Hickory Tech Corporation

Transcription

1 Hickory Tech Corporation doing business as Annual Report 2013 Letter to Shareholders Report on Form 10-K

2 Enventis Service Area MINNESOTA Fargo Duluth St. Cloud Plymouth Minneapolis Edina Mankato Eau Claire Enventis Fiber Network Extended Network Community Fiber Ring Backbone POP Data Center Telecom Service Areas Regional offices Sioux Falls Rock Valley Rochester IOWA Urbandale Des Moines

3 Letter to Shareholders March 27, 2014 Dear Shareholders, 2013 was a successful year for our company, as we continued our transformation and rebranded our company as Enventis. We continue to embrace the change our industry offers while we position Enventis for the future. As we write another chapter in our 116-year history, we pay tribute to our roots and our founders who had the vision of building a remarkable company that provides superior customer service and competitive products. We remain committed to our mission and our values as well as providing an important return to our shareholders. One Brand reliable, adaptable communication solutions supported by our highly skilled team of local employees. In 2013, we grew our fiber and data services revenue 11 percent as a result of growth in retail and wholesale business services. We see more opportunity to drive growth in our fiber and data business services as we strategically build additional fiber access networks and target increased customer penetration across our regional fiber network Fiber and Data Revenue Growth ($ in millions) $60.1 $67.9 $45.9 In October of 2013, we announced Enventis would become our unified service brand for all customers across all our markets. By aligning under the strength of one brand, Enventis, we have simplified the customer experience, increased our visibility and market recognition and realized numerous marketing synergies. This unified brand strategy is more efficient as we grow and scale our company. With this proxy, we ask for your support in voting to change our corporate name from Hickory Tech Corporation to Enventis Corporation to fully align our corporate brand and service brand under a single, unified name. Upon a successful vote, our shares would trade under a new ticker symbol, ENVE. We believe the new corporate brand will position us for future success, enhance our market position and increase our visibility throughout the markets we serve. Results As Enventis, we deliver simplified communications experiences that enhance how our customers work and live. Our commitment has never been stronger to provide We achieved consistent equipment hardware sales in 2013, and grew our support services revenue 29 percent in our Equipment Segment. Our strong partnerships with Cisco and other industry-leading technology providers enable us to provide complete solutions and differentiate us in the marketplace as a highly skilled business partner. With this expertise, we are well positioned to expand our managed services and launch new cloud services in the coming year. Leveraging a value-based selling approach and our partner relationships, Enventis is well prepared to deliver the next phase of technology and infrastructure needs for new and existing customers. Growth in business services more than offset the 4 percent revenue decline within our Telecom Segment last year.

4 Broadband services (high-speed Internet and Digital TV) grew 5 percent, providing an important return on capital expenditures invested in the Telecom Segment which helps us maintain high margin legacy services. Our consumer bundle strategy continues to be competitive with the majority of customers who choose a bundle opting into a two-year agreement, lessening our broadband churn. 79 percent of our 2013 revenue was from business and broadband services, compared to 69 percent in This demonstrates the success we have had executing on our strategy and creating a more diverse and stronger revenue stream for our company. The Telecom Segment continues to generate strong cash flow; however, we are now less dependent on the regulated and declining legacy services. Revenue Diversification our product set, expand our service area and provide overall profitability and growth. In 2014, we will focus on driving sales, ensuring profitability and enhancing our customers experience as a local, committed, and responsive service provider. We ll continue to invest in opportunities that fit well with our strategy and position Enventis for future growth. As we look broadly at how technology is transforming communications, we see opportunities to leverage our regional fiber network and information technology services expertise to expand our managed and hosted, cloud services. Bandwidth needs are increasing and our high level of skill in both network and managed and hosted services is a key differentiator for Enventis. We believe we offer strong value to our customers as an experienced communications provider with a 116-year history, a dedicated, local support team and our commitment to deliver reliable services. Business and Broadband Telecom, Corp Other 21% 79% As a service company, our employees are key to our success and we thank them for their commitment to our customers, their dedication to constant improvement and their volunteer efforts that make the communities we serve a better place to live and work. Growth and the Future Our position as a regional communications provider with a local presence in each of our core markets allows us to be more responsive and nimble, and few providers have the depth and breadth to compete with our product and service portfolio. Furthermore, we have a highly skilled team of 520 employees who are instrumental in our day-to-day operations providing customers quality and reliable services and exceptional support. This local presence and strong customer focus differentiates Enventis from its competitors and gives us an advantage in the marketplace. We remain committed to returning cash to shareholders in the form of our quarterly dividends which go back more than 65 years. In the fourth quarter, we increased our dividend 3 percent, this being the fourth dividend increase we ve made since This is a reflection of our ability to generate strong cash flow to invest in growth opportunities while we provide an important return to shareholders through our long-standing dividend. We thank you, our shareholders, for your investment in our company and your continued confidence in our products and services and our business as we continue our legacy of building shareholder value. Thank you for your continued support. Sincerely, Diane L. Dewbrey Board Chairperson John W. Finke President and Chief Executive Officer We are confident in our plan and energized about opportunities to continue growing our company. We are a strong, financially secure company with a solid balance sheet and cash flow. We have had the foresight to anticipate declines in legacy telecom services and have successfully positioned ourselves as we invested in organic growth opportunities and made strategic acquisitions to diversify

5 Investor FAQ regarding proposed corporate name change Why is HickoryTech Corporation changing its name to Enventis Corporation? The purpose of the proposed name change is to align our corporate name with our service brand and how we conduct business. We are no longer exclusively a provider of landline telephone and related services, although these services remain an important aspect of our overall business. In the last eight years, we have expanded our business to provide voice over Internet Protocol, advanced data and fiber services, managed and hosted services and equipment and IT solutions. We have marketed the Enventis brand in the regions outside of our Telecom operations, including: Minneapolis/St. Paul, Minnesota; northern Minnesota; Fargo, North Dakota; and Des Moines, Iowa. Our board of directors believes that the proposed name change will better represent our company and the services it offers customers, will more accurately reflect our business and will not encumber the company with a name that limits how our customers and the public perceive us. Accordingly, we began conducting business exclusively under the name Enventis on October 7, Will the ticker symbol change? If the corporate name change is approved, the ticker symbol will change from HTCO to ENVE. The company s stock will continue to trade on the NASDAQ Global Stock Exchange. What will happen to stock certificates under the former name(s)? If the name change is approved, shareholders with shares in certificate form may continue to retain their existing certificates and the number of shares of common stock represented by those certificates will remain unchanged. Certificates that are issued after the name change becomes effective will bear our new name, Enventis Corporation. When will the name change and ticker symbol change be effective? If the name change is approved at the Annual Meeting on May 6, 2014, the change will be effective immediately. The ticker symbol will change within one week from the meeting date. As a shareholder, will I need to do anything on my end? If the name change is approved, you don t need to take any action as a shareholder. Do you have a new website address? Our new website address is Our investor relations site is hickorytech.com.

6 Shareholder Information Website Corporate Headquarters HickoryTech 221 East Hickory Street Mankato, MN Stock Market NASDAQ: HTCO Annual Shareholder Meeting Tuesday, May 6, 2014 at 10 a.m. CDT Mankato Civic Center, located at 1 Civic Center Plaza (at the corner of Riverfront Drive and Hickory Street) in Mankato, Minn. Registrar and Transfer Agent For inquiries regarding stock certificates, account changes or dividend disbursements, contact our transfer agent. Transfer Agent and Registrar Wells Fargo Bank Minnesota, N.A. Shareowner Services 1110 Centre Pointe Curve, Suite 101 Mendota Heights, MN Telephone: [email protected] Independent Accountant Moss Adams LLP Investor and Media Relations Information requests from members of the investment community or news media should be addressed to the Corporate Headquarters. Telephone: [email protected] or [email protected] Investor Information HickoryTech investor news and information including the Company s SEC filings is available online at

7 Investor Information: