy Eye		Pro Forma			Pro Forma
		Telecom, Inc.		Telephone Co.		Adjustments			Combined
REVENUES	$	8,027,347	$	1,353,183	$	(89,859)		$	9,290,671
NET INCOME	$	543,125	$	275,389	$	(369,445)	*	$	449,069
BASIC AND DILUTED NET INCOME
PER SHARE	$	0.11	$	0.05	$	(0.07)		$	0.09

* These adjustments include depreciation, amortization, management services,

equity income and interest expense, net of the related tax benefit.

	NINE MONTHS ENDED SEPTEMBER 30, 2012
									New Ulm
		Actual		Actual					Telecom, Inc.
		New Ulm		Sleepy Eye		Pro Forma			Pro Forma
		Telecom, Inc.		Telephone Co.		Adjustments			Combined
REVENUES	$	24,358,382	$	4,091,927	$	(269,579)		$	28,180,730
NET INCOME	$	1,650,086	$	925,223	$	(1,108,334)	*	$	1,466,975
BASIC AND DILUTED NET INCOME
PER SHARE	$	0.32	$	0.18	$	(0.21)		$	0.29

* These adjustments include depreciation, amortization, management services,

equity income and interest expense, net of the related tax benefit.

The operating results for SETC are included in the September 30, 2013 operating results of NU Telecom, but are not included in the operating results of NU Telecom as of September 30, 2012.