0000071557 us-gaap:RetainedEarningsMember 2011-09-30 0000071557 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2011-09-30 0000071557 us-gaap:RetainedEarningsMember 2010-12-31 0000071557 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2010-12-31 0000071557 us-gaap:RetainedEarningsMember 2009-12-31 0000071557 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2009-12-31 0000071557 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2011-01-01 2011-09-30 0000071557 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2010-01-01 2010-12-31 0000071557 us-gaap:RetainedEarningsMember 2011-01-01 2011-09-30 0000071557 us-gaap:RetainedEarningsMember 2010-01-01 2010-12-31 0000071557 2010-01-01 2010-12-31 0000071557 us-gaap:CommonStockMember 2011-09-30 0000071557 us-gaap:CommonStockMember 2010-12-31 0000071557 us-gaap:CommonStockMember 2009-12-31 0000071557 2010-09-30 0000071557 2009-12-31 0000071557 2011-09-30 0000071557 2010-12-31 0000071557 2011-07-01 2011-09-30 0000071557 2010-07-01 2010-09-30 0000071557 2010-01-01 2010-09-30 0000071557 2011-11-14 0000071557 2011-01-01 2011-09-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares false --12-31 Q3 2011 2011-09-30 10-Q 0000071557 5115435 Smaller Reporting Company NEW ULM TELECOM INC Note 6 – Other Investments We are a co-investor with other rural telephone companies in several partnerships and limited liability companies. These joint ventures make it possible to offer services to customers, including digital video services and fiber optic transport services that we would have difficulty offering on our own. These joint ventures also make it possible to invest in new technologies with a lower level of financial risk. We recognize income and losses from these investments on the equity method of accounting. For a listing of our investments, see Note 9 – "Segment Information" to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q. 732294 255287 647989 198870 3060921 1073610 3394769 1132272 1788461 612121 1987115 675041 169742 162384 30870 17066 34753 9914 480534 462500 523284 183176 485016 163809 10383488 3548637 10791510 3603193 179703 179057 172820 95315 172210 73426 Note 4 – Secured Credit Facility We have a $59,700,000 credit facility with CoBank, ACB. Under this credit facility, we entered into separate Master Loan Agreements (MLAs) and a series of supplements to those respective MLAs. NU Telecom and its respective subsidiaries also entered into security agreements under which substantially all of the assets of NU Telecom and its respective subsidiaries have been pledged to CoBank, ACB as collateral. In addition, NU Telecom and its respective subsidiaries have guaranteed all obligations under the credit facility. The loan agreements had also put restrictions on the ability of NU Telecom to pay cash dividends to its stockholders. NU Telecom was allowed to pay dividends (a) (i) in an amount up to $2,050,000 in any year and (ii) in any amount if NU Telecom's "Total Leverage Ratio," that is, the ratio of its "Indebtedness" to "EBITDA" (in each case as defined in the loan documents), was equal to or less than 3.50 to 1.00 and (b) in either case, if NU Telecom was not in default or potential default under the loan agreements. As of December 31, 2010, NU Telecom's Total Leverage Ratio fell below the 3.50 to 1.00 ratio, thus eliminating any restrictions on NU Telecom's ability to pay cash dividends to its stockholders. As of September 30, 2011, we were in compliance with the financial ratios in the loan agreements. As described in Note 5 – "Interest Rate Swaps" to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q, we entered into interest rate swaps that effectively fix our interest rates and cover $36.0 million of our debt at a weighted average rate of 5.52%, as of September 30, 2011. The additional $14.18 million ($6.09 million available under the credit facilities and $8.09 million currently outstanding) remains subject to variable interest rates, at an effective weighted average interest rate of 2.31%, as of September 30, 2011. 91384156 93549710 3423056 1217870 3842324 1321410 7416075 8176465

1154791

1097706

187220

134515

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Note 13 – Acquisition of Cable Television Assets (CATV) On June 14, 2010 NU Telecom completed the acquisition of all of the assets of the CATV system located in and around Glencoe, Minnesota from Midcontinent Communications for approximately $1.6 million pursuant to the Asset Purchase Agreement dated March 30, 2010. NU Telecom funded the purchase with current cash reserves. The acquisition resulted in the addition of approximately 1,200 connections to our video and Internet services. The allocation of the purchase price for the CATV assets has been based on the asset's fair values. GAAP establishes criteria for determining whether intangible assets should be recognized separately from goodwill. GAAP states that goodwill and intangible assets with indefinite lives are not amortized, but rather are tested for impairment on at least an annual basis. The allocation of the net purchase price of the CATV assets is shown below: <table style="margin-left: 10%;" border="0" cellspacing="0" cellpadding="0" width="60%"> <tr style="font-size: 1px;"><td valign="bottom" width="81%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="13%">  </td> <td valign="bottom" width="1%">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Current assets</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 23,958</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Property, plant and equipment</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 1,237,607</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Customer relationship intangible</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 147,659</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Excess cost over net assets acquired (Goodwill)</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> 190,776</td> <td valign="bottom">  </td></tr> <tr><td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom"> Cash paid for acquisition</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 1,600,000</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td></tr></table> This acquisition 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 the acquisition. Based upon our final purchase price allocation, the excess of the purchase price and acquisition costs over the fair value of the net identifiable tangible assets acquired was $338,435, which is deductible for income tax purposes. The remaining estimated useful life of the customer relationships intangible asset is 13 years. Our operations reflect the business activity of Glencoe from the date of its acquisition on June 14, 2010. These operations were not material to our overall business.

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-130863

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Note 11 – Commitments and Contingencies We are involved in certain contractual disputes in the ordinary course of business. We do not believe the ultimate resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows. We did not experience any changes to material contractual obligations in the first nine months of 2011. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for the discussion relating to commitments and contingencies.

0.2400

0.0800

0.2450

0.0825

1.66

90000000

5115435

8525725

Note 8 – Deferred Compensation As part of the acquisition of HTC, we have recorded other deferred compensation relating to the estimated present value of executive compensation payable to certain former executives of HTC. Cash compensation over the next year includes deferred wages totaling $309,750. The difference between the recorded deferred compensation on the balance sheet and compensation to be paid over the next year is due to life-time employee benefits.

Note 10 – Comprehensive Income Our comprehensive income includes two items in addition to net income. The first is an unrealized gain resulting from our one-third ownership share of HCC's accumulated other comprehensive income gain. HCC's accumulated comprehensive income (loss) differs from the "HCC investment income" reported on our consolidated statements of income. The second item reflects the change in the unrealized gains (losses) of the interest rate swap agreements, net of deferred income taxes that NU Telecom entered into with CoBank, ACB. As of September 30, 2011, these interest rate swap agreements cover $36.0 million of NU Telecom's indebtedness to CoBank, ACB, and are described in Note 5 – "Interest Rate Swaps" to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Components of our comprehensive income consist of the following: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="bottom" width="42%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="1%">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Three Months Ended September 30,</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Nine Months Ended September 30,</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Net Income</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 706,328</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 330,780</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 1,685,513</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 1,145,609</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td valign="bottom"> Other Comprehensive Income:</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Unrealized Gain of Equity Method Investee</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 83,456</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 50,438</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 296,509</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 106,710</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td valign="bottom"> Change in Unrealized Gains (Losses) of Interest Rate Swap Agreements, Net of Deferred Income Taxes</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> 133,726</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> 58,725</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> 334,884</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> (326,021</td> <td style="padding-bottom: 1px;" valign="bottom"> )</td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom"> Total Comprehensive Income</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 923,510</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 439,943</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 2,316,906</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 926,298</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td></tr></table>

4171233

1418725

4657190

1500362

7387098

2448099

6841531

2013785

21173183

7222599

21636024

6948954

1128863

843366

670533

413566

78237

186706

1246640

1144912

13476518

13773484

7416405

6870838

92658

2038519

1568631

1636939

1253285

0.22

0.06

0.33

0.14

200000

Note 12 – Hector Communications Corporation On November 3, 2006 we acquired a one-third interest in HCC. HCC is owned equally by NU Telecom, Blue Earth Valley Communications, Inc. and Arvig Enterprises, Inc. Each of the owners provides management and other operational services to HCC and its subsidiaries. Our President and Chief Executive Officer, Mr. Bill D. Otis, has been named Chairman of the Board of Directors and President of HCC. Ms. Barbara A.J. Bornhoft, our Vice-President and Chief Operating Officer, also serves on the Board of Directors of HCC. The following table summarizes financial information of HCC for the periods ended September 30, 2011 and 2010: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="bottom" width="42%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="1%">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Three Months Ended September 30,</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Nine Months Ended September 30,</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Operating Revenues</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 7,009,738</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 7,108,154</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 20,313,870</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 20,765,949</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Operating Income</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 1,617,255</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 1,407,903</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 4,150,418</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 4,277,190</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Net Income</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 653,260</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 462,721</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 1,437,779</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 1,316,609</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr></table>

Note 2 – Fair Value Measurements We have adopted the rules prescribed under GAAP for our financial assets and liabilities. GAAP includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity's pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="top" width="4%">  </td> <td valign="top" width="7%">  </td> <td valign="top" width="88%">  </td></tr> <tr><td valign="top">  </td> <td valign="top"> Level 1: </td> <td valign="top"> Inputs are quoted prices in active markets for identical assets or liabilities. </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td></tr> <tr><td valign="top">  </td> <td valign="top"> Level 2: </td> <td valign="top"> Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and market-corroborated inputs that are derived principally from or corroborated by observable market data. </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td></tr> <tr><td valign="top">  </td> <td valign="top"> Level 3: </td> <td valign="top"> Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. </td></tr></table> We use financial derivative instruments to manage our overall cash flow exposure to fluctuations in interest rates. We account for derivative instruments in accordance with GAAP that requires derivative instruments to be recorded on the balance sheet at fair value. Changes in fair value of derivative instruments must be recognized in earnings unless specific hedge accounting criteria are met, in which case, the gains and losses are included in other comprehensive income rather than in earnings. We have entered into interest rate swaps with our lender CoBank, ACB to manage our cash flow exposure to fluctuations in interest rates. These instruments were designated as cash flow hedges and were effective at mitigating the risk of fluctuations on interest rates in the market place. Any gains or losses related to changes in the fair value of these derivatives are accounted for as a component of accumulated other comprehensive income (loss) for as long as the hedge remains effective. The fair value of our interest rate swap agreements is discussed in Note 5 – "Interest Rate Swaps" to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Our swap agreements were determined based on Level 2 inputs. Other Financial Instruments Other Investments - It is difficult to estimate a fair value for equity investments in companies carried on the equity or cost basis due to a lack of quoted market prices. We conducted an evaluation of our investments in all of our companies in connection with the preparation of our audited financial statements at December 31, 2010. We believe the carrying value of our investments is not impaired. Debt – We estimate the fair value of our long-term debt based on the discounted future cash flows we expect to pay using current rates of borrowing for similar types of debt. Fair value of the debt approximates carrying value. Other Financial Instruments - Our financial instruments also include cash equivalents, trade accounts receivable and accounts payable for which the current carrying amounts approximate fair market value.

Note 5 – Interest Rate Swaps We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely affect expected future cash flows and by evaluating hedging opportunities. We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facilities with CoBank, ACB require that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility. To meet this objective, we entered into Interest Rate Swap Agreements with CoBank, ACB. Under these Interest Rate Swap Agreements and subsequent swaps that each cover a specified notional dollar amount, we have changed the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of these interest rate swaps, we pay a fixed contractual interest rate and (i) make an additional payment if the LIBOR variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate. Each month, we make interest payments to CoBank, ACB under its loan agreements based on the current applicable LIBOR Rate plus the contractual LIBOR margin then in effect with respect to each applicable loan, without reflecting any interest rate swaps. At the end of each calendar quarter, CoBank, ACB adjusts our aggregate interest payments based upon the difference, if any, between the amounts paid by us during the quarter and the current effective interest rate set forth in the table below. All net interest payments made by us are reported in our consolidated income statement as interest expense. Pursuant to these interest rate swap agreements, we entered into interest rate swaps covering (i) $39.0 million of our aggregate indebtedness to CoBank, ACB effective March 19, 2008 and (ii) an additional $6.0 million of our aggregate indebtedness to CoBank, ACB effective June 23, 2008. These swaps effectively lock in the interest rate on (i) $6.0 million of variable-rate debt through March 2011, (ii) $33.0 million of variable-rate debt through March 2013, (iii) $3.0 million of variable-rate debt through June 2011 and (iv) $3.0 million of variable-rate debt through June 2013. On January 1, 2011, we entered into a cash management agreement with CoBank, ACB. This agreement reduces our borrowing expense in the form of lower interest expense by ensuring there are no idle funds in our bank accounts as those excess funds are used to reduce our debt. When we have excess cash in our bank accounts, our surplus cash is automatically applied to our outstanding loan balances in our revolver debt facilities and when we have a cash deficit position in our bank accounts, CoBank, ACB advances funds on our revolver debt facilities to fund the deficit position. Over time, our interest expense is reduced as we are in a cash surplus position more often than a deficit position. In connection with this agreement, on December 30, 2010, we broke out $1,000,000 of the interest rate swap agreements on Loan RX0583-T1. We recognized a realized loss of $6,345 for the early termination of this interest rate swap agreement as of December 31, 2010. On March 31, 2011, an additional $5,000,000 of our swaps matured on Loan RX0583-T1 ($1,000,000) and Loan RX0584-T1 ($4,000,000). No gain or loss was recognized on these swaps as they had reached their full maturities. On June 30, 2011, an additional $3,000,000 of our swaps matured on Loan RX0583-T2. No gain or loss was recognized on this swap as it had reached its full maturity. As of September 30, 2011 we had the following interest rate swaps in effect. <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="top" width="37%">  </td> <td valign="top" width="3%">  </td> <td valign="top" width="12%">  </td> <td valign="top" width="2%">  </td> <td valign="top" width="1%">  </td> <td valign="top" width="12%">  </td> <td valign="top" width="2%">  </td> <td valign="top" width="30%">  </td> <td valign="top" width="1%">  </td></tr> <tr><td style="border-bottom: black 1px solid;" valign="top"> Loan #</td> <td valign="top">  </td> <td style="border-bottom: black 1px solid;" valign="top"> Maturity Date</td> <td valign="top">  </td> <td style="border-bottom: black 1px solid;" valign="top" colspan="2"> Notional Amount</td> <td valign="top">  </td> <td style="border-bottom: black 1px solid;" valign="top"> Current Effective Interest Rate (1)</td> <td valign="top">  </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td></tr> <tr><td valign="top"> RX0583-T1</td> <td valign="top">  </td> <td valign="top"> 03/31/2013</td> <td valign="top">  </td> <td valign="top"> $</td> <td valign="top"> 11,250,000</td> <td valign="top">  </td> <td valign="top"> 5.26% (LIBOR Rate of 3.26% plus 2.00% LIBOR Margin)</td> <td valign="top">  </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td></tr> <tr><td valign="top"> RX0583-T2</td> <td valign="top">  </td> <td valign="top"> 06/30/2013</td> <td valign="top">  </td> <td valign="top"> $</td> <td valign="top"> 3,000,000</td> <td valign="top">  </td> <td valign="top"> 6.54% (LIBOR Rate of 4.54% plus 2.00% LIBOR Margin)</td> <td valign="top">  </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td> <td valign="top">  </td></tr> <tr><td valign="top"> RX0584-T1</td> <td valign="top">  </td> <td valign="top"> 03/31/2013</td> <td valign="top">  </td> <td valign="top"> $</td> <td valign="top"> 21,750,000</td> <td valign="top">  </td> <td valign="top"> 5.51% (LIBOR Rate of 3.26% plus 2.25% LIBOR Margin)</td> <td valign="top">  </td></tr></table> (1) As described in Note 4 – "Secured Credit Facility" to the Consolidated Financial Statement of this Quarterly Report on Form 10-Q, each note initially bears interest at a LIBOR rate determined by the maturity of the note, plus a "LIBOR Margin" rate equal to either 2.00% or 2.25% according to the individual secured credit facility. The LIBOR Margin decreases as the borrower's "Leverage Ratio" decreases. The "Current Effective Interest Rate" in the table reflects the rate we pay giving effect to the swaps. These interest rate swaps qualify as cash flow hedges for accounting purposes under GAAP. We have reflected the effect of these hedging transactions in the financial statements for the periods ended September 30, 2011 and 2010. The unrealized gain and loss were reported in other comprehensive income (loss). If we were to terminate our interest rate swap agreements, the cumulative change in fair value at the date of termination would be reclassified from accumulated other comprehensive income (loss), which is classified in stockholders' equity, into earnings on the consolidated statements of income. The fair value of the Company's interest rate swap agreements is determined based on valuations received from CoBank, ACB and are based on the present value of expected future cash flows using discount rates appropriate with the terms of the swap agreements. The fair value indicates an estimated amount we would have to pay if the contracts were canceled or transferred to other parties. The activity on the interest rate swap agreements at September 30, 2011 and 2010 was as follows: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="bottom" width="42%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="10%">  </td> <td valign="bottom" width="1%">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Three Months Ended September 30,</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> Nine Months Ended September 30,</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> 2010</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Gain (Loss) on Derivative Instruments</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 224,637</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 98,648</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> 562,546</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> $</td> <td bgcolor="#d6f3e8" valign="bottom"> (547,659</td> <td bgcolor="#d6f3e8" valign="bottom"> )</td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td valign="bottom"> Deferred Income Tax</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> (90,911</td> <td valign="bottom"> )</td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> (39,923</td> <td valign="bottom"> )</td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> (227,662</td> <td valign="bottom"> )</td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom"> 221,638</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td></tr> <tr><td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom"> Gain (Loss) Reported in Accumulated Other Comprehensive Income (Loss)</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 133,726</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 58,725</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> 334,884</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 3px double;" bgcolor="#d6f3e8" valign="bottom"> (326,021</td> <td style="padding-bottom: 3px;" bgcolor="#d6f3e8" valign="bottom"> )</td></tr></table>

4282

4338

29707100

Note 3 – Goodwill and Intangible Assets We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. At September 30, 2011 and December 31, 2010, our goodwill totaled $29,707,100. As required by GAAP, we do not amortize goodwill and other intangible assets with indefinite lives, but test for impairment on an annual basis or earlier if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying amount. These circumstances include, but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or discounted cash flows approach and (ii) the market approach that utilizes comparable companies' data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit's goodwill to its carrying amount. In calculating the implied fair value of the reporting unit's goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value. We completed our annual impairment test for acquired goodwill in the fourth quarter of 2010, which resulted in no impairment charges to goodwill. Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights and a noncompetition agreement. As of December 31, 2009, our management determined that our trade name intangible was no longer an indefinite-lived intangible asset due to the rebranding of HTC's products and services. Our management anticipates that this rebranding process would take approximately three years to complete. We anticipate an additional charge to amortization expense of $266,667 per year, over the three years which began in 2010, due to this rebranding process. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives and classifications of our identifiable intangible assets. The components of our identified intangible assets are as follows: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="bottom" width="33%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="9%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="9%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="9%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="9%">  </td> <td valign="bottom" width="3%">  </td> <td valign="bottom" width="1%">  </td> <td valign="bottom" width="9%">  </td> <td valign="bottom" width="1%">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> September 30, 2011</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="5"> December 31, 2010</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> Useful Lives</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> Gross Carrying Amount</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> Accumulated Amortization</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> Gross Carrying Amount</td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom" colspan="2"> Accumulated Amortization</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Definite-Lived Intangible Assets</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Customers Relationships</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 14-15 yrs</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 19,378,445</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 5,176,650</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 19,378,445</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 4,139,070</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Regulatory Rights</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 15 yrs</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 4,000,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 999,993</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 4,000,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 799,994</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Non-Competition Agreement</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 5 yrs</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 800,000</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 599,985</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 800,000</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> 480,000</td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Trade Name</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 3 yrs</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 800,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 466,667</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 800,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom"> 266,667</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Indefinitely-Lived Intangible Assets</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Video Franchise</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 3,000,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 0</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 3,000,000</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 0</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr> <tr><td valign="bottom"> Total</td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 27,978,445</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 7,243,295</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 27,978,445</td> <td valign="bottom">  </td> <td valign="bottom"> $</td> <td valign="bottom"> 5,685,731</td> <td valign="bottom">  </td></tr> <tr><td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" valign="bottom">  </td> <td valign="bottom">  </td></tr> <tr><td bgcolor="#d6f3e8" valign="bottom"> Net Identified Intangible Assets</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 20,735,150</td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td bgcolor="#d6f3e8" valign="bottom">  </td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> $</td> <td style="border-bottom: black 1px solid;" bgcolor="#d6f3e8" valign="bottom"> 22,292,714</td> <td bgcolor="#d6f3e8" valign="bottom">  </td></tr></table> Amortization expense related to the definite-lived intangible assets was $1,557,564 and $1,553,230 for the nine months ended September 30, 2011 and 2010. Amortization expense for the remaining three months of 2011 and the five years subsequent to 2011 is estimated to be: <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="top" width="5%">  </td> <td valign="top" width="5%">  </td> <td valign="top" width="90%">  </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> (October 1 – December 31) - $519,188 </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> 2012 - $2,076,658 </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> 2013 - $1,649,991 </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> 2014 - $1,649,991 </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> 2015 - $1,649,991 </td></tr> <tr><td valign="top">  </td> <td valign="top"> </td> <td valign="top"> 2016 - $1,648,602 </td></tr></table>

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Note 1 – Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements of New Ulm Telecom, Inc. (NU Telecom) and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (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 condensed 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 condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2010. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could 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 include NU Telecom and its subsidiaries. All inter-company transactions have been eliminated from the consolidated financial statements. Revenue Recognition We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or a service has been provided, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. Revenues are earned from our customers primarily through the connection to our local network, digital and commercial television programming, and Internet services (both dial-up and high-speed broadband). Revenues for these services are billed based on set rates for monthly service or based on the amount of time the customer is utilizing our facilities. The revenue for these services is recognized when the service is rendered. Revenues earned from interexchange carriers accessing our network are based on the utilization of our network by these carriers as measured by minutes of use on the network by the individual carriers. Revenues are billed at tariffed access rates for both interstate and intrastate calls. Revenues for these services are recognized based on the period the access is provided. Interstate access rates are established by a nationwide pooling of companies known as the National Exchange Carriers Association (NECA). The Federal Communications Commission (FCC) established NECA in 1983 to develop and administer interstate access service rates, terms and conditions. Revenues are pooled and redistributed on the basis of a company's actual or average costs. NU Telecom settlements from the pools are based on its actual costs to provide service, while the settlements for NU Telecom subsidiaries – Western Telephone Company, Peoples Telephone Company and Hutchinson Telephone Company (HTC) are based on nationwide average schedules. Access revenues for NU Telecom include an estimate of a cost study each year that is trued-up subsequent to the end of any given year. Our management believes the estimates included in our preliminary cost study are reasonable. We cannot predict the future impact that industry or regulatory changes will have on interstate access revenues. Intrastate access rates are filed with state regulatory commissions in Minnesota and Iowa. We derive revenues from system sales and services through the sale, installation and servicing of communication systems. In accordance with GAAP, these deliverables are accounted for separately. We recognize revenue from customer contracts for sales and installations using the completed-contract method, which recognizes income when the contract is substantially complete. We recognize rental revenues over the rental period. Cost of Services (excluding depreciation and amortization) Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transport cost. Selling, General and Administrative Expenses Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated with the operations of the business. Depreciation and Amortization Expense We use the group life method (mass asset accounting) to depreciate the assets of our telephone companies. Telephone plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of telecommunications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $1,494,597 and $1,928,323 for the three months ended September 30, 2011 and 2010. Depreciation expense was $5,283,967 and $5,833,868 for the nine months ended September 30, 2011 and 2010. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. Income Taxes The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences. We account for income taxes in accordance with GAAP. As required by GAAP, we recognize the financial statement benefit of tax positions only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We did not have any net unrecognized tax benefits at September 30, 2011 that, if recognized, would affect the income tax provision when recorded, in accordance with GAAP. We are primarily subject to United States, Minnesota and Iowa income taxes. Tax years subsequent to 2007 remain open to examination by federal and state tax authorities. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. At September 30, 2011 and December 31, 2010 we had $0 and $8,316 accrued for interest or penalties related to income tax matters. Recent Accounting Developments In June, 2011 the Financial Accounting Standards Board (FASB) issued new guidance regarding the presentation of comprehensive income. The guidance requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. We do not believe the adoption of this guidance will have a material impact on our financial statements. In May 2011, the FASB issued new guidance related to fair value measurement. The purpose of this guidance is to achieve commonality between United States GAAP and International Financial Reporting Standards pertaining to fair value measurement and disclosure requirements. It changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. The amendment becomes effective for annual periods beginning after December 15, 2011. We do not believe the adoption of this guidance will have a material impact on our disclosures. Issued in January, 2010 Accounting Standards Update (ASU) 2010-06 – Fair Value Measures and Disclosures, provides amendments to Accounting Standards Codification Topic 820 – Fair Value Measurements and Disclosures, and provides guidance related to disclosures about the transfer in and out of Levels 1 and 2 and the activity in Level 3 fair value measurements. It also clarifies disclosures about the level of disaggregation, inputs and valuation techniques. Our adoption of this guidance, which was effective in the first quarter of 2010 except for the new requirements relating to a Level 3 activity, did not have a material impact on our disclosures. Our adoption of this guidance on Level 3 activity, which was effective in the first quarter of 2011, did not have a material impact on our disclosures. Issued in October, 2009 ASU 2009-13 – Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, provides guidance for separating consideration in multiple-deliverable arrangements. Our adoption of this guidance, which was effective on January 1, 2011, did not have a material effect on our consolidated financial statements. We reviewed all other significant newly issued accounting pronouncements and determined they are either not applicable to our business or that no material effect is expected on our financial position and results of operations.

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Note 7 – Guarantees On January 30, 2004 we guaranteed a portion of the indebtedness of FiberComm, LC in connection with the refinancing of a fifteen-year loan, maturing in January, 2019 made by American State Bank to FiberComm, LC. In 2009, we guaranteed additional indebtedness of FiberComm, LC in connection with an additional loan entered into on March 23, 2009 maturing January 1, 2015 made by American State Bank to FiberComm, LC. On September 30, 2011 Fibercomm, LC refinanced the above two loans with American State Bank with a new ten-year loan, maturing on September 30, 2021. As of September 30, 2011 we have recorded a liability $462,500 in connection with the guarantee on this new loan. This guarantee may be exercised if FiberComm, LC does not make its required payments on this note.

Note 9 – Segment Information We operate in the Telecom Segment and have no other significant business segments. The Telecom Segment consists of voice, data and video communication services delivered to the customer over our local communications network. The Telecom Segment operates the following incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs) and has investment ownership interests as follows: Telecom Segment Businesses <table border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="font-size: 1px;"><td valign="top" width="5%">  </td> <td valign="top" width="5%">  </td> <td valign="top" width="5%">  </td> <td valign="top" width="85%">  </td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top" colspan="2"> ILECs:</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> New Ulm Telecom, Inc., the parent company;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Hutchinson Telephone Company, a wholly-owned subsidiary of NU Telecom;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Western Telephone Company, a wholly-owned subsidiary of NU Telecom; and</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Peoples Telephone Company, a wholly-owned subsidiary of NU Telecom;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top" colspan="2"> CLECs:</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> New Ulm Telecom, Inc. located in Redwood Falls, Minnesota; and</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Hutchinson Telecommunications, Inc., a wholly-owned subsidiary of HTC, located in Litchfield, Minnesota;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top" colspan="2"> Our investments and interests in the following entities include some management responsibilities:</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Hector Communications Corporation (HCC) – 33.33% ownership interest;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> FiberComm, LC – 25.18% ownership interest;</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Broadband Visions, LLC – 16.26% ownership interest; and</td></tr> <tr><td valign="top">  </td> <td valign="top">  </td> <td valign="top"> §</td> <td valign="top"> Independent Emergency Services, LLC – 14.29% ownership interest.</td></tr></table> No single customer accounted for a material portion of our consolidated revenues.

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<div> Note 14 – Subsequent Events We have evaluated and disclosed subsequent events through the filing date of this Quarterly Report on Form 10-Q. </div>

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