10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑K

(Mark One)

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

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:  000-35180

Lumos Networks Corp.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	80-0697274 (I.R.S. Employer Identification No.)
One Lumos Plaza, Waynesboro, Virginia 22980 (Address of principal executive offices) (Zip Code)
(540) 946-2000 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common stock, $0.01 par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes   ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes   ☒  No

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   ☐ No

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   ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K.  ☒

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 definitions 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 ☒ Non-accelerated filer ☐ Smaller reporting company ☐

(Do not check if a 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

As of June 30, 2015, the aggregate market value of the Registrant’s common stock was $329,427,269.

There were 23,211,325 shares of the registrant’s common stock outstanding as of the close of business on March 4, 2016.  

DOCUMENTS INCORPORATED BY REFERENCE
Document	Incorporated Into
Proxy Statement for the 2016 Annual Meeting of Stockholders	Part III

LUMOS NETWORKS CORP.
2015ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	2
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Mine Safety Disclosures	17
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 8.	Financial Statements and Supplementary Data	40
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	71
Item 9A.	Controls and Procedures	71
Item 9B.	Other Information	73
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	73
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	73
Item 13.	Certain Relationships and Related Transactions, and Director Independence	73
Item 14.	Principal Accountant Fees and Services	73
Part IV
Item 15.	Exhibits and Financial Statement Schedules	74
Signatures

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Part I

FORWARD-LOOKING STATEMENTS

Any statements contained in this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such.  The words “anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates,” “targets,” “projects,” “should,” “may,” “will” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are contained throughout this report, for example in “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements.  Many of these risks are beyond our ability to control or predict.  All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.  Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements.  These risks and other factors include those listed under “Risk Factors” and elsewhere in this report.  Furthermore, forward-looking statements speak only as of the date they are made.  We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Item 1.  Business.

Lumos Networks Corp. Overview

Lumos Networks Corp. (“Lumos Networks,” the “Company,” “we,” “us” or “our”) isa fiber-based bandwidth infrastructure and service provider in the Mid-Atlantic region.  We provide services to carrier and enterprise customers, including healthcare providers, local government agencies, financial institutions, educational institutions, and other enterprises over our approximately 8,600 route-mile fiber network.  Our principal products and services include Multiprotocol Label Switching (“MPLS”) based Ethernet, Metro Ethernet (“Metro E”), Fiber to the Cell site (“FTTC”) wireless backhaul and data transport services, wavelength transport services and IP services. 

We became an independent, publicly traded company on October 31, 2011, as a result of our spin-off from NTELOS Holdings Corp. (“NTELOS”).  Our common stock has been publicly traded on The NASDAQ Stock Market LLC (“NASDAQ”) under the ticker symbol “LMOS” since November 1, 2011.  We conduct all of our business through our wholly-owned subsidiary Lumos Networks Operating Company and its subsidiaries.  Our principal executive offices are located at One Lumos Plaza, Waynesboro, Virginia 22980.  The telephone number at that address is (540) 946-2000. 

Business Strategy

Our overall strategy is to transition into a pure-play fiber bandwidth infrastructure company through pursuit of expansion opportunities, both organic and inorganic. To achieve organic growth, our objective is to leverage and expand our fiber assets to capture the growing demand for data and mobility services among our carrier and enterprise customers in our marketplace. Our operating strategy is to (i) leverage our fiber network to expand to new fiber to the cell opportunities; (ii) monetize our approximately 8,600 route-mile fiber optic network by selling bandwidth infrastructure services to new and existing carrier and enterprise customers while maintaining a ratio of approximately 80% of our data revenue from on-net traffic;  (iii) use our “expansion” and "edge-out” strategies to expand into new markets and markets adjacent to our existing footprint to increase our addressable market size; (iv) proactively manage our churn through several initiatives including upgrading existing customers from legacy technologies to carrier Ethernet services and continually improving network and operational performance; (v) focus on managing resources from the declining legacy voice products into our faster growing and more profitable data products; and (vi) execute our success-based investment strategy to maintain our capital efficiency and expand margins.

Our data segment, which provided approximately 56% of our total revenue in 2015, represents the main growth opportunity and is the key focal point of our strategy and includes our enterprise data, transport and FTTC product groups.  Given our focus on on-net customers, our data services typically carry higher gross margins than many of our other services.  A significant majority of our capital expenditures and sales force are dedicated to increasing revenue and profit from our data segment.  We believe that a balanced split between enterprise and carrier revenue results in the most effective capital allocation and resulting profitability.  We are focused on taking advantage of increased carrier bandwidth demand, particularly for long-term FTTC contracts from wireless carriers that are deploying long-term evolution (“LTE”) data services, selling into our expansion and edge-out markets, maximizing the use of our carrier end user distribution channel, connecting our enterprise customers to data centers and improving penetration in existing markets.

Our residential and small business (“R&SB”) and RLEC access segments provided approximately 33% and 11% of our total revenue in 2015, respectively.  Our R&SB segment includes legacy voice and IP services products targeted to our residential and small business customers.  Our RLEC access segment provides other carriers access to our network within our RLEC territories, primarily

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through switched access services.  These segments require limited incremental capital to maintain the underlying assets and deliver reasonably predictable cash flows.  Despite declining revenues as a result of regulatory actions taken to reduce intra-state tariffs, access line loss resulting from residential wireless substitution, technology changes and product replacement of voice service offerings from cable operators in our markets, we expect the cash flows from these legacy businesses to continue to significantly contribute to funding the capital investment in our growing data segment.  Alternatively, we could explore the separation of these assets in order to monetize them more expediently through a sale or some other transaction.

The key imperatives for our data growth initiatives are as follows:

Enhance Carrier Ethernet Network and Grow FTTC Revenues

As demand for FTTC services, greater data transport bandwidth and guaranteed network stability continues, there is an increasing demand to provide carrier Ethernet networks to our wireless carrier customers and select large data transport customers. In 2014, we completed the core construction of an approximately 850-mile carrier network within our existing fiber network to provide FTTC solutions to multiple large wireless communication providers and select large enterprise customers who operate in our markets and connected the first FTTC sites to this carrier network. This migration continued through 2015 and we expect to have substantially allexisting FTTC traffic transitioned early in 2016. Additionally, new traffic has been and will continue to be added directly to this network. As of December 31, 2015, we provided FTTC connectivity to 1,099 cell sites.  We intend to significantly increase FTTC connectivity to cell sites in close proximity to our fiber network over the next several years to capitalize on the growth opportunity in our footprint. In addition to our initiatives centered on enhancing our network and improving operational performance, we will continue to deliberately and proactively manage our carrier customers with legacy services to our Ethernet-based services with the intent of reducing churn and improving the customer experience.

Enhance Legacy Enterprise Networks and Grow Enterprise Revenues

As demand for greater data bandwidth and guaranteed network stability continues to grow within enterprise services, we continue to invest capital in expanding and enhancing our enterprise networks to accommodate our customer needs. Growing our enterprise revenues using a success-based expansion approach is critical to ensuring the desired returns on invested capital are met.  As of December 31, 2015, our 8,600 route-mile fiber network was connected to approximately 1,732 buildings.  We believe there is significant prospect to compete for opportunities to connect to additional buildings and data centers in close proximity to our existing fiber network.  Our primary sales channels are enterprise-direct and carrier end user.  Our carrier end user channel facilitates the sale of enterprise data services for national carrier customers that are within our footprint.  Through use of this sales channel we are able to leverage our existing fiber infrastructure to grow revenue and reduce the likelihood of being overbuilt within our markets.  In addition to our initiatives centered on enhancing our network and improving operational performance, we will continue to deliberately and proactively manage our enterprise customers with legacy services to our Ethernet-based services, and appropriately incent our sales force to focus on renewal of long-term contracts with the intent of reducing churn and improving the customer experience.

Monetize our Expansion Markets and Edge-Out into Key Markets Adjacent to Our Existing Network Footprint

Driven by demand from existing enterprise and carrier customers, our expansion strategy grows our fiber network into new contiguous markets by leveraging existing and new assets.  Our current expansion markets are Richmond, VA and Norfolk, VA (including the nearby City of Petersburg and the Hampton Roads area).  In 2015, we added 785 route miles of new fiber to our network, which includes our partially completed fiber network expansion of approximately 822 route miles in the Richmond and Norfolk area. This expansion is underpinned by a long-term FTTC contract with a national U.S. wireless carrier, which will connect a total of 250 new cell sites to our fiber network by early 2016.  We expect the build out to be substantially complete by March 31, 2016. As we expand into these new markets we are significantly increasing our addressable market size, thus allowing us to bring new FTTC carrier customers and enterprise customers onto our fiber networks.Our edge-out strategy, which focuses on incrementally adding network assets and new customers in markets in close proximity to our existing footprint, is complementary to our expansion strategy in the Richmond, VA and Norfolk, VA area.

Drive Incremental On-Net Data Traffic

Our on-net strategy focuses on driving traffic through our network, thereby increasing profitability. As our network footprint grows and the bandwidth demand increases, we are able to drive incremental revenue through our existing network with minimal increase in operating expenses or incremental capital expenditures.  We evaluate this on-net approach and the associated capital expenditure against the revenue opportunity and have determined that maintaining approximately 80% of our data revenue from on-net traffic is the most effective use of capital.

Use Disciplined, Success-Based Capital Investment Strategy

We seek to maximize our capital expenditure efficiency by requiring that a significant percentage of our capital investment be tied to specific revenue generating products based on customer commitments, which we refer to as “success-based projects”.  Our success-based capital investment strategy involves maximizing capital expenditure efficiency by pursuing on-net and near-net customer

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opportunities and maintaining a balanced mix of carrier (including FTTC) and enterprise business.  Our capital investment strategy targets a greater than 15% return on investment and a less than four year payback, along with other strategic considerations.

Business Segments

We have three reportable business segments, as follows:

Data 

Our data segment includes our enterprise data, transport and FTTC product groups.  We market and sell these services primarily to carriers and enterprise customers, including healthcare providers, state and local government agencies, financial institutions, and educational institutions.  Revenues from our data segment accounted for 56.0%, 52.9% and 50.2% of our total revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  Data product lines are growing at a pace that significantly exceeds our legacy product lines and in aggregate, they also provide a higher gross margin.  The objective of our data segment is to leverage the ever increasing data bandwidth demands from our enterprise and carrier customers in our existing and expanding addressable markets.

Our data segment operations are based upon our expansion, edge-out and on-net strategies that seek to capitalize on new markets by maximizing the use of our fiber assets while optimizing capital efficiency and profitability.  In 2015, we continued to re-deploy capital and personnel resources away from our declining legacy product lines towards our growth businesses within our data segment.  Our strategy requires disciplined use of capital expenditures on success-based projects to grow our fiber assets and reach an increasing number of both carrier and enterprise customers.

In addition to the higher gross margins that are characteristic of the data business and our on-net expansion, we have also been able to deliver other enterprise services, such as metro Ethernet transport as a direct result of our expanding network.  We believe our expansion, edge-out and on-net strategies, combined with our commitment to customer service, will continue to attract larger customers in our key vertical markets.

We generate growth within our data segment through new long-term FTTC contracts with wireless carriers deploying LTEservices and bandwidth upgrades on existing contracts, improving enterprise penetration within our existing and new markets and providing greater Ethernet bandwidth to enterprise customers.  In 2015, we added 241 FTTC sites, representing a year-over-year increase of approximately 28.1%, and 255 on-net buildings, representing an increase of approximately 17.3% year-over-year.  Our sales force is organized into carrier and enterprise teams to effectively pursue the respective opportunities.  Our ability to sustain or accelerate revenue growth in our data segment depends on our ability to obtain and effectively deploy capital to upgrade and expand our fiber network and implement our FTTC and edge-out plans in a timely and disciplined manner, attract new customers and successfully manage churn downwards through customer retention programs, including upgrading existing customers from legacy technologies to carrier Ethernet services.

R&SB

Our R&SB segment includes the following voice products:  local lines, primary rate interface (“PRI”), long distance, toll and directory advertising and other voice services (excluding voice over IP (“VoIP”) services which are typically provided to enterprise customers and are included in our data segment) and the following IP services products: fiber-to-the-premise broadband XL, DSL, integrated access and IPTV video.  These products are sold to residential and small business customers through our competitive local exchange carrier (“CLEC”) and rural local exchange carrier (“RLEC”) networks.  Revenues from our R&SB segment accounted for 32.9%,  35.8% and 38.9% of our total revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  Despite declining revenues, we expect the cash flows from our legacy businesses to continue to significantly contribute to funding the capital investment in our growing data segment.  As of December 31, 2015, we operated approximately 73,705 CLEC lines and approximately 25,516 RLEC telephone access lines, a portion of which are fiber-fed and have IPTV-based video services and broadband Internet accessofferingspeeds of up to 1 Gigabit.  We also provide high-speed DSL bundled services to customers within this segment.  This segment also includes revenues from switched access and reciprocal compensation services provided to other carriers in our competitive markets.

RLEC Access

Our RLEC access segment provides carrier customers access to our network within our RLEC footprint and primarily includes switched access services.  Revenues from our RLEC access segment accounted for 11.1%, 11.3% and 10.9% of our total revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  A significant portion of our RLEC access segment revenues are derived from programs funded by regulatory agencies for recovery of revenue loss resulting from intercarrier compensation reform.  We anticipate continuing declines in RLEC access revenues primarily resulting from regulatory actions taken by applicable regulatory authorities as described in the Regulation section below and also due to network grooming activities by carriers.

For detailed financial information about our business segments, see Note 4 in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K, and for a detailed review of our financial performance and results of operations by business

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segment, see Part II, Item 7.  Managements’ Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

Products and Services

Data Services:

We provide data services to carriers and enterprise customers including healthcare providers, local government agencies, financial institutions, educational institutions, and other enterprises over our fiber network.  Our key data service offerings include the following:

Carrier Ethernet 2.0	•	Ethernet connectivity among multiple locations in the same city or region over our fiber optic network.
	•	Connectivity to/from our partner networks through connections to carrier hotels and Network-to-Network Interface (“NNI”) circuits.
	•	Metro Ethernet Forum (“MEF”) 2.0 certified products (E-line, E-Tree, E-LAN and E-Access).
	•	Fiber to the cell sites (“FTTC”), used by wireless carriers as backhaul.
	•	User Network Interfaces (UNIs) offered at 1Gbps, 10Gbps and 100Gbps; Ethernet Virtual Circuit (EVC) bandwidth ranging from 3Mbps to 100Gbps.
High-capacity Private Line Service and Wavelength Transport Services	•	High-capacity, non-switched transport facilities provided to end users and carriers for voice and data applications.
	•	Wavelength technology provides a point-to-point connection between two locations that is dedicated to a single customer and provisioned on our high-speed fiber optic backbone. Our wavelength services now offer speeds up to 100 Gbps.
	•	Point to Point T1/DS3 and SONET OCX based services with speeds from OC3 to OC192.
Dedicated Internet Access (DIA)	•	Dedicated synchronous bandwidth for large enterprise and ISP customers in speeds from 5 Mbps to 10 Gbps over our protected fiber optic network with resilient connectivity to high speed transit and peering connection locations in Ashburn, VA and Chicago, IL.
Data Center/Collocation Services	•	Secure, reliable and high speed access to computing resources for regional data center/collocation facilities that provide security, UPS, generator and HVAC technologies.
Dark Fiber	•	We provide leased dark fiber for our customers that want the ability to scale their communications with high bandwidth needs.  These customers own the electronics and therefore control their own network requirements.

Residential and Small Business:

We provide fiber-to-the-premise Broadband XL and DSL Internet, voice, video and IP services to our residential and small business customers.  Our voice service offerings include local lines, PRI, long distance, toll and directory advertising and other voice services.  Our customers have the option of bundling our voice, broadband and video service offerings.  Our IP-enabled product offerings combine voice and data services over dedicated broadband facilities utilizing VoIP protocols allowing customers dynamically allocated bandwidth to maximize voice and data transmission. VoIP technology also enables advanced voice features such as simultaneous ring, remote office, SIP trunks and business continuity.  Our IPTV-based video services offer over 300 channels, including approximately 86 high definition channels, video-on-demand, TV Everywhere and DVR capability.

Carrier Access:

In addition to our data services, we also provide carrier customers with access to our network within our footprint which primarily includes switched access services.

Sales, Marketing and Customer Care

Sales.  We serve our carrier and enterprise customers with our suite of fiber-based data products, which include carrier Ethernet, MPLS, VPN, wavelength and dedicated Internet access.  We have continued to see increased demand for these products across our customer base, particularly as demand for data transport and mobility services grow.  The mission of our sales team is to capitalize on this growing demand by offering customized solutions to our carrier and enterprise customers with a continued focus on expanding within our key vertical markets, which include healthcare, education, financial services and government.  Our technical team plays a significant role in our sales approach in order to focus on selling customized, long-term and secure networking and data solutions. 

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Our overall strategy of deliberately and strategically shifting resources to our data business also extends to our sales and sales engineering teams.  Our specialized sales force is organized into carrier and enterprise teams to effectively pursue opportunities with the focus on capitalizing on the increased bandwidth demand through new long-term FTTC contracts and bandwidth upgrades in our expansion and edge-out markets and to improve enterprise penetration within our existing markets.  Our carrier sales team uses the carrier end user sales channel to reach new enterprise customers through strategic partnerships with national carriers to provide fiber bandwidth solutions over our network.  We expect an increasing portion of new enterprise sales over time will be initiated through this sales channel.

Our current expansion markets include Richmond, VA and Norfolk, VA (including the City of Petersburg and the Hampton Roads area).  We employ in-market sales teams to drive revenue growth in these markets.  In 2015, we completed a portion of our expansion of approximately 822-route miles to our fiber network in the Richmond metropolitan area and eastward to the key metropolitan areas in and around Norfolk, VA, which is expected to be substantially complete by March 31, 2016.  Our expansion in these markets significantly increases our addressable market for FTTC and enterprise data and our carrier and enterprise sales teams are rapidly mobilizing to sell into these new markets.  We expect to generate significant revenue from this expansion in 2016.

Marketing.  Our marketing team is primarily focused on driving revenue growth in our data business, particularly in our expansion markets of Richmond, VA and Norfolk, VA, revenue retention in our residential and small business segment and enhancing the overall customer experience.  During 2015, we completed a robust market analysis in our existing, expansion and edge-out markets which provided further visibility into our data business growth opportunities. We have developed and will implement a comprehensive outreach and lead generation strategy across our footprint. We also continue to implement a multi-phase customer experience enhancement plan that provides deeper customer data visibility internally and enables proactive management of our top customers’ experience.

Customer Care.  We differentiate our customer care teams so our customer care representatives can provide the highest level of service by specializing in servicing and supporting data customers and residential and small business customers.  We continue to implement our Elite Care and Platinum Care programs, whichare designed to provide a higher level of service to our top wireless carrier andenterprise data customers, respectively. Each customer is assigned a dedicated Client Program Manager who assists in proactively managing the customers’ experience and addresses customer issues and opportunitiesusing a cross functional team approach that engages sales, network, service delivery and customer care teams. The Client Program Manager is assisted by a Technical Support Manager who focuses on support of network performance.

Our Network and Platform

We have developed a fiber optic network of long-haul fiber, carrier Ethernet and Ethernet rings located primarily in Virginia and West Virginia, and portions of Pennsylvania, Maryland, Ohio and Kentucky.  As of December 31, 2015, our fiber network spanned approximately 8,600 route miles.

Our integrated fiber transport network allows us to offer a suite of advanced next-generation communications services, including, but not limited to, 100Gbps wavelength services, which provides greater throughput and superior latency performance, multi-site networking, dedicated Internet and MEF 2.0 certified Ethernet solutions, high-speed Internet and VoIP services.  We use a multi-vendor approach, including Cisco, Alcatel-Lucent and Ciena, among others, to deliver high-bandwidth wavelength services directly to end customers as infrastructure for the MPLS Ethernet and high-speed Internet backbone.  Network-to-network interconnection points allow us to engage carrier partners to provide end to end service for carrier and enterprise customers.  We continue to invest in our fiber network to support the deployment of next-generation products and services, expand our addressable market and bring new customers on-net.

In 2015, we completed several significant network enhancement and upgrade projects including the construction of a new MEF certified Carrier Ethernet MPLS/IP fiber overlay network designed to handle FTTC traffic within our network.  This overlay network, totaling approximately 850 route miles, connects four key markets in our footprint (Pittsburgh, PA, Charleston, WV, Roanoke, VA and Ashburn, VA) and meets carrier class requirements for fast-rerouting, full redundancy and low latency performance.  Our second network operations center located in Pittsburgh, PA, opened in 2014, is compatible with our FTTC all-IP network overlay.  Now fully operational, the new network operations center provides replication of all traditional functions of our existing network operations center located in Waynesboro, VA, including performance surveillance, repair, upgrade and maintenance of our fiber network and redundancy of our business continuity and disaster recovery functions.  Our parallel network operations centers provide technical surveillance of our network using industry leading network management systems. 

Our local networks consist of central office digital switches, routers, loop carriers and virtual and physical collocations interconnected primarily with fiber facilities. A mix of fiber optic and copper facilities connect our customers with the core network.

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Competition

We compete with incumbent local exchange carriers (“ILECs”), broadband service providers, incumbent cable operators, and fiber providers and to a lesser extent, CLECs.  We also face competition from potential future market entrants.  In the last several years, we have seen increasing competition from the cable operators and ILECs for metro-Ethernet services to mid-size businesses.  Toremain competitive, we position our company as a customer-focused, leading edge provider with a full portfolio of broadband and IP-based services and a differentiation strategy centered on customizable data solutions.

As a result of the rapid growth in demand for broadband data transport, we expect that our competition will increase from market entrants offering FTTC, metro Ethernet solutions and other high-speed data services, including cable and wireless access.  Our competition includes:

• ILECs, including AT&T, Verizon, Frontier, Windstream and CenturyLink;

• national fiber service providers and CLECs, including Level 3 and Zayo; and

• national and regional cable operators, including Comcast, Shentel, Cox, Time Warner Cable and Suddenlink. 

As the RLEC for the western Virginia cities of Waynesboro, Clifton Forge and Covington and portions of the Virginia counties of Alleghany, Augusta and Botetourt, we have competition from cable companies and are subject to competition from wireless carriers.  A portion of residential customers moving into our service area do not purchase landline phone service.  Although CLECs have not entered our incumbent markets to compete with us, it is possible that one or more may enter our markets.  To minimize potential competition in the RLEC markets, we offer fiber-to-the-premise, DSL, video over copper and a variety of bundled services for broadband, voice and video.

We believe our competitive strengths include our advanced fiber network; our footprint, including contiguous markets, which we believe provides opportunities for growth with a favorable competitive environment relative to first-tier markets; our robust and expanding products and services, including FTTC and metro Ethernet; our disciplined, success-based capital investment strategy aimed at optimizing our capital efficiency and delivering attractive returns; our diverse customer base, our future cash flow visibility from our legacy businesses; and our experienced management team, with deep industry experience and a strong track record of operating and scaling bandwidth infrastructure assets.

Employees

As of December 31, 2015, we employed 591 full-time and two part-time employees. Of these employees, 43 are covered by a collective bargaining agreement that expires June 30, 2017.  We believe that we have good relations with our employees.

Access to Public Filings

We routinely post important information on our website at www.lumosnetworks.com.  Information contained on our website is not incorporated by reference into this annual report on Form 10-K.  We provide public access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934.  These documents may be accessed free of charge on our website at the following address: http://ir.lumosnetworks.com.These reports are available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Regulation

The following summary does not describe all present and proposed federal and state legislation and regulations affecting the telecommunications industry.  Some legislation and regulations are currently the subject of judicial proceedings, legislative hearings and administrative proposals which could change the manner in which this industry operates.  Neither the outcome of any of these developments, nor their potential impact on us, can be predicted at this time.  Regulation can change rapidly in the telecommunications industry, and such changes may have an adverse effect on us in the future.  See “Risk Factors” elsewhere in this report.

Regulation Overview

Our communications services are subject to varying degrees of federal, state and local regulation.  Under the federal Communications Act, the Federal Communications Commission (“FCC”) has jurisdiction over interstate and international common carrier services.  Under the Telecommunications Act of 1996, the FCC has jurisdiction over certain aspects of local interconnection terms and rates between carriers.

In addition to FCC regulation, our communications services are regulated to different degrees by state public service commissions and by local authorities.  Such local authorities have jurisdiction over public rights-of-way and video and telecommunications franchises.

Our operations are subject to various federal and state laws intended to protect the privacy of customers who subscribe to our services.  The FCC has regulations that place restrictions on the permissible uses that we can make of customer-specific information, known as

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Customer Proprietary Network Information (“CPNI”), received from subscribers and that govern procedures for release of such information and the Federal Trade Commission’s “Red Flag” rules require that companies develop and implement written Identity Theft Prevention programs.

Federal Regulation of Interconnection and Interexchange Services

The Communications Act requires all common carriers to interconnect on a non-discriminatory basis with other carriers, imposes additional requirements on incumbent local exchange carriers (such as our RLEC’s), and imposes even more comprehensive requirements on the largest ILECs.  The large ILECs are required to provide competitors with physical collocation to allow competitors to place qualifying equipment in ILEC central offices; to unbundle some of their services into unbundled network elements (“UNE”) at “forward looking” rates, permit resale of some of their services, provide access to poles, ducts, conduits and rights-of-way, and to establish reciprocal compensation for the transport and termination of local traffic.  The obligations of the large ILECs to provide these network facilities and services could be altered or removed by new legislation, regulations or court order.

ILEC operating entities that serve fewer than 50,000 lines are defined as “rural telephone companies” under the Communications Act and are exempt from the additional requirements applicable to the large ILECs unless and until such exemption is removed by the state regulatory body.  Each of our RLEC operations is considered separately and each has this rural telephone company exemption.   

Intercarrier Compensation Reform

Intercarrier compensation includes regulated interstate and intrastate access charges that we and other RLECs and CLECs receive from long distance carriers for the origination and termination of long distance calls and reciprocal compensation that interconnected local carriers pay to each other for terminating interconnected local wireline calls.

In 2011, the FCC released a significant order on intercarrier compensation reform.  In the order, the FCC adopted a uniform national bill-and-keep framework (in which carriers do not collect or pay access charges or reciprocal compensation) as the ultimate end state for all telecommunications traffic exchanged between carriers.  The FCC established the $2 billion Connect America Fund (CAF) for RLECs and RLECs now receive support principally through the CAF rather than through intercarrier compensation.  The FCC order permitted ILECs to implement a new charge on end users to partially offset the loss in access charge revenues, the Access Recovery Charge (“ARC”), effective July 1, 2012.  The maximum ARC for residential customers is $3 per month after six years.  Multi-line business customers have their Subscriber Line Charge and ARC combined capped at $12.20 per line. On May 23, 2014, the Tenth District Court of Appeals affirmed the FCC’s order, including the establishment of the CAF and the reform of intrastate access and reciprocal compensation.

Our RLECs began charging the ARC and began receiving funding from the CAF on July 1, 2012.  Effective July 1, 2013, our RLECs and CLECs took their rates for most intrastate access to interstate rates. Effective July 1, 2014 and July 1, 2015, our RLECs and CLECS further reduced interstate and intrastate access charges as required by the FCC.

Net Neutrality. 

On March 12, 2015, the FCC released an order re-classifying Internet service providers as common carriers under Title II of the Federal Communications Act and stating its intention to forbear from much of Title II regulation at this time. These new rules took effect on June 12, 2015. At this early stage, it is uncertain what portions of Title II the FCC might apply and the FCC has not yet adjudicated any complaints under the new rules. Rules that increase the regulation of Internet services could limit our ability to efficiently manage our network and to respond to competitive challenges and could cause us to incur additional administrative costs. While it is uncertain what impact the new rules will have on us,  we do not currently expect that the new rules will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

State Regulation of RLEC, CLEC and Interexchange Services

Most states require wireline telecommunications providers to obtain authority from state regulatory commissions prior to offering common carrier services.  State regulatory commissions generally regulate RLEC rates for intrastate services and RLECs must file tariffs setting forth the terms, conditions and prices for their intrastate services.  Our RLECs are subject to regulation in Virginia by the State Corporation Commission (“SCC”). 

We are certificated as a CLEC in Virginia, West Virginia, Pennsylvania, Maryland, Ohio and Kentucky.  Although we file tariffs covering our CLEC services, our rates for such CLEC services generally fluctuate based on market conditions.

Local Government Authorizations

Certain governmental authorities require permits to open streets for construction and/or telecommunications franchises to install or expand facilities.  Video franchises are also required for our video services.  We obtain such permits and franchises as required.  We hold video franchises in the City of Waynesboro, Botetourt County, City of Lynchburg, City of Staunton (for the Gypsy Hill Development only), Bedford County, Alleghany County, City of Covington, Town of Clifton Forge, and Town of Iron Gate.  All of these localities are in the Commonwealth of Virginia.

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Item 1A.  Risk Factors.

RISK FACTORS

The following risk factors and other information included in this Form 10-K should be carefully considered.  The risks and uncertainties described below are not the only ones we face.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may adversely impact our business operations.  Our business, financial condition or results of operations could be materially adversely affected by any or all of these risks.

Risks Relating to Our Business:

Adverse economic conditions may harm our business. 

Economic uncertainty or a lack of economic growth could negatively impact our business results.  Unfavorable economic conditions, including a return to recession or disruptions to the credit and financial markets, could cause customers to slow or delay spending.  If demand for our services decreases, our revenues would be adversely affected and churn may increase.  In addition, during challenging economic times our customers may face issues gaining timely access to sufficient credit, which may impair the ability of our customers to pay for services they have purchased.  Any of the above could have a material effect on our business, financial position, results of operations and cash flows. 

We are also susceptible to risks associated with the potential financial instability of the vendors and third parties on which we rely to provide services or to which we outsource certain functions.  The same economic conditions that may affect our customers could also adversely affect vendors and third parties and lead to significant increases in prices, reduction in quality or the bankruptcy of our vendors or third parties upon which we rely.  Any interruption in the services provided by our vendors or by third parties could adversely affect our business, financial position, results of operations and cash flows.  

We may not be able to successfully implement our strategy to grow our data business and thereby sustain our revenue and cash flow growth.

We must grow our data business and manage the decline in our legacy businesses in order to sustain our revenue and cash flow growth.  We have pursued several growth initiatives including:

· Investing in a comprehensive network expansion into the Richmond, VA and Norfolk, VA area;

· Increasing network investments in our core markets;

· Investing in fiber network expansion into new adjacent geographic markets;

· Building fiber to wireless carrier cell sites; and

· Launching new products and services that meet customers’ data and IP needs.

Our ability to manage this expansion depends on many factors, including our ability to:

· Attract new customers and sell additional services to existing customers by effectively implementing our sales and marketing plans;

· Manage churn through successful implementation of our customer retention programs and upgrading existing customers from time division multiplexing (“TDM”) products to advanced Ethernet services;

· Offset our revenue declines from churn in our legacy voice and access segments and within our data segment resulting from customers TDM product replacement;

· Complete customer installations in a timely manner to meet customer demands;

· Successfully train our sales force to adapt to evolutionary demand for advanced data service;

· Efficiently manage our capital expansion plans;

· Obtain capital necessary to implement our growth plans;

· Manage increased competition from other data service providers in existing and new markets; and

· Remain competitive with customer pricing and service expectations.

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We may be unable to successfully divest legacy businesses on a timely basis, which would hinder our strategy of accelerating our transformation to a pure play fiber bandwidth infrastructure company, and divestitures we do complete could adversely affect our results of operations.

From time to time, we consider the divestiture of legacy businesses based on management's assessment of their strategic value to our business. Divesting certain of our products or assets would be complex operationally due to their interrelationships with products and assets we would desire to retain. Any divestiture also would have implications under our Credit Facility and 8% Notes. The inability to divest legacy businesses on a timely basis would hinder our strategy of accelerating our transformation to a pure play fiber bandwidth infrastructure company. Additionally, decisions to divest certain business operations could involve realization of losses, transition and wind-up expenses and the elimination of revenues along with associated costs, any of which could adversely affect our results of operations and cash flows, and may fail to yield the expected benefits.

We may require additional capital to fund our strategic growth plan, and if we fail to obtain this capital, we may experience a material adverse effect on our business.  

Our strategic growth plans require a significant amount of capital investment in fiber operations through organic and/or inorganic growth. Additionally, to remain competitive, we will need to continue to upgrade the technical requirements of our existing network infrastructure and build out our network with advanced fiber technology within our territories which will require a significant investment of capital resources.  Additionally, the cost or extent of the work required for organic growth projects could be more significant than anticipated.  Any such unplanned capital expenditures may adversely affect our business, financial condition and operating results. 

We expect that the cash we generate from operations combined with our cash on hand and marketable securities will be sufficient to satisfy our working capital requirements, capital expenditures and debt service requirements for the foreseeable future.  Additionally, we have access to a revolving credit facility, which is currently undrawn. However,  if our assumptions prove incorrect or if there are other factors that increase our need for additional liquidity, such as material unanticipated losses, loss of customers or a significant reduction in demand for our services or other factors, or if we are successful in obtaining additional major FTTC contracts or we make acquisitions, we would expect to seek additional sources of funds through refinancing or other means including additional equity financing.  There is no assurance that we could obtain such additional financing on acceptable terms, if at all.  If available, additional equity financing may dilute our stockholders and debt financing may restrict our ability to raise future capital.

We may not be able to complete acquisitions and acquisitions we do complete could result in operating difficulties, dilution and other adverse consequences, which could adversely affect our results of operations.

We evaluate potential strategic transactions in order to pursue our strategy. At any given time, we may be engaged in discussions with respect to one or more of such transactions that may be material to our financial condition and results of operations. There can be no assurance that any such discussions will result in the consummation of any transaction or that we will identify appropriate transactions on terms acceptable to us. Adverse capital markets and volatility in our stock price could also negatively impact our ability to make acquisitions.

Future acquisitions may result in the dilutive issuances of equity securities, use of our cash resources and incurrence of debt or contingent liabilities. Acquisitions also may result in significant costs and expenses and charges to earnings, including those related to employee costs, integration costs, unexpected liabilities and legal, accounting and financial advisory fees. Any of these items could adversely affect our business, results of operations and cash flows.

We face substantial competition in our markets; our competitors may have substantial business advantages over us and we may not be able to compete successfully.

We compete with ILECs, broadband service providers, incumbent cable operators, fiber companies and to a lesser extent, CLECs.  As a result of the rapid growth in demand for broadband data, we expect that our competition will increase from market entrants offering FTTC, metro Ethernet solutions and other high-speed data services, including cable and wireless access. Our competition includes ILECs, such as AT&T, Verizon, Frontier, Windstream and Centurylink; national fiber service providers and CLECs, including Level 3 and Zayo, and national and regional cable operators, such as Comcast, Shentel, Cox, Time Warner Cable and Suddenlink.  In addition, due to consolidation and strategic alliances within the telecommunications industry, we cannot predict the number of competitors that will emerge.Such increased competition from existing and new entities could lead to price reductions, loss of customers, reduced operating margins and/or loss of market share.

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Many of our competitors have financial resources, corporate backing, customer bases, marketing programs and brand names that are greater than ours.  Additionally, competitors may charge less than we do for services, causing us to reduce, or preventing us from raising, our fees. 

Network delays or interruptions of service could cause us to lose customers.  

To be successful, we must provide our customers reliable network service.  Some of the risks to our network and infrastructure include:  physical damage to outside plant facilities, power surges or outages; network equipment failures due to aging or other factors; software defects; human error; disruptions beyond our control, including disruptions caused by terrorist activities or severe weather; and failures in operational support systems.

Furthermore, as the demand for increased bandwidth from our customers has grown and as it continues to grow, our fiber optic network could experience greater data loads that may also result in network interruptions in service and reduced capacity for our customers.  Service interruptions and lack of redundancy could cause us to incur additional expenses and/or issue network outage credits to our customers and may cause us to lose customers.

The telecommunications industry is generally characterized by rapid development and introduction of new technologies; if we are unable to adapt to these rapid changes, we could suffer price reductions, customer losses, reduced operating margins and/or loss of market share. 

The telecommunications industry continues to experience rapid and significant changes in technologies and architectures to deliver new services to customers and to deliver existing services more cost-effectively.  We expect that new technologies will continue to enable advances in our customers’ environments that create new demand drivers.  We believe that our future success will depend in part on our ability to anticipate and respond to the rapidly changing needs and demands of our customers on a timely basis and to compete with our competitors' offerings.  Our failure to obtain and integrate new technologies and applications, and develop new service offerings to meet those customer needs or to keep pace with or exceed the service capabilities of our competitors could impact the breadth of our service portfolio, resulting in less competitive and compelling offerings that could impair our ability to attract and retain customers.  We may be unable to keep pace with competitive offerings without making significant additional capital investments or adversely affecting our margins.

Revenue from certain of our more traditional products such as dedicated network services and certain voice services is growing slowly or is declining.  As a result, our overall revenue growth is driven primarily by our Ethernet services and we must continue to develop those and other next generation services in order to continue to grow our revenue.  New product development may be capital intensive and may pressure margins until the new products begin to generate substantial revenue.  New products that are largely software based are increasingly complex and may require more customer support and additional systems development.  In addition to investing in new technologies, we must replace equipment that supports our traditional services as that equipment ages or becomes redundant.  If we do not properly manage this process, including the migration of customers to our newer technologies, we may lose customers and market share, and our margins and returns could be adversely affected.

Losses or a decrease in usage from certain key customers may result in lower revenues or higher expenses.  

We generated approximately 32% of our operating revenue from our six largest carrier customers in the year ended December 31, 2015. No single customer currently represents more than 10% of our operating revenues.  If we were to lose one or more of these carrier customers, our revenues would decline, which could have a material adverse effect on our business, financial condition and operating results.

We may have to undertake further restructuring plans which would require additional charges.

From time to time we have incurred restructuring charges as a result of changes in our business strategy, most recently in the first quarter of 2016. We plan to continue to evaluate our business, which may result in additional restructuring activities. We may choose to implement workforce reductions, outsource certain functions or consolidate or close certain facilities. Decisions to engage in future restructuring activities could involve realization of losses, wind-up expenses, workforce reductions, impairment of assets and the elimination of revenues along with associated costs, any of which could adversely affect our results of operations and cash flows.

We have substantial indebtedness, which could have a negative impact on our financing options and liquidity position.

Lumos Networks Operating Company, our wholly-owned subsidiary, has a credit facility (the “Credit Facility”) which consists of senior secured term loans and a senior secured revolving credit facility.  Our indebtedness under the Credit Facility was $348.4 million at December 31, 2015 and it carries interest expense of approximately $12 million annually.

On August 6, 2015, we issued $150 million in aggregate principal amount of 8% Notes due 2022 (the “8% Notes”) to an entity formed by Pamplona Capital Management, LLP (together with another entity formed by Pamplona Capital Management, LLP that acquired

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warrants to purchase our common stock, the “Pamplona Entities”).  Our 8% Notes carry interest expense of approximately $12 million annually.

Our indebtedness could adversely affect our financial health and business and future operations by, among other things: 

· Limiting our ability to obtain any additional financing we may need to operate, develop and expand our business;

· Making it more difficult for us to satisfy our obligations with respect to our indebtedness;

· Increasing our vulnerability to adverse economic and industry conditions by making it more difficult for us to react quickly to changing conditions;

· Requiring us to dedicate a substantial portion of any cash flows from operations to service our debt, which reduces the funds available for operations and future business opportunities;

· Potentially making us more highly leveraged than our competitors, which could potentially decrease our ability to compete in our industry;

· Exposing us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates; and

· Limiting our flexibility in planning for, or reacting to, changes in our business, and the industry in which we operate. 

The ability to make payments on our debt will depend upon our future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which we cannot control.  If the cash flows from our subsidiaries’ operating activities are insufficient to service our debt obligations, we may take actions, such as delaying or reducing capital expenditures, attempting to restructure or refinance our debt, selling assets or operations or seeking additional equity capital.  Any or all of these actions may not be sufficient to allow us to service our debt obligations.  Further, we may be unable to take any of these actions on satisfactory terms, in a timely manner or at all. 

Our Credit Facility and our 8% Notes imposecertain operating and financial restrictions, which may prevent us from capitalizing on business opportunities and taking some corporate actions.  

Our Credit Facility imposes certain operating and financial restrictions on our subsidiaries.  These restrictions generally:

· Restrict our subsidiaries’ ability to incur additional indebtedness or issue preferred stock;  

· Restrict our subsidiaries from entering into transactions with affiliates;

· Restrict our subsidiaries’ ability to consolidate, merge or sell all or substantially all of their assets;

· Impose financial covenants relating to the business of our subsidiaries, including leverage and interest coverage ratios;

· Require our subsidiaries to use a portion of “excess cash flow” (as defined in the debt agreement) to repay indebtedness if our leverage ratio exceeds specified levels; and

· Restrict our subsidiaries’ ability to agree to liens on assets or agreements (such as leases). 

Our 8% Notes also impose certain financial and operating restrictions.  These restrictions generally:

· Restrict our ability to incur additional indebtedness or issue preferred stock; and

· Restrict our ability to agree to liens.

We cannot provide assurance that these covenants will not adversely affect our ability tofinance our future operations or capital needs or pursue available business opportunities.  A breach of any of these covenants could result in a default with respect to the Credit Facility or the 8% Notes, as applicable.  If a default occurs, our indebtedness under the Credit Facility or the 8% Notes, as applicable, could be declared immediately due and payable.

Our RLEC subsidiaries are subject to competition and to regulatory regimes at the state and federal level and consequently face substantial regulatory burdens and uncertainties; regulatory developments will further reduce revenues that we receive from access charges and/or from the federal Universal Service Fund, the Connect America Fund or other fund allocations. 

Our RLECs qualify as rural local telephone companies under the Telecommunications Act and are, therefore, exempt from many of the most burdensome obligations of the Telecommunications Act, such as the obligation to sell unbundled elements of our network to our competitors at “forward-looking” prices that the Telecommunications Act places on larger carriers.  Nevertheless, our RLECs face significant competition, particularly from competitors that do not need to rely on access to our network to reach their customers.  Wireless carriers, cable companies and other VoIP providers are able to compete with our RLECs even though the “rural exemption”

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under the Telecommunications Act is in place.  If our rural exemption were removed, CLECs could more easily enter our RLECs’ markets.  Moreover, the regulatory environment governing wireline local operations has been, and we believe will likely continue to be, very liberal in its approach to promoting competition and network access. 

Over time, FCC and state regulations have resulted in reducing the switched access and reciprocal compensation revenue of our RLECs.  In 2011, the FCC released an order comprehensively reforming interstate and intrastate intercarrier compensation systems.  In the order, the FCC determined that interstate and intrastate access charges, as well as local reciprocal compensation, should be eliminated entirely over time.  These FCC pricing reductions commenced on July 1, 2012 and continue through July 1, 2020.  A portion of the access revenue previously received by our RLECs from carriers is being recovered through payments from the FCC’s “Connect America Fund” (“CAF”) and from increases in charges to end user subscribers in the form of rate increases and the FCC’s “Access Recovery Charge.”  Regulatory changes could impact the amount and timing of the revenues received from these funds in the future.  There is no guarantee that we will recover all or a portion of lost revenues resulting from intercarrier compensation system reform or that we will not be subject to further rate reductions in the future.  Furthermore, by accepting government funding, we are subject to audit by the FCC or certain other government agencies that administer the funds and our methodologies or approaches taken to determine the amounts of eligible access revenues or costs, as applicable, could be called into question during an audit. Although we believe our methodologies and approaches are compliant and reasonable, there is no assurance that an audit would not result in a demand for a partial refund or nonpayment of future funding by the respective government agency.

Lumos Networks and other industry participants are frequently involved in disputes over issues that, if decided adversely to us, could harm our financial and operational prospects. 

We anticipate that we will continue to be subject to risks associated with the resolution of various disputes, lawsuits, arbitrations and proceedings affecting our business.  These issues may include, among other things, the administration and enforcement of existing interconnection agreements and tariffs, the terms of new interconnection agreements, operating performance obligations and intercarrier compensation.  We also may be included in proceedings and arbitrations before state and regulatory commissions, private arbitration organizations, and courts over many issues that will be important to our financial and operation success.  While we believe we have adequate reserves for the probable and estimable losses related to the expected outcomes of our current disputes, the results of these disputes are inherently unpredictable.

The implementation of our business strategy is dependent upon our ability to maintain, expand and update our information technology infrastructure in response to growth and changing business needs.

Our business relies on our data, billing and other operational and financial reporting and business systems.  To effectively implement our business strategy, we will need to continue to maintain and, in some cases, make upgrades to modernize our information technology systems and infrastructure, which can be costly.  Our inability to maintain, expand or upgrade our technology infrastructure could have adverse consequences, which could include service or billing interruptions, the diversion of critical resources and inhibiting our growth plans due to an inability to scale effectively.

We are dependent on third-party vendors for our information and billing systems.  Any significant disruption in our relationship with these vendors could increase our costs and affect our operating efficiencies.  

Sophisticated information and billing systems are vital to our ability to monitor and control costs, bill customers, process customer orders, provide customer service and achieve operating efficiencies.  We currently rely on a mix of internal systems and third-party supported applications and systems to provide all of our information and data processing needs.  Some of our billing, customer service and management information systems have been developed by third parties and may not perform as anticipated or the third parties may experience interruptions or other problems delivering these systems.  In addition, our plans for developing and implementing our information and billing systems rely to some extent on the delivery of products and services by third-party vendors.  Our right to use these systems is dependent upon license agreements with third-party vendors.  Some of these agreements are cancelable by the vendor, and the cancellation or nonrenewable nature of these agreements could impair our ability to process customer information and/or bill our customers.  Since we rely on third-party vendors to provide some of these services, any switch in vendors could be costly and affect operating efficiencies.

We rely on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure.  If these suppliers or vendors experience problems or favor our competitors, we could fail to obtain sufficient quantities of the products and services we require to operate our businesses successfully.  

We depend on a limited number of key suppliers and vendors for equipment and services relating to our network infrastructure.  If these suppliers experience interruptions or other problems delivering these network components and related software on a timely basis, our subscriber growth and operating results could suffer significantly.  Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of the network, cause us effectively to be locked into one or a few suppliers for key network components.  As a result, we have become reliant upon a limited number of network equipment

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manufacturers, including Cisco, Alcatel-Lucent, Ciena and others.  If alternative suppliers and vendors become necessary, we may not be able to obtain satisfactory and timely replacement supplies on economically attractive terms, or at all.

If we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire, or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed.  

We are a party to collective bargaining agreements with our labor union, which represented 43 employees as of December 31, 2015.  Although we believe that relations with our employees are satisfactory, no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements when they expire.  If we fail to extend or renegotiate our collective bargaining agreements, if disputes with our union arise, or if our unionized workers engage in a strike or a work stoppage, we could experience a significant disruption of operations or incur higher ongoing labor costs, either of which could have an adverse effect to the business.  Our collective bargaining agreements are generally renegotiated every three years and the current agreements expire June 30, 2017.

If we cannot obtain and maintain necessary construction permits, rights-of-way and access to pole attachments for our network, our operations may be interrupted, customer installations may be delayed and we would likely face increased costs.  

We need to obtain and maintain the necessary rights-of-way for our network from governmental and quasi-governmental entities and third parties, such as railroads, utilities, state highway authorities, local governments, transit authorities and private landowners.  Additionally, in many cases we require construction permits to complete fiber installations. We may not be successful in obtaining and maintaining these rights-of-way or construction permits or obtaining them on acceptable terms.  Some agreements relating to rights-of-way may be short-term or revocable at will, and we cannot be certain that we will continue to have access to existing rights-of-way after the governing agreements are terminated or expire.  If any of our right-of-way agreements were terminated or could not be renewed, we may be forced to remove our network facilities from the affected areas, relocate or abandon our networks.  This would interrupt our operations and force us to find alternative rights-of-way and make unexpected capital expenditures.  If we are unable to obtain construction permits in a timely manner, or at all, we could face delaysin fiber installations, incur unexpected cost for network redesign work, or default on customer contracts. In addition, our failure to maintain the necessary rights-of-way, franchises, easements, licenses and permits may result in an event of default under our credit agreement and may subject us to legal complaints or claims.  We may also incur costs resulting from a disruption of service or the relocation of equipment for other carriers that use our network under Indefeasible Rights to Use (“IRU”) arrangements granted by us.

Under federal law, we have a right to use the poles, ducts, and conduits of investor-owned utilities (electric and telephone) at regulated rates for our cables, including fiber optic facilities.  Some of the poles we use are exempt from federal regulation because they are owned by utility cooperatives and municipal entities.  If the rates, terms and conditions imposed by utilities are unreasonable, or if the utilities do not allow us access to the poles, ducts, and conduits in a timely manner, our business, financial results or financial condition could suffer.

Our rights to the use of fiber that are part of our network may be affected by the ability to continue long term contracts and the financial stability of our IRU fiber providers. 

A portion of our services are provided on network fiber facilities licensed or leased from other network service providers through IRUs or similar arrangements.  The facilities under these agreements have remaining terms generally ranging from less than1 year to 24 years.  In these agreements, the network owner is responsible for network maintenance for which we pay such network owners.  If our network provider under IRU agreements has financial troubles, it could adversely affect our costs, especially maintenance costs and ability to deliver service.  Also, if our network providers under IRU agreements are unable to obtain and maintain necessary rights-of-way and access to pole attachments for their fiber networks or if they fail to renew or extend our IRUs, our operations may be interrupted and/or we could incur material expenses if we were required to relocate to alternative network assets.

We are dependent upon interconnection agreements with other carriers to reach some of our customer locations.

We have interconnection agreements with ILECs  in the competitive markets we serve.  Based on existing customers and our assessment of growth opportunities in these markets, we purchase wholesale voice lines, data circuits and access to collocation facilities under these agreements.  From time to time, we are required to negotiate amendments to, extensions of, or replacements for these agreements.  Additionally, we may be required to negotiate new interconnection agreements in order to enter new markets in the future.  We may not be able to successfully negotiate amendments to existing agreements, negotiate new interconnection agreements, renew our existing interconnection agreements, opt in to new agreements or successfully arbitrate replacement agreements for interconnection on terms and conditions acceptable to us.  Our inability to do so would adversely affect our existing operations and opportunities to expand our business in existing and new markets.  If rates became unfavorable or we could no longer access collocation facilities, we could be forced to alter our service delivery which could reduce our customer base.  As the FCC modifies and implements rules related to unbundling of ILEC network elements and collocation of competitive facilities at ILEC central offices, we generally have to renegotiate our interconnection agreements to implement those new or modified rules.

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If interest rates increase, our net income could be negatively affected.

Our Credit Facility exposes us to adverse changes in interest rates.  We cannot predict whether interest rates for long-term debt will increase, and thus we cannot assure you that our future interest expense will not have a material adverse effect on our business, financial condition, operating results and cash flows.  Our interest rate swap contracts, which partially mitigated this exposure, expired on December 31, 2015.

Security breaches to our physical facilities, computer networks, and informational databases, and unauthorized use of, or interference with, our network could disrupt services and result in loss of customer data and customers, and increase our costs.  

The nature of our business necessitates that parts of our network remain in the public domain and as a result it is possible that unauthorized use, interference with, or malicious or unintentional disruptions of our network may occur. In addition, computer viruses, theft, attacks by hackers, or similar disruptive problems may occur.  If hackers gain improper access to our databases, they may be able to steal, publish, delete or modify confidential personal information concerning our subscribers. 

In addition, misuse of our customer information could result in more substantial harm perpetrated by third parties.  This could damage our business and reputation, and result in a loss of customers.  Misuse of our customer information would also subject us to fines by the FCC.  We may incur costs associated with the unauthorized use of our network including administrative and capital costs associated with detecting, monitoring and reducing the incidence of malice and fraud.  Malicious and fraudulent use of our network may impact interconnection costs, capacity costs, legal and administrative costs, fraud prevention costs and payments to other carriers for fraudulent use.  

Our physical facilities may be vulnerable to physical break-ins which may also result in the misuse of our customer information, malicious and fraudulent use of our networks that may impact interconnection costs, capacity costs, legal and administrative costs, fraud prevention costs and payments to other carriers for fraudulent use.

If or when we lose a member or members of our senior management, our business may be adversely affected.  

The success of our business is largely dependent on our senior management team, as well as on our ability to attract and retain other highly qualified technical and management personnel, including talented sales and technical personnel. 

We believe that there is, and will continue to be, intense competition for qualified personnel in the telecommunications industry, and we cannot assure you that we will be able to attract and retain the personnel necessary for the development of our business.  The unexpected loss of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and operating results.  

Any significant impairment of our goodwill or intangible assets would lead to a decrease in our assets and a reduction in net income. 

As of December 31, 2015, we had goodwill and other intangible assets of approximately $111.4 million (approximately 14.9% of total assets).  If the impact or the timing of ongoing regulatory reform actions is significantly different than what we anticipate or if there are other regulatory or operating changes to our business, we may be forced to record an impairment charge, which would lead to a decrease in our assets and reduction in net income.  We test goodwill and other indefinite-lived intangible assets for impairment annually or more frequently if events or changes in circumstances indicate an impairment may have occurred.  If the testing performed indicates that impairment has occurred, we are required to record an impairment charge for the difference between the carrying value of the goodwill or indefinite-lived intangible asset and the implied fair value of the asset in the period in which the determination is made.  The testing of goodwill and indefinite-lived intangible assets for impairment requires us to make significant estimates about the fair values of our reporting units. These estimates can be affected by numerous factors, including changes in economic, industry or market conditions, changes in underlying business operations, future reporting unit operating performance, existing or new product market acceptance, changes in competition or changes in technologies.  Any changes in key fair value assumptions, or actual performance compared with those assumptions, about our business and our future prospects or other assumptions could affect the fair value of one or more of the indefinite-lived intangible assets or of the reporting units, resulting in an additional impairment charge.

Risks Related to Our Common Stock:

Outstanding warrants may cause dilution to existing shareholders.

On August 6, 2015, we issued to a Pamplona entity a warrant to purchase up to 5,500,000 shares of our common stock (the “Warrant”).  The Warrant is exercisable on a cashless basis at an initial exercise price of $13.99 per share and may be net-share settled only.  Exercise of the Warrant may cause dilution to the interests of other stockholders as a result of the additional common stock that would be issued.  Additionally, the Warrant contains anti- dilution provisions that could result in further dilution to our stockholders.

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The Pamplona Entities have influence over our business and their interests may not always coincide with the interests of the holders of our common stock.

Two of our 11 current directors that serve on our board of directors (and two of the nine directors who will be nominated for election at our 2016 Annual Meeting) are representatives or designees of the Pamplona Entities pursuant to an Investors Rights Agreement between a Pamplona Entity and us. By virtue of the Investors Rights Agreement and such representation on the board of directors, the Pamplona Entities have influence over corporate and management policies and matters submitted to our stockholders, including the election of the directors.

The interest of the Pamplona Entities may not always coincide with the interests of our stockholders. Accordingly, because the Pamplona Entities have influence over our business, they could seek to influence us to enter into transactions or agreements adverse to the interests of our stockholders or to forego entering into transactions or agreements that may be beneficial to our stockholders.

In addition, the Pamplona Entities are in the business of making investments in companies and may, from time to time, acquire and hold interests in business that compete directly or indirectly with us. The Pamplona Entities may also pursue, for their own account, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Additionally, we have specifically renounced any interest or expectancy that the Pamplona Entities will offer to us any investment or business opportunity of which they are aware.

Provisions in our charter documents and the General Corporation Law of Delaware could discourage potential acquisition proposals, could delay, deter or prevent a change in control and could limit the price certain investors might be willing to pay for our common stock. 

Certain provisions of the General Corporation Law of Delaware, the state in which we are organized, and our certificate of incorporation and bylaws may inhibit a change of control not approved by our board of directors or changes in the composition of our board of directors, which could result in the entrenchment of current management.  These provisions include:

· advance notice requirements for stockholder proposals and director nominations;

· limitations on the ability of stockholders to amend, alter or repeal our bylaws;

· limitations on the removal of directors;

· the inability of the stockholders to act by written consent; and

· the authority of the board of directors to issue, without stockholder approval, preferred stock with such terms as the board of directors may determine and additional shares of our common stock. 

Our stock price may be volatile.

The trading price of our common stock is subject to fluctuations in response to certain events and factors, such as quarterly variations in results of operations; entry into major transactions; changes in our business strategy; changes in financial guidance; changes in recommendations or reduced coverage by securities analysts; the operating and stock price performance of other companies that investors may deem comparable to us; industry or stock market trends unrelated to our performance; and general economic conditions.

Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company.

Our certificate of incorporationprovides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine.  Our certificate of incorporation further provides that any person or entity purchasing or acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions described above.  This forum selection provision in our certificate of incorporationmay limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company.

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Item 1B.  Unresolved Staff Comments.

None.

Item 2.  Properties.

We are headquartered in Waynesboro, Virginia and own offices and facilities in a number of locations within our operating markets.  Our offices and facilities are generally shared by our operating segments. We believe that our current facilities are adequate to meet our needs in our existing markets for the foreseeable future.  The table below provides the location, description and approximate square footage of our significant owned properties.

Location	Property Description	Approximate Square Footage
Harrisonburg, VA	Competitive POP	2,500
Troutville, VA	Switch and Video Headend Building	11,400
Clifton Forge, VA	Switch Building	12,000
Covington, VA	Service Center	13,000
Waynesboro, VA	Service Center	20,000
Daleville, VA	Regional Operations Center	21,000
Covington, VA	Switch Building	32,000
Waynesboro, VA	Corporate Headquarters	30,000
Waynesboro, VA	Switch Building	33,920
Daleville, VA	Service Center	9,400
Washington, PA	Competitive POP	1,580

We also lease the following significant properties:

· Our Charleston, West Virginia regional operations center (wireline switching) under a sub-lease from NTELOS Inc. for approximately 3,200 square feet of this space; 

· Our Charleston, West Virginia switch building under a lease agreement by and between Nelson Trust and FiberNet, LLC dated April 19, 2005, for approximately 9,100 square feet of space;

· Our Charleston, West Virginia office and switch building under a lease agreement by and between Williams Land Company and Mountaineer Telecommunications, LLC dated April 12, 2005, for approximately 21,100 square feet of space;

· Our Canonsburg, Pennsylvania regional operations center with a parallel NOC under a lease agreement by and between Southpointe Two Lot 12, L.P. and Lumos Networks of West Virginia, Inc. dated April 29, 2014, for approximately 8,800 square feet of space; and

· Our Richmond, Virginia regional operations center under a lease agreement by and between Highwoods Realty Limited Partnership and Lumos Networks, Inc. dated October 1, 2014, for approximately 4,200 square feet of space.

Item 3.  Legal Proceedings.

We are involved in routine litigation in the ordinary course of our business,  including litigation involving disputes relating to our billings to other carriers for access to our network (see Note 13 in Part II, Item 8. Financial Statements and Supplementary Data).  We do not believe that any pending or threatened litigation of which we are aware will have a material adverse effect on our financial condition, results of operations or cash flows.

Item 4.  Mine Safety Disclosures.

Not applicable.

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Part II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is traded on the NASDAQ Global Market under the symbol “LMOS.”  On March 4, 2016, the last reported sale price for our common stock was $12.52 per share.

Our common stock has been traded on the NASDAQ Global Market under the symbol “LMOS” since November 1, 2011.  Prior to that time, there was no established public trading market for our common stock.  The following table sets forth the high and low prices per share of our common stock and the cash dividends declared per common share for each of the quarters in 2015 and 2014, which correspond to our quarterly fiscal periods for financial reporting purposes:

	Stock Price per Share
	High		Low		Cash Dividends Declared per Common Share
2014:
First Quarter	$	21.15	$	13.37	$	0.14
Second Quarter		15.16		11.54		0.14
Third Quarter		16.25		14.07		0.14
Fourth Quarter		17.47		14.89		0.14
2015:
First Quarter	$	18.29	$	15.25	$	-
Second Quarter		15.95		13.33		-
Third Quarter		14.70		11.30		-
Fourth Quarter		13.65		11.12		-

Stock Performance Graph

The following indexed line graph indicates our total return to stockholders from November 1, 2011 (the first day our Common Stock began trading on the NASDAQ Global Market) to December 31, 2015, as compared to the total return for the NASDAQ Composite Index and the NASDAQ Telecommunications Index for the same period. The calculations in the graph assume that $100 was invested on November 1, 2011 in our Common Stock and each index and also assume dividend reinvestment.

Cumulative Total Shareholder Return

Lumos Networks, NASDAQ Composite Index
and NASDAQ Telecommunications Index
(11/1/11 - 12/31/15)

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		November 1, 2011		December 31, 2011		December 31, 2012		December 31, 2013		December 31, 2014		December 31, 2015
Lumos Networks Corp.	$	100	$	98	$	67	$	141	$	113	$	75
NASDAQ Composite Index	$	100	$	101	$	105	$	130	$	141	$	131
NASDAQ Telecommunications Index	$	100	$	105	$	116	$	160	$	182	$	192

Holders

There were approximately 3,000 holders of our common stock on March 4, 2016.

Dividends

Cash dividends of $0.14 per share were declared and subsequently paid for each of the four quarters in 2014.  On March4, 2015, our board of directors terminated our quarterly dividend in favor of allocating capital to growth opportunities.

Issuer Purchases of Equity Securities

The Company does not currently have a share repurchase program in effect.  However, from time to time the Company repurchases shares of common stock from employee plan participants for settlement of tax withholding obligations in connection with the vesting of restricted stock grants issued pursuant to the Company’s 2011 Equity and Cash Incentive Plan.  The number of shares repurchased and the average price paid per share for each month in the three-monthsended December 31, 2015 are as follows:

Period	(a) Total Number of Shares Repurchased	(b) Average Price Paid per Share		(c) Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
October 1, 2015 - October 31, 2015	322	$	12.60	N/A	N/A
November 1, 2015 - November 30, 2015	4,759	$	11.92	N/A	N/A
December 1, 2015 - December 31, 2015	1,288	$	11.66	N/A	N/A
	6,369	$	11.90	N/A

Credit Agreement

Amounts that can be made available to pay dividends or to repurchase shares are limited by a restricted payment basket in our Credit Agreement.

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Item 6.  Selected Financial Data

SELECTED HISTORICAL FINANCIAL INFORMATION(1)

	Lumos Networks Corp. Year Ended December 31,
(In thousands, except per share amounts)	2015		2014		2013		2012		2011
Consolidated Statements of Operations Data:
Operating Revenues	$	204,269	$	201,456	$	207,475	$	206,871	$	207,414
Operating Expenses
Network access costs		39,310		40,868		42,417		46,845		47,715
Selling, general and administrative (2), (3)		80,187		64,782		76,749		79,176		66,571
Depreciation and amortization and accretion of asset retirement
obligations		47,666		45,330		42,424		39,008		43,206
Asset impairment charges		-		-		-		-		86,295
Restructuring charges		638		-		50		2,981		-
Gain on settlements, net		-		-		-		(2,335)		-
Total Operating Expenses, net		167,801		150,980		161,640		165,675		243,787
Operating Income (Loss)		36,468		50,476		45,835		41,196		(36,373)
Other Income (Expenses)
Interest expense		(19,918)		(15,575)		(14,191)		(11,921)		(11,993)
Gain (loss) on interest rate swap derivatives		665		492		(144)		(1,898)		-
Other income (expense), net		114		664		(1,587)		81		105
Total Other Expenses, net		(19,139)		(14,419)		(15,922)		(13,738)		(11,888)
Income (Loss) Before Income Taxes		17,329		36,057		29,913		27,458		(48,261)
Income Tax Expense (Benefit)		7,146		14,409		12,019		11,010		(4,383)
Net Income (Loss)		10,183		21,648		17,894		16,448		(43,878)
Net Income Attributable to Noncontrolling Interests		(157)		(120)		(121)		(108)		(52)
Net Income (Loss) Attributable to Lumos Networks Corp.	$	10,026	$	21,528	$	17,773	$	16,340	$	(43,930)
Basic and Diluted Earnings (Loss) per Common Share
Attributable to Lumos Networks Corp. Stockholders
(Pro Forma and Unaudited for 2011)
Basic Earnings (Loss) per Share(4)	$	0.44	$	0.97	$	0.81	$	0.78	$	(2.11)
Diluted Earnings (Loss) per Share(4)	$	0.43	$	0.95	$	0.80	$	0.76	$	(2.11)
Cash Dividends Declared per Share - Common Stock	$	-	$	0.56	$	0.56	$	0.56	$	0.14

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	As of December 31,
(In thousands)	2015		2014		2013		2012		2011
Balance Sheet Data:
Cash and cash equivalents	$	13,267	$	14,140	$	14,114	$	2	$	10,547
Marketable securities		88,811		16,870		38,480		-		-
Property and equipment, net		498,944		429,451		378,723		336,589		299,958
Total assets(5)		745,372		611,807		592,369		509,227		493,878
Total long-term debt(5)		466,700		368,177		373,336		308,290		321,854
Stockholders' equity attributable to
Lumos Networks Corp.	$	131,392	$	92,677	$	86,333	$	64,050	$	52,383

⁽¹⁾ The consolidated financial statements of Lumos Networks for the period January 1, 2011 through October 31, 2011 have been adjusted to reflect certain corporate expenses, including equity-based compensation expense, of NTELOS which were not previously allocated to the NTELOS segments.  These adjustments have been reflected beginning January 1, 2006.  Equity attributable to Lumos Networks has not been adjusted to reflect these corporate expenses for periods prior to January 1, 2006.

⁽²⁾ Selling, general and administrative expenses include equity-based compensation expense, as follows:

	Year Ended December 31,
(In thousands)	2015		2014		2013		2012		2011
Equity-based compensation expense	$	5,881	$	4,340	$	6,778	$	3,912	$	2,383

⁽³⁾ Selling, general and administrative expenses for the year ended December 31, 2014 include a curtailment gain of approximately $10.8 million recognized in 2014 due to the discontinuance of certain medical benefits under our postretirement medical plan.

⁽⁴⁾ Basic and dilutedloss per share for the year ended December 31, 2011 is computed on a pro forma basis by dividing net loss for the year by the weighted average number of common shares outstanding during the two month post-Business Separation period beginning November 1, 2011 and ending December 31, 2011, as if such shares had been outstanding for the entire year.  Prior to the Business Separation from NTELOS on October 31, 2011, we did not have any common stock outstanding.

⁽⁵⁾ Total assets and total long-term debt as of the years ended December 31, 2014, 2013, 2012 and 2011 have been retrospectively revised to reflect our early adoption of FASB ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, and ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, in 2015 as applicable.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition in conjunction with our consolidated financial statements and the related notes included herein (Item 8).  This discussion contains forward looking statements that involve risks and uncertainties.  For additional information regarding some of these risks and uncertainties that affect our business and the industry in which we operate, please see “Risk Factors” and “Forward-Looking Statements” elsewhere in this report.

Overview

Lumos Network Corp. (“Lumos Networks,” the “Company,” “we,” “us,” or “our”) is a fiber-based bandwidth infrastructure and service provider in the Mid-Atlantic region.  We provide services to carrier and enterprise customers, including healthcare providers, local government agencies, financial institutions and educational institutions over our approximately 8,600 route-mile fiber network.  Our principal products and services include Multiprotocol Label Switching (“MPLS”) based Ethernet, Metro Ethernet (“Metro E”), Fiber to the Cell site (“FTTC”) wireless backhaul and data transport services, wavelength transport services and IP services.

Our overall strategy is to transition into a pure-play fiber bandwidth infrastructure company through pursuit of expansion opportunities, both organic and inorganic. To achieve organic growth, our objective is to leverage and expand our fiber assets to capture the growing demand for data and mobility services among our carrier and enterprise customers in our marketplace. Our operating strategy is to (i) leverage our fiber network to expand to new fiber to the cell opportunities; (ii) monetize our approximately 8,600 route-mile fiber optic network by selling bandwidth infrastructure services to new and existing carrier and enterprise customers while maintaining a ratio of approximately 80% of our data revenue from on-net traffic;  (iii) use our expansion and "edge-out” strategies to expand into new markets and markets adjacent to our existing footprint to increase our addressable market size; (iv) proactively manage our churn through several initiatives including upgrading existing customers from legacy technologies to carrier Ethernet services and continually improving network and operational performance; (v) focus on managing resources from the declining legacy voice products into our faster growing and more profitable data products; and (vi) execute our success-based investment strategy to maintain our capital efficiency and expand margins.

Business Segments

Our operating segments generally align with our major product and service offerings and coincide with the way that our chief operating decision makers measured performance and allocated resources during 2015.  Ourcurrent reportable operating segments are data, residential and small business (“R&SB”) and RLEC access.  Financial information concerning our reportable segments presented below includes restated segment results for the year ended December 31, 2013 to be consistent with the classification and presentation of our operating segments in 2014 and 2015.

Our data segment provided 56.0%,  52.9% and 50.2% of our total revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  Revenue for our data segment increased 7.2% for the year ended December 31, 2015, as compared to 2014.  This segment, which includes our enterprise data, transport and FTTC product and service groups, represents the main growth opportunity and the key focal point of our strategy.  We market and sell these services primarily to carrier and enterprise customers, including healthcare providers, local government agencies, financial institutions and educational institutions.  These businesses, in the aggregate, typically carry higher gross margins than many of our other product lines.  A majority of our capital expenditures and the focus of our sales force are dedicated to expanding revenue and profit from our data products.  We believe that a balanced split between carrier and enterprise revenue results in the most effective capital allocation and resulting profitability.  Our ability to successfully implement our strategy and thereby sustain our revenue growth in our data segment depends on our ability to obtain capital on acceptable terms and implement our network expansion plans in a timely manner, upgrade and enhance our network, attract new customers and expand our relationships with existing customers, manage our churn through customer retention programs, including upgrading existing customers from legacy technologies to Ethernet-based services and respond to competition from other data service providers in existing and our expansion markets.  

The 7.2% growth in our data segment revenues in 2015was achieved primarily through increases in long-term contracts with large U.S. wireless carriers, as reflected in the addition of 241FTTC sites in2015, the addition of second tenants to existing connected cell towers,  bandwidth upgrades, new enterprise contracts and improved rates of renewal with existing enterprise customers.Our marketing and sales efforts are focused on taking advantage of increased carrier bandwidth demand, particularly for long-term FTTC contracts from wireless carriers that are deploying long-term evolution (“LTE”) data services, selling into our expansion and edge out markets (with an emphasis on targeting large enterprises in our expansion markets of Richmond, VA and Norfolk, VA), maximizing the use of our carrier end user distribution channel, connecting our enterprise customers to data centers and improving penetration in existing markets.As of December 31, 2015, we had 1,099 cell towers and 1,732 buildings connected to our fiber network, including 34 data centers.  Our FTTC revenue increased $8.5 million, or 42.8%, as a result of the growth in connected towers as well as the addition of second tenants and bandwidth upgrades on existing towers.  Revenues from our enterprise data products increased $3.5 million, or  8.2%, due to growth in our metro Ethernet and dedicated Internet product lines.  The growth in FTTC and enterprise data revenues was partially offset by the year-over-year decline in our revenue from data transport products, which have been negatively impacted by network grooming as existing customers redesign their networks and upgrade from time division multiplexing (“TDM”)

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technology to Ethernet products to improve efficiency.As we continue to implement our data growth strategy, which includes completing the extension of our fiber optic network in the key Virginia markets of Richmond and Norfolk, we believe that the effect of churn on legacy product lines will continue to be more than offset by revenues from carrier Ethernet products, long-term FTTC contracts and new enterprise customers.

Our R&SB segment provided 32.9%,  35.8% and 38.9% of revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  This segment includes legacy voice and IP services products targeted at our residential and small business customers.  Revenue declined 6.7% for our R&SBsegmentin 2015 as compared to 2014 primarily due to the decline in revenues from legacy voice products. This decline is attributable to voice line loss resulting from residential wireless substitution, technology changes and product replacement by competitive voice service offerings from cable operators in our markets. We currently expect aggregate revenue from these businesses will continue to decline.

Our RLEC access segment provided 11.1%,  11.3% and 10.9% of revenue for the years ended December 31, 2015,  2014 and 2013, respectively.  This business requires limited incremental capital to maintain the underlying assets and delivers reasonably predictable cash flows.  However, revenue decline over time is expected due to access line loss andregulatory actions taken to reduce intra-state tariffs by applicable regulatory authorities, principally the FCC and the SCC.  In 2011, the FCC released an order comprehensively reforming its Universal Service Fund (“USF”) and intercarrier compensation systems.  In the order, the FCC determined that interstate and intrastate access charges, as well as local reciprocal compensation, should be eliminated entirely over time.  These FCC pricing reductions commenced on July 1, 2012 and continue through July 1, 2020.  However, a portion of the access revenue previously received from carriers is being recovered through payments from the FCC’s “Connect America Fund” (“CAF”) and from increases in charges to end user subscribers in the form of rate increases and the FCC’s “Access Recovery Charge”.  These new payments and revenues were also effective July 1, 2012.  These actions directly impact the access rates charged by our RLECs, which provide service to the rural Virginia cities of Waynesboro and Covington, and portions of the Virginia counties of Alleghany, Augusta and Botetourt.  Our total revenues derived from cost recovery mechanisms, including the USF and the CAF, were $21.4 million, $22.5 million and $16.6 million for the years ended December 31, 2015,  2014 and 2013, respectively, mostof which are reported in our RLEC access segment.

Our operating income margins were 17.9%,25.1%and 22.1%for the years ended December 31, 2015,  2014 and 2013, respectively.  Excluding a $10.8 million curtailment gain recognized in 2014 as a result of the discontinuance of certain postretirement medical benefits, our operating income margins were 19.7% in 2014.  Our Adjusted EBITDA margins, as defined below, were 45.0%,  50.0% and 46.4% for the years ended December 31, 2015,  2014 and 2013, respectively.  Excluding the curtailment gain, our Adjusted EBITDA margin was 44.6% for 2014.  Our Adjusted EBITDA margin for 2015is essentially flat as compared to 2014 as the increase in operating revenuesand lower network access costs we experienced were offset by higher selling, general and administrative expenses.  Our operating income margins are also impacted by increased depreciation expense resulting from our capital investments in our fiber optic network and internal business systems as well as restructuring charges incurred during the first quarter of 2015.

Operating Revenues

Our revenues are generated from the following segments: 

· Data, which includes the following products:  enterprise data (metro Ethernet, dedicated Internet, VoIP, and private line), transport, and FTTC; 

· R&SB, which includes legacy voice products (local lines, PRI, long distance, toll and directory services and other voice services) and IP services (integrated access, DSL, fiber-to-the-premise broadband XL and IP-based video). This segment also includes revenues from switched access and reciprocal compensation services provided to other carriers in our competitive markets; and

· RLEC access, which primarily includes switched access provided to other carriers in our RLEC markets.

Operating Expenses

Our operating expenses are incurred from the following categories: 

· Network access costs, including usage-based access charges, long distance and other direct costs incurred in accessing other telecommunications providers’ networks in order to provide telecommunication services to our end-user customers, and leased facility expenses for connection to other carriers;

· Selling, general and administrative expenses, including network operating and selling costs (which includes salaries, wages and benefits of network operations personnel, customer care, engineering, marketing, sales and other indirect network costs, but excludes network access costs), billing, publication of regional telephone directories, directory services, bad debt expenses, taxes other than income, executive services, accounting, legal, purchasing, information technology, human resources and other general and administrative expenses, including earned bonuses and equity-based compensation expense 23

related to stock and option instruments held by employees and non-employee directors and amortization of actuarial losses and other gains or losses related to retirement plans;

· Depreciation and amortization, including depreciable long-lived property, plant and equipment and amortization of intangible assets where applicable;

· Accretion of asset retirement obligations;

· Gain on settlements, net; and

· Restructuring charges.

Adjusted EBITDA

Adjusted EBITDA, as defined by us, is net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined above, to operating revenues.

Adjusted EBITDA is a non-GAAP financial performance measure.  It should not be considered in isolation, as an alternative to, or more meaningful than measures of financial performance determined in accordance with GAAP.  Management believes that Adjusted EBITDA is a standard measure of operating performance and liquidity that is commonly reported in the telecommunications and high speed data transport industry and provides relevant and useful information to investors for comparing performance period to period and for comparing financial performance of similar companies.   Management utilizes Adjusted EBITDA internally to assess its ability to meet future capital expenditure and working capital requirements, to incur indebtedness if necessary, and to fund continued growth.  Management also uses Adjusted EBITDA to evaluate the performance of its business for budget planning purposes and as factors in our employee compensation programs.

Note 4 – in Part II, Item 8. Financial Statements and Supplementary Data Disclosures, provides a reconciliation of Adjusted EBITDA to net income attributable to Lumos Networks Corp.  

Other Income (Expenses)

Our other income (expenses) are generated (incurred) from interest expense on debt instruments and capital lease obligations,including amortization of debt discounts and issuance costs, gains or losses on interest rate swap derivatives and other income or expense, which includes interest income and fees, expenses related to our senior secured credit facility and, as appropriate under the circumstances,  secondary public offering and stock registration costs and write-off of unamortized debt issuance costs. 

Income Taxes

Our income tax expense and effective tax rate increases or decreases based upon changes in a number of factors, including primarily the amount of our pre-tax income or loss, state minimum tax assessments and non-deductible expenses. 

Noncontrolling Interests in Earnings of Subsidiaries

We have a  partnership through our RLEC with a 46.3% noncontrolling interest that owns certain signaling equipment and provides services to a number of small RLECs and to TNS (an inter-operability solution provider). 

Results of Operations

Year ended December 31, 2015 compared to year ended December 31, 2014

Operating revenues increased  $2.8 million, or 1.4%, from 2014 to 2015 resulting from anincrease in data segment revenues of $7.7 million, partially offset by decreases in R&SB segment revenues of $4.8 million and RLEC access segment revenues of $0.1 million.  The growth in data segment revenues was primarily driven by increases in FTTC revenue of $8.5 million and enterprise data revenue of $3.5 million, which was partiallyoffset by declines in transport revenues.The $4.8 million decline in R&SB segment revenues is due primarily to line loss from legacy voice products. For further information regarding these revenue fluctuations, see “Operating Revenues” below.

Operating income decreased $14.0 million from $50.5 million in 2014 to $36.5 million in 2015 due primarily to the $10.8 million curtailment gain recognized in 2014 related to discontinuance of benefits under the postretirement medical plan referenced above,a  $4.6 million increase in other selling, general and administrative expenses,  a  $2.3 million increase in depreciation and amortization expense, and$0.6 million in restructuring charges.  These werepartially offset by a $4.3 million increase in gross margin (operating revenues less network access costs).  Variances in the individual line items on the consolidated statements of income are described in the “Operating Expenses” section below.

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Adjusted EBITDA was $92.0 million in 2015 compared to Adjusted EBITDA of$100.6 million in 2014.  Excluding the curtailment gain for the postretirement medical plan, Adjusted EBITDA was $89.9 million for 2014.  The year-over-year increase in Adjusted EBITDA, excluding the curtailment gain in 2014, is primarily attributable to the increase in total operating revenues, as described above and in further detail below.

Net income attributable to Lumos Networks decreased $11.5 million from 2014 to 2015.Reflected in these results was a $14.0 million decrease in operating income and an increase in interest expense of $4.2 million (net of changes in the fair value of interest rate swap derivatives), partially offset by a decrease in income tax expense of $7.3 million.

OPERATING REVENUES

The following table identifies our operating revenues by major product group for the years ended December 31, 2015 and 2014:

	Year Ended December 31,
(Dollars in thousands)	2015		2014		$  Variance		%Variance
Operating Revenues:
Data:
Enterprise data	$	45,820	$	42,334	$	3,486	8.2	%
Transport		40,021		44,373		(4,352)	(9.8)	%
FTTC		28,470		19,935		8,535	42.8	%
Total data		114,311		106,642		7,669	7.2	%
R&SB:
Legacy voice		45,235		49,578		(4,343)	(8.8)	%
IP services		16,726		16,645		81	0.5	%
CLEC access		5,253		5,805		(552)	(9.5)	%
Total R&SB		67,214		72,028		(4,814)	(6.7)	%
RLEC Access		22,744		22,786		(42)	(0.2)	%
Total operating revenues	$	204,269	$	201,456	$	2,813	1.4	%

Data.Data revenues increased $7.7 million, or 7.2%, in 2015.  The overall increase in data revenues is due to growth in contracts with wireless carriers for FTTC services, new enterprise data contracts and increased services with existing customers, partially offset by churn in data transport revenues due to network grooming activities as described below:

· Enterprise Data.  Enterprise data revenues increased 8.2% in 2015 primarily due to growth in revenues from our metro Ethernet and dedicated Internet products. We connected to 1,732 on-net buildings as of December 31, 2015, as compared to 1,477 as of December 31, 2014.  The growth in these product revenues was partially offset by declines in private line and other legacy enterprise data products as a result of churn from competition from national carriers and cable operators in our markets and to a lesser extent due to customers upgrading from TDM to Ethernet products.

· Transport.  The 9.8% decrease in transport revenue was primarily attributable to network grooming activities by carriers as TDM technology is replaced by Ethernet.

· FTTC.  Revenues from our FTTC contracts grew 42.8% in 2015.  This growth is attributable to a 28.1% increase in our fiber connections to wireless cell sites, from 858 at December 31, 2014 to 1,099 at December 31, 2015 and the addition of second tenants and increased bandwidth to existing connected cell towers.

R&SB.  Revenue from residential and small business products declined 6.7% in 2015 as compared to 2014.  This decline was primarily due to the continuing churn of legacy voice products due to the increasing use of wireless devices and competition from cable operators in our markets as well as our shift in focus to VoIP services (which is included in data segment revenues).  As of December 31, 2015, we operated approximately 25,516  RLEC telephone access lines and approximately 73,705 competitive voice lines, compared to approximately 27,250 and 83,400, respectively, as of December 31, 2014.  This represents a 6.4% year-over-year decline in RLEC telephone access lines and an11.6%year-over-year decline in competitive voice lines.  Growth in fiber-to-the-premise products within our IP services product group such as Broadband XL and IP video was more than offset by declines in revenue from legacy DSL products.  Our total video subscribers increased from 5,352 at December 31, 2014 to 5,904 at December 31, 2015.

RLEC Access.  Revenue from RLEC access was essentially flat year-over-year asdeclines in revenues due to the decrease in telephone access lines and intrastate access rate reductions mandated by regulatory rate reform was offset by recovery of certain additional intrastate access charges from the FCC’s CAF and other support as discussed in the overview section above.

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OPERATING EXPENSES

The following table identifies our operating expenses for the years ended December 31, 2015 and 2014:

	Year Ended December 31,
(Dollars in thousands)	2015		2014		$ Variance		%Variance
Consolidated Operating Expenses:
Network access costs	$	39,310	$	40,868	$	(1,558)	(3.8)	%
Selling, general and administrative		80,187		64,782		15,405	23.8	%
Depreciation and amortization		47,527		45,212		2,315	5.1	%
Accretion of asset retirement obligations		139		118		21	17.8	%
Restructuring charges		638		-		638	100.0	%
Total operating expenses	$	167,801	$	150,980	$	16,821	11.1	%

Network Access Costs.  Network access costs decreased $1.6 million, or 3.8%, from the prior year primarily due to the overall decrease in voice access lines and network grooming, partially offset by increases in collocation costs as we expand and enhance our fiber network.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses increased $15.4 million, or 23.8%, in 2015 as compared to 2014 primarily as a result of a net curtailment gain of approximately $10.8 million recognized in 2014 due to the discontinuance of certain medical benefits under our postretirement medical plan, in addition to a $2.6 million increase in salaries, wages and benefit related costs due to increased headcount in our data business, partially offset by reduced headcount in our R&SB segment, and increases in retirement benefit plan costs, a $1.5 million increase in equity-based compensation primarily due to grant activity, and increases in operating taxes and other general and administrative costs.  These increases were partially offset by decreases in advertising and marketing costs, professional fees and contracted services.  

Depreciation and Amortization.  Depreciation and amortization increased $2.3 million, or 5.1%, over 2014.  This net increase is attributable to a $6.7 million increase in depreciation expense, partially offset by a $4.4 million decrease in amortization expense.  The increase in depreciation costs is a result of the year-over-year increase in our depreciable base of assets primarily from capital investment in our fiber network including infrastructure upgrades and FTTC site installations.  The decrease in amortization cost is attributable to run off of amortization for customer intangible assets under an accelerated amortization method based on these assets’ estimated patterns of benefit.

Restructuring Charges.We incurred $0.6 million in restructuring charges in 2015, which consisted of separation benefits associated with an employee reduction-in-force, primarily in our legacy businesses, that was completed in March 2015.

The following table identifies our operating expenses by segment for the years ended December 31, 2015 and 2014 and provides a reconciliation from total segment operating expenses to consolidated operating expenses for each period.

	Year Ended December 31,
(Dollars in thousands)	2015		2014		$ Variance		%Variance
Segment Operating Expenses:
Data	$	62,836	$	54,917	$	7,919	14.4	%
R&SB		45,659		52,128		(6,469)	(12.4)	%
RLEC Access		3,771		4,547		(776)	(17.1)	%
Total segment operating expenses	$	112,266	$	111,592	$	674	0.6	%
Reconciliation of Segment Operating Expenses to Consolidated Operating Expenses:
Total segment operating expenses	$	112,266	$	111,592	$	674	0.6	%
Depreciation and amortization and
accretion of asset retirement obligations		47,666		45,330		2,336	5.2	%
Equity-based compensation expense		5,881		4,340		1,541	35.5	%
Employee separation charges		-		244		(244)	(100.0)	%
Restructuring charges		638		-		638	100.0	%
Amortization of actuarial losses		1,350		248		1,102	444.4	%
Gain on curtailment of retiree medical benefits		-		(10,774)		10,774	100.0	%
Total operating expenses	$	167,801	$	150,980	$	16,821	11.1	%

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Data.  Total operating expenses attributed to our data segment increased $7.9 million, or 14.4%, from 2014 to 2015 due to a $0.7 million increase in network access costs, a $6.6 million increase in network operating and engineering costs and a $0.5 million increase in other selling, general and administrative expenses.   The increases in network access and operating costs are directly attributable to our investment of resources in our network operations to support the growth in this segment in 2015 and drive future growth.The increase in selling, general and administrative costs is primarily attributable to the increase in allocated corporate expenses as the data segment grows in relation to the other segments and the continued redirection of our customer service, engineering, service delivery, and other resources to support and grow the data business. 

R&SB.  The $6.5 million, or 12.4%, decrease in total operating costs attributed to our R&SB segment is primarily due to a $2.3 million decrease in network access costs, a $2.8 million decrease in network operating and engineering costs and a $1.4 million decrease in other selling, general and administrative expenses.  The decrease in network access costs and network operating costs is due to an approximate 10.3% year-over-year decrease in voice lines, as reflected in the decline in segment revenues, network grooming activities and internal reorganization to shift resources away from the legacy businesses to our data segment.  The decrease in selling, general and administrative costs is primarily attributable to the decrease in allocated corporate expenses as the data segment grows and we redirect  resources to support and grow the data business.

RLEC Access.  Operating costs for the RLEC access segment decreased $0.8 million,or 17.1%, primarily attributable to a $0.5 million decrease in network operating and engineering costs and a $0.3 million decrease in other selling, general and administrative expenses.

OTHER INCOME (EXPENSES) AND INCOME TAXES

The following table summarizes our other income (expenses) and income taxes for the years ended December 31, 2015 and 2014:

	Year Ended December 31,
(Dollars in thousands)	2015		2014		$ Variance		%Variance
Interest expense	$	(19,918)	$	(15,575)	$	(4,343)	27.9	%
Gain on interest rate swap derivatives		665		492		173	35.2	%
Other income, net		114		664		(550)	(82.8)	%
Total other expenses, net	$	(19,139)	$	(14,419)	$	(4,720)	32.7	%
Income tax expense	$	7,146	$	14,409	$	(7,263)	(50.4)	%

Interest Expense.  Interest expense in 2015 and 2014 primarily consists of incurred interest costs associated with our Credit Facility as well as amortization of debt issuance costs, and beginning in the third quarter of 2015, interest incurred on the 8% Notes as well as amortization of associated debt discounts and debt issuance costs.  The year-over-year increase in interest expense of $4.3 million is attributable to the 8% Notes,  partially offset by reduced interest costs on the Credit Facility due to lower interest rates and a partial prepayment using proceeds from the 8% Notes (see Note 5 in Part II, Item 8. Financial Statements and Supplementary Data).

Gainon Interest Rate Swap Derivatives.  We recognized a gain on interest rate swap derivatives of $0.7 million and$0.5 million for the years ended December 31, 2015 and2014, respectively.  These gains are reflective of mark-to-market adjustments to record the liability associated with the interest rate swap derivatives at fair value on the consolidated balance sheets, which is impacted by fluctuations in interest rates and other market factors.  The interest rate swap derivatives expired on December 31, 2015 and were not replaced or renewed.

Other Income,net.  Other income primarily consists of interest income earned on marketable securities during 2015 and 2014, which was partially offset by costs incurred for the secondary public stock offering (see Note 1 in Part II, Item 8. Financial Statements and Supplementary Data) for 2015.

Income Tax Expense.  Income tax expense for the years ended December 31, 2015 and 2014 was $7.1 million and $14.4 million, respectively, which represents the federal statutory tax rate applied to pre-tax income and the effects of state income taxes and certain non-deductible charges for each period.  Our recurring non-deductible expenses relate primarily to certain non-cash equity-based compensation and, beginning in the third quarter of 2015, non-deductible interest on the 8% Notes, which are treated as applicable high yield discount obligations (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code, as amended.  The decrease in income tax expense was primarily due to a decrease in income before taxes.  Our effective tax rate was 41.2% in 2015 as compared to 40.0% in 2014.

At December 31, 2015, we had unused federal net operating losses (“NOLs”) of approximately$48.0million, net of adjustments for unrecognized income tax benefits.  Our NOLs, if not utilized to reduce taxable income in future periods, will expire in varying

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amounts from 2022 through 2035.  We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

Year ended December 31, 2014 compared to year ended December 31, 2013

Operating revenues decreased $6.0 million, or 2.9%, from 2013 to 2014 resulting from a decrease in R&SB segment revenues of $8.6 million, partially offset by an increase in data segment revenues of $2.5 million.  The growth in data segment revenues was primarily driven by an increase in FTTC revenue of $5.7 million, which increase was partially offset by declines in transport revenues.  The $8.6 million decline in R&SB segment revenues is due primarily to line loss from legacy voice products. For further information regarding these revenue fluctuations, see “Operating Revenues” below.

Operating income increased $4.6 million from $45.8 million in 2013 to $50.5 million in 2014 due primarily to the $10.8 million curtailment gain related to discontinuance of benefits under the postretirement medical plan referenced above, partially offset by a $4.5 million decrease in gross margin (operating revenues less network access costs) and a $2.9 million increase in depreciation and amortization costs due to capital investment primarily in our fiber network assets.  Variances in the individual line items on the consolidated statements of income are described in the operating expenses section below.

Adjusted EBITDA was $100.6 million in 2014 compared to Adjusted EBITDA of $96.3 million in 2013.  Excluding the curtailment gain for the postretirement medical plan, Adjusted EBITDA was $89.9 million for 2014.  The year-over-year decrease in Adjusted EBITDA is primarily attributable to the decline in total operating revenues, as described above and in further detail below.

Net income attributable to Lumos Networks increased $3.8 million from 2013 to 2014. Reflected in these results was a $4.6 million increase in operating income and decrease in other expenses due to the non-recurrence of secondary offering costs and costs associated with the debt refinancing in 2013, offset by an increase in interest expense of $0.7 million (net of changes in the fair value of interest rate swap derivatives) and increase in income tax expense of $2.4 million.

OPERATING REVENUES

The following table identifies our external operating revenues by business segment for years ended December 31, 2014 and 2013:

	Year Ended December 31,
(Dollars in thousands)	2014		2013		$ Variance		% Variance
Operating Revenues:
Data:
Enterprise data	$	42,334	$	42,404	$	(70)	(0.2)	%
Transport		44,373		47,434		(3,061)	(6.5)	%
FTTC		19,935		14,274		5,661	39.7	%
Total data		106,642		104,112		2,530	2.4	%
R&SB:
Legacy voice		49,578		56,466		(6,888)	(12.2)	%
IP services		16,645		17,221		(576)	(3.3)	%
CLEC access		5,805		6,972		(1,167)	(16.7)	%
Total R&SB		72,028		80,659		(8,631)	(10.7)	%
RLEC Access		22,786		22,704		82	0.4	%
Total operating revenues	$	201,456	$	207,475	$	(6,019)	(2.9)	%

Data.  Data revenues increased $2.5 million, or 2.4%, in 2014.  The overall increase in data revenues is due to growth in contracts with wireless carriers for fiber to the cell site services, partially offset by churn in data transport revenues due to network grooming activities as described below:

· Enterprise Data.  Enterprise data revenues remained relatively flat year-over-year.  Combined growth in revenues from our metro Ethernet and carrier end user products was $1.7 million in 2014.  We connected to 1,477 on-net buildings as of December 31, 2014, as compared to 1,344 as of December 31, 2013.  The growth in these product revenues was offset by declines in private line and other legacy enterprise data products as a result of churn from competition from national carriers and cable operators in our markets and to a lesser extent due to customers upgrading from TDM to Ethernet products.

· Transport.  The 6.5% decrease in transport revenue was primarily attributable to network grooming activities by carriers as TDM technology is replaced by Ethernet.

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· FTTC.  Revenues from our fiber to the cell site contracts grew 39.7% in 2014.  This growth is attributable to a 41.1% increase in our fiber connections to wireless cell sites, from 608 at December 31, 2013 to 858 at December 31, 2014 and the addition of second tenants to existing connected cell towers.

R&SB.  Revenue from residential and small business products declined 10.7% in 2014 as compared to 2013.  This decline was primarily due to the continuing churn of legacy voice products due to the increasing use of wireless devices and competition from cable operators in our markets as well as our shift in focus to VoIP services (which is included in data segment revenues).  As of December 31, 2014, we operated approximately 27,250 RLEC telephone access lines and approximately 83,400 competitive voice lines, compared to approximately 28,900 and 95,700, respectively, as of December 31, 2013.  This represents a 5.7% year-over-year decline in RLEC telephone access lines and a 12.9% year-over-year decline in competitive voice lines.  Growth in fiber-to-the-premise products within our IP services product group such as Broadband XL and IP video was more than offset by declines in revenue from legacy DSL products.  Our total video subscribers increased from 5,034 at December 31, 2013 to 5,352 at December 31, 2014.

RLEC Access.  Revenue from RLEC access increased slightly year-over-year primarily as a result of the recovery of certain additional intrastate access charges from the FCC’s Connect America Fund (“CAF”) discussed in the overview section above, offset by declines in revenues due to the decrease in telephone access lines and intrastate access rate reductions mandated by regulatory rate reform.

OPERATING EXPENSES

The following table identifies our operating expenses for the years ended December 31, 2014 and 2013:

	Year Ended December 31,
(Dollars in thousands)	2014		2013		$ Variance		%Variance
Consolidated Operating Expenses:
Network access costs	$	40,868	$	42,417	$	(1,549)	(3.7)	%
Selling, general and administrative		64,782		76,749		(11,967)	(15.6)	%
Depreciation and amortization		45,212		42,320		2,892	6.8	%
Accretion of asset retirement obligations		118		104		14	13.5	%
Restructuring charges		-		50		(50)	(100.0)	%
Total operating expenses	$	150,980	$	161,640	$	(10,660)	(6.6)	%

Network Access Costs.  Network access costs decreased $1.5 million, or 3.7%, from the prior year primarily due to network grooming and the overall decrease in voice access lines, partially offset by increases in collocation costs as we expand and enhance our fiber network.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses decreased $12.0 million, or 15.6%, in 2014 as compared to 2013 primarily as a result of a net curtailment gain of approximately $10.8 million recognized in 2014 due to the discontinuance of certain medical benefits under our postretirement medical plan and other reductions in personnel-related costs such as non-cash and incentive compensation and pension-related costs, partially offset by increased salaries and wages.  We also incurred lower rent, repairs and maintenance and operating taxes, which decreases were partially offset by increased advertising and marketing costs and professional fees.

Depreciation and Amortization.  Depreciation and amortization increased $2.9 million, or 6.8%, over 2013.  This net increase is attributable to a $3.5 million increase in depreciation expense, partially offset by a $0.6 million decrease in amortization expense related to customer intangibles for which an accelerated amortization method is applied based on these assets’ estimated pattern of benefits.  The increase in depreciation expense is a result of the year-over-year increase in our depreciable base of assets primarily from capital investment in our network including infrastructure upgrades and fiber to the cell site installations and internal business systems.

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The following table identifies our operating expenses by segment for the years ended December 31, 2014 and 2013 and provides a reconciliation from total segment operating expenses to consolidated operating expenses for each period.

	Year Ended December 31,
(Dollars in thousands)	2014		2013		$ Variance		%Variance
Segment Operating Expenses:
Data	$	54,917	$	50,608	$	4,309	8.5	%
R&SB		52,128		56,000		(3,872)	(6.9)	%
RLEC Access		4,547		4,543		4	0.1	%
Total segment operating expenses	$	111,592	$	111,151	$	441	0.4	%
Reconciliation of Segment Operating Expenses to Consolidated Operating Expenses:
Total segment operating expenses	$	111,592	$	111,151	$	441	0.4	%
Depreciation and amortization and
accretion of asset retirement obligations		45,330		42,424		2,906	6.8	%
Equity-based compensation expense		4,340		6,778		(2,438)	(36.0)	%
Employee separation charges		244		-		244	(100.0)	%
Restructuring charges		-		50		(50)	(100.0)	%
Amortization of actuarial losses		248		1,237		(989)	(80.0)	%
Gain on curtailment		(10,774)		-		(10,774)	100.0	%
Total operating expenses	$	150,980	$	161,640	$	(10,660)	(6.6)	%

Data.  Total operating expenses attributed to our data segment increased $4.3 million, or 8.5%, from 2013 to 2014 due to a $0.2 million increase in network access costs, a $2.2 million increase in network operating and engineering costs and a $1.9 million increase in other selling, general and administrative expenses.   The increases in network access and operating costs are directly attributable to our investment of resources in our network operations to support the growth in this segment in 2014 and drive future growth.  The increase in selling, general and administrative costs is primarily attributable to the increase in allocated corporate expenses as the data segment grows in relation to the other segments and the redirection of our sales, marketing, customer service, engineering and other resources to support and grow the data business. 

R&SB.  The $3.9 million, or 6.9%, decrease in total operating costs attributed to our R&SB segment is primarily attributable to a $1.7 million decrease in network access costs and a $2.2 million decrease in network operating and engineering costs.  The decrease in network access costs and network operating costs is due to an approximate 11.2% year-over-year decrease in voice lines, as reflected in the decline in segment revenues, network grooming activities and internal reorganization to shift resources away from the legacy businesses to our data segment.  The decrease in selling, general and administrative costs is primarily attributable to the decrease in allocated corporate expenses as the data segment grows and we redirect our sales, marketing, customer service, engineering and other resources away from the legacy businesses to support and grow the data business.

RLEC Access.  Operating costs for the RLEC access segment remained materially consistent with the prior year.

OTHER INCOME (EXPENSES) AND INCOME TAXES

The following table summarizes our other income (expenses) and income taxes for the years ended December 31, 2014 and 2013:

	Year Ended December 31,
(Dollars in thousands)	2014		2013		$ Variance		%Variance
Interest expense	$	(15,575)	$	(14,191)	$	(1,384)	9.8	%
Gain (loss) on interest rate swap derivatives		492		(144)		636	N/M
Other income (expense), net		664		(1,587)		2,251	N/M
Total other expenses, net	$	(14,419)	$	(15,922)	$	1,503	(9.4)	%
Income tax expense	$	14,409	$	12,019	$	2,390	19.9	%

N/M – not meaningful

Interest Expense.  Interest expense in 2014 and 2013 primarily consists of incurred interest costs associated with our Credit Facility as well as amortization of debt issuance costs.  The year-over-year increase in interest expense of $1.4 million is attributable to the debt refinancing in April 2013, which resulted in a higher outstanding principal balance and a $0.2 million increase in amortization of debt issuance costs in 2014 as compared to 2013 (see Note 5 in Part II, Item 8. Financial Statements and Supplementary Data).

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Gain(Loss) on Interest Rate Swap Derivatives.  We recognized a gain on interest rate swap derivatives of $0.5 million in 2014 and a loss of $0.1 million for 2013.  These gains and losses are reflective of mark-to-market adjustments to record the liability associated with the interest rate swap derivatives at fair value on the consolidated balance sheets, which is impacted by fluctuations in interest rates and other market factors.

Other Income (Expenses).  Other income of $0.7 million in 2014 primarily consists of interest income earned on marketable securities. Other expenses of $1.6 million for 2013 includes approximately $0.9 million of expense related to unamortized debt issuance costs that were written off in connection with the April 2013 debt refinancing transaction and $0.8 million of administrative, legal and accounting costs associated with the secondary offering of our common stock in November 2013 (see Note 1 in Part II, Item 8. Financial Statements and Supplementary Data).

Income Tax Expense.  Income tax expense for the years ended December 31, 2014 and 2013 was $14.4 million and $12.0 million, respectively, which represents the federal statutory tax rate applied to pre-tax income and the effects of state income taxes and certain non-deductible charges for each period.  Our recurring non-deductible expenses relate primarily to certain non-cash equity-based compensation for 2014 and 2013 and limitations on certain officer compensation for 2013.  The increase in income tax expense was primarily due to an increase in income before taxes.  Our effective tax rate was 40.0% in 2014 as compared to 40.2% in 2013.

Quarterly Results

The following table sets forth selected unaudited consolidated quarterly statement of operations data for each of the quarters in 2015 and 2014.  This unaudited quarterly information has been prepared on substantiallythe same basis as our consolidated financial statements appearing elsewhere in this report and includes all adjustments (consisting of normal recurring adjustments) we believe necessary for a fair statement of the unaudited consolidated quarterly data.  The unaudited consolidated quarterly statement of income data should be read together with the consolidated financial statements and related notes thereto included elsewhere in this report.  The results for any quarter are not necessarily indicative of results for any future period, and you should not rely on them as such. 

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		Quarter Ended:
Summary Operating Results (Unaudited)	December 31,		September 30,		June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
(In thousands, except per share amounts)	2015		2015		2015		2015		2014		2014		2014		2014
Operating Revenues
Data	$	29,832	$	28,623	$	28,089	$	27,767	$	27,310	$	26,488	$	26,707	$	26,137
R&SB		16,379		16,560		17,010		17,265		17,423		17,668		18,290		18,647
RLEC Access		5,641		5,786		5,854		5,463		5,952		6,360		5,168		5,306
Total Operating Revenues		51,852		50,969		50,953		50,495		50,685		50,516		50,165		50,090
Operating Expenses
Data		15,611		16,228		15,597		15,400		14,681		13,504		13,312		13,420
R&SB		10,823		11,515		11,683		11,638		12,800		13,165		13,060		13,103
RLEC Access		867		952		1,006		946		1,331		1,146		1,070		1,000
Operating expenses, before depreciation and
amortization and accretion of asset
retirement obligations, equity-based
compensation expense, employee
separation charges, restructuring charges,
amortization of actuarial  losses, and
gain on curtailment of retiree medical benefits		27,301		28,695		28,286		27,984		28,812		27,815		27,442		27,523
Depreciation and amortization and accretion
of asset retirement obligations		12,449		11,836		11,479		11,902		12,094		11,310		11,240		10,686
Equity-based compensation expense		1,645		1,454		1,557		1,225		1,231		1,123		1,152		834
Employee separation charges		-		-		-				-		-		19		225
Restructuring charges		1		-		4		633		-		-		-		-
Amortization of actuarial losses		338		337		338		337		56		64		64		64
Gain on curtailment of retiree medical benefits		-		-		-		-		(567)		(10,207)		-		-
Total Operating Expenses		41,734		42,322		41,664		42,081		41,626		30,105		39,917		39,332
Operating Income		10,118		8,647		9,289		8,414		9,059		20,411		10,248		10,758
Other Income (Expenses)
Interest expense		(6,896)		(5,817)		(3,719)		(3,486)		(3,820)		(3,969)		(3,812)		(3,974)
Gain (loss) on interest rate swap derivatives		220		198		165		82		97		302		(16)		109
Other income (expenses)		203		58		96		(243)		135		179		170		180
Total Other Expenses, net		(6,473)		(5,561)		(3,458)		(3,647)		(3,588)		(3,488)		(3,658)		(3,685)
Income Before Income Taxes		3,645		3,086		5,831		4,767		5,471		16,923		6,590		7,073
Income tax expense		925		1,774		2,438		2,009		2,007		6,713		2,711		2,978
Net Income		2,720		1,312		3,393		2,758		3,464		10,210		3,879		4,095
Net Income Attributable to
Noncontrolling Interests		(46)		(33)		(44)		(34)		(51)		(3)		(33)		(33)
Net Income Attributable to Lumos
Networks Corp.	$	2,674	$	1,279	$	3,349	$	2,724	$	3,413	$	10,207	$	3,846	$	4,062
Basic and Diluted Earnings per Common
Share Attributable to Lumos Networks Corp.
Stockholders:
Basic Earnings per share	$	0.12	$	0.06	$	0.15		0.12	$	0.15	$	0.46	$	0.17	$	0.18
Diluted Earnings per share	$	0.12	$	0.06	$	0.14		0.12	$	0.15	$	0.45	$	0.17	$	0.18
Cash Dividends Declared per Share -
Common Stock	$	-	$	-	$	-	$	-	$	0.14	$	0.14	$	0.14	$	0.14

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Liquidity and Capital Resources

For the years ended December 31, 2015,  2014 and 2013, our cash flow from operations totaled approximately $66.7 million, $79.8 million and $74.3 million, respectively.  Our cash flow from operations is primarily generated by payments received from customers for data and voice communication services and carrier access to our network offset by payments to other carriers and suppliers, payments to our employees, payments for interest and taxes, and payments for other network operating costs and other selling, general and administrative expenses.  We have also generated cash from debt financing activities for the primary purpose of repaying debt obligations,  to fund investment in our fiber optic network to facilitate growth and for general working capital requirements.  Our cash on hand and marketable securities, which are generally available for operations, may be used to repay debt obligations or fund capital expenditures.

As of December 31, 2015, we had $564.5 million in aggregate long-term liabilities, consisting of $456.3 million in long-term debt, net of $34.3 million in debt discount and deferred issuance costs, and $108.2 million in other long-term liabilities, inclusive of deferred income tax liabilities of $89.2 million, pension and other postretirement obligations of $17.0 million and other long-term liabilities of $2.0 million. Our Credit Facility includes a revolving credit facility of $50 million (the “Revolver”), all of which was available for our working capital requirements and other general corporate purposes as of December 31, 2015.

Mandatory prepayments include an excess cash flow sweep equal to 50% of Excess Cash Flow, as defined under the Credit Agreement, for each fiscal year commencing in 2013 for so long as the leverage ratio exceeds 3.25:1.00.Based on the excess cash flow calculation as of December 31, 2015, no mandatory prepayment was due for the year ended December 31, 2015.

Under the Credit Agreement, our subsidiaries are bound by certain financial covenants.  Noncompliance with any one or more of the debt covenants may have an adverse effect on our financial condition or liquidity in the event such noncompliance cannot be cured or should we be unable to obtain a waiver from the lenders of the Credit Facility.

As of December 31, 2015,  our subsidiaries were in compliance with all of our debt covenants, and our ratios were as follows: 

6.7
	Actual	Covenant Requirement at December 31, 2015
Total debt outstanding to EBITDA (as defined in the Credit Agreement)	3.78	Not more than 5.00
Minimum interest coverage ratio	6.70	Not less than 3.25

On January 2, 2015, we entered into a $28 million senior secured incremental term loan facility under the existing Credit Facility (“Term Loan C”) and amended certain terms of the Credit Facility (the “Amended Credit Facility”).  The net proceeds from Term Loan C were used to fund capital expenditures for customer builds related to new FTTC contracts.  Term Loan C will mature in 2019 with quarterly payments of 1% per annum.  The Amended Credit Facility sets a maximum leverage ratio of 5.00:1.00 through December 31, 2015, 4.75:1.00 through December 31, 2016, 4.50:1.00 through December 31, 2017, 4.25:1.00 through December 31, 2018 and 4.00:1.00 thereafter.

On August 6, 2015, we closed on the issuance of unsecured promissory notes in an aggregate principal amount of $150 million (the “8% Notes”) to an affiliate of Pamplona Capital Management LLC (“Pamplona”). Net proceeds of the 8% Notes, after payment of closing costs, were used to pay off $40 million of our existing Credit Facility, with the remainder to be used for general corporate purposes, including to fund future growth opportunities. The 8% Notes bear interest at an annual fixed rate of 8.00% and mature on August 15, 2022.  Interest is payable in arrears on a quarterly basis on August 15, November 15, February 15 and May 15 of each year, beginning on November 15, 2015.  Interest is payable in cash or, at our election, through the issuance of additional notes or by adding the amount of the accrued interest to the unpaid principal amount of the 8% Notes outstanding at that time.We currently intend to pay the interest in cash.

In addition to the Credit Facility, we have capital leases on vehicles with original lease terms of four to five years and an obligation for certain software licenses that is included in capital lease obligations as a component of long-term debt on the consolidated balance sheet as of December 31, 2015.As of December 31, 2015, the combined total net present value of our future minimum lease payments was $2.6 million.

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The following table presents a summary of our cash flow activity for the years ended December 31, 2015,  2014 and 2013.

	Year Ended December 31,
(In thousands)	2015		2014		2013
Net cash provided by operating activities	$	66,745	$	79,809	$	74,254
Net cash used in investing activities		(182,485)		(63,433)		(104,903)
Net cash provided by (used in) financing activities		114,867		(16,350)		44,761
(Decrease) increase in cash and cash equivalents	$	(873)	$	26	$	14,112

Operating.  The decrease in cash flows from operations in 2015 as compared to 2014 is primarily due to changes in working capital largely due to timing of payments to vendors, partially offset by a decrease in income taxes paid.

The increase in cash flows from operations in 2014 as compared to 2013 was primarily due to changes in working capital largely due to timing of payments to vendors and a decrease in income taxes paid partially offset by the decrease in operating revenues.

Investing.The increase in cash used in investing activities from 2014 to 2015 is primarily due to an increase in capital expenditures of $31.6 million and purchases of marketable securities, net of sales and maturities, of $72.3  million in 2015, as compared to net proceeds of $21.2 million in 2014.This was partially offset by cash received from the broadband stimulus grant for reimbursement of qualified expenditures and the corresponding release of restricted funds totaling $8.0 million. Capital expenditures for 2015 were comprised of (i) $103.8 million for success-based customer and network expansion projects, (ii) $4.3 million for infrastructure upgrades and network maintenance, and (iii) $7.6 million for information technology, facility related projects and increase in inventory on hand.

The decrease in cash used in investing activities from 2013 to 2014 was primarily due to cash proceeds from the sale or maturity of marketable securities, net of purchases, of $21.2 million in 2014, as compared to net purchases of $38.6 million in 2013 offset by an increase in capital expenditures of $15.8 million.  Capital expenditures for 2014 were comprised of (i) $68.7 million for success-based customer projects and network expansion, (ii) $4.8 million for infrastructure upgrades and network maintenance, and (iii) $10.6 million for information technology, facility related projects and increase in inventory on hand.

We currently expect capital expenditures for 2016 to range from approximately $85million to $95 million,  with approximately $22 million of these expendituresto primarily be spent on network expansion projects, including the completion of our approximate 822 route-mile expansion between Richmond, VA and Norfolk, VA. The remaining planned capital expenditures will be used forenhancing our existing investment in our fiber network backbone and fiber rings and to significantly improve our ability to provide carrierEthernet transport and enterprise customer data services,  FTTC deployments and other wholesale revenue opportunities with attractive return on investment profiles.  Through December 31, 2015, we have developed a network of approximately 8,600 route miles.  Approximately 42% of our fiber network is owned by us and has been accumulated through our capital investment in fiber builds and strategic acquisitions over the past several years with the remaining approximately 58% of our network under IRU agreements.  During 2016, we expect to continue to allocate a portion of our capital resources to fund essential network facility upgrades and fiber-to-the-premise deployments for our R&SB segment and to fund internal business system and IT infrastructure upgrades and enhancements.

Financing.In 2013, we entered into a $425 million credit facility consisting of a $50 million senior secured five-year revolving credit facility, a $100 million senior secured five-year amortizing term loan and a $275 million senior secured six-year amortizing term loan (the “2013 Credit Facility”).  The proceeds from the debt refinancing were used to repay all outstanding obligations under the previous Credit Facility,which amounted to approximately $311 million, and to pay debt issuance costs of $4.9 million, with the remaining proceeds used to fund a working capital cash reserve.  We did not draw down on the $50 million revolving credit facility during 2014 or in 2015.We received proceeds of $28 million from Term Loan C, which closed in January2015 and proceeds of $150 million from the 8% Notes in August 2015.

The net cash provided by financing activities in 2015 consisted of proceeds from the issuance of Term Loan C and the 8% Notes, net of debt issuance costs, of $168.3 million, partially offset by repayment of principal on the Credit Facility and payments under capital lease obligations totaling $50.4 million and other equity-based compensation items totaling $0.2 million.  We also paid approximately $3.2 million in dividends.

The net cash used in financing activities in 2014 was primarily for repayment of principal on the 2013 Credit Facility of $5.3 million, payments for capital lease obligations of $1.5 million and dividend payments of $12.5 million, offset by proceeds from stock option exercises totaling $2.9 million.

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As of December 31, 2015, we had approximately $13.3million in cash and cash equivalents and approximately $88.8 million in marketable securities, all of which we consider to be available for current operations due to the short-term maturities and/or liquid nature of the holdings.  After completion of the RUS broadband stimulus grant work as of September 30, 2015, the federal government approved the release of the associated restricted cash in December 2015. As such, none of our cash on hand is restricted currently. As of December 31, 2015 we had working capital (current assets minus current liabilities) of approximately $83.0 million.  We expect that the cash we generate from operations combined with our cash on hand and marketable securities will be sufficient to satisfy our working capital requirements, capital expenditures and debt service requirements for the foreseeable future.  Additionally, we have access to the Revolver, which is currently undrawn. However,  if our assumptions prove incorrect or if there are other factors that increase our need for additional liquidity, such as material unanticipated losses, loss of customers or a significant reduction in demand for our services or other factors, or if we are successful in obtaining additional major FTTC contracts or we make acquisitions, we would expect to seek additional sources of funds through refinancing or other means including additional equity financing.  There is no assurance that we could obtain such additional financing on acceptable terms, if at all.  If available, additional equity financing may dilute our stockholders and debt financing may restrict our ability to raise future capital.

As discussed previously in“Regulation” and this “Management’s Discussion and Analysis”, events and actions taken by the FCC are projected to have a significant negative impact on our future cash flows from the RLEC access products, partially offset by the CAF payments to us.

Our board of directors declared cash dividends on our common stock of $0.14 per share in each of the four quarters of 2014 and 2013.  We paid $12.5million in cash dividends to our common stockholders during the year ended December 31, 2014 and $3.2 million during the year ended December 31, 2015.  On March 4, 2015, our board of directors terminated our quarterly dividend in favor of allocating capital to growth opportunities.

Contractual Obligations and Commercial Commitments

We have contractual obligations and commercial commitments that may affect our financial condition.  The following table summarizes our significant contractual obligations and commercial commitments as of December 31, 2015:  

	Payments Due by Period
(In thousands)	Total (2)		Less than one year		One to three years		Three to five years		More than five years
Long-term debt obligations (1),(3)	$	498,415	$	8,030	$	83,877	$	256,508	$	150,000
Capital lease obligations (3)		2,597		2,370		209		18		-
Operating lease obligations		5,912		1,456		2,496		1,160		800
Purchase obligations		6,906		6,906		-		-		-
Total	$	513,830	$	18,762	$	86,582	$	257,686	$	150,800

(1)Represents the borrowings under the 2013 Credit Facility and 8% Notes (see Note 5 in Part II, Item 8. Financial Statements and Supplementary Data).

(2)Excludes certain benefit obligation projected payments under our qualified and non-qualified pension and otherpostretirement benefit plans (see Note 11 in Part II, Item 8. Financial Statements and Supplementary Data).

(3)Excludes interest payments.

Under the tax matters agreement entered into between us and NTELOS, we are generally required to indemnify NTELOS against any tax resulting from the Distribution to the extent that such tax resulted from any of the following events (among others): (1) an acquisition of all or a portion of our stock or assets, whether by merger or otherwise, (2) any negotiations, understandings, agreements or arrangements with respect to transactions or events that cause the Distribution to be treated as part of a plan pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50% or greater interest in Lumos Networks, (3) certain other actions or failures to act by us, or (4) any breach by us of certain of our representations or undertakings.  Our indemnification obligations to NTELOS and its subsidiaries, officers and directors are not limited by any maximum amount. 

Pursuant to the separation and distribution agreement and certain other agreements with NTELOS, NTELOS agreed to indemnify us from certain liabilities, and we agreed to indemnify NTELOS for certain liabilities.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements or financing activities with special purpose entities.

Critical Accounting Policies and Estimates

The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities.  To aid in that understanding, management has identified our critical accounting policies for discussion herein.  These policies have the potential to have a more significant impact on our consolidated financial statements, either because of the

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significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events which are continuous in nature.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Lumos Networks Operating Company, a wholly-owned subsidiary of the Company, and all of Lumos Networks Operating Company’s wholly-owned subsidiaries and those limited liability corporations where Lumos Networks Operating Company or certain of its subsidiaries, as managing member, exercised control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, services are rendered or products are delivered, installed and functional, as applicable, the price to the buyer is fixed and determinable and collectability is reasonably assured. Certain services require payment in advance of service performance. In such cases, we record a service liability at the time of billing and subsequently recognize revenue ratably over the service period.  We bill customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

We earn revenue by providing services through access to and usage of our network.  Local service revenues are recognized as services are provided.  Carrier data revenues are earned by providing switched access and other switched and dedicated servicesto other carriers.  Revenues for equipment sales are recognized at the point of sale.

Trade Accounts Receivable

We sell our services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  We have credit and collection policies to maximize collection of trade receivables and require deposits or prepayment of services on certain sales.  Weestimate an allowance for doubtful accounts based on a review of specific customers with large receivable balances and for the remaining customer receivables use historical results, current and expected trends and changes in credit policies.

Property, Plant and Equipment and Other Long-Lived Assets (Excluding Goodwill and Indefinite-Lived Intangible Assets)

Property, plant and equipment, finite-lived intangible assets and long-term deferred charges are recorded at cost and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated pursuant to the subsequent measurement guidance described in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35.  Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets.  If the carrying value exceeds the estimated undiscounted cash flows, the excess of the asset’s carrying value over the estimated fair value is recorded as an impairment charge.

We believe that no impairment indicators exist as of December 31, 2015 that would require us to perform impairment testing for long-lived assets, including property, plant and equipment, long-term deferred charges and finite-lived intangible assets to be held and used.

Depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets, which we review and update based on historical experiences and future expectations.  Buildings are depreciated over a 50-year life and leasehold improvements, which are categorized in land and buildings, are depreciated over the shorter of the estimated useful lives or the remaining lease terms.  Network plant and equipment are generally depreciated over various lives from 3 to 25 years. Furniture, fixtures and other equipment are depreciated over various lives from 2 to 24 years.

Plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.  Amortization of assets held under capital leases, including certain software licenses, is included with depreciation expense.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and franchise rights are considered to be indefinite-lived intangible assets.  Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired.  Ourpolicy is to assess the recoverability of indefinite-lived assets annually on October 1 or more frequently if adverse events or changes in circumstances indicate that impairment may have occurred.

We first consider whether to take a qualitative approach in determining whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test promulgated by FASB ASC Topic 350.  If we determine that it is more likely than not that a reporting unit’s fair value is less than its carrying amount or if we elect to bypass the qualitative test for a specific period, the two-step process is used to test for goodwill impairment.  Step one requires a determination of the fair value of each of the reporting units and, to the extent that the fair value of the reporting unit exceeds its carrying value (including goodwill), the step two calculation of implied fair value of goodwill is not required and no impairment loss

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is recognized.

We have attributed our goodwill balance to our segments at December 31, 2015, as follows:

(In thousands)	December 31, 2015
Data	$	90,561
R&SB		9,736
RLEC Access		-
Total goodwill	$	100,297

As of October 1, 2015, we performed goodwill impairment testing for each of our reporting units with goodwill, which were two of our three operating segments (data andR&SB).  After a preliminary assessment, we elected to bypass the qualitative assessment and applied step one of the quantitative test as described above. We performed the step one quantitative test utilizing a market approach that includes the use of comparable multiples of publicly traded companies whose services are comparable to ours and recent M&A activity. We also reconciled the estimated fair values of the segments to our market capitalization as of October 1, 2015 and concluded that they provided a reasonable basis for fair value.  Based on the results of this annual impairment testing, we determined that the fair values of each of the data andR&SB reporting units substantially exceed their respective carrying amounts and that no impairment exists.

Pension Benefits and Retirement Benefits Other Than Pensions

We sponsor a non-contributory defined benefit pension plan (“Pension Plan”) covering all employees who meet eligibility requirements and were employed prior to October 1, 2003.  Pension benefits vest after five years of plan service and are based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee retires before reaching age 65 and elects to receive the benefit prior to age 65.  We froze the Pension Plan effective December 31, 2012.  As such, no further benefits will be accrued by participants for services rendered beyond that date.Also, we havea  nonqualified pension plan that was also frozen as of December 31, 2012.

Sections 412 and 430 of the Internal Revenue Code and ERISA Sections 302 and303 establish minimum funding requirements for defined benefit pensionplans.  The minimum required contribution is generally equal to the target normal cost plus the shortfall amortization installments for the current plan year and each of the six preceding plan years less any calculated credit balance. Our policy is to make contributions to stay at or above the threshold required in order to prevent benefit restrictions and related additional notice requirements and is intended to provide for benefits to be paid in the future.  We are required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in our consolidated balance sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income (loss). We are required to measure plan assets and benefit obligations as of the date of our fiscal year-end balance sheet and provide the required disclosures as of the end of each fiscal year.

We also provide certain life insurance benefits for retired employees that meet eligibility requirements through the qualified nonpension postretirement benefit plan, which is contributory. These obligations, along with all of the pension plans and other postretirement benefit plans, are assumed by us.  Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5, 1994 and is not eligible to employees hired after April 1993.  We previously provided  health care benefits for retired employees, however, we terminated those benefits effective December 31, 2014.  Eligible retirees received partial compensation for settlement of accrued benefits through a series of supplemental pension payments in 2014.

We account for the pension and retirement benefits other than pensions by accruing the cost of such benefits over the service lives of employees. Unrecognized actuarial gains and losses are amortized over the estimated average remaining service period for active employees and over the estimated average remaining life for retirees. We recognize in our consolidated balance sheets the amount of our unfunded Accumulated Postretirement Benefit Obligation (“APBO”) at the end of the year. Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

We sponsor a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees.  Our current policy is to match 100% of each participant’s annual contributions for contributions up to 1% of each participant’s annual compensation and 50% of each participant’s annual contributions up to an additional 5% of each participant’s annual compensation.  Employer contributions vest after two years of service.

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Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  We accrue interest and penalties related to unrecognized tax benefits in interest expense and income tax expense, respectively. For balance sheet presentation purposes, we net our deferred tax asset and liability positions by jurisdiction and present the net deferred tax asset and/or liability as non-current in accordance with FASB Accounting Standards Update (“ASU”) 2015-17 described in greater detail in Note 2 in Part II, Item 8. Financial Statements and Supplementary Data.

Equity-based Compensation

We account for share-based employee compensation plans under FASB ASC 718, Stock Compensation.  Equity-based compensation expense from share-based equity awards is recorded with an offsetting increase to additional paid-in capital on the consolidated balance sheet.  For equity awards with only service conditions, we recognize compensation cost on a straight-line basis over the requisite service period for the entire award.

The fair value of common stock options granted with service-only conditionsis estimated at the respective measurement date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.  The fair value of restricted stock awards granted with service-only conditions is estimated based on the market value of the common stock on the date of grant reduced by the present value of expected dividends as applicable.  Certain stock options and restricted shares granted by us contain vesting provisions that are conditional on achievement of a target market price for our common stock.  The grant date fair value of these options and restricted shares is adjusted to reflect the probability of the achievement of the market condition based on management’s best estimate using a Monte Carlo model.  We initially recognize the related compensation cost for these awards that contain a market condition on a straight-line basis over the requisite service period as derived from the valuation model.  We accelerate expense recognition if the market conditions are achieved prior to the end of the derived requisite service period.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers(“ASU 2014-09”), which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU2015-14, Revenue from Contracts with Customers (Topic 606), which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  We have not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 820): Amendments to the Consolidation Analysis (“ASU 2015-02”).  ASU 2015-02 provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities.  All legal entities will be subject to reevaluation under this revised consolidation model.  The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships.  ASU 2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  We do not expect the future adoption of ASU 2015-02 to have a material impact on our consolidated financial statements and disclosures.

In the third quarter of 2015, we elected early adoption of FASB ASU 2015-03,  Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and applied it retrospectively to all prior periods presented in the consolidated financial statements. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense over the life of the associated debt instrument.The adoption of ASU 2015-03 resulted in the presentation of $10.5 million of debt issuance costs as a reduction to long-term debt in the consolidated balance sheet as of December 31, 2015. We also reclassified $5.2 million of debt issuance costs from deferred charges and other assets to a reduction to long-term debt on the consolidated balance sheet as of December 31, 2014. The adoption of ASU

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2015-03 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

In the fourth quarter of 2015, we elected early adoption of FASB ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) and applied it retrospectively to all prior periods presented in the consolidated financial statements. ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and deferred tax liabilities be offset by tax jurisdiction and the resulting net deferred tax asset and/or net deferred tax liability amount be classified as noncurrent in the consolidated balance sheet. The adoption of ASU 2015-17 resulted in the presentation of $2.4 million of deferred tax assets as a reduction to the noncurrent net deferred liability in the consolidated balance sheet as of December 31, 2015. We also reclassified $5.6 million of deferred tax assets from current assets to a reduction to the noncurrent net deferred tax liability as of December 31, 2014. The adoption of ASU 2015-07 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will replace most existing lease guidance in U.S. GAAP when it becomes effective.  ASU 2016-02 requires an entity to recognize most leases, including operating leases, on the consolidated balance sheet of the lessee. ASU 2016-02 is effective for public business entities for annual reporting periods beginning after December 15, 2018, with early adoption permitted.  ASU 2016-02 requires the use of a modified retrospective transition method with elective reliefs.  We are still evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and disclosures.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks primarily related to interest rates on our variablerate debt obligations.  We entered into the $425 million Credit Facility in 2013 and amended the Credit Facility to include Term Loan C for an additional $28 million on January 2, 2015.  As of December 31, 2015,  $348.4 million was outstanding under our Credit Facility. As of December 31, 2015, we had a leverage ratio of 3.78:1.00 and an interest coverage ratio 6.70:1.00, both of which are in compliance with our debt covenant requirements.  We have other fixed rate, long-term debt in the form of unsecured notes and capital lease obligations totaling $150 million and $2.6 million, respectively, as of December 31, 2015.

Under the terms of our Credit Facility, we were required to enter into interest rate derivative instruments for three years on 50% of our term loans.  These interest rate agreements expired on December 31, 2015, and did not replace or renew them, therefore we areexposed to interest rate risk on the full amount of the term loan balances.  We do not purchase or hold any financial derivative instruments for trading purposes.

At December 31, 2015, our financial assets in the consolidated balance sheet included unrestricted cash and cash equivalents of approximately $13.3 million, which is comprised of deposits in non-interest bearing accounts with financial institutions of $4.5 million, highly liquid fixed income securities of $2.1 million, deposits in money market mutual funds of $6.7 million, and marketable securities of $88.8 million, substantially all of which are short-term fixed income securities.  Other non-current securities and investments totaled $1.2 million at December 31, 2015.

As of December 31, 2015, our cash, cash equivalents and marketable securities were held in financial institutions, money market mutual funds, commercial paper and debt securities.  Although we actively monitor the depository institutions and the performance and quality of our investments, we are exposed to risks resulting from deterioration in the financial condition or failure of financial institutions holding our cash deposits, decisions of our investment advisors and defaults in securities underlying the funds and investments.  In accordance with our Board-approved investment policy we have instructed our investment management firm to prioritize liquidity and safety over investment return in choosing the investment vehicles for cash, cash equivalents and marketable securities and they have diversified these investments to the extent practical in an effort to minimize our exposure to any one investment vehicle or financial institutions.

The following sensitivity analysis indicates the impact at December 31, 2015, on the fair value of certain financial instruments, which would be potentially subject to material market risks, assuming a ten percent increase and a ten percent decrease in the levels of our interest rates:

(In thousands)	Book Value		Fair Value		Estimated fair value assuming noted decrease in market pricing		Estimated fair value assuming noted increase in market pricing
Credit Facility	$	343,710	$	298,400	$	307,491	$	289,659
8% Notes	$	120,393	$	132,027	$	139,237	$	125,273
Capital lease obligations	$	2,597	$	2,597	$	2,600	$	2,594

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Item 8.  Financial Statements and Supplementary Data.

LUMOS NETWORKS CORP.

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	41
Consolidated Balance Sheets as of December 31, 2015 and 2014	42
Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013	44
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013	45
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	46
Consolidated Statements of Equity for the years ended December 31, 2015, 2014 and 2013	47
Notes to Consolidated Financial Statements	48

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Lumos Networks Corp.:

We have audited the accompanying consolidated balance sheets of Lumos Networks Corp. and subsidiaries (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the years in the three‑year period ended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lumos Networks Corp. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three‑year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Lumos Network Corp.’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 10, 2016 expressed an unqualified opinion on the effectiveness of Lumos Network Corp.’s internal control over financial reporting.

/s/ KPMG LLP

Richmond, Virginia
March 10, 2016

41

ConsolidatedBalance Sheets

Lumos Networks Corp.

(In thousands)	December 31, 2015		December 31, 2014
Assets
Current Assets
Cash and cash equivalents	$	13,267	$	14,140
Marketable securities		88,811		16,870
Restricted cash		-		4,208
Accounts receivable, net of allowance of $1,235  ($1,217 in 2014)		20,796		22,925
Other receivables		852		2,113
Income tax receivable		568		172
Prepaid expenses and other		7,215		4,321
Total Current Assets		131,509		64,749
Securities and Investments		1,180		914
Property, Plant and Equipment
Land and buildings		23,019		19,726
Network plant and equipment		624,360		540,108
Furniture, fixtures and other equipment		48,266		45,729
Total in service		695,645		605,563
Under construction		51,663		34,426
		747,308		639,989
Less accumulated depreciation and amortization		248,364		210,538
Total Property, Plant and Equipment, net		498,944		429,451
Other Assets
Goodwill		100,297		100,297
Other intangibles, less accumulated amortization of $94,892 ($90,086 in 2014)		11,078		15,884
Deferred charges and other assets		2,364		512
Total Other Assets		113,739		116,693
Total Assets	$	745,372	$	611,807

See accompanying Notes to Consolidated Financial Statements.

42

ConsolidatedBalance Sheets

Lumos Networks Corp.

(In thousands, except par value per share amounts)	December 31, 2015		December 31, 2014
Liabilities and Equity
Current Liabilities
Current portion of long-term debt	$	10,400	$	10,227
Accounts payable		14,182		20,257
Dividends payable		-		3,152
Advance billings and customer deposits		13,849		14,029
Accrued compensation		1,191		1,516
Accrued operating taxes		3,907		4,618
Other accrued liabilities		4,974		4,223
Total Current Liabilities		48,503		58,022
Long-term Liabilities
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion		456,300		357,950
Retirement benefits		17,029		18,257
Deferred income taxes, net		89,193		82,263
Other long-term liabilities		1,923		1,746
Income tax payable		93		110
Total Long-term Liabilities		564,538		460,326
Commitments and Contingencies		-		-
Equity
Preferred stock, par value $0.01 per share, authorized 100 shares, none issued		-		-
Common stock, par value $0.01 per share, authorized 55,000 shares;  23,005 shares issued and 22,992 shares outstanding (22,579 shares issued and  22,544 shares outstanding in 2014)		230		226
Additional paid-in capital		171,746		143,545
Treasury stock, 13 shares at cost (35 shares in 2014)		(103)		(41)
Accumulated deficit		(28,541)		(38,567)
Accumulated other comprehensive loss, net of tax		(11,940)		(12,486)
Total Lumos Networks Corp. Stockholders' Equity		131,392		92,677
Noncontrolling Interests		939		782
Total Equity		132,331		93,459
Total Liabilities and Equity	$	745,372	$	611,807

See accompanying Notes to Consolidated Financial Statements.

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ConsolidatedStatements of Income

Lumos Networks Corp.

	Year Ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Operating Revenues	$	204,269	$	201,456	$	207,475
Operating Expenses
Network access costs		39,310		40,868		42,417
Selling, general and administrative		80,187		64,782		76,749
Depreciation and amortization		47,527		45,212		42,320
Accretion of asset retirement obligations		139		118		104
Restructuring charges		638		-		50
Total Operating Expenses, net		167,801		150,980		161,640
Operating Income		36,468		50,476		45,835
Other Income (Expenses)
Interest expense		(19,918)		(15,575)		(14,191)
Gain (loss) on interest rate swap derivatives		665		492		(144)
Other income (expenses), net		114		664		(1,587)
Total Other Expenses, net		(19,139)		(14,419)		(15,922)
Income Before Income Taxes		17,329		36,057		29,913
Income Tax Expense		7,146		14,409		12,019
Net Income		10,183		21,648		17,894
Net Income Attributable to Noncontrolling Interests		(157)		(120)		(121)
Net Income Attributable to Lumos Networks Corp.	$	10,026	$	21,528	$	17,773
Basic and Diluted Earnings Per Common Share Attributable to Lumos Networks Corp. Stockholders:
Earnings per share - basic	$	0.44	$	0.97	$	0.81
Earnings per share - diluted	$	0.43	$	0.95	$	0.80
Cash Dividends Declared per Share - Common Stock	$	-	$	0.56	$	0.56

See accompanying Notes to Consolidated Financial Statements.

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ConsolidatedStatements of ComprehensiveIncome

Lumos Networks Corp.

	Year Ended December 31,
(In thousands)	2015		2014		2013
Net Income	$	10,183	$	21,648	$	17,894
Other Comprehensive Income (Loss), Net of Tax:
Adjustment to unrecognized loss due to curtailment of postretirement medical plan benefits, net of $463 of income taxes for the year ended December 31, 2014		-		725		-
Net unrecognized (loss) gain from defined benefit plans, net of $169 and $5,944 of income tax benefit for the years ended December 31, 2015 and 2014, respectively, and $4,992 of income tax expense for the year ended December 31, 2013.		(266)		(9,271)		7,840
Reclassification adjustment for amortization of unrealized loss from defined benefit plans included in net income, net of $526, $97 and $481 of income taxes for the years ended December 31, 2015, 2014 and 2013, respectively (see Note 2)		824		151		756
Unrealized (loss) gain on available-for-sale marketable securities, net of $7 and $5 of income tax benefit for the years ended December 31, 2015 and 2014, respectively, and $3 of income tax expense for the year ended December 31, 2013.		(12)		(18)		7
Other Comprehensive Income (Loss), Net of Tax		546		(8,413)		8,603
Total Comprehensive Income		10,729		13,235		26,497
Less:  Comprehensive Income Attributable to Noncontrolling Interests		(157)		(120)		(121)
Comprehensive Income Attributable to Lumos Networks Corp.	$	10,572	$	13,115	$	26,376

See accompanying Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows

Lumos Networks Corp

	Year Ended December 31,
(In thousands)	2015		2014		2013
Cash Flows from Operating Activities:
Net income	$	10,183	$	21,648	$	17,894
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		42,721		36,025		32,496
Amortization		4,806		9,187		9,824
Accretion of asset retirement obligations		139		118		104
Deferred income taxes		6,767		14,477		11,503
(Gain) loss on interest rate swap derivatives		(665)		(492)		144
Equity-based compensation expense		5,881		4,340		6,778
Amortization of debt discount and issuance costs		2,688		1,461		1,280
Write off of unamortized debt issuance costs		-		-		890
Curtailment gain		-		(10,774)		-
Retirement benefits, net of cash contributions and distributions		(314)		(1,628)		(330)
Excess tax benefits from share-based compensation		(165)		-		(1,060)
Other		789		221		(163)
Changes in assets and liabilities from operations:
Decrease (increase) in accounts receivable		1,938		845		(241)
(Increase) decrease in other assets		(4,889)		(124)		832
Changes in income taxes		(433)		615		(501)
(Decrease) increase in accounts payable		(923)		3,112		(3,798)
(Decrease) increase in other current liabilities		(1,778)		778		(1,398)
Net Cash Provided by Operating Activities		66,745		79,809		74,254
Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(115,675)		(84,100)		(68,334)
Broadband network expansion funded by stimulus grant		(2,578)		(878)		(29)
Purchases of available-for-sale marketable securities		(114,478)		(19,516)		(38,560)
Proceeds from sale or maturity of available-for-sale marketable securities		42,200		40,679		-
Change in restricted cash		4,208		116		979
Cash reimbursement received from broadband stimulus grant		3,838		116		979
Other		-		150		62
Net Cash Used in Investing Activities		(182,485)		(63,433)		(104,903)
Cash Flows from Financing Activities:
Proceeds from issuance of senior secured term loan		28,000		-		375,000
Proceeds from issuance of unsecured notes, net of debt discount		148,500		-		-
Payment of financing costs		(8,192)		-		(4,872)
Principal payments on senior secured term loans		(47,960)		(5,250)		(308,876)
Borrowings from revolving credit facility		-		-		15,000
Principal payments on revolving credit facility		-		-		(18,521)
Termination payments of interest rate swap derivatives		-		-		(858)
Cash dividends paid on common stock		(3,152)		(12,456)		(12,213)
Principal payments under capital lease obligations		(2,471)		(1,468)		(1,456)
Proceeds from stock option exercises and employee stock purchase plan		356		2,892		1,222
Excess tax benefits from share-based compensation		165		-		1,060
Other		(379)		(68)		(725)
Net Cash Provided by (Used in) Financing Activities		114,867		(16,350)		44,761
(Decrease) increase in cash and cash equivalents		(873)		26		14,112
Cash and Cash Equivalents:
Beginning of Year		14,140		14,114		2
End of Year	$	13,267	$	14,140	$	14,114

See accompanying Notes to Consolidated Financial Statements

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Consolidated Statements of Equity

Lumos Networks Corp.

(In thousands, except per share amounts)	Common Shares	Treasury Shares	Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Lumos Networks Corp. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2012	21,610	112	$	216	$	129,570	$	-	$	(53,060)	$	(12,676)	$	64,050	$	552	$	64,602
Adjustments related to spin-off
from NTELOS Holdings Corp.						(144)								(144)				(144)
Net income attributable to Lumos
Networks Corp.										17,773				17,773				17,773
Other comprehensive income,
net of tax												8,603		8,603				8,603
Equity-based compensation
expense						5,847								5,847				5,847
Adjustments to excess tax benefit
from  stock-based compensation						1,060								1,060				1,060
Restricted shares issued, shares
issued through the employee  stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	451	(63)		5		709		(404)						310				310
Stock option exercises	97			1		1,124								1,125				1,125
Cash dividends declared ($0.56 per
share)										(12,291)				(12,291)				(12,291)
Net income attributable to														-				-
noncontrolling interests																121		121
Balance, December 31, 2013	22,158	49	$	222	$	138,166	$	(404)	$	(47,578)	$	(4,073)	$	86,333	$	673	$	87,006
Net income attributable to Lumos
Networks Corp.										21,528				21,528				21,528
Other comprehensive income,
net of tax												(8,413)		(8,413)				(8,413)
Equity-based compensation
expense						3,377								3,377				3,377
Adjustments to excess tax benefit
from  stock-based compensation						(1,488)								(1,488)				(1,488)
Restricted shares issued, shares
issued through the employee  stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	211	(14)		4		673		363						1,040				1,040
Stock option exercises	210					2,817								2,817				2,817
Cash dividends declared ($0.56 per
share)										(12,517)				(12,517)				(12,517)
Net income attributable to
noncontrolling interests																109		109
Balance, December 31, 2014	22,579	35	$	226	$	143,545	$	(41)	$	(38,567)	$	(12,486)	$	92,677	$	782	$	93,459
Net income attributable to Lumos
Networks Corp.										10,026				10,026				10,026
Other comprehensive income,
net of tax												546		546				546
Equity-based compensation
expense						4,721								4,721				4,721
Adjustments to excess tax benefit
from  stock-based compensation						165								165				165
Restricted shares issued, shares
issued through the employee  stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	399	(22)		4		881		(62)						823				823
Stock warrants issued (net of discount and deferred
issuance fees)						22,147								22,147				22,147
Stock option exercises	27					287								287				287
Net income attributable to
noncontrolling interests																157		157
Balance, December 31, 2015	23,005	13	$	230	$	171,746	$	(103)	$	(28,541)	$	(11,940)	$	131,392	$	939	$	132,331

See accompanying Notes to Consolidated Financial Statements.

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Notes to Consolidated Financial Statements

Lumos Networks Corp.

Note 1.  Organization

Lumos Networks Corp. (“Lumos Networks” or the “Company”) is a fiber-based bandwidth infrastructure and service provider in the Mid-Atlantic region with a network of long-haul fiber, metro Ethernet and Ethernet rings located primarily in Virginia and West Virginia, and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company serves carrier, business and residential customers over its fiber network offering data, voice and IP services.  The Company’s principal products and services include Multiprotocol Label Switching (“MPLS”) based Ethernet, Metro Ethernet (“Metro E”), Fiber to the Cell (“FTTC”) wireless backhaul and fiber transport services, wavelength transport services, IP services and other voice services.

On October 14, 2011, NTELOS Holdings Corp. (“NTELOS”) announced a distribution date of October 31, 2011 for the spin-off of all of the then issued and outstanding shares of common stock of Lumos Networks, which operated NTELOS’s wireline operations (the “Business Separation”).  Prior to and in connection with the Business Separation, following the market close on October 31, 2011, NTELOS effectuated a 1-for-2 reverse stock split (the “Reverse Stock Split”) of its shares of Common Stock, $0.01 par value.  The spin-off of Lumos Networks was in the form of a tax-free stock distribution to NTELOS stockholders of record as of the close of business on October 24, 2011, the record date (the “Distribution”).  On October 31, 2011, NTELOS distributed one share of Lumos Networks common stock for every share of NTELOS’s common stock outstanding, on a post-Reverse Stock Split basis.

On November 20, 2013, in a secondary offering of the Company’s common stock, Quadrangle Capital Partners LP. (“Quadrangle”) sold 2,888,939 shares, priced at $20.00 per share.  On March 17, 2015, in an additional secondary offering of the Company’s common stock, Quadrangle sold 1,600,000 shares on an underwritten basis.  On September 14, 2015, Quadrangle distributed its remaining 591,898 shares to its investors (the “Distribution”).  As a result, the shareholder agreement between Quadrangle and the Company expired as of the effective date of the Distribution.  The Company did not receive any proceeds from the offerings, and the Company’s total shares outstanding did not change. All direct costs of these offerings, which were primarily legal, printing and accounting fees related to the preparation of the registration statement, which totaled $0.3 and $0.8 million, are included in other expenses in the consolidated statements of income for the year ended December 31, 2015 and 2013, respectively.  The Company didnot incur any direct costs related to offerings during the year ended December 31, 2014.

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, Lumos Networks Operating Company, a wholly-owned subsidiary of the Company, and all of Lumos Networks Operating Company’s wholly-owned subsidiaries and those limited liability corporations where Lumos Networks Operating Company or certain of its subsidiaries, as managing member, exercised control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the allowance for doubtful accounts; the valuation of deferred tax assets and/or liabilities, asset retirement obligations and equity-based compensation; goodwill impairment assessments; actuarial determination of employee benefit obligations; stock warrants; and reserve for uncertain income tax positions.

Changes in Accounting Principle

The Company historically presented unamortized debt issuance costs, or fees directly related to issuing debt, as long-term assets on the consolidated balance sheets in accordance with existing GAAP. In the third quarter of 2015, the Company elected early adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and applied it retrospectively to all prior periods presented in the consolidated financial statements. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense over the life of the associated debt instrument.The adoption of ASU 2015-03 resulted in the presentation of $10.5 million of debt issuance costs as a reduction to long-term debt in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.2 million of debt issuance costs from deferred charges and other assets to a reduction to long-term debt on the consolidated balance sheet as of

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December 31, 2014. The adoption of ASU 2015-03 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

The Company historically  classified its deferred tax asset and/or deferred tax liability as either current or noncurrent on the consolidated balance sheets in accordance with existing GAAP. In the fourth quarter of 2015, the Company elected early adoption of FASB ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) and applied it retrospectively to all prior periods presented in the financial statements. ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and deferred tax liabilities be offset by tax jurisdiction and the resulting net deferred tax asset and/or net deferred tax liability amount be classified as noncurrent in the consolidated balance sheet. The adoption of ASU 2015-17 resulted in the presentation of $2.4 million of deferred tax assets as a reduction to the noncurrent deferred liability in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.6 million of deferred tax assets from current assets to a reduction to the noncurrent net deferred tax liability as of December 31, 2014. The adoption of ASU 2015-07 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services are rendered or products are delivered, installed and functional, as applicable, the price to the buyer is fixed and determinable and collectability is reasonably assured.  Certain services of the Company require payment in advance of service performance.  In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue ratably over the service period.  The Company bills customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

The Company earns revenue by providing services through access to and usage of its networks.  Local service revenues are recognized as services are provided.  Carrier data revenues are earned by providing switched access and other switched and dedicated services to other carriers.  Revenues for equipment sales are recognized at the point of sale.

Cash Equivalents and Marketable Securities

The Company considers its investments in all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents.  The Company’s marketable securities at December 31, 2015 and 2014 consist of debt securities not classified as cash equivalents.  The Company classifies such debt securities as either held-to-maturity, when the Company has the positive intent and ability to hold the securities to maturity, or available-for-sale.  Held-to-maturity debt securities are carried at amortized cost, adjusted for the amortization of premiums or accretion of discounts.  Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in other comprehensive income or loss, net of tax.  All of the Company’s debt securities not classified as cash equivalents were classified as available-for-sale securities as of December 31, 2015 and 2014.

The Company previously utilized a swingline credit facility that it had with its primary commercial bank.  This swingline facility was terminated in April 2013, concurrent with the closing of the Company’s debt refinancing (see Note 5).  The Company had a book overdraft related to this master cash account of $1.8 million as of December 31, 2012.  The Company classified the changes in the book overdraft amount in cash flows from operating activities on the consolidated statement of cash flows for the year ended December 31, 2013.

Restricted Cash

During 2010, the Company received a federal broadband stimulus award to bring broadband services and infrastructure to Alleghany County, Virginia.  The total project was $16.1 million, of which 50% (approximately $8 million) was funded by a grant from the federal government.  The project was completed as of December 31, 2015.  The Company was required to deposit 100% of its portion for the grant (approximately $8 million) into a pledged account in advance of any reimbursements, which was to be drawn down ratably following the grant reimbursement approvals which were contingent on adherence to the program requirements.  The Company received $3.8 million, $0.1 million and $1.0 million in the years ended December 31, 2015, 2014 and 2013, respectively, for the reimbursable portion of the qualified recoverable expenditures.  The Company has no remaining receivable for the reimbursable portion of the qualified recoverable expenditures as of December 31, 2015 and all amounts from the pledged account were released as of December 31, 2015.

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires deposits on certain sales.  The Company estimates an allowance for doubtful accounts based on a review of specific customers with large receivable balances and for the remaining customer receivables the Company uses historical results, current and expected trends and changes in credit policies.  Management believes the allowance

49

adequately covers all anticipated losses with respect to trade receivables.  Actual credit losses could differ from such estimates. The Company includes bad debt expense in selling, general and administrative expense in the consolidated statements of income.  The following table shows the activity in the allowance for doubtful accounts and customer credits for the years ended December 31, 2015, 2014 and 2013:

(In thousands)	2015		2014		2013
Allowance for doubtful accounts and customer credits, beginning	$	1,217	$	1,485	$	1,822
Additions:
Charged to expense		461		604		249
Charged to other accounts		96		(19)		346
Deductions		(539)		(853)		(932)
Allowance for doubtful accounts and customer credits, ending	$	1,235	$	1,217	$	1,485

Property, Plant and Equipment and Other Long-Lived Assets (Excluding Goodwill and Indefinite-Lived Intangible Assets)

Property, plant and equipment, finite-lived intangible assets and long-term deferred charges are recorded at cost and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated pursuant to the subsequent measurement guidance described in FASBAccounting Standards Codification (“ASC”) 360-10-35.  Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets.  If the carrying value exceeds the estimated undiscounted cash flows, the excess of the asset’s carrying value over the estimated fair value is recorded as an impairment charge.

The Company believes that no impairment indicators exist as of December 31, 2015 that would require it to perform impairment testing for long-lived assets, including property, plant and equipment, long-term deferred charges and finite-lived intangible assets to be held and used.

Depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets, which the Company reviews and updates based on historical experience and future expectations.  As of December 31, 2015 the estimated lives for each category of property, plant and equipment are as follows:

	Estimated Life
Buildings	50 years
Network plant and equipment	3 to 25 years
Furniture, fixtures and other equipment	2 to 24 years

Leasehold improvements, which are categorized in land and buildings, are depreciated over the shorter of the estimated useful lives or the remaining lease terms.  Plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.  Amortization of assets held under capital leases, including certain software licenses, is included with depreciation expense.

Intangibles with a finite life are classified as other intangibles on the consolidated balance sheets.  At December 31, 2015 and 2014, other intangibles were comprised of the following: 

		2015				2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$	103,108	$	(93,051)	$	103,108	$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862		(1,841)		2,862		(1,680)
Total		$	105,970	$	(94,892)	$	105,970	$	(90,086)

The Company amortizes its finite-lived intangible assets using the straight-line method unless it determines that another systematic method is more appropriate.  The amortization for certain customer relationship intangibles is being recognized using an accelerated amortization method based on the pattern of estimated earnings from these assets.

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The estimated life of amortizable intangible assets is determined from the unique factors specific to each asset and the Company reviews and updates estimated lives based on current events and future expectations. The Company capitalizes costs incurred to renew or extend the term of a recognized intangible asset and amortizes such costs over the remaining life of the asset. No such costs were incurred during the years ended December 31, 2015 or 2014.  Amortization expense for the years ended December 31, 2015, 2014 and 2013 was $4.8 million, $9.2 million and $9.8 million, respectively.

Amortization expense for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
2016	$	2,412	$	163	$	2,575
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and franchise rights are considered to be indefinite-lived intangible assets.  Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired.  The Company’s policy is to assess the recoverability of indefinite-lived assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.

The Company first considers whether to take a qualitative approach in determining whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test promulgated by FASB ASC Topic 350.  If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount or if the Company elects to bypass the qualitative test for a specific period, the two-step process is used to test for goodwill impairment.  Step one requires a determination of the fair value of each of the reporting units and, to the extent that the fair value of the reporting unit exceeds its carrying value (including goodwill), the step two calculation of implied fair value of goodwill is not required and no impairment loss is recognized.  In testing for goodwill impairment, the Company utilizes a market approach that includes the use of comparable multiples of publicly traded companies whose services are comparable to ours and recent M&A activity.

As of December 31, 2015, goodwill was attributed to the Company’s segments as follows:

(In thousands)	December 31, 2015
Data	$	90,561
R&SB		9,736
RLEC Access		-
Total goodwill	$	100,297

As of October 1, 2015, the Company performed its annual goodwill impairment test for each of its reporting units with goodwill, which are two of our three operating segments (data and R&SB).  After a preliminary assessment, the Company elected to bypass the qualitative assessment and applied step one of the quantitative test as described above. Based on the results of this annual impairment testing, the Company determined that the fair values of each of the data and R&SB reporting units substantially exceed their respective carrying amounts and that no impairment exists.

The gross amount of goodwill was $133.7 million and the accumulated impairment loss was $33.4 million for a net carrying amount of $100.3 million as of December 31, 2015 and 2014. There was no activity in the consolidated goodwill accounts for the years ended December 31, 2015, 2014 and 2013.

Accounting for Asset Retirement Obligations

An asset retirement obligation is evaluated and recorded as appropriate on assets for which the Company has a legal obligation to retire.  The Company records a liability for an asset retirement obligation and the associated asset retirement cost capitalized at the time the underlying asset is acquired.  Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. 

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The Company enters into various facility collocation agreements and is subject to locality franchise ordinances.  The Company constructs assets at these locations and, in accordance with the terms of many of these agreements, the Company is obligated to restore the premises to their original condition at the conclusion of the agreements, generally at the demand of the other party to these agreements.  The Company recognizes the fair value of a liability for an asset retirement obligation and capitalizes that cost as part of the cost basis of the related asset, depreciating it over the useful life of the related asset.

Included in certain of the franchise ordinances under which the Company’s RLECs and CLECs operate are clauses that require the removal of the RLEC’s and CLEC’s equipment at the termination of the franchise agreement.  The Company has not recognized an asset retirement obligation for these liabilities as the removal of the equipment is not estimable due to an indeterminable end date and the fact that the equipment is part of the public switched telephone network and it is not reasonable to assume the jurisdictions would require its removal.

The following table indicates the changes to the Company’s asset retirement obligation liability, which is included in other long-term liabilities, for the years ended December 31, 2015 and 2014:

(In thousands)	2015		2014
Asset retirement obligations, beginning	$	1,500	$	1,401
Additional asset retirement obligations recorded, net of
adjustments in estimates		81		(19)
Accretion of asset retirement obligations		139		118
Asset retirement obligations, ending	$	1,720	$	1,500

Advertising Costs

The Company expenses advertising costs and marketing production costs as incurred (included within selling, general and administrative expenses in the consolidated statements of income).  Advertising expense for the years ended December 31, 2015, 2014 and 2013 was $0.7 million, $1.4 million and $0.8 million, respectively.  

Pension Benefits and Retirement Benefits Other Than Pensions

The Company sponsors a non-contributory defined benefit pension plan (“Pension Plan”) covering all employees who meet eligibility requirements and were employed prior to October 1, 2003.  Pension benefits vest after five years of plan service and are based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee retires before reaching age 65 and elects to receive the benefit prior to age 65.  The Company froze the Pension Plan effective December 31, 2012.  As such, no further benefits are being accrued by participants for services rendered beyond that date.  The Company has a nonqualified pension plan that was also frozen as of December 31, 2012.

Sections 412 and 430 of the Internal Revenue Code and ERISA Sections 302 and 303 establish minimum funding requirements for defined benefit pension plans.  The minimum required contribution is generally equal to the target normal cost plus the shortfall amortization installments for the current plan year and each of the six preceding plan years less any calculated credit balance. The Company’s policy is to make contributions to stay at or above the threshold required in order to prevent benefit restrictions and related additional notice requirements and is intended to provide for benefits to be paid in the future. The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its consolidated balance sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income (loss). The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end balance sheet and provide the required disclosures as of the end of each fiscal year.

The Company also provides certain life insurance benefits for retired employees that meet eligibility requirements through the postretirement welfare benefit plan (the “Other Postretirement Benefit Plan”), which is contributory.  These obligations, along with all of the pension plans and other postretirement benefit plans, are assumed by the Company.  Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5, 1994 and is not eligible to employees hired after April 1993.  The Company previously provided  health care benefits for retired employees, however, the Company terminated those benefits effective December 31, 2014.  Eligible retirees received partial compensation for settlement of accrued benefits through a series of supplemental pension payments in 2014. As a result, the Company recognized a curtailment gain of $10.8 million in the year ended December 31, 2014 (see Note 11).

The Company accounts for the pension and retirement benefits other than pensions by accruing the cost of such benefits over the service lives of employees. Unrecognized actuarial gains and losses are amortized over the estimated average remaining service period for active employees and over the estimated average remaining life for retirees. The Company recognizes in its consolidated balance sheets the amount of the Company’s unfunded Accumulated Postretirement Benefit Obligation (“APBO”) at the end of the year.

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Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

The Company sponsors a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees.  The Company’s policy is to match 100% of each participant’s annual contributions for contributions up to 1% of each participant’s annual compensation and 50% of each participant’s annual contributions up to an additional 5% of each participant’s annual compensation.  Company contributions vest after two years of service.

Operating Leases

The Company has operating leases for administrative office space and equipment, certain of which have renewal options.  These leases, with few exceptions, provide for automatic renewal options and escalations that are either fixed or based on the consumer price index.  Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term.  The Company’s minimum lease term for most leases includes the initial non-cancelable term and at least one renewal period to the extent that the exercise of the related renewal option or options is reasonably assured.  A renewal option or options is determined to be reasonably assured if failure to renew the leases imposes an in-substance economic penalty on the Company.  Leasehold improvements are capitalized and depreciated over the shorter of the assets’ useful life or the lease term, including renewal option periods that are reasonably assured.

Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  The Company accrues interest and penalties related to unrecognized tax benefits in interest expense and income tax expense, respectively. For balance sheet presentation purposes, the Company nets its deferred tax asset and deferred tax liability positions by tax jurisdiction and classifies the resulting net deferred tax asset and/or net deferred tax liability as noncurrent in accordance with ASU 2015-17.

Equity-based Compensation

The Company accounts for share-based employee compensation plans under FASB ASC 718, Stock Compensation.  Equity-based compensation expense from share-based equity awards is recorded with an offsetting increase to additional paid-in capital on the consolidated balance sheet.  For equity awards with only service conditions, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

The fair value of common stock options granted with service-only conditions is estimated at the respective measurement date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.  The fair value of restricted stock awards granted with service-only conditions is estimated based on the market value of the common stock on the date of grant reduced by the present value of expected dividends as applicable.  Certain stock options and restricted shares granted by the Company contain vesting provisions that are conditional on achievement of a target market price for the Company’s common stock.  The grant date fair value of these options and restricted shares was adjusted to reflect the probability of the achievement of the market condition based on management’s best estimate using a Monte Carlo model (see Note 9).  The Company initially recognizes the related compensation cost for these awards that contain a market condition on a straight-line basis over the requisite service period as derived from the valuation model.  The Company accelerates expense recognition if the market conditions are achieved prior to the end of the derived requisite service period.

Total equity-based compensation expense related to all of the share-based awards (Note 9), including the Company’s 401(k) matching contributions, was $5.9 million, $4.3 million and $6.8 million for the years ended December 31, 2015, 2014 and 2013, respectively, which amounts are included in selling, general and administrative expenses in the consolidated statements of income.

Future charges for equity-based compensation related to instruments outstanding at December 31, 2015 for the years 2016 through 2018 are estimated to be $4.0 million, $3.3 million, $1.0 million and less than $0.1 million for each of 2019 and 2020, respectively.

Fair Value Measurements

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Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required to be recorded at fair value or for certain financial instruments for which disclosure of fair value is required, the Company uses fair value techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.  However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability.  Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

GAAP establishes a fair value hierarchy with three levels of inputs that may be used to measure fair value:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs other than quoted prices that are observable for the asset or liability.

• Level 3 – Unobservable inputs for the asset or liability.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU2015-14, Revenue from Contracts with Customers (Topic 606), which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 820): Amendments to the Consolidation Analysis (“ASU 2015-02”).  ASU 2015-02 provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities.  All legal entities will be subject to reevaluation under this revised consolidation model.  The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships.  ASU 2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company does not expect the future adoption of ASU 2015-02 to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will replace most existing lease guidance in U.S. GAAP when it becomes effective.  ASU 2016-02 requires an entity to recognize most leases, including operating leases, on the consolidated balance sheet of the lessee. ASU 2016-02 is effective for public business entities for annual reporting periods beginning after December 15, 2018, with early adoption permitted.  ASU 2016-02 requires the use of a modified retrospective transition method with elective reliefs.  The Company is still evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and disclosures.

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Note 3.  Cash Equivalents and Marketable Securities

The Company’s cash equivalents and available-for-sale securities reported at fair value as of December 31, 2015 and 2014 are summarized below.

(In thousands)	December 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	6,746	$	49
Commercial paper		1,000		-
Corporate debt securities		1,055		1,357
Total cash equivalents		8,801		1,406
Marketable securities:
Commercial paper		8,684		998
Debt securities issued by U.S. Government agencies		35,155		2,734
Municipal bonds		-		353
Corporate debt securities		44,972		12,785
Total marketable securities, available-for-sale		88,811		16,870
Total cash equivalents and marketable securities	$	97,612	$	18,276

At December 31, 2015 and 2014, the carrying values of the investments included in cash and equivalents approximated fair value.  The amortized cost basis of the available-for-sale securities was not materially different from the aggregate fair value. 

The contractual maturities of the Company’s available-for-sale debt securities were as follows as of December 31, 2015:

(In thousands)	Total
Due in one year or less	$	88,561
Due after one year through two years		250
Total debt securities	$	88,811

The Company received total proceeds of $42.2 million and $40.7 million from the sale or maturity of available-for-sale marketable securities during the years ended December 31, 2015 and 2014.  The Company did not receive any material proceeds from the sale or maturity of available-for-sale marketable securities or recognize any material realized net gains or losses during the year ended December 31, 2013.  Net unrealized holding gains on available-for-sale securities were less than $0.1 million for each of the years ended December 31, 2015 and 2014 and are included in accumulated other comprehensive loss on the consolidated balance sheets as of December 31, 2015 and 2014.

Note 4.  Disclosures About Segments of an Enterprise and Related Information

The Company’s operating segments generally align with its major product and service offerings and coincide with the way that the Company’s chief operating decision makers measure performance and allocate resources.  The Company’s chief operating decision makers are its Chief Executive Officer and its Chief Financial Officer (collectively, the “CODMs”).  The Company’s current reportable operating segments are Data, Residential and Small Business (“R&SB”) and RLEC Access. A general description of the products and services offered and the customers served by each of these segments is as follows:

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· Data:  This segment includes the Company’s enterprise data (metro Ethernet, dedicated Internet, voice over IP (“VoIP”) and private line), transport, and FTTC product and service groups.  These businesses primarily serve enterprise and carrier customers utilizing the Company’s network of long-haul fiber, metro Ethernet and Ethernet rings located primarily in Virginia and West Virginia, and portions of Pennsylvania, Maryland, Ohio and Kentucky.

· R&SB:  This segment includes the following voice products:  local lines, primary rate interface (“PRI”), long distance, toll and directory advertising and other voice services (excluding VoIP which are typically provided to enterprise customers and are included in the Company’s data segment) and the following IP services products: fiber-to-the-premise broadband XL, DSL, integrated access and video.  These products are sold to residential and small business customers on the Company’s network and within the Company’s footprint.  This segment also provides carrier customers access to our network located in competitive markets.

· RLEC Access:  This segment provides carrier customers access to the Company’s network within the Company’s RLEC     footprint and primarily includes switched access services. 

Summarized financial information concerning the Company’s reportable segments is presented in the following table and includes restated segment results for the year ended December 31, 2013 to be consistent with the classification and presentation of the Company’s operating segments in 2014 and 2015.

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the year ended December 31, 2015
Operating revenues	$	114,311	$	67,214	$	22,744	$	-	$	204,269
Network access costs		16,728		22,582		-		-		39,310
Network operating and selling costs		31,477		14,835		1,058		-		47,370
Other general and administrative expenses		14,631		8,242		2,713		7,231		32,817
Adjusted EBITDA(1)		51,475		21,555		18,973		-		92,003
Capital expenditures		98,535		9,545		-		7,595		115,675
For the year ended December 31, 2014:
Operating revenues	$	106,642	$	72,028	$	22,786	$	-	$	201,456
Network access costs		15,990		24,878		-		-		40,868
Network operating and selling costs		24,833		17,656		1,544		-		44,033
Other general and administrative expenses		14,094		9,594		3,003		(5,942)		20,749
Adjusted EBITDA(1)		51,725		19,900		18,239		10,774		100,638
Capital expenditures		66,570		7,089		-		10,441		84,100
For the year ended December 31, 2013:
Operating revenues	$	104,112	$	80,659	$	22,704	$	-	$	207,475
Network access costs		15,801		26,616		-		-		42,417
Network operating and selling costs		22,616		19,869		1,850		-		44,335
Other general and administrative expenses		12,191		9,515		2,693		8,015		32,414
Adjusted EBITDA(1)		53,504		24,659		18,161		-		96,324
Capital expenditures		48,085		6,693		1,634		11,922		68,334

⁽¹⁾ The Company’s CODMs evaluate performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional disclosures, including the Company’s reasons for using this non-GAAP financial measure.

The Company’s CODMs do not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments.  However, total assets may be allocated to the segments in the future should the CODMs decide to manage

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the business in that manner.  Management does review capital expenditures using success-based metrics that allow the Company to determine which segment product groups are driving investment in the network.  Depreciation and amortization expense and certain corporate expenses that are excluded from the measurement of segment profit or loss are not allocated to the segments.  The Company did not allocate the curtailment gain of $10.8 million recognized in 2014 due to the discontinuance of certain medical benefits under the postretirement medical plan to the segments and this amount is included in corporate unallocated charges for the year ended December 31, 2014 in the table above.

The following table provides a reconciliation of net income attributable to Lumos Networks Corp. to Adjusted EBITDA, as defined by the Company, on a consolidated basis for the years ended December 31, 2015, 2014 and 2013:

	Year Ended December 31,
(In thousands)	2015			2014			2013
Net Income Attributable to Lumos Networks Corp.	$	10,026	$		21,528	$		17,773
Net Income Attributable to Noncontrolling Interests		157			120			121
Net income		10,183			21,648			17,894
Income tax expense		7,146			14,409			12,019
Interest expense		19,918			15,575			14,191
(Gain) loss on interest rate swap derivatives		(665)			(492)			144
Other (income) expenses, net		(114)			(664)			1,587
Operating Income		36,468			50,476			45,835
Depreciation and amortization and accretion
of asset retirement obligations		47,666			45,330			42,424
Amortization of actuarial losses		1,350			248			1,237
Equity-based compensation		5,881			4,340			6,778
Restructuring charges		638			-			50
Employee separation charges(1)		-			244			-
Adjusted EBITDA	$	92,003		$	100,638		$	96,324

⁽¹⁾ Employee separation charges in 2014 include employee separation benefits which were provided for in the separation agreements of an executive officer who left the Company.  These charges are included in selling, general and administrative expense on the consolidated statements of income.

One of the Company's carrier customers, AT&T, individually accounted for 8%, 10% and 8% of the Company's total revenue for each of the years ended December 31, 2015, 2014 and 2013, respectively.  Another carrier customer, Verizon, accounted for 8% of the Company’s total revenue for each of the years ended December 31, 2015 and 2014 and 10% of the Company’s total revenue for the year ended December 31, 2013.  Revenue from these carrier customers was derived primarily from network access, data transport and FTTC services.

Note 5.  Long-Term Debt

As of December 31, 2015 and 2014, the Company’s outstanding long-term debt consisted of the following: 

	December 31, 2015				December 31, 2014
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	348,415	$	4,705	$	368,375	$	5,206
8% Notes due 2022		150,000		29,607		-		-
Capital lease obligations		2,597		-		5,008		-
Long-term debt		501,012		34,312		373,383		5,206
Less:  Current portion of long-term debt		10,400		-		10,227		-
Long-term debt, excluding current portion	$	490,612	$	34,312	$	363,156	$	5,206

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Credit Facility

On April 30, 2013, Lumos Networks Operating Company, a wholly-owned subsidiary of the Company, entered into a $425 million credit facility (the “Credit Facility”).  The Credit Facility consists of a $100 million senior secured five-year term loan (the “Term Loan A”), a $275 million senior secured six-year term loan (the “Term Loan B”); a $28 million senior secured incremental term loan facility under the existing credit facility (“Term Loan C”); and a $50 million senior secured five-year revolving credit facility (the “Revolver”).  The proceeds from the Term Loan A and the Term Loan B were used to retire the prior credit facility outstanding amount of approximately $311 million and to pay closing costs and other expenses related to the transaction, with the remaining proceeds available for normal course capital expenditures and working capital purposes.  As of December 31, 2015, no borrowings were outstanding under the Revolver.

On January 2, 2015, the Company entered into the Term Loan C and amended certain terms of the Credit Facility.  The Company used the net proceeds from Term Loan C to fund new FTTC projects.  The amendment included changes to the maximum leverage ratio and the pricing of the Credit Facility as discussed below.

On August 6, 2015, the Company prepaid $40.0 million of the outstanding principal of the Credit Facility, which was allocated ratably to Term Loans A, B and C.  The Company used proceeds from the issuance of the 8% Notes due 2022, discussed below, to fund these prepayments.

Pricing of the amended Credit Facility is LIBOR plus 3.00% for the Revolver and Term Loan A and LIBOR plus 3.25% for Term Loan B and C.  The Credit Facility does not require a minimum LIBOR rate.  The Term Loan A matures in 2018 with quarterly payments of 1.25% per annum through December 31, 2016 and 2.50% per annum thereafter.  The Term Loan B matures in 2019 with quarterly payments of 1% per annum.  The Term Loan C matures in 2019 with quarterly payments of 1% per annum beginning on June 30, 2015.  The Revolver matures in full in 2018.  The Credit Facility is secured by a first priority pledge of substantially all property and assets of Lumos Networks Operating Company and all material subsidiaries, as guarantors, excluding the RLECs.

The amended Credit Facility includes various restrictions and conditions, including a maximum leverage ratio of 5.00:1.00 through December 31, 2015, 4.75:1.00 through December 31, 2016, 4.50:1.00 through December 31, 2017, 4.25:1.00 through December 31, 2018 and 4.00:1.00 thereafter.  The Credit Facility also sets a minimum interest rate coverage ratio of 3.25:1.00.  At December 31, 2015, the Company’s leverage ratio was 3.78:1.00 and its interest coverage ratio was 6.70:1.00.  The Company was in compliance with its debt covenants as of December 31, 2015. 

Mandatory prepayments include an excess cash flow sweep equal to 50% of Excess Cash Flow, as defined under the Credit Agreement, for each fiscal year commencing in 2013 for so long as the leverage ratio exceeds 3.25:1.00. Based on the excess cash flow calculation as of December 31, 2015, no mandatory prepayment was due for the year ended December 31, 2015.

In accordance with the terms of the Credit Facility, the Company entered into interest rate swap agreements with a combined notional amount of 50 percent of the aggregate outstanding balance of Term Loan A and Term Loan B.  Under the interest rate swap agreements, the Company swapped one-month LIBOR with a fixed rate of approximately 0.5% for certain agreements entered into in 2012 and 0.8% for certain agreements entered into in 2013.  The interest rate swap agreements expired on December 31, 2015.  The Company recognized a net gain on interest rate swap derivatives of $0.7 and $0.5 million for the years ended December 31, 2015 and 2014, respectively, and a net loss of $0.1 million for the year ended December 31, 2013. 

The Company’s effective interest rate on its Credit Facility for the year ended December 31, 2015 was 3.96%.

8% Notes due 2022

On August 6, 2015, the Company issued $150 million in unsecured promissory notes (the “8% Notes”) to an affiliate of Pamplona Capital Management LLC (“Pamplona”). The net proceeds of the 8% Notes, after a $1.5 million purchasers discount and payment of $7.1 million of closing costs, were used to prepay $40.0 million of the Company’s existing Credit Facility with the remainder to be used for general corporate purposes, including to fund future growth opportunities. The 8% Notes bear interest at an annual fixed rate of 8.00% and mature on August 15, 2022.  Interest is payable in arrears on a quarterly basis on August 15, November 15, February 15, and May 15 of each year, beginning on November 15, 2015.  Interest is payable in cash or, at the election of the Company, through the issuance of additional notes or by adding the amount of the accrued interest to the unpaid principal amount of the 8% Notes outstanding at that time. The 8% Notes were also issued with 5,500,000 warrants for no additional consideration to purchase shares of the Company’s common stock (the “Warrants”). The Company allocated the net proceeds received from the debt issuance to the 8% Notes and the equity-classified Warrants based on the relative fair value of the instruments.  As a result, the Company recognized a total discount on the 8% Notes of $24.8 million, of which $23.5 million represents the value assigned to the Warrants and $1.3 million represents the allocated portion of the aforementioned $1.5 million purchasers discount.  The discount on the 8% Notes will be amortized to interest expense over the life of the debt using the effective interest method. See Note 9 for additional information regarding the valuation of the Warrants.

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In connection with the issuance of the 8% Notes in August 2015 and the Term Loan C financing in January 2015, the Company deferred an additional $6.0 million and $0.9 million, respectively, in debt issuance costs.  Total unamortized debt issuance costs associated with the 8% Notes and Credit Facility are included in the table above, which amounts are presented as a reduction of long-term debt in the consolidated balance sheets in accordance with ASU 2015-03 (Note 2.) These costs are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs for the years ended December 31, 2015, 2014 and 2013 was $2.7 million, $1.5 million and $1.3 million, respectively.

The Company’s effective interest rate on the 8% Notes for the year ended December 31, 2015 was 12.55%, which represents the contractual rate adjusted for the aforementioned discount and deferred debt issuance costs.

The Company receives patronage credits from CoBank and certain other of the Farm Credit System lending institutions (collectively referred to as “patronage banks”) which are not reflected in the interest rates above.  The patronage banks hold a portion of the credit facility and are cooperative banks that are required to distribute their profits to their members.  Patronage credits are calculated based on the patronage banks’ ownership percentage of the credit facility and are received by the Company as either a cash distribution or as equity in the patronage banks.  The current patronage credit percentages are 75% in cash and 25% in equity.  These credits are recorded in the consolidated statements of income as an offset to interest expense.  The patronage credits were $1.2 million, $0.7 million and $1.3 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The aggregate maturities of the Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $8.0 million in 2016, $13.0 million in 2017, $70.8 million in 2018 and $256.5 million in 2019.  The revolver under the Credit Facility, under which no borrowings are outstanding as of December 31, 2015, matures in full in 2018.  The 8% Notes mature for $150.0 million in 2022.

Capital lease obligations

In addition to the long-term debt discussed above, the Company has capital leases on vehicles with original lease terms of four to five years.  At December 31, 2015, the historical cost and accumulated amortization of the related assets were $2.7 million and $1.4 million, respectively.  In 2013, the Company entered into a financing arrangement with a provider of software services related to the upgrading of internal infrastructure, including certain software licenses, which the Company classified as a capital lease.  The agreement extends through 2016 with payments due annually.  As of December 31, 2015, the historical cost and accumulated depreciation of the related asset were $5.9 million and $3.0 million, respectively.  As of December 31, 2015, the combined total net present value of the Company’s future minimum lease payments is $2.6 million and the principal portion of these capital lease obligations was due as follows:  $2.4 million in 2016, $0.1 million in 2017 and $0.1 million in 2018.

Note 6.  Supplementary Disclosures of Cash Flow Information

The following information is presented as supplementary disclosures for the consolidated statements of cash flows for the years ended December 31, 2015,  2014 and 2013: 

(In thousands)	2015		2014		2013
Cash payments (receipts):
Interest (net of amounts capitalized)	$	12,467	$	13,206	$	13,278
Income taxes		843		(680)		970
Supplemental investing and financing
activities:
Additions to property and equipment
included in accounts payable and
other accrued liabilities		6,906		8,373		6,145
Capital lease obligations		-		123		6,544
Dividend declared not paid	$	-	$	3,152	$	3,091

Cash payments for interest for the years ended December 31, 2015,  2014 and 2013 in the table above are net of $0.8 million, $0.9 million and $0.7 million, respectively, of cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $1.2 million, $0.3 million and $0.2 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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Note 7.  Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, restricted cash, accounts receivable, accounts payable, capital lease obligations (including the current portion), accrued liabilities, interest rate swap derivatives, the 8% Notes and the Credit Facility (including the current portion) as of December 31, 2015 and 2014.  The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, capital lease obligations and accrued liabilities approximated their fair values at December 31, 2015 and 2014.  Marketable securities and interest rate swap derivatives are recorded in the consolidated balance sheets at fair value (see Note 3 and Note 5).

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The following table presents the placement in the fair value hierarchy of financial assets and liabilities that are measured at fair value on a recurring basis at December 31, 2015 and 2014:

	Fair Value Measurements at December 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	6,746	$	-	$	-	$	6,746
Commercial paper		-		1,000		-		1,000
Corporate debt securities		-		1,055		-		1,055
Total cash equivalents		6,746		2,055		-		8,801
Marketable securities:
Commercial paper		-		8,684		-		8,684
Debt securities issued by U.S. Government agencies		-		35,155		-		35,155
Corporate debt securities		-		44,972		-		44,972
Total marketable securities		-		88,811		-		88,811
Total financial assets	$	6,746	$	90,866	$	-	$	97,612

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	49	$	-	$	-	$	49
Corporate debt securities		-		1,357		-		1,357
Total cash equivalents		49		1,357		-		1,406
Marketable securities:
Commercial paper		-		998		-		998
Debt securities issued by U.S. Government agencies		-		2,734		-		2,734
Municipal bonds		-		353		-		353
Corporate debt securities		-		12,785		-		12,785
Total marketable securities		-		16,870		-		16,870
Total financial assets	$	49	$	18,227	$	-	$	18,276
Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

The fair value of commercial paper and corporate, municipal and U.S. government debt securities are provided by a third-party pricing service and are estimated using pricing models.  The underlying inputs to the pricing models are directly observable from active markets.  However, the pricing models used do entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.  As such, the Company classifies these fair value measurements as Level 2 within the fair value hierarchy.  The fair value of interest rate swap derivatives at December 31, 2015 was derived based on bid prices obtained from the administrative agents as of the measurement date.

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The following table summarizes the carrying amounts and estimated fair values of the components included in the Company’s long-term debt, including the current portion.

	December 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	343,710	$	298,400	$	363,169	$	370,769
8% Notes		120,393		132,028		-		-
Capital lease obligations		2,597		2,597		5,008		5,008

The respective fair values of the Credit Facility and the 8% Notes were estimated based on an internal discounted cash flows analysis that schedules out the estimated cash flows for the future debt and interest repayments and applies a discount factor that is adjusted to reflect estimated changes in market conditions and credit factors.

The Company also has certain non-marketable long-term investments for which it is not practicable to estimate fair value with a total carrying value of $1.2 million and $0.9 million as of December 31, 2015 and 2014, respectively, of which $1.1 million and $0.8 million, respectively, represents the Company’s investment in CoBank.  This investment is primarily related to patronage distributions of restricted equity and is a required investment related to the portion of the Credit Facility held by CoBank.  This investment is carried under the cost method.

Note 8.  Earnings per Share

The Company computes basic earnings per share by dividing net income attributable to Lumos Networks Corp. applicable to common shares by the weighted average number of common shares outstanding during the period.  The impact on earnings per share of nonvested restricted shares outstanding that contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares is included in the computation of basic earnings per share pursuant to the two-class method.  The Company issues restricted shares from time to time with vesting terms that are based on achievement of certain stock price performance conditions.  These nonvested restricted shares are excluded from the computation of basic and diluted weighted average shares until the period in which the applicable performance or market conditions are attained.  The Company uses the treasury stock method to determine the number of potentially dilutive common shares from stock options and nonvested restricted shares during the period.

The computations of basic and diluted earnings per share for the years ended December 31, 2015,2014 and 2013 are as follows: 

(In thousands, except per share amounts)	2015		2014		2013
Numerator:
Net income attributable to Lumos Networks Corp.	$	10,026	$	21,528	$	17,773
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(338)		(540)		(425)
Numerator for basic and diluted earnings per common share		9,688		20,988		17,348
Denominator:
Weighted average basic shares outstanding		22,825		22,328		21,887
Less:  weighted average participating securities and nonvested performance-based restricted shares		(791)		(581)		(579)
Denominator for basic earnings per common share		22,034		21,747		21,308
Plus:  potentially dilutive stock options		275		363		368
Denominator for diluted earnings per common share		22,309		22,110		21,676
Basic earnings per share	$	0.44	$	0.97	$	0.81
Diluted earnings per share	$	0.43	$	0.95	$	0.80

For the year ended December 31, 2015, the denominator for diluted earnings per common share excludes 740,214 shares related to stock options and 24,000 shares related to restricted stock awards which would be antidilutive for the period.  For the year ended December 31, 2014, the denominator for diluted earnings per common share excludes 598,463 shares related to stock options and 17,383 shares related to restricted stock awards which would be antidilutive for the period.  For the year ended December 31, 2013,  the denominator for diluted earnings per common share excludes 310,933 shares related to stock options and 20,100 shares related to restricted stock awards which would be antidilutive for the period. The earnings per share calculation for the year ended December 31, 2015 also excludes the 5,500,000 outstanding stock warrants described in Note 9 as they would be antidilutive for the period.

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Note 9.  Stock Options, Restricted Stock and Stock Warrants

Stock Options and Restricted Stock

The Company has an Equity and Cash Incentive Plan administered by the Compensation Committee of the Company’s board of directors, which permits the grant of long-term incentives to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, incentive awards, other stock-based awards and dividend equivalents.  As of December 31, 2015, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan is 5,500,000 and1,182,061 securities remained available for issuance under the Equity and Cash Incentive Plan.  Upon the exercise of stock options or upon the grant of restricted stock under the Equity and Cash Incentive Plan, new common shares are issued or treasury stock is reissued.

The Company issued 6,680 stock options and 388,984 shares of restricted stock under the Equity and Cash Incentive Plan during the year ended December 31, 2015.  Options issued to employees with service-only conditions generally vest on a graded vesting schedule over a four to five year period.  Options generally cliff vest on the first anniversary of the grant date for non-employee directors.  Restricted shares generally cliff vest on the third anniversary of the grant date for employees and generally cliff vest on the first anniversary of the grant date for non-employee directors.  Some restricted stock awards vest on a graded vesting schedule over a five year period.Certain stock options and restricted shares granted by the Company contain vesting provisions that are conditional on achievement of a target market price for the Company’s common stock.  In 2013, the Company recognized compensation expense totaling $1.8 million related to the accelerated vesting of equity awards for which the target market price had been achieved.

Dividend rights applicable to restricted stock with service-only vesting conditions are equivalent to the Company’s common stock.  Restricted stock awards that vest based on achievement of a market condition are not eligible for dividends during the vesting period unless the Compensation Committee determines otherwise.

Stock options must be granted under the Equity and Cash Incentive Plan at not less than 100% of fair value on the date of grant and have a maximum life of ten years from the date of grant.  Options and other awards under the Equity and Cash Incentive Plan may be exercised in compliance with such requirements as determined by a committee of the board of directors.  Substantially all options outstanding were issued at a strike price equal to or greater than the fair value on the date of grant.

The fair value of each option award with service-only vesting conditions is estimated on the grant date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.The risk-free rate is based on the zero-coupon U.S. Treasury rate in effect at the time of grant, with a term equal to the expected life of the options.For awards granted in 2014 and 2015, the Company usedhistorical trading prices for its common stock to estimate volatility assumptions.  Prior to 2014, the Company used peer group and other publicly available market data to estimate volatility assumptions due to limited trading history of its own common stock.  The expected option life represents the period of time that the options granted are expected to be outstanding and is determined using the simplified method.  The expected dividend yield is estimated based on the Company’s actual dividend yield at the date of the grant.

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2015,  2014 and 2013 was $8.09, $6.68 and $3.33, respectively.  The following weighted-average assumptions were used in estimating the grant date fair value of these awards:

	Year Ended December 31, 2015	Year Ended December 31, 2014	Year Ended December 31, 2013
Risk-free interest rate	1.90%	1.96%	1.34%
Expected volatility	55.93%	59.52%	44.19%
Expected dividend yield	0.00%	3.54%	4.70%
Expected term	6.3 years	6.1 years	6.6 years

The fair value of each restricted stock award with service-only vesting conditions is based on the closing price of the Company’s common stock on the grant date.  The fair value for option awards and restricted stock awards with vesting that is conditional on achievement of market conditions is adjusted to reflect the probability of satisfying the market condition based on a Monte Carlo valuation model.

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The summary of the activity and status of the Company’s stock options for the year ended December 31, 2015is as follows:

(In thousands, except per share amounts)	Shares	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2014	2,226	$	12.49
Granted during the period	7		14.87
Exercised during the period	(27)		9.97
Forfeited during the period	(8)		14.23
Expired during the period	(16)		5.70
Stock options outstanding at December 31, 2015	2,182	$	12.57	5.6 years	$	1,575
Stock options exercisable at December 31, 2015	1,545	$	12.40	4.9 years	$	1,175
Total stock options outstanding, vested and expected to vest
at December 31, 2015	2,136	$	12.58		$	1,528

The total intrinsic value of stock options exercised during the years ended December 31, 2015,  2014 and 2013 was $0.1 million, $0.3 million and $0.9 million, respectively.  The total fair value of options that vested during the yearsended December 31, 2015,  2014 and 2013 was  $1.3 million,  $0.5 million and $2.3 million, respectively.As of December 31, 2015, there was $1.7 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.5 years.

The summary of the activity and status of the Company’s restricted stock for the year ended December 31, 2015 is as follows: 

(In thousands, except per share amounts)	Shares		Weighted-Average Grant Date Fair Value per Share
Restricted stock outstanding at December 31, 2014	614	$	13.26
Granted during the period	389		15.39
Vested during the period	(117)		11.17
Forfeited during the period	(25)		18.04
Restricted stock outstanding at December 31, 2015	861	$	14.37

As of December 31, 2015, there was $6.0 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 2.0 years.  The total fair value of restricted stock awards that vested duringthe years ended December 31, 2015,2014 and 2013 was $1.7 million,$1.7 million and $4.6 million, respectively.   

In addition to the Equity and Cash Incentive Plan discussed above, the Company has an employee stock purchase plan which commenced in November 2011with 100,000 shares available.  As of December 31, 2015,  67,783 shares remained available for issuance under the employee stock purchase plan.  New common shares will be issued for purchases under this plan or treasury shares will be reissued.  Shares are priced at 85% of the closing price on the last trading day of the month and settle on the second business day of the following month.  During the year ended December 31, 2015,5,787 shares were issued under the employee stock purchase plan.  Compensation expense associated with the employee stock purchase plan was less than $0.1 million for the years ended December 31, 2015,2014 and 2013.

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Stock Warrants

On August 6, 2015, in conjunction with the 8% Notes issuance discussed in Note 5, the Company issued for no additional consideration 5,500,000 warrants (the “Warrants”) to purchase shares of the Company’s common stock at an exercise price of $13.99. The Warrants are fully vested and exerciseable and may be net-share settled on a cashless basis only until they expire on August 6, 2022.  The grant date fair value of the Warrants was $4.44 per share, which was estimated using the Black-Scholes option pricing model and the following assumptions:

Risk-free interest rate	1.61	%
Expected volatility	41.53	%
Expected dividend yield	0	%
Expected term	5 years

A portion of the net proceeds from the 8% Notes issuance was allocated to the equity-classified Warrants based on the relative fair value of the instruments. The allocated proceeds of $23.5 million were recorded in additional paid-in capital on the consolidated balance sheet as of December 31, 2015, net of $1.3 million in issuance costs.

A summary of the activity and status of the Company’s stock warrants for the year ended December 31, 2015, is as follows:

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2014	-	$	-
Granted during the period	5,500		13.99
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at December  31, 2015	5,500	$	13.99

Note 10.  Income Taxes

The components of income tax expense (benefit) are as follows for the years ended December 31, 2015, 2014 and 2013:

(In thousands)	2015		2014		2013
Current tax expense (benefit):
Federal	$	-	$	-	$	-
State		379		(68)		516
Total current tax expense (benefit)		379		(68)		516
Deferred tax expense:
Federal		6,319		11,908		10,102
State		448		2,569		1,401
Total deferred tax expense		6,767		14,477		11,503
Total income tax expense	$	7,146	$	14,409	$	12,019

Total income tax expense was different than an amount computed by applying the graduated federal statutory income tax rates to income before taxes.  The reasons for the differences are as follows for the years ended December 31, 2015, 2014 and 2013:

(In thousands)	2015		2014		2013
Computed tax expense at federal statutory
rate of 35%	$	6,065	$	12,620	$	10,470
Nondeductible compensation		122		27		307
Noncontrolling interests		(61)		(47)		(50)
Nondeductible public offering costs		112		-		285
State income taxes, net of federal income
tax impact		538		1,626		1,246
Nondeductible interest		578		-		-
Other, net		(208)		183		(239)
Total income tax expense	$	7,146	$	14,409	$	12,019

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During the years ended December 31, 2015 and 2013, the Company recognized excess tax benefits of approximately $0.2 million and $1.1 million, respectively, in additional paid-in-capital related to stock compensation plans.  During the year ended December 31, 2014, the Company reclassified tax benefits of approximately $1.5 million from additional paid-in capital to deferred tax liabilities associated with unrealized excess tax benefits related to stock compensation plans.  As of December 31, 2015, these tax benefits are available to offset future taxable income.  The Company recognized tax expense (benefits) of $0.4 million, $(5.4) million and $5.5 million in accumulated other comprehensive income associated with the adjustments to various employee benefit plan liabilities for the years ended December 31, 2015, 2014 and 2013, respectively, in accordance with FASB ASC 715.

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities at December 31, 2015 and 2014 are presented below:

(In thousands)	2015		2014
Deferred income tax assets:
Retirement benefits other than pension	$	2,167	$	2,337
Pension and related plans		4,588		4,872
Net operating loss		16,509		9,488
Accrued expenses		6,848		4,588
Other		425		725
Total deferred income tax assets		30,537		22,010
Deferred income tax liabilities:
Property and equipment		(111,846)		(97,460)
Intangibles		(7,884)		(6,813)
Total deferred income tax liabilities		(119,730)		(104,273)
Net deferred income tax liability	$	(89,193)	$	(82,263)

At December 31, 2015, the Company had federal net operating losses (“NOLs”) of $48.0 million, net of adjustments for unrecognized income tax benefits (“UTBs”).  The Company’s NOLs, if not utilized to reduce taxable income in future periods, will expire in varying amounts from 2022 through 2035.  The Company believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. 

The Company recognizes interest related to UTBs in interest expense and penalties on UTBs in income tax expense.  A reconciliation of the change in the UTB balance for the years ended December 31, 2015 and 2014 is as follows:

(In thousands)	2015		2014
Balance at beginning of year	$	1,112	$	1,125
Additions for tax positions related to the current year		297		344
Increases for tax positions related to prior years		109		11
Statute of limitations expiration		(162)		(368)
Balance at end of year	$	1,356	$	1,112

All of the Company’s UTBs as of December 31, 2015 and 2014 were adjusted through income tax expense.  The Company does not expect to have any material changes to its UTBs over the next twelve months.

While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than its accrued position.  Accordingly, additional provisions could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.  In general, the tax years that remain open and subject to federal and state audit examinations are 2012-2015 as of December 31, 2015.

Note 11.  Pension Plans and Other Postretirement Benefits 

The Company sponsors a non-contributory defined benefit pension plan (“Pension Plan”), as well as non-qualified pension plans and other postretirement benefit plan (“OPEB”) for its eligible employees.  The Company recognized total income of $1.3million,  $1.1 million (excluding the curtailment gain discussed below) and $0.7 million in 2015,  2014 and 2013, respectively, for all qualified and non-qualified pension and OPEB plans.  Effective December 31, 2012, the Company froze the accumulation of benefits under the Pension Plan and the supplemental executive retirement plan.  As such, no further benefits will be accrued by plan participants for services rendered after that date under either of these plans.Effective December 31, 2014, the Company terminated the health care

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benefits under the Other Postretirement Benefit Plans.  Eligible retirees will receive partial compensation for settlement of accrued benefits through a series of supplemental pension payments.  As a result, the Company recognized a curtailment gain of approximately $10.8 million in the year ended December 31, 2014, which was calculated as the decrease in the accumulated benefit obligation resulting from the termination of the medical portion of the Other Postretirement Benefit Plans less unrecognized losses in accumulated other comprehensive loss and less the actuarially determined cost of the benefit obligation that was transferred to the Pension Plan in the form of supplemental benefit payments on December 31, 2014. 

The following tables provide a reconciliation of the changes in the qualified plans’ benefit obligations and fair value of assets and a statement of the funded status as of December 31, 2015,  2014 and 2013 and the classification of amounts recognized in the consolidated balance sheets:

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Change in benefit obligations:
Benefit obligations, beginning of period	$	70,892	$	57,209	$	64,511	$	844	$	12,800	$	12,874
Service cost		-		-		-		-		80		91
Interest cost		2,664		2,622		2,432		31		373		485
Actuarial loss (gain)		(4,550)		13,547		(7,199)		(83)		887		26
Benefits paid, net		(3,281)		(2,956)		(2,756)		(27)		(671)		(676)
Curtailment gain		-		-		-		-		(12,625)		-
Transfer		-		470		221		-		-		-
Benefit obligations, end of period		65,725		70,892		57,209		765		844		12,800
Change in plan assets:
Fair value of plan assets, beginning of period		58,403		57,847		51,675		-		-		-
Actual return on plan assets		(1,166)		3,555		8,897		-		-		-
Employer contributions		-		-		-		27		671		676
Benefits paid		(3,325)		(2,999)		(2,812)		(27)		(671)		(676)
Transfer		-		-		87		-		-		-
Fair value of plan assets, end of period		53,912		58,403		57,847		-		-		-
Funded status:
Non-current asset		-		-		(638)		-		-		-
Current liabilities		-		-		-		72		72		671
Non-current liabilities		11,813		12,489		-		693		772		12,129
Funded status recognized in the consolidated balance sheets	$	11,813	$	12,489	$	(638)	$	765	$	844	$	12,800
Amounts recognized in accumulated other comprehensive loss:
Net actuarial (loss) gain		(17,899)		(18,119)		(3,711)		18		(65)		(1,211)
Income taxes		6,981		7,066		1,444		(7)		25		471
Net amount recognized in accumulated other comprehensive loss	$	(10,918)	$	(11,053)	$	(2,267)	$	11	$	(40)	$	(740)

The accumulated benefit obligation for the defined benefit pension plan at December 31, 2015 and 2014 was $65.7 million and $70.9 million, respectively.  The decrease in the projected benefit obligation is primarily attributable to actuarial gains resulting from an increase in the discount rate from 3.85%  at December 31, 2014 to 4.20% at December 31, 2015 and adjusted mortality tables.  The accumulated benefit obligation represents the present value of pension benefits based on service and salary earned to date.  The benefit obligation indicated in the table above is the projected benefit obligation which represents the present value of pension benefits taking into account projected future service and salary increases.  The projected benefit obligation is equal to the accumulated benefit obligation as of December 31, 2015 and 2014 since the Pension Plan was frozen effective as of December 31, 2012.

The total amounts reclassified out of accumulated other comprehensive income related to amortization of actuarial losses for the pension and other postretirement benefit plans for the years ended December 31, 2015,  2014 and 2013 were$1.0 million,less than $0.1 million, and $1.0 million, respectively.  Amortization of actuarial losses is included in selling, general and administrative expenses on the consolidated statements of income.

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The following table provides the components of net periodic (benefit) expense for the plans for the years ended December 31, 2015,  2014and 2013:  

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Components of net periodic (benefit) expense:
Service cost	$	-	$	-	$	-	$	-	$	80	$	91
Interest cost		2,664		2,622		2,432		31		373		485
Expected return on plan assets		(4,111)		(4,373)		(3,901)		-		-		-
Amortization of loss		991		-		918		-		23		28
Net periodic (benefit) expense	$	(456)	$	(1,751)	$	(551)	$	31	$	476	$	604

Actuarial gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants.  

The assumptions used in the measurements of the Company’s benefit obligations at December 31, 2015 and 2014 are shown in the following table:

	Defined Benefit Pension Plan				Other Postretirement Benefit Plans
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Discount rate	4.20	%	3.85	%	4.20	%	3.85	%
Rate of compensation increase	N/A		N/A		N/A		N/A

The assumptions used in the measurements of the Company’s net income or expense for the consolidated statements of income for the years ended December 31, 2015,  2014 and 2013 were as follows:  

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Discount rate	3.85	%	4.70	%	3.85	%	3.85	%	4.70	%	3.85	%
Expected return on plan assets	7.25	%	7.75	%	7.75	%	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A		N/A		N/A		N/A

The Company reviews the assumptions noted in the above table annually or more frequently to reflect anticipated future changes in the underlying economic factors used to determine these assumptions.  The discount rates assumed reflect the rate at which the Company could invest in high quality corporate bonds in order to settle future obligations.  In doing so, the Company utilizes a Citigroup Pension Discount Curve applied against the Company’s estimated defined benefit payments to derive a blended rate.  The Citigroup Pension Discount Curve is derived from over 350 Aa corporate bonds.  The Company also compares this to a Moody’s ten year Aa bond index for reasonableness. 

In developing the expected long-term rate of return assumption for the assets of the Pension Plan, the Company evaluated input from its third party pension plan asset managers, including their review of asset class return expectations and long-term inflation assumptions.  The Company also considered the related historical ten-year average asset return at December 31, 2015 as well as considering input from the Company’s third party pension plan asset managers. 

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The weighted average actual asset allocations by asset category and the fair value by asset category as of December 31, 2015 and 2014 were as follows:

(Dollars in thousands)	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Fair Value		Actual Allocation		Fair Value
Large Cap Value	23	%	$	12,193	23	%	$	13,120
Large Cap Blend	11	%		6,085	11	%		6,622
Mid Cap Blend	6	%		3,342	6	%		3,585
Small Cap Blend	4	%		2,080	4	%		2,511
Foreign Stock - Large Cap	7	%		3,817	7	%		3,969
Bond	34	%		18,239	34	%		19,806
Cash and cash equivalents	15	%		8,156	15	%		8,790
Total	100	%	$	53,912	100	%	$	58,403

The actual and target allocation for plan assets is broadly defined and measured as follows:

	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Target Allocation		Actual Allocation		Target Allocation
Equity securities	51	%	50	%	51	%	50	%
Bond securities and cash equivalents	49	%	50	%	49	%	50	%
Total	100	%	100	%	100	%	100	%

It is the Company’s policy to invest pension plan assets in a diversified portfolio consisting of an array of asset classes.  The investment risk of the assets is limited by appropriate diversification both within and between asset classes.  The assets are primarily invested in investment funds that invest in a broad mix of publicly traded equities, bonds and cash equivalents (and fair value is based on quoted market prices (Level 1 input within the fair value hierarchy previously defined)).  The allocation between equity and bonds is reset quarterly to the target allocations.  Updates to the allocation are considered in the normal course and changes may be made when appropriate.  The bond holdings consist of three bond funds split relatively evenly between these funds at December 31, 2015.  At December 31, 2015, the Company believes that there are no material concentrations of risk within the portfolio of plan assets.

The assumed long term return noted above is the target long term return.  Overall return, risk adjusted return, and management fees are assessed against a peer group and benchmark indices.  Reporting on asset performance is provided quarterly and review meetings are held semi-annually.  In addition to normal rebalancing to maintain an adequate cash reserve, projected cash flow needs of the plan are reviewed at least annually to ensure liquidity is properly managed. 

The Company did not contribute to the Pension Plan in 2015, 2014 or 2013 and does not expect to contribute to the Pension Plan in 2016.  The Company expects the net periodic expensefor the Pension Plan in 2016 to be $0.2 million and the expense for the other postretirement benefit plans in 2016 to be less than $0.1 million. 

The following estimated future pension benefit payments and other postretirement benefit plan payments which reflect expected future service, as appropriate, are expected to be paid in the years indicated:

(In thousands) Year	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
2016	$	3,048	$	111
2017		3,104		57
2018		3,105		57
2019		3,194		56
2020		3,237		55
2021-2025		17,210		256

Other Benefit Plans

The Company also has a supplemental executive retirement plan (“SERP”).  The Company froze the SERP effective December 31, 2012.  As such, no further benefits will be accrued by plan participants for services rendered and the accumulated benefit obligation is equivalent to the projected benefit obligation for periods ending after that date.The projected benefit obligation was$4.6million,$4.9 million and$4.3 million as of December 31, 2015,  2014 and 2013, respectively.  The Company recognized $0.4 million, $0.2

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millionand $0.3 millionof expense from previously unrecognized loss related to the supplemental executive retirement plan duringthe years ended December 31, 2015,  2014 and 2013, respectively,all of which is included in selling, general and administrative expenses in the consolidated statements  of income.  The total amount of unrecognized actuarial losses recognized in accumulated other comprehensive income at December 31, 2015 and 2014 related to this plan was $1.0 million, net of income taxes of $0.6 million, and $1.4 million, net of income taxes of $0.9 million, respectively. 

The estimated future benefit payments are expected to be $0.2 million annually for each of the years2016 through 2020 and $1.4 million in aggregate for the years 2021 through 2025.

The Company also has certain other nonqualified postretirement plans assumed from a prior merger.  The projected benefit obligation related to these plans at December 31, 2013 was $0.4 million.  The Company curtailed the medical benefits under these plans as of December 31, 2014, as such there is no material future obligation associated with these plans.

The Company also sponsors a defined contribution 401(k) plan.  The Company’s matching contributions to this plan were $1.1 million, $1.0 million and $0.9 million for the years ended December 31, 2015,  2014 and 2013, respectively.  The Company funds its 401(k) matching contributions in shares of the Company’s common stock.

Note 12. Related Party Transactions

ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement.  Facility lease revenue from ValleyNet was approximately $4.7 million, $5.0 millionand $4.7 million in the years ended December 31, 2015, 2014 and 2013, respectively, which is presented in the Company’s data segment revenue.  At both December 31, 2015 and 2014, the Company had accounts receivable from ValleyNet of approximately $0.4 million.  The Company also leases and resells capacity from ValleyNet. The total lease expense was $1.2 million, $0.9 million and $0.9 million in the years ended December 31, 2015, 2014 and 2013, respectively, which is presented as network access costs in the consolidated statements of income.

Note 13.  Commitments and Contingencies

Operating Leases

Rental expense for all operating leases for the years ended December 31, 2015,  2014 and 2013was $2.7million, $2.4 million and$2.9 million, respectively.  The total amount committed under these lease agreements at December 31, 2015is:  $1.5 million in 2016, $1.3 million in 2017, $1.2 million in 2018, $0.9 million in 2019, $0.3 million in 2020 and $0.8 million for the years thereafter.

Other Commitments and Contingencies

The Company periodically makes claims or receives disputes and is involved in legal actions related to billings to other carriers for access to the Company’s network.  The Company does not recognize revenue related to such matters until collection of the claims is reasonably assured.  In addition to this, the Company periodically disputes access charges that are assessed by other companies with which the Company interconnects and is involved in other disputes and legal and tax proceedings and filings arising from normal business activities. 

The Company is involved in routine litigation and disputes in the ordinary course of its business.  While the results of litigation and disputes are inherently unpredictable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows, and believes that adequate provision for any probable and estimable losses has been made in the Company’s consolidated financial statements.

The Company has other purchase commitments relating to capital expenditures totaling $6.9 million as of December 31,  2015, which are expected to be satisfied during 2016.

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Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.  Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.  Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. 

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the three months ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934, as amended.  Management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2015 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control- Integrated Framework  (2013).  Our management has concluded that our assessment provides reasonable assurance that, as of December 31, 2015, our internal control over financial reporting was effective.

Our independent registered public accounting firm, KPMG LLP, has issued an attestation report on our internal control over financial reporting as of December 31, 2015, which is attached hereto.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Lumos Networks Corp.:

We have audited Lumos Networks Corp.’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Lumos Networks Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting (Item 9A). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Lumos Networks Corp. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Lumos Networks Corp. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the years in the three-year period ended December 31, 2015, and our report dated March 10, 2016  expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Richmond, Virginia
March 10, 2016

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Item 9B.  Other Information.

None.

Part III

Item 10.  Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated herein by reference from the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 4, 2016 to be filed with the Commission pursuant to Regulation 14A.

We have adopted a Code of Business Conduct and Ethics pursuant to section 406 of the Sarbanes-Oxley Act.  A copy of our Code of Business Conduct and Ethics is publicly available on our Company website at http://ir.lumosnetworks.com.  The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K.

Item 11.  Executive Compensation.

The information required by this item is incorporated herein by reference from the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information as of December31, 2015 concerning the shares of common stock which are authorized for issuance under our equity compensation plans.

Plan Category	Number of Securities to be Issued on Exercise of Outstanding Options, Warrants and Rights (a)	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity Compensation Plans Approved by Stockholders
2011 Equity and Cash Incentive Plan	2,181,931	$	12.57	1,182,061
Employee Stock Purchase Plan	-		-	67,783
Equity Compensation Plans Not Approved by Stockholders	-		-	-
Total	2,181,931	$	12.57	1,249,844

All other information required by this item is incorporated herein by reference from the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders.

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated herein by reference from the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders.

Item 14.  Principal Accountant Fees and Services.

The information required by this item is incorporated herein by reference from the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders.

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Part IV

Item 15.  Exhibits and Financial Statement Schedules.

(a)  The following documents are filed as a part of this Annual Report on Form 10-K:

(1)  Consolidated Financial Statements

The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed in Item 8 hereof.

(2)  Financial Statement Schedules

Schedules are omitted either because they are not required or they are inapplicable.

(3)  Exhibits

The exhibits on the accompanying Exhibits Index below are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.

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EXHIBIT INDEX

Exhibit No.	Description
3.1(1)	Amended and Restated Certificate of Incorporation of Lumos Networks Corp.
3.2(1)	Amended and Restated Bylaws of Lumos Networks Corp.
4.1(2)	Form of Common Stock Certificate of Lumos Networks Corp.
10.1(3)	Lumos Networks Corp. 2011 Equity and Cash Incentive Plan (Amended as of March 5, 2014)
10.2(4)	Lumos Networks Corp. 2011 Employee Stock Purchase Plan
10.3(5)	Credit Agreement, dated as of April 30, 2013, among Lumos Networks Operating Company, certain subsidiaries of the Borrower (as defined in the Credit Agreement) party thereto and the Lenders (as defined in the Credit Agreement) party thereto
10.4(6)	First Amendment, dated as of October 8, 2013, to the Credit Agreement dated as of April 30, 2013, among Lumos Networks Operating Company, certain subsidiaries of the Borrower (as defined in the Credit Agreement) party thereto and the Lenders (as defined in the Credit Agreement) party thereto
10.5(7)	Joinder Agreement and Second Amendment to the Credit Agreement dated as of January 2, 2015, among Lumos Networks Operating Company,  certain subsidiaries of the Borrower (as defined in the Credit Agreement) party thereto and the Lenders (as defined in the Credit Agreement) party thereto
10.6(8)	Notes Purchase Agreement dated August 5, 2015, between Lumos Operating Company and Lumos Holdings, L.P.
10.7(8)	Warrants Purchase Agreement dated August 5, 2015, between Lumos Operating Company and Lumos Holdings, L.P.
10.8(8)	8% Notes due August 15, 2022
10.9(8)	Warrants to Purchase 5,500,000 shares of Common Stock of Lumos Networks
10.10(8)	Investors Rights Agreement dated August 6, 2015, between Lumos Operating Company and Lumos Holdings, L.P.
10.11(8)	Third Amendment to the Credit Agreement, dated August 5, 2015.
10.12(9)	Form of performance vesting stock option award agreement, dated as of April 26, 2012, between Timothy G. Biltz and Lumos Networks Corp.
10.13(9)	Form of time vested stock option award agreement, dated as of April 26, 2012, between Timothy G. Biltz and Lumos Networks Corp.
10.14(9)	Form of restricted stock award agreement, dated as of April 26, 2012, between Timothy G. Biltz and Lumos Networks Corp.
10.15*	Employment Agreement, dated as of May 15, 2013, between Jeffrey Miller and Lumos Networks Operating Company
10.16(10)	Employment Agreement, dated as of October 3, 2014, between Johan G. Broekhuysen and Lumos Networks Operating Company
10.17(11)	Employment Agreement, dated as of June 25, 2014, between Mary McDermott and Lumos Networks Corp. Operating Company
10.18(12)	Employment Agreement, dated May 5, 2015, between Timothy G. Biltz and Lumos Networks Corp.
10.19(13)	Severance Agreement, dated January 11, 2016, between Craig M. Drinkhall and Lumos Networks Corp.
10.20(14)	First Amendment to Employment Agreement, dated March 4, 2016, between Johan G. Broekhuysen and Lumos Networks Corp.
10.21(14)	Employment Agreement, dated as of August 28, 2012 and First Amendment to the Employment agreement dated March 4, 2016, between Diego Anderson and Lumos Networks Corp.
10.22(15)	Form of Stock Option Award Letter (Service-based)
10.23(15)	Form of Stock Option Award Letter (Performance-based)
10.24(15)	Form of Restricted Stock Award Letter (Service-based)
10.25(15)	Form of Restricted Stock Award Letter (Performance-based)
10.26(16)	Stock Option Award for James A. Hyde
10.27(17)	Restricted Stock award grant, dated as of May 6, 2015, between Timothy G. Biltz and Lumos Networks Corp.
21.1*	Subsidiaries of Lumos Networks Corp.
23.1*	Consent of KPMG LLP
31.1*	Certificate of Timothy G. Biltz, President and Chief Executive Officer pursuant to Rule 13a-14(a)
31.2*	Certificate of Johan G. Broekhuysen, Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a)
32.1*	Certificate of Timothy G. Biltz, President and 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*	Certificate of Johan G. Broekhuysen, Executive Vice President and 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.

*	Filed herewith.
(1)	Filed as an exhibit to Current Report on Form 8-K filed November 4, 2011.
(2)	Filed as an exhibit to Amended Registration of Securities on Form 10-12B/A filed September 8, 2011.
(3)	Filed as appendix to Proxy Statement on Schedule 14A filed on March 18, 2014.
(4)	Filed as an exhibit to Registration Statement on Form S-8 filed on October 31, 2011.
(5)	Filed as an exhibit to Form 8-K filed on April 30, 2013.
(6)	Filed as an exhibit to Form 10-K filed on March 7, 2014.
(7)	Filed as an exhibit to Form 8-K filed on January 2, 2015.
(8)	Filed as an exhibit to Form 8-K filed on August 6, 2015.
(9)	Filed as an exhibit to Quarterly Report on Form 10-Q filed November 1, 2012.
(10)	Filed as an exhibit to Form 8-K filed on October 6, 2014.
(11)	Filed as an exhibit to Quarterly Report on Form 10-Q filed August 7, 2014.
(12)	Filed as an exhibit to Form 8-K filed on May 5, 2015.
(13)	Filed as an exhibit to Form 8-K filed on January 15, 2016.
(14)	Filed as an exhibit to Form 8-K filed on March 9, 2016.
(15)	Filed as an exhibit to Quarterly Report on Form 10-Q filed May 3, 2013.

75

(16)	Filed as an exhibit to Annual Report on Form 10-K filed March 23, 2012.
(17)	Filed as an exhibit to Quarterly Report on Form 10-Q filed August 6, 2015.

76

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.

Lumos Networks Corp.

By:	/s/ Timothy G. Biltz
Name:	Timothy G. Biltz
Title:	President and Chief Executive Officer

Signature	Title	Date
/s/ Timothy G. Biltz	President and Chief Executive Officer, Director	March 10, 2016
Timothy G. Biltz	(principal executive officer)
/s/ Johan G. Broekhuysen	Executive Vice President, Chief Financial Officer	March 10, 2016
Johan G. Broekhuysen	and Chief Accounting Officer
	(principal accounting officer)
/s/ Peter D. Aquino	Director	March 10, 2016
Peter D. Aquino
/s/ Lawrence J. Askowitz	Director	March 10, 2016
Lawrence J. Askowitz
/s/ Robert E. Guth	Director	March 10, 2016
Robert E. Guth
/s/ Julia B. North	Director	March 10, 2016
Julia B. North
/s/ Shawn F. O'Donnell	Director	March 10, 2016
Shawn F. O'Donnell
/s/ William M. Pruellage	Director	March 10, 2016
William M. Pruellage
/s/ Michael K. Robinson	Director	March 10, 2016
Michael K. Robinson
/s/ Brian C. Rosenberg	Director	March 10, 2016
Brian C. Rosenberg
/s/ Michael T. Sicoli	Director	March 10, 2016
Michael T. Sicoli
/s/ Jerry E. Vaughn	Director	March 10, 2016
Jerry E. Vaughn

EX-10.15

Exhibit 10.15

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of May 15, 2013 (the “Effective Date”) between Jeffrey J. Miller (the “Executive”) and Lumos Networks Operating Company, a Delaware corporation, Lumos Networks Corp., a Delaware  corporation (“Holdings”), and Lumos Payroll Corp., a Virginia corporation (collectively with Lumos Networks Operating Company and Holdings, the “Company”), recites and provides as follows:

WHEREAS, the Board of Directors of Holdings (the “Board”) expects that the Executive will make substantial contributions to the growth and prospects of the Company; and

WHEREAS, the Executive will serve the Company in reliance upon the undertakings of the Company contained herein.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein, the receipt and sufficiency of which are hereby acknowledged by each of the parties, the Company and the Executive agree as follows:

1. Employment.

Position.  On the terms and subject to the conditions set forth herein, the Company agrees to employ the Executive as a Senior Vice President throughout the Employment Term (as defined below).  At the request of the Board and without additional compensation, the Executive shall also serve as an officer and/or director of any or all of the subsidiaries of the Company.

Duties and Responsibilities.  The Executive shall have such duties and responsibilities that are consistent with the Executive’s position as the Board determines and shall perform such duties and carry out such responsibilities to the best of the Executive’s ability for the purpose of advancing the business of the Company and its subsidiaries.  Subject to the provisions of Section 1(c) below, during the Employment Term the Executive shall devote the Executive’s full business time, skill and attention to the business of the Company and its subsidiaries, and, except as specifically approved by the Board, shall not engage in any other business activity or have any other business affiliation.

Other Activities.  Anything in this Agreement to the contrary notwithstanding, as part of the Executive’s business efforts and duties on behalf of the Company, the Executive may participate fully in social, charitable and civic activities, and, if specifically approved by the Board, the Executive may serve on the boards of directors of other companies, provided that such activities do not unreasonably interfere with the performance of and do not involve a conflict of interest with the Executive’s duties or responsibilities hereunder.

2. Employment Term.   The “Employment Term” hereunder shall commence on the Effective Date and continue in full force and effect until December 31, 2014 unless terminated earlier pursuant to the terms and conditions of this Agreement.  Thereafter, the Employment Term will renew hereunder automatically for successive one-year periods unless either party gives written notice to the other not less than six (6) months prior to the end of Employment Term hereof (or any subsequent anniversary, as the case may be) that such party does not wish the Employment Term to be so extended, and under such circumstances, the Employment Term and this Agreement will terminate by its terms, and without liability to either party, on December 31, 2014 (or such subsequent anniversary, as the case may be).  Notwithstanding the foregoing, upon the occurrence of a “Change in Control” (as such term is defined in Section 4(f)(iii)), the Employment Term shall be automatically

extended so that the Employment Term shall continue in full force and effect until the date which is twenty-four (24) months from the date of a Change in Control and thereafter will renew automatically as of such date and successive one-year periods thereafter, unless prior notice is given, as provided above. 

3. Compensation.   During the Employment Term, the Company will pay and/or otherwise provide the Executive with compensation and related benefits as follows:

Base Salary.  The Company agrees to pay the Executive, for services rendered hereunder, a base salary at the annual rate of $210,000 (the “Base Salary”). The Executive’s Base Salary will be reviewed annually throughout the Employment Term by the Compensation Committee of the Board.  Notwithstanding anything in this Agreement to the contrary, the Company may reduce the Executive’s Base Salary by up to ten percent (10%) during the Employment Term, but only as part of a salary reduction program pursuant to which the Base Salaries of all Vice Presidents are reduced by the same percentage at the same time and for the same period of time.  The Base Salary shall be payable in equal periodic installments, not less frequently than monthly, less any sums which may be required to be deducted or withheld under applicable provisions of law.  The Base Salary for any partial year shall be prorated based upon the number of days elapsed in such year.

Stock-Based Incentive Compensation. At the Board’s discretion, the Executive shall be eligible to participate in the Company’s stock-based incentive compensation plan pursuant to its terms (“Stock-Based Incentive Payment”).

Team Incentive Plan.  The Executive shall be eligible to participate in the Company’s team incentive plan with an annual incentive target of seventy percent (70%) of Base Salary (“Incentive Payment”), subject to achievement of such program’s objectives and final approval of the Board.  Notwithstanding the foregoing or the terms of the team incentive plan, the full Incentive Payment the Executive is eligible to receive under the team incentive plan based on objective performance factors must be paid and cannot be reduced or eliminated as a result of individual performance factors other than as a result of a good faith determination by the Board.  The Incentive Payment, if any, shall be payable on or before the March 15 immediately following the end of the year in which the Incentive Payment vests and is no longer subject to a substantial risk of forfeiture within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

Benefits.  During the Employment Term (and thereafter to the extent expressly provided herein), the Executive shall be entitled to participate in all of the Company’s employee benefit plans applicable to the Company’s comparable senior executives to the extent the Executive is entitled to so participate according to the terms of those plans.  In addition to the foregoing compensation, the Company agrees that it shall provide to the Executive a monthly automobile allowance pursuant to Company policy payable in equal periodic installments, not less frequently than monthly, less any sums which may be required to be deducted or withheld under applicable provisions of law.

Vacation.  The Executive shall be entitled to a minimum of four (4) weeks of vacation annually, during which time the Executive shall receive compensation in accordance with the terms of this Agreement.

Term Life Insurance.  Subject to availability at non-rated premiums with no premium gross-up, during the Employment Term, and in addition to any other benefits to which Executive shall be entitled, the Company agrees to pay the premiums on a term life insurance contract covering the Executive that pays a death benefit of $210,000.  The Company in its discretion shall select the term life insurance contract on which it will pay the premiums; but the Executive shall be the owner of such contract and will be or will designate the beneficiary of such contract.  The Company will include and report such premium payments in the Executive’s taxable income to the extent required under applicable law.  Such premium payments shall be paid on or before the March 15 immediately following the end of the year in which the premiums on such term life insurance contract accrued (provided the Executive was employed at such time).  Notwithstanding any other

provision of this Agreement, in the event the term life insurance contract described herein extends beyond the termination of Executive’s employment with the Company, the Executive, and not the Company, shall be obligated to pay the premiums on such term life insurance contract accruing after the Executive’s termination of employment with the Company.  Notwithstanding any other provision of this Agreement, if the Company’s preferred insurance providers, for whatever reason, are unwilling to insure the Executive on commercially reasonable terms, the Company will pay to the Executive an annual amount equal to the average life insurance premium paid to insure other Executives on a prorated cost per thousand basis in lieu of the term life insurance described in this paragraph.  Such annual amount (prorated if the Executive is not employed for the full year) shall be paid on or before the March 15 immediately following the end of the year in which such term life insurance contract otherwise would have been provided.

4. Termination of Employment.

By the Company For Cause.  The Company may terminate the Executive’s employment under this Agreement at any time for Cause (as defined in Section 4(f)(i)) and shall provide written notice of termination to the Executive (which notice shall specify in reasonable detail the basis upon which such termination is made).  Notwithstanding the foregoing, in no event, shall any termination of employment be deemed for Cause unless the Executive’s employment is terminated within one hundred eighty (180) days of when the Company learns of the act or conduct that constitutes Cause and the Board of Directors concludes that the situation warrants a determination that the Executive’s employment may be terminated for Cause.  In the event the Executive’s employment is terminated for Cause, all provisions of this Agreement (other than Sections 5 through 15 hereof) and the Employment Term shall be terminated; provided, however, that such termination shall not divest the Executive of any previously vested benefit or right unless the terms of such vested benefit or right specifically require such divestiture where the Executive’s employment is terminated for Cause.  In addition, the Executive shall be entitled to payment of the Executive’s earned and unpaid Base Salary to the date of termination payable as described above.  The Executive also shall be entitled to unreimbursed business and entertainment expenses in accordance with, and payable at the same time set forth in, the Company’s policy (but no later than thirty (30) days after the date of termination), and unreimbursed medical, dental and other employee benefit expenses payable in accordance with the Company’s applicable employee benefit plans (the payments and benefits described in this subsection (a) herein after referred to as the “Standard Termination Payments”).

Upon Death or Disability.  If the Executive dies, all provisions of Section 3 of this Agreement (other than rights or benefits arising as a result of such death) and the Employment Term shall be automatically terminated; provided, however, that an amount equal to the earned and unpaid Incentive Payments to the date of death and the Standard Termination Payments shall be paid, as described above, to the Executive’s surviving spouse or, if none, the Executive’s estate (as set forth above), and the death benefits under the Company’s employee benefit plans shall be paid to the Executive’s beneficiary or beneficiaries as properly designated in writing by the Executive, in accordance with the Company’s applicable employee benefit plans.  If the Executive is unable to perform the essential functions of the Executive’s job under this Agreement, with or without reasonable accommodation, by reason of physical or mental disability or incapacity (“Disability”) and such disability or incapacity shall have continued for any period aggregating six (6) months within any twelve (12) consecutive months, the Company may terminate the Executive’s employment, this Agreement and the Employment Term at any time thereafter.  In such event, the Executive shall be entitled to receive the Executive’s normal compensation hereunder during said time of disability or incapacity, and shall thereafter be entitled to receive the “Disability Incentive Payment” (as described in the last sentence of this subsection (b)), payable no later than two and a half (2 ½) months after the Company terminates the Executive’s employment, and the earned and unpaid Incentive Payments to the date of termination of the Executive’s employment and the Standard Termination Payments, payable as described above.  The portion of the payment representing the Disability Incentive Payment shall be paid in a lump sum determined on a net present value basis, using a reasonable discount rate determined by the Board.  The Disability Incentive Payment shall be equal to the target Incentive Payment that the Executive would have been eligible to receive for the year in

which the Employment Term is terminated multiplied by a fraction, the numerator of which is the number of days in such year before and including the day of termination of the Employment Term and the denominator of which is the total number of days in such year.

By the Company Without Cause.

The Company may terminate the Executive’s employment under this Agreement at any time without Cause (for purposes of clarity, it is acknowledged that expiration of the Employment Term (including notice of non-renewal) shall not be considered a termination without Cause), and other than by reason of the Executive’s death or disability.  The Company shall provide written notice of termination to the Executive, which notice shall specify the effective date of such termination and that the termination is without Cause (the “Termination Date”).  If the Termination Date is later than the date of the notice, then from the date of the notice through the Termination Date, the Executive shall continue to perform the normal duties of the Executive’s employment hereunder, and shall be entitled to receive when due all compensation and benefits applicable to the Executive hereunder, payable as described above.  Thereafter, conditioned upon the Executive executing and not revoking an effective general release in favor of the Company, the Board and their affiliates, in a form mutually acceptable to both parties hereto, within sixty (60) days after termination of the Executive’s employment, the Company shall pay the Executive the amounts set forth in this subsection (c) (except for the amounts set forth in subsection (c)(iii) which shall be paid as set forth below regardless of whether the Executive executes such release).  Under such circumstances, subject to subsection (c)(v) and Section 19 below, the Company shall pay the Executive an amount equal to fifty percent (50%) of the Executive’s Base Salary for a period of twelve (12) months beginning immediately after the Termination Date (the “Termination Period”), in such periodic installments as were being paid immediately prior to the Termination Date, no less frequently than monthly, less any sums which may be required to be deducted or withheld under applicable provisions of law.

Subject to subsection (c)(v) and Section 19 below, the Company shall pay the Executive a lump sum, determined on a net present value basis, using a reasonable discount rate determined by the Board, equal to the full target Incentive Payment for the year that includes the Termination Date multiplied by a fraction, the numerator of which is the number of weeks in the Termination Period and the denominator of which is fifty-two (52), no later than two and a half (2 ½) months after the Termination Date.

The Company shall also be obligated to pay to the Executive the earned and unpaid Incentive Payment to the Termination Date and the Standard Termination Payments (as described above).

During the Termination Period, subject to subsection (c)(v) and Section 19 below, the Executive and the Executive’s dependents will be entitled to continued medical and dental benefits under the “employee welfare benefit plans” (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974) in which the Executive and the Executive’s dependents participated on the Executive’s Termination Date with respect to any such plans for which such continued participation is allowed pursuant to applicable law and the terms of the plan on the same terms as active employees (with the Company to pay or reimburse the Executive for such continued participation on a monthly basis).  In lieu of medical and dental coverage for which such continued participation is not allowed, subject to subsection (c)(v) and Section 19 below, the Executive will be reimbursed, on a net after-tax basis, on a monthly basis, for the cost of individual insurance coverage for the Executive and the Executive’s dependents under a policy or policies that provide medical and dental benefits not less favorable than the medical and dental benefits provided under such employee welfare benefit plans.  Notwithstanding the foregoing, the coverage or reimbursements for coverage provided under this subsection (iv) shall cease if the Executive and/or the Executive’s dependents become covered under an employee welfare benefit plan of another employer of the Executive that provides the same or similar type of medical and dental benefits.

Notwithstanding any of the foregoing provisions, any payments to be made, or benefits to be delivered, under this subsection (c) (except for the amounts set forth in subsection (c)(iii) above) within the sixty (60) days after the Termination Date shall be accumulated and paid, subject to Section 19 below, in a lump sum on the first payroll date occurring more than sixty (60) days, and less than two and a half (2 ½) months, after the Termination Date, provided the Executive executes the release described above and the applicable revocation period thereunder expires within the time described above without the Executive having elected to revoke the release.  Any benefits to be provided to the Executive during such time may be provided at the Executive’s expense with the Executive having the right to reimbursement of such amounts at the time described above.

By the Executive.  The Executive may terminate the Executive’s employment, and any further obligations which the Executive may have to perform services on behalf of the Company hereunder at any time after the date hereof; by sending written notice of termination to the Company not less than sixty (60) days prior to the effective date of such termination. During such sixty (60) day period, the Executive shall continue to perform the normal duties of the Executive’s employment hereunder and shall be entitled to receive when due all compensation and benefits applicable to the Executive hereunder, payable as described above.  Except as provided below, if the Executive shall elect to terminate the Executive’s employment hereunder (other than as a result of the Executive’s death or disability), then the Executive shall remain vested in all vested benefits provided for hereunder or under any benefit plan of the Company in which the Executive is a participant and shall be entitled to receive the earned and unpaid Incentive Payments to the date of termination of the Executive’s employment and the Standard Termination Payments (as set forth above), but the Company shall have no further obligation to make payments or provide benefits to the Executive under Section 3 hereof.  Anything in this Agreement to the contrary notwithstanding, the termination of the Executive’s employment by the Executive for Good Reason (as defined in Section 4(f)(ii)), shall be deemed to be a termination of the Executive’s employment without Cause by the Company for purposes of this Agreement, and the Executive shall be entitled to the payments and benefits set forth in Section 4(c) above, payable as and upon the terms described above, subject to the Executive executing and not revoking a general release in favor of the Company, the Board and their affiliates, in a form mutually acceptable to both parties hereto, within sixty (60) days after the termination of Executive’s employment subject to subsection 4(c)(v) above and Section 19 below.  Notwithstanding the foregoing, in no event shall any termination of employment by the Executive be deemed for Good Reason unless the Executive terminates employment within one hundred eighty (180) days of when the Executive learns of the act or conduct that constitutes Good Reason.

Change in Control.  Notwithstanding anything to the contrary above, in the event of a termination of the Executive’s employment without Cause by the Company, or by the Executive for Good Reason, in contemplation of or within the one (1) year period after a Change in Control, provided that the termination of employment occurs within twenty-four (24) months of the date of this Agreement and the price per share Holdings shareholders receive in the Change in Control transaction is less than $22.50 (a “Change in Control Termination”), then the Termination Period shall be the twenty-four (24) months beginning immediately after the Termination Date for purposes of calculating payments and other benefits to be made by the Company to the Executive. (Otherwise the Termination Period shall have the meaning set forth in Section 4(c)(i).)The Executive’s employment will be considered to have been terminated “in contemplation of” a Change in Control only if the Company makes a public announcement or files a report or proxy statement with the Securities and Exchange Commission disclosing a transaction or series of transactions which, if completed, would constitute a Change in Control and the Executive’s employment is terminated by the Company without Cause, or by the Executive for Good Reason, during the period beginning with such disclosure and ending on the earlier of (x) the date that the Board, acting in good faith, adopts a resolution stating that the transaction or series of transactions will not be completed or (y) the date that such transaction or series of transactions is completed.

Definitions.  For purposes of this Agreement, the following definitions will apply:

Cause.  The term “Cause” means:  (i) gross or willful misconduct; (ii) willful and repeated failure to comply with the lawful directives of the Board or any supervisory personnel; (iii) any criminal act or act of dishonesty or willful misconduct that has a material adverse impact on the property, operations, business or reputation of the Company or its subsidiaries or any act of fraud, dishonesty or misappropriation involving the Company or its subsidiaries; (iv) any conviction or plea of guilty or nolocontendere to a felony (other than traffic offenses) or a crime involving dishonesty; (v) the material breach of the terms of any confidentiality, non-competition, non-solicitation or employment agreement the employee has with the Company or its subsidiaries; (vi) acts of malfeasance or negligence in a matter of material importance to the Company or its subsidiaries; (vii) the material failure to perform the duties and responsibilities of employee’s position after written notice and a reasonable opportunity to cure (not to exceed ninety (90) days); (viii) grossly negligent conduct; or (ix) activities materially damaging to the property, operations, business or reputation of the Company or its subsidiaries (it being understood that conduct or activities pursuant to employee’s exercise of good faith business judgment shall not be in violation of  this Section 4(f)(i). 

Good Reason.  “Good Reason” means, after written notice by the Executive to the Board, and a reasonable opportunity for the Company to cure (not to exceed forty-five (45) days), that (i) the Executive’s Base Salary is not paid or is reduced by more than ten percent (10%) in the aggregate or other than as part of a salary reduction program pursuant to which the Base Salaries of all Vice Presidents are reduced by the same percentage at the same time and for the same period of time, (ii) the Executive’s target Incentive Paymentis reduced, (iii) the Executive’s job duties and responsibilities are diminished; provided that so long as the Executive retains the title Vice President or higher, a division of, or change in, responsibilities, or change in title, of the Executive shall not constitute a “diminution” under this subparagraph (iii), (iv)  the Executive is required to relocate to a facility more than 50 miles from Waynesboro, Virginia, (v) the Executive is not provided benefits (e.g., health insurance) that are comparable in all material respects to those previously provided to the Executive, (vi) the Executive is directed by the Board or an officer of the Company or an affiliate (or the Company’s successor or an affiliate thereof) to engage in conduct that Company counsel, or mutually agreed upon counsel if requested by the Executive, has advised is likely to be illegal and that such counsel states with specificity why such direction is likely to be illegal (including a proposal for modification of such direction which in counsel’s opinion would not be likely to be illegal), or (vii) the Executive is directed by the Board or an officer of the Company or an affiliate (or the Company’s successor or an affiliate thereof) to refrain from acting and Company counsel, or mutually agreed upon counsel if requested by the Executive, has advised that such failure to act is likely to be illegal and that such counsel states with specificity why such direction is likely to be illegal (including a proposal for modification of such direction which in counsel’s opinion would not be likely to be illegal).  If the Executive is directed to engage in conduct that he reasonably believes is likely to be illegal or to refrain from acting and the Executive reasonably believes that such failure to act is likely to be illegal, the Executive can express such reservations to the Board or directing officer, and the Company shall, at its expense, engage Company counsel, or mutually agreed upon counsel if requested by the Executive, to advise as to whether such conduct or failure to act is likely to be illegal.  Subject to the last sentence of Section 4(d) hereof, if any of the events occur that would entitle the Executive to terminate the Executive’s employment for Good Reason hereunder and the Executive does not exercise such right to terminate the Executive’s employment, any such failure shall not operate to waive the Executive’s right to terminate the Executive’s employment for that or any subsequent action or actions, whether similar or dissimilar, that would constitute Good Reason. For purposes of clarity, it is acknowledged that expiration of the Employment Term (including notice of non-renewal) shall not be considered “Good Reason” hereunder.

Change in Control.  “Change in Control” means any of the following described in clauses (I) through (IV) below, provided that a “Change in Control” shall not mean any event listed in clauses (I) through (IV) that occurs directly or indirectly as a result of or in connection with Quadrangle Capital Partners LP, a Delaware limited partnership, Quadrangle Select Partners LP, a Delaware limited partnership, Quadrangle Capital Partners – A LP, a Delaware limited partnership, and Quadrangle NTELOS Holdings II LP, a Delaware limited partnership (collectively the “Quadrangle Entities”) and/or their Affiliates, related funds and co-investors becoming the owner or “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),

directly or indirectly, of securities of Holdings representing more than fifty-one percent (51%) of the combined voting power of the then outstanding securities, or the shareholders of Holdings approve a merger, consolidation or reorganization of Holdings with any other company and such merger, consolidation or reorganization is consummated, and after such merger, consolidation or reorganization any of the Quadrangle Entities or their respective Affiliates, related funds and co-investors acquire more than fifty-one percent (51%) of the combined voting power of Holdings’ then outstanding securities:

any Person is or becomes the owner or “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Holdings representing more than fifty-one percent (51%) of the combined voting power of the then outstanding securities;

consummation of a merger, consolidation or reorganization of Holdings with any other company, or a sale of all or substantially all the assets of Holdings (a “Transaction”), other than (i) a Transaction that would result in the voting securities of Holdings outstanding immediately prior thereto continuing to represent either directly or indirectly more than fifty-one percent (51%) of the combined voting power of the then outstanding securities of Holdings or such surviving or purchasing entity;

the shareholders of Holdings approve a plan of complete liquidation of Holdings and such liquidation is consummated; or

During any period of twelve (12) consecutive months commencing on November 1, 2011, (i) the individuals who constituted the Board on November 1, 2011, and (ii) any new director who either (A) was elected by the Board or nominated for election by Holdings’ stockholders and whose election or nomination was approved by a vote of more than fifty percent (50%) of the directors then still in office who either were directors on November 1, 2011, or whose election or nomination for election was previously so approved or (B) was appointed to the Board pursuant to the designation of Quadrangle Entities, cease for any reason to constitute a majority of the Board.

For purposes of the foregoing, “Person” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

For purposes of the foregoing, “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.

5. Confidential Information.  The Executive understands and acknowledges that during the Executive’s employment with the Company, the Executive has been and will be making use of, acquiring or adding to the Company’s Confidential Information (as defined below).  In order to protect the Confidential Information, the Executive will not, during the Executive’s employment with the Company or at any time thereafter, in any way utilize any of the Confidential Information except in connection with the Executive’s employment by the Company.  The Executive will not at any time use any Confidential Information for the Executive’s own benefit or the benefit of any person except the Company.  At the end of the Executive’s employment with the Company, the Executive will surrender and return to the Company any and all Confidential Information in the Executive’s possession or control, as well as any other Company property that is in the Executive’s possession or control.  The Executive acknowledges and agrees that any breach of this Section 5 would be a material breach of this Agreement.  The term “Confidential Information” shall mean any

information that is confidential and proprietary to the Company and is not known or made available to the public (other than as a result of a breach of this Agreement by the Executive), including but not limited to the following general categories:

trade secrets;

lists and other information about current and prospective customers;

plans or strategies for sales, marketing, business development, or system build-out;

sales and account records;

prices or pricing strategy or information;

current and proposed advertising and promotional programs;

engineering and technical data;

the Company’s methods, systems, techniques, procedures, designs, formulae, inventions and know-how; personnel information;

legal advice and strategies; and

other information of a similar nature not known or made available to the public or the Company’s Competitors (as defined in Section 8).

Confidential Information includes any such information that the Executive may prepare or create during the Executive’s employment with the Company, as well as such information that has been or may be created or prepared by others.  This promise of confidentiality is in addition to any common law or statutory rights of the Company to prevent disclosure of its Trade Secrets and/or Confidential Information.

6. Return of Documents.   All writings, records and other documents and things containing any Confidential Information in the Executive’s custody or possession shall be the exclusive property of the Company, shall not be copied and/or removed from the premises of the Company, except in pursuit of the business of the Company, and shall be delivered to the Company, without retaining any copies, upon the termination of the Executive’s employment or at any time as requested by the Company.

7. Reaffirm Obligations.   Upon termination of the Executive’s employment with the Company, the Executive shall, if requested by the Company, reaffirm in writing Employee’s recognition of the importance of maintaining the confidentiality of the Company’s proprietary information and trade secrets and reaffirm all of the obligations set forth in Section 5 of this Agreement.

8. Non-Compete; Non-Solicitation.   The Executive agrees that:

While the Executive is employed by the Company, the Executive will not, directly or indirectly, compete with the business conducted by the Company, and the Executive will not, directly or indirectly, provide any services to a Competitor.

For a period of twelve (12) months (the “Non-Competition Period”) after the Executive’s employment with the Company ends for any reason, the Executive will not compete with the Company by performing or causing to be performed the same or similar types of duties or services that the Executive performed for the Company for a Competitor of the Company in any capacity whatsoever, directly or indirectly, within any city or county of the continental United States in which, at the time the Executive’s employment

with the Company ends, the Company provides services or products, offers to provide services or products, or has documented plans to provide or offer to provide services or products within the Non-Competition Period provided that the Executive has knowledge of those plans at the time the Executive’s employment with the Company ends (the “Service Area”).  Additionally, the Executive agrees that during the Non-Competition Period, the Executive will not, directly or indirectly, sell, attempt to sell, provide or attempt to provide, any wireline telecommunication services, including but not limited to internet services, to any person or entity who was a customer or an actively sought prospective customer of the Company, at any time during the Executive’s employment with the Company.  The restrictions set forth above shall immediately terminate and shall be of no further force or effect in the event of a default by the Company in the payment of any consideration, if any, to which the Executive is entitled under Section 8(i) below, which default is not cured within thirty (30) days after written notice thereof.  The Executive acknowledges and agrees that because of the nature of the Company’s business, the nature of the Executive’s job responsibilities, and the nature of the Confidential Information and Trade Secrets of the Company which the Company will give the Executive access to, any breach of this provision by the Executive would result in the inevitable disclosure of the Company’s Trade Secrets and Confidential Information to its direct competitors.

While the Executive is employed by the Company and during the Non-Competition Period, the Executive will not, directly or indirectly, solicit or encourage any employee of the Company to terminate employment with the Company; hire, or cause to be hired, for any employment by a Competitor, any person who within the preceding twelve (12) month period has been employed by the Company, or assist any other person, firm, or corporation to do any of the acts described in this subsection (c).

The Executive acknowledges and agrees that the Company has a legitimate business interest in preventing him from engaging in activities competitive with it as described in this Section 8 and that any breach of this Section 8 would constitute a material breach of this Section 8 and this Agreement.

The Company may notify anyone employing the Executive or evidencing an intention to employ the Executive during the Non-Competition Period as to the existence and provisions of this Agreement and may provide such person or organization a copy of this Agreement.  The Executive agrees that the Executive will provide the Company with a notice containing the identity of any employer the Executive plans to go to work for during the Non-Competition Period along with the Executive’s anticipated job title, anticipated job duties with any such employer, and anticipated start date.  The Company will analyze the proposed employment and make a determination as to whether it would violate this Section 8.  The Company will notify the Executive in writing within ten (10) business days following the receipt of the Executive’s notice as to whether or not the Company objects to the proposed employment.  The Executive further agrees to provide a copy of this Agreement to anyone who employs the Executive during the Non-Competition Period.

The Executive acknowledges and agrees that this Section 8 is intended to limit the Executive’s right to compete only to the extent necessary to protect the Company’s legitimate business interest.  The Executive acknowledges and agrees that the Executive will be reasonably able to earn a livelihood without violating the terms of this Section 8.  If any of the provisions of this Section 8 should ever be deemed to exceed the time, geographic area, or activity limitations permitted by applicable law, the Executive agrees that such provisions may be reformed to the maximum time, geographic area and activity limitations permitted by applicable law, and the Executive authorizes a court or other trier of fact having jurisdiction to so reform such provisions.  In the event the Executive breaches any of the restrictions or provisions set forth in this Section 8, the Executive waives and forfeits any and all rights to any further benefits under this Agreement, including but not limited to the consideration set forth in subsection (i) below as well as any additional payments, compensation, benefits or severance pay he may otherwise be entitled to receive under this Agreement.  Additionally, in the event the Executive breaches any of the restrictions or provisions set forth in this Section 8, the Executive agrees to repay the Company for any of the consideration set forth in subsection (i) below that the Executive received prior to the breach as well as any additional payments, compensation, benefits or severance pay the Executive might otherwise have previously received under Section 4(c) of this Agreement.

For purposes of this Section 8, the following definitions will apply:

“Directly or indirectly” as used in this Agreement includes an interest in or participation in a business as an individual, partner, shareholder, owner, director, officer, principal, agent, employee, consultant, trustee, lender of money, or in any other capacity or relation whatsoever. The term includes actions taken on behalf of the Executive or on behalf of any other person. “Directly or indirectly” does not include the ownership of less than five percent (5%) of the outstanding shares of any corporation, if such shares are publicly traded in the over-the-counter market or listed on a national securities exchange.

“Competitor” as used in this Agreement means any person, firm, association, partnership, corporation or other entity that competes or attempts to compete with the Company by providing or offering to provide wireline telecommunication services, including but not limited to internet services, within any city or county in which the Company provides or offers those services or products.

Notwithstanding any other provision of this Section 8, the Executive will not be considered to have violated any prohibition against competing with the Company for engaging in any of the following activities: (1) being employed or retained by (i) any parent, subsidiary or affiliate organization of any Competitor where that parent, subsidiary or affiliate organization does not itself, and the Executive’s employment will not cause the Executive to, compete or attempt to compete with the Company by providing or offering to provide wireline telecommunications services, including but not limited to internet services, within the Service Area or (ii) any Competitor, directly or indirectly, so long as Executive’s employment or service does not relate to (A) working principally within the Service Area or (B) activities that would benefit the Competitor principally within the Service Area and in each of (A) or (B) the Service Area is not the Primary Focus of the business operations of the Competitor; or (2) working or providing services within the Service Area so long as the Executive’s employment or service does not relate to the type of services provided or offered by the Company within that Service Area or to services for which the Company has documented plans to provide, offer or supply within that Service Area at the time of Executive’s termination of employment; or (3) selling or attempting to sell wireline telecommunications services, including but not limited to internet services, so long as the services or products, which the Executive is selling or attempting to sell to a customer, do not relate to the type of services or products provided or offered by the Company to such customer or for which the Company has documented plans to provide, offer or supply to such customer at the time of Executive’s termination of employment; provided , however , that the Executive is nevertheless prohibited from: (i) selling, attempting to sell, and providing or attempting to provide, to any person who was a customer, or who was actively sought as a customer, of the Company at the time of Executive’s termination of employment any wireline telecommunications services, including but not limited to internet services, that are the type of services or products that the Company sold, attempted to sell or provided or attempted to provide to such customer as described in (b) above and (ii) soliciting or encouraging any employee of the Company to terminate employment or taking any other of the prohibited actions as described in (c) above.  For purposes hereof, “Primary Focus” with respect to a Competitor means that more than twenty-five percent (25%) of the consolidated revenues of such Competitor were derived from such Competitor’s and its consolidated subsidiaries’ wireline telecommunications services, including but not limited to internet services, in the Service Area in the Competitor’s most recently completed fiscal year before any applicable date of determination.

In consideration of the Executive’s undertakings set forth in this Section 8 with respect to periods after termination of employment, but only in the event that the Executive is entitled to the benefits and payments under Section 4(c) above, subject to subsection 4(c)(v) and Section 19 below, the Company will pay the Executive an amount equal to fifty percent (50%) of his Base Salary during the Non-Competition Period, in such periodic installments, not less frequently than monthly, as his Base Salary was being paid immediately prior to termination of employment, with a lump sum payment on the sixtieth (60) day after termination of the Executive’s employment equal to the payments the Executive would have received had the payments commenced immediately following termination of the Executive’s employment and subsequent installments in equal periodic installments thereafter, no less frequently than monthly, less any sums which may be required to

be deducted or withheld under applicable provisions of law.  In the event the Executive is not entitled to the benefits and payments under Section 4(c) above, the Company will not pay the Executive any of the consideration set forth in this Section 8(i).

In the event the Executive breaches any of the restrictions or provisions set forth in this Section 8, the Executive waives and forfeits any and all rights to any further payments under subsection (i) or otherwise under this Agreement and agrees to return to the Company the gross amount of any amounts previously paid, and the value of any benefits previously provided under this Agreement.  This waiver and forfeiture shall be effective even in the event a court refuses to enforce the restrictions set forth in this Section 8.

9. Representations.   The Executive represents and warrants to the Company that the execution, delivery and performance of this Agreement by the Executive does not conflict with, or result in the breach by the Executive or violation by the Executive of, any other agreement to which the Executive is a party or by which the Executive is bound.  The Executive hereby agrees to indemnify the Company, its officers, directors and shareholders and hold them harmless from and against any liability (including, without limitation, reasonable attorneys’ fees and expenses) which they may at any time suffer or incur arising out of or relating to any breach of an agreement, representation or warranty made by the Executive herein.  The Company represents and warrants that this Agreement and the transactions contemplated hereby have been duly authorized by the Company by all necessary corporate and shareholder action, and that the execution, delivery and performance of this Agreement by the Company does not conflict with, or result in the breach or violation by the Company of, its Certificate of Incorporation, Articles of Incorporation or Bylaws or any other agreement to which the Company is a party or by which it is bound.  The Company hereby agrees to indemnify the Executive and hold the Executive harmless from and against any liability (including, without limitation, reasonable attorneys’ fees and expenses) which the Executive may at any time suffer or incur arising out of or relating to any breach of an agreement, representation or warranty made by the Company herein.  Any indemnity to be paid hereunder shall be payable within thirty (30) days after the Company and the Executive agree that such amounts are owed or there is a final settlement or resolution of the claim or dispute for which the payments are required.

10. Remedies.   The parties hereto agree that the Company would suffer irreparable harm from a breach by the Executive of any of the covenants or agreements contained herein. Therefore, in the event of the actual or threatened breach by the Executive of any of the provisions of this Agreement, the Company may, in addition and supplementary to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof.  The Executive agrees that if a lawsuit or other proceeding is brought to enforce the terms of this Agreement or determine the validity of its terms and the Company prevails, the Company will be entitled to recover from the Executive its reasonable attorneys’ fees and court costs.  The Executive agrees that these provisions are reasonable.

11. Successors and Assigns.   This Agreement shall be binding upon and inure to the benefit of the Company and its affiliates and their successors and assigns, and shall be binding upon and inure to the benefit of the Executive and the Executive’s legal representatives and assigns, provided that in no event shall the Executive’s obligations to perform services for the Company and its affiliates be delegated or transferred by the Executive.  The Company may assign or transfer its rights hereunder to a successor corporation in the event of a merger, consolidation, transfer or sale of all or substantially all of the assets of the Company’s business  (provided,  however, that no such assignment or transfer shall have the effect of relieving the Company of any liability to the Executive hereunder or under any other agreement or document contemplated herein), but only if such assignment or transfer does not result in employment terms, conditions, duties or responsibilities which are or may be materially different than the terms, conditions, duties or responsibilities of the Executive hereunder.  If the Company assigns or transfers its rights under this Agreement to a successor corporation, the Executive’s obligations under Section 8 of this Agreement will be construed and enforceable with respect to the business and geographic scope of the Company only and will not be construed or enforceable with respect to the business and geographic scope of any successor corporation to which the Company’s rights may be assigned or

transferred to the extent such business or geographic scope is greater than that of the Company at the time of such assignment or transfer.  The Executive may not transfer or assign the Executive’s rights and obligations under this Agreement

12. Modification or Waiver.   No amendment, modification, waiver, termination or cancellation of this Agreement shall be binding or effective for any purpose unless it is made in a writing signed by the party against whom enforcement of such amendment, modification, waiver, termination or cancellation is sought.  No course of dealing between or among the parties to this Agreement shall be deemed to affect or to modify, amend or discharge any provision or term of this Agreement. No delay on the part of the Company or the Executive in the exercise of any of their respective rights or remedies shall operate as a waiver thereof, and no single or partial exercise by the Company or the Executive of any such right or remedy shall preclude other or further exercises thereof.  A waiver of a right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any other occasion.

13. Governing Law; Jurisdiction.   This Agreement and all rights, remedies and obligations hereunder, including, but not limited to, matters of construction, validity and performance shall be governed by the laws of the Commonwealth of Virginia without regard to its conflict of laws principles or rules.  To the full extent lawful, each of the Company and the Executive hereby consents irrevocably to personal jurisdiction, service and venue in connection with any claim or controversy arising out of this Agreement in the courts of the Commonwealth of Virginia located in Waynesboro, Virginia, and in the federal courts in the Western District of Virginia.

14. Excise Taxes.

If any payment or distribution by the Company or any affiliate to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Code Section 4999 or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then the benefits payable or provided under this Agreement (or other Payments as described above) shall be reduced (but not in excess of the amount of the benefits payable or provided under this Agreement) if, and only to the extent that, such reduction will allow the Executive to receive a greater Net After Tax Amount than such Executive would receive absent such reduction.

The Accounting Firm (as defined below) will first determine the amount of any Parachute Payments (as defined below) that are payable to the Executive.  The Accounting Firm also will determine the Net After Tax Amount attributable to the Executive’s total Parachute Payments.

The Accounting Firm will next determine the largest amount of payments that may be made to the Executive without subjecting the Executive to the Excise Tax (the “Capped Payments”).  Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable to the Capped Payments.

The Executive then will receive the total Parachute Payments or the total Capped Payments, whichever provides the Executive with the higher Net After Tax Amount; however, if the reductions imposed under this Section 14 are in excess of the amount of benefits payable or provided under this Agreement, then the total Parachute Payments will be adjusted by first reducing, on a pro rata basis, the amount of any noncash or cash benefits under this Agreement, then noncash or cash benefits under any other plan, agreement or arrangement, then any cash payments under this Agreement and finally any cash payments under any other plan agreement or arrangement.  The Accounting Firm will notify the Executive and the Company if it determines that the Parachute Payments must be reduced and will send the Executive and the Company a copy of its detailed calculations supporting that determination.

As a result of the uncertainty in the application of Code Sections 280G and 4999 at the time that the Accounting Firm makes its determinations under this Section 14, it is possible that the Executive will have received Parachute Payments or Capped Payments in excess of the amount that should have been paid or distributed (“Overpayments”), or that additional Parachute Payments or Capped Payments should be paid or distributed to the Executive (“Underpayments”).  If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive, which assertion the Accounting Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, that Overpayment may, at the Executive’s discretion, be treated for all purposes as a loan ab initio that the Executive must repay to the Company immediately together with interest at the applicable Federal rate under Code Section 7872; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999 and the Executive will receive a greater Net After Tax Amount than such Executive would otherwise receive.  If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the Executive and the Company of that determination and the amount of that Underpayment will be paid to the Executive promptly by the Company after such determination.

For purposes of this Section 14, the following terms shall have their respective meanings:

“Accounting Firm” means the independent accounting firm currently engaged by the Company, or a mutually agreed upon independent accounting firm if requested by the Executive; and

“Net After Tax Amount” means the amount of any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Code Sections 1, 3101 (b) and 4999 and any State or local income taxes applicable to the Executive on the date of payment.  The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable, in effect on the date of payment.

“Parachute Payment” means a payment that is described in Code Section 280G(b)(2), determined in accordance with Code Section 280G and the regulations promulgated or proposed thereunder.

The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by the preceding subsections shall be borne by the Company.

The Company and the Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or the Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by the preceding subsections.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

15. Severability.  Whenever possible each provision and term of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision or term of this Agreement shall be held to be prohibited by or invalid under such applicable law, then such provision or term shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provisions or term or the remaining provisions or terms of this Agreement.  If any provision contained in Sections 5 or 8 of this Agreement shall for any reason be held to be excessively broad or unreasonable as to time, territory, or interest to be protected, a court is hereby empowered and requested to construe such provision by narrowing it so as to make it reasonable and enforceable to the extent provided under applicable law.

16. Counterparts.   This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same Agreement.

17. Headings.   The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof and shall not affect the construction or interpretation of this Agreement.

18. Entire Agreement.   This Agreement (together with all documents and instruments referred to herein) constitutes the entire agreement, and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof, including any prior employment or management continuity agreement under which the Executive hereby agrees to waive all rights and which is hereby terminated.

19. Section 409A.  It is intended that any payment or benefit which the Executive is to be paid or provided in connection with this Agreement which is considered to be non-qualified deferred compensation subject to Section 409A of the Code, shall be paid and provided in a manner, and at such time, as complies with, or is exempt from, the applicable requirements of Section 409A of the Code.  In connection with effecting such compliance with, or exemption from, Section 409A of the Code, the following shall apply:

Neither the Executive nor the Company shall take any action to accelerate or delay the payment of any monies and/or provision of any benefits in any matter which would not be in compliance with, or exempt from, Section 409A of the Code.

If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, any payment or provision of benefits in connection with the Executive’s separation from service (as determined for purposes of Section 409A of the Code) shall not be made until six (6) months after the Executive’s separation from service or, if earlier, the Executive’s death (the “409A Deferral Period”) as and to the extent required under Section 409A of the Code.  In the event such payments are otherwise due to be made in installments or periodically during the 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as, and within thirty (30) days after, the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled.  In the event such benefits are required to be deferred, any such benefits may be provided during the 409A Deferral Period at the Executive’s expense, and the Executive will have the right to reimbursement from the Company as soon as, and within thirty (30) days after, the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled.

For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.

For purposes of determining time of (but not entitlement to) the payment or provision of non-qualified deferred compensation under this Agreement subject to Section 409A of the Code in connection with the termination of the Executive’s employment, termination of employment will be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that the Executive will not perform any further services after that date or that the level of bona fide services that the Executive will perform after that date (whether as an employee or independent contractor) will permanently decrease to no more than twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period.

A “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code shall be determined on the basis of the applicable twelve (12)-month period ending on the specified employee identification date designated by the Company consistently for purposes of this Agreement and similar

agreements or, if no such designation is made, based on the default rules and regulations under Section 409A(a)(2)(B)(i) of the Code.

Notwithstanding any of the provisions of this Agreement, the Company shall not be liable to the Executive if any payment or benefit which is to be provided pursuant to this Agreement and which is non-qualified deferred compensation subject to Section 409A of the Code otherwise fails to comply with, or be exempt from, the requirements of Section 409A of the Code.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

LUMOS NETWORKS OPERATING COMPANY LUMOS NETWORKS CORP. LUMOS PAYROLL CORP.
By:	s/Timothy G. Biltz
	Timothy G. Biltz
	President and Chief Executive Officer

Executive
By:	s/Jeffrey J. Miller
	Jeffrey J. Miller

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF LUMOS NETWORKS CORP.

Subsidiary	Jurisdiction of Organization
FiberNet Telecommunications of Pennsylvania, LLC	Pennsylvania
FiberNet of Ohio, LLC	Ohio
FiberNet of Virginia Inc.	Virginia
Lumos Networks LLC	West Virginia
Lumos Networks Corp.	Delaware
Lumos Networks Operating Company	Delaware
Lumos Telephone Inc.	Virginia
Lumos Networks of West Virginia Inc.	Virginia
Mountaineer Telecommunications, LLC	West Virginia
Lumos Networks Inc.	Virginia
Valley Network Partnership	Virginia
Lumos Telephone of Virginia LLC	Virginia
Virginia Independent Telephone Alliance LC	Virginia
Lumos Telephone of Botetourt Inc.	Virginia
Lumos Media Inc.	Virginia
R & B Telephone LLC	Virginia

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Lumos Networks Corp.:

We consent to the incorporation by reference in the Registration Statement No. 333-195767 and 333-177627on Form S-8and Registration Statement No. 333-190825 on Form S-3 of Lumos Networks Corp.of our reports dated March 10, 2016, with respect to the consolidated balance sheets ofLumos Networks Corp. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income,  comprehensive income, cash flows, and equity for each of the years in the three-year period ended December 31, 2015,  and the related financial statement schedulefor each of the years in the three-year period ended December 31, 2015, and the effectiveness of internal control over financial reporting as of December 31, 2015,  whichreports appear in the December 31, 2015annual report on Form 10-K of Lumos Networks Corp.  

/s/ KPMG LLP

Richmond,  Virginia

March 10, 2016

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Timothy G. Biltz, certify that:

1.I have reviewed this annual report on Form 10-K for theyear ended December 31, 2015of Lumos Networks Corp.;

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(s) 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(s) 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:  March10, 2016

/s/Timothy G. Biltz

Timothy G. Biltz

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Johan G. Broekhuysen, certify that:

1.I have reviewed this annual report on Form 10-K for the yearended December 31, 2015of Lumos Networks Corp.;

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(s) 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(s) 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:  March10, 2016

/s/ Johan G. Broekhuysen

Johan G. Broekhuysen

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

EX-32.1

Exhibit 32.1

LUMOS NETWORKS CORP.

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 theannual report of Lumos Networks Corp. (the “Company”) on Form 10-K for the yearended December 31, 2015(the “Report”), I, Timothy G. Biltz,  President and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:

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

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

/s/ Timothy G. Biltz

Timothy G. Biltz

President and Chief Executive Officer

March 10, 2016

EX-32.2

Exhibit 32.2

LUMOS NETWORKS CORP.

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 annual report of Lumos NetworksCorp. (the “Company”) on Form 10-K for the yearended December 31, 2015(the “Report”), I, Johan G. Broekhuysen,  Executive Vice President, Chief Financial Officer and Chief Accounting Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:

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

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

/s/ Johan G. Broekhuysen

Johan G. Broekhuysen

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

March10, 2016

XML

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 04, 2016	Jun. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Entity Registrant Name	Lumos Networks Corp.
Entity Central Index Key	0001520744
Trading Symbol	LMOS
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		23,211,325
Entity Public Float			$ 329,427,269
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 13,267	$ 14,140
Marketable securities	88,811	16,870
Restricted cash		4,208
Accounts receivable, net of allowance of $1,235 ($1,217 in 2014)	20,796	22,925
Other receivables	852	2,113
Income tax receivable	568	172
Prepaid expenses and other	7,215	4,321
Total Current Assets	131,509	64,749
Securities and Investments	1,180	914
Property, Plant and Equipment
Land and buildings	23,019	19,726
Network plant and equipment	624,360	540,108
Furniture, fixtures and other equipment	48,266	45,729
Total in service	695,645	605,563
Under construction	51,663	34,426
Property, plant and equipment, gross	747,308	639,989
Less accumulated depreciation and amortization	248,364	210,538
Total Property, Plant and Equipment, net	498,944	429,451
Other Assets
Goodwill	100,297	100,297
Other intangibles, less accumulated amortization of $94,892 ($90,086 in 2014)	11,078	15,884
Deferred charges and other assets	2,364	512
Total Other Assets	113,739	116,693
Total Assets	745,372	611,807
Current Liabilities
Current portion of long-term debt	10,400	10,227
Accounts payable	14,182	20,257
Dividends payable		3,152
Advance billings and customer deposits	13,849	14,029
Accrued compensation	1,191	1,516
Accrued operating taxes	3,907	4,618
Other accrued liabilities	4,974	4,223
Total Current Liabilities	48,503	58,022
Long-term Liabilities
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	456,300	357,950
Retirement benefits	17,029	18,257
Deferred income taxes, net	89,193	82,263
Other long-term liabilities	1,923	1,746
Income tax payable	93	110
Total Long-term Liabilities	$ 564,538	$ 460,326
Commitments and Contingencies
Equity
Preferred stock, par value $0.01 per share, authorized 100 shares, none issued
Common stock, par value $0.01 per share, authorized 55,000 shares; 23,005 shares issued and 22,992 shares outstanding (22,579 shares issued and 22,544 shares outstanding in 2014)	$ 230	$ 226
Additional paid-in capital	171,746	143,545
Treasury stock, 13 shares at cost (35 shares in 2014)	(103)	(41)
Accumulated deficit	(28,541)	(38,567)
Accumulated other comprehensive loss, net of tax	(11,940)	(12,486)
Total Lumos Networks Corp. Stockholders' Equity	131,392	92,677
Noncontrolling Interests	939	782
Total Equity	132,331	93,459
Total Liabilities and Equity	$ 745,372	$ 611,807

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 1,235	$ 1,217
Other intangibles, accumulated amortization	$ 94,892	$ 90,086
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	55,000,000	55,000,000
Common stock, shares issued	23,005,000	22,579,000
Common stock, shares outstanding	22,992,000	22,544,000
Treasury stock, shares	13,000	35,000

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Consolidated Statements Of Income - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Income [Abstract]
Operating Revenues		$ 204,269	$ 201,456	$ 207,475
Operating Expenses
Network access costs		39,310	40,868	42,417
Selling, general and administrative		80,187	64,782	76,749
Depreciation and amortization		47,527	45,212	42,320
Accretion of asset retirement obligations		139	118	104
Restructuring charges		638		50
Total Operating Expenses, net		167,801	150,980	161,640
Operating Income	[1]	36,468	50,476	45,835
Other Income (Expenses)
Interest expense		(19,918)	(15,575)	(14,191)
Gain (loss) on interest rate swap derivatives		665	492	(144)
Other income (expenses), net		114	664	(1,587)
Total Other Expenses, net		(19,139)	(14,419)	(15,922)
Income Before Income Taxes		17,329	36,057	29,913
Income Tax Expense		7,146	14,409	12,019
Net Income		10,183	21,648	17,894
Net Income Attributable to Noncontrolling Interests		(157)	(120)	(121)
Net Income Attributable to Lumos Networks Corp.		$ 10,026	$ 21,528	$ 17,773
Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders
Earnings per share - basic		$ 0.44	$ 0.97	$ 0.81
Earnings per share - diluted		$ 0.43	0.95	0.80
Cash Dividends Declared per Share - Common Stock			$ 0.56	$ 0.56

[1] Employee separation charges in 2014 include employee separation benefits which were provided for in the separation agreements of an executive officer who left the Company. These charges are included in selling, general and administrative expense on the consolidated statements of income

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Comprehensive Income [Abstract]
Net Income	$ 10,183	$ 21,648	$ 17,894
Other Comprehensive Income (Loss), Net of Tax:
Adjustment to unrecognized loss due to curtailment of postretirement medical plan benefits, net of $463 of income taxes for the year ended December 31, 2014.		725
Net unrecognized (loss) gain from defined benefit plans, net of $169 and $5,944 of income tax benefit for the years ended December 31, 2015 and 2014, respectively, and $4,992 of income tax expense for the year ended December 31, 2013.	(266)	(9,271)	7,840
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income, net of $526, $97 and $481 of income taxes for the years ended December 31, 2015, 2014 and 2013, respectively (see Note 2)	824	151	756
Unrealized (loss) gain on available-for-sale marketable securities, net of $7 and $5 of income tax benefit for the years ended December 31, 2015 and 2014, respectively, and $3 of income tax expense for the year ended December 31, 2013	(12)	(18)	7
Other Comprehensive Income (Loss), Net of Tax	546	(8,413)	8,603
Total Comprehensive Income	10,729	13,235	26,497
Less: Comprehensive Income Attributable to Noncontrolling Interests	(157)	(120)	(121)
Comprehensive Income Attributable to Lumos Networks Corp.	$ 10,572	$ 13,115	$ 26,376

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Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Finalization of Pension and Other Postretirement Benefit Plan Valuation, Tax		$ 463
Deferred income tax (asset) liability, Net unrecognized gain (loss) from defined benefit plans	$ (169)	(5,944)	$ 4,992
Deferred income tax asset, Reclassification adjustment for amortization of actuarial loss from defined benefit plans	526	97	481
Deferred income tax asset, Unrealized gain on available-for-sale securities	$ (7)	$ (5)	$ 3

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flows from Operating Activities:
Net income	$ 10,183	$ 21,648	$ 17,894
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	42,721	36,025	32,496
Amortization	4,806	9,187	9,824
Accretion of asset retirement obligations	139	118	104
Deferred income taxes	6,767	14,477	11,503
(Gain) loss on interest rate swap derivatives	(665)	(492)	144
Equity-based compensation	5,881	4,340	6,778
Amortization of debt discounts and issuance costs	2,688	1,461	1,280
Write off of unamortized debt issuance costs			890
Curtailment gain		(10,774)
Retirement benefits, net of cash contributions and distributions	(314)	(1,628)	(330)
Excess tax benefits from share-based compensation	(165)		(1,060)
Other	789	221	(163)
Changes in assets and liabilities from operations:
Decrease (increase) in accounts receivable	1,938	845	(241)
(Increase) decrease in other assets	(4,889)	(124)	832
Changes in income taxes	(433)	615	(501)
(Decrease) increase in accounts payable	(923)	3,112	(3,798)
(Decrease) increase in other current liabilities	(1,778)	778	(1,398)
Net Cash Provided by Operating Activities	66,745	79,809	74,254
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(115,675)	(84,100)	(68,334)
Broadband network expansion funded by stimulus grant	(2,578)	(878)	(29)
Purchases of available-for-sale marketable securities	(114,478)	(19,516)	(38,560)
Proceeds from sale or maturity of available-for-sale marketable securities	42,200	40,679
Change in restricted cash	4,208	116	979
Cash reimbursement received from broadband stimulus grant	3,838	116	979
Other		150	62
Net Cash Used in Investing Activities	(182,485)	(63,433)	(104,903)
Cash Flows from Financing Activities:
Proceeds from issuance of senior secured term loan	28,000		375,000
Proceeds from issuance of unsecured notes, net of debt discount	148,500
Payment of financing costs	(8,192)		(4,872)
Principal payments on senior secured term loans	(47,960)	(5,250)	(308,876)
Borrowings from revolving credit facility			15,000
Principal payments on revolving credit facility			(18,521)
Termination payments of interest rate swap derivatives			(858)
Cash dividends paid on common stock	(3,152)	(12,456)	(12,213)
Principal payments under capital lease obligations	(2,471)	(1,468)	(1,456)
Proceeds from stock option exercises and employee stock purchase plan	356	2,892	1,222
Excess tax benefits from share-based compensation	165		1,060
Other	(379)	(68)	(725)
Net Cash Provided by (Used in) Financing Activities	114,867	(16,350)	44,761
(Decrease) increase in cash and cash equivalents	(873)	26	14,112
Cash and Cash Equivalents:
Beginning of Year	14,140	14,114	2
End of Year	$ 13,267	$ 14,140	$ 14,114

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Consolidated Statements Of Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total Lumos Networks Corp. Stockholders' Equity [Member]	Noncontrolling Interests [Member]	Total
Balance, at Dec. 31, 2012	$ 216		$ 129,570	$ (53,060)	$ (12,676)	$ 64,050	$ 552	$ 64,602
Balance, shares at Dec. 31, 2012	21,610	112
Adjustments related to spin-off from NTELOS Holdings Corp.			(144)			(144)		(144)
Net income attributable to Lumos Networks Corp.				17,773		17,773		17,773
Other comprehensive income, net of tax					8,603	8,603		8,603
Equity-based compensation expense			5,847			5,847		5,847
Adjustments to excess tax benefit from stock-based compensation			1,060			1,060		1,060
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	$ 5	$ (404)	709			310		310
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits), shares	451	(63)
Stock option exercises	$ 1		1,124			1,125		1,125
Stock option exercises, shares	97
Cash dividends declared ($0.56 per share)				(12,291)		(12,291)		(12,291)
Net income attributable to noncontrolling interests							121	121
Balance, at Dec. 31, 2013	$ 222	$ (404)	138,166	(47,578)	(4,073)	86,333	673	87,006
Balance, shares at Dec. 31, 2013	22,158	49
Net income attributable to Lumos Networks Corp.				21,528		21,528		21,528
Other comprehensive income, net of tax					(8,413)	(8,413)		(8,413)
Equity-based compensation expense			3,377			3,377		3,377
Adjustments to excess tax benefit from stock-based compensation			(1,488)			(1,488)		(1,488)
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	$ 4	$ 363	673			1,040		1,040
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits), shares	211	(14)
Stock option exercises			2,817			2,817		2,817
Stock option exercises, shares	210
Cash dividends declared ($0.56 per share)				(12,517)		(12,517)		(12,517)
Net income attributable to noncontrolling interests							109	109
Balance, at Dec. 31, 2014	$ 226	$ (41)	143,545	(38,567)	(12,486)	92,677	782	$ 93,459
Balance, shares at Dec. 31, 2014	22,579	35						22,579
Net income attributable to Lumos Networks Corp.				10,026		10,026		$ 10,026
Other comprehensive income, net of tax					546	546		546
Equity-based compensation expense			4,721			4,721		4,721
Adjustments to excess tax benefit from stock-based compensation			165			165		165
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	$ 4	$ (62)	881			823		823
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits), shares	399	(22)
Stock warrants issued (net of debt discount and deferred issuance fees)			22,147			22,147		22,147
Stock option exercises			287			287		$ 287
Stock option exercises, shares	27							27
Net income attributable to noncontrolling interests							157	$ 157
Balance, at Dec. 31, 2015	$ 230	$ (103)	$ 171,746	$ (28,541)	$ (11,940)	$ 131,392	$ 939	$ 132,331
Balance, shares at Dec. 31, 2015	23,005	13						23,005

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Consolidated Statements Of Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Equity [Abstract]
Cash dividends declared, per share	$ 0.56	$ 0.56

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Organization

12 Months Ended

Dec. 31, 2015

Organization [Abstract]

Organization

Note 1.  Organization

Lumos Networks Corp. (“Lumos Networks” or the “Company”) is a fiber-based bandwidth infrastructure and service provider in the Mid-Atlantic region with a network of long-haul fiber, metro Ethernet and Ethernet rings located primarily in Virginia and West Virginia, and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company serves carrier, business and residential customers over its fiber network offering data, voice and IP services.  The Company’s principal products and services include Multiprotocol Label Switching (“MPLS”) based Ethernet, Metro Ethernet (“Metro E”), Fiber to the Cell (“FTTC”) wireless backhaul and fiber transport services, wavelength transport services, IP services and other voice services.

On October 14, 2011, NTELOS Holdings Corp. (“NTELOS”) announced a distribution date of October 31, 2011 for the spin-off of all of the then issued and outstanding shares of common stock of Lumos Networks, which operated NTELOS’s wireline operations (the “Business Separation”).  Prior to and in connection with the Business Separation, following the market close on October 31, 2011, NTELOS effectuated a 1-for-2 reverse stock split (the “Reverse Stock Split”) of its shares of Common Stock, $0.01 par value.  The spin-off of Lumos Networks was in the form of a tax-free stock distribution to NTELOS stockholders of record as of the close of business on October 24, 2011, the record date (the “Distribution”).  On October 31, 2011, NTELOS distributed one share of Lumos Networks common stock for every share of NTELOS’s common stock outstanding, on a post-Reverse Stock Split basis.

On November 20, 2013, in a secondary offering of the Company’s common stock, Quadrangle Capital Partners LP. (“Quadrangle”) sold 2,888,939 shares, priced at $20.00 per share.  On March 17, 2015, in an additional secondary offering of the Company’s common stock, Quadrangle sold 1,600,000 shares on an underwritten basis.  On September 14, 2015, Quadrangle distributed its remaining 591,898 shares to its investors (the “Distribution”).  As a result, the shareholder agreement between Quadrangle and the Company expired as of the effective date of the Distribution.  The Company did not receive any proceeds from the offerings, and the Company’s total shares outstanding did not change. All direct costs of these offerings, which were primarily legal, printing and accounting fees related to the preparation of the registration statement, which totaled $0.3 and $0.8 million, are included in other expenses in the consolidated statements of income for the year ended December 31, 2015 and 2013, respectively.  The Company did not incur any direct costs related to offerings during the year ended December 31, 2014.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, Lumos Networks Operating Company, a wholly-owned subsidiary of the Company, and all of Lumos Networks Operating Company’s wholly-owned subsidiaries and those limited liability corporations where Lumos Networks Operating Company or certain of its subsidiaries, as managing member, exercised control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the allowance for doubtful accounts; the valuation of deferred tax assets and/or liabilities, asset retirement obligations and equity-based compensation; goodwill impairment assessments; actuarial determination of employee benefit obligations; stock warrants; and reserve for uncertain income tax positions.                                     

Changes in Accounting Principle

The Company historically presented unamortized debt issuance costs, or fees directly related to issuing debt, as long-term assets on the consolidated balance sheets in accordance with existing GAAP. In the third quarter of 2015, the Company elected early adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and applied it retrospectively to all prior periods presented in the consolidated financial statements. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense over the life of the associated debt instrument.The adoption of ASU 2015-03 resulted in the presentation of $10.5 million of debt issuance costs as a reduction to long-term debt in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.2 million of debt issuance costs from deferred charges and other assets to a reduction to long-term debt on the consolidated balance sheet as of December 31, 2014. The adoption of ASU 2015-03 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

The Company historically  classified its deferred tax asset and/or deferred tax liability as either current or noncurrent on the consolidated balance sheets in accordance with existing GAAP. In the fourth quarter of 2015, the Company elected early adoption of FASB ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) and applied it retrospectively to all prior periods presented in the financial statements. ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and deferred tax liabilities be offset by tax jurisdiction and the resulting net deferred tax asset and/or net deferred tax liability amount be classified as noncurrent in the consolidated balance sheet. The adoption of ASU 2015-17 resulted in the presentation of $2.4 million of deferred tax assets as a reduction to the noncurrent deferred liability in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.6 million of deferred tax assets from current assets to a reduction to the noncurrent net deferred tax liability as of December 31, 2014. The adoption of ASU 2015-07 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services are rendered or products are delivered, installed and functional, as applicable, the price to the buyer is fixed and determinable and collectability is reasonably assured.  Certain services of the Company require payment in advance of service performance.  In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue ratably over the service period.  The Company bills customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

The Company earns revenue by providing services through access to and usage of its networks.  Local service revenues are recognized as services are provided.  Carrier data revenues are earned by providing switched access and other switched and dedicated services to other carriers.  Revenues for equipment sales are recognized at the point of sale.

Cash Equivalents and Marketable Securities

The Company considers its investments in all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents.  The Company’s marketable securities at December 31, 2015 and 2014 consist of debt securities not classified as cash equivalents.  The Company classifies such debt securities as either held-to-maturity, when the Company has the positive intent and ability to hold the securities to maturity, or available-for-sale.  Held-to-maturity debt securities are carried at amortized cost, adjusted for the amortization of premiums or accretion of discounts.  Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in other comprehensive income or loss, net of tax.  All of the Company’s debt securities not classified as cash equivalents were classified as available-for-sale securities as of December 31, 2015 and 2014.

The Company previously utilized a swingline credit facility that it had with its primary commercial bank.  This swingline facility was terminated in April 2013, concurrent with the closing of the Company’s debt refinancing (see Note 5).  The Company had a book overdraft related to this master cash account of $1.8 million as of December 31, 2012.  The Company classified the changes in the book overdraft amount in cash flows from operating activities on the consolidated statement of cash flows for the year ended December 31, 2013.

Restricted Cash

During 2010, the Company received a federal broadband stimulus award to bring broadband services and infrastructure to Alleghany County, Virginia.  The total project was $16.1 million, of which 50% (approximately $8 million) was funded by a grant from the federal government.  The project was completed as of December 31, 2015.  The Company was required to deposit 100% of its portion for the grant (approximately $8 million) into a pledged account in advance of any reimbursements, which was to be drawn down ratably following the grant reimbursement approvals which were contingent on adherence to the program requirements.  The Company received $3.8 million, $0.1 million and $1.0 million in the years ended December 31, 2015,  2014 and 2013, respectively, for the reimbursable portion of the qualified recoverable expenditures.  The Company has no remaining receivable for the reimbursable portion of the qualified recoverable expenditures as of December 31, 2015 and all amounts from the pledged account were released as of December 31, 2015.

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires deposits on certain sales.  The Company estimates an allowance for doubtful accounts based on a review of specific customers with large receivable balances and for the remaining customer receivables the Company uses historical results, current and expected trends and changes in credit policies.  Management believes the allowance adequately covers all anticipated losses with respect to trade receivables.  Actual credit losses could differ from such estimates. The Company includes bad debt expense in selling, general and administrative expense in the consolidated statements of income.  The following table shows the activity in the allowance for doubtful accounts and customer credits for the years ended December 31, 2015,  2014 and 2013:

(In thousands)	2015		2014		2013
Allowance for doubtful accounts and customer credits, beginning	$	1,217	$	1,485	$	1,822
Additions:
Charged to expense		461		604		249
Charged to other accounts		96		(19)		346
Deductions		(539)		(853)		(932)
Allowance for doubtful accounts and customer credits, ending	$	1,235	$	1,217	$	1,485

Property, Plant and Equipment and Other Long-Lived Assets (Excluding Goodwill and Indefinite-Lived Intangible Assets)

Property, plant and equipment, finite-lived intangible assets and long-term deferred charges are recorded at cost and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated pursuant to the subsequent measurement guidance described in FASBAccounting Standards Codification (“ASC”) 360-10-35.  Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets.  If the carrying value exceeds the estimated undiscounted cash flows, the excess of the asset’s carrying value over the estimated fair value is recorded as an impairment charge.

The Company believes that no impairment indicators exist as of December 31, 2015 that would require it to perform impairment testing for long-lived assets, including property, plant and equipment, long-term deferred charges and finite-lived intangible assets to be held and used.

Depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets, which the Company reviews and updates based on historical experience and future expectations.  As of December 31, 2015 the estimated lives for each category of property, plant and equipment are as follows:

	Estimated Life
Buildings	50 years
Network plant and equipment	3 to 25 years
Furniture, fixtures and other equipment	2 to 24 years

Leasehold improvements, which are categorized in land and buildings, are depreciated over the shorter of the estimated useful lives or the remaining lease terms.  Plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.  Amortization of assets held under capital leases, including certain software licenses, is included with depreciation expense.

Intangibles with a finite life are classified as other intangibles on the consolidated balance sheets.  At December 31, 2015 and 2014, other intangibles were comprised of the following: 

		2015				2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$	103,108	$	(93,051)	$	103,108	$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862		(1,841)		2,862		(1,680)
Total		$	105,970	$	(94,892)	$	105,970	$	(90,086)

The Company amortizes its finite-lived intangible assets using the straight-line method unless it determines that another systematic method is more appropriate.  The amortization for certain customer relationship intangibles is being recognized using an accelerated amortization method based on the pattern of estimated earnings from these assets.

The estimated life of amortizable intangible assets is determined from the unique factors specific to each asset and the Company reviews and updates estimated lives based on current events and future expectations. The Company capitalizes costs incurred to renew or extend the term of a recognized intangible asset and amortizes such costs over the remaining life of the asset. No such costs were incurred during the years ended December 31, 2015 or 2014.  Amortization expense for the years ended December 31, 2015,  2014 and 2013 was $4.8 million, $9.2 million and $9.8 million, respectively.

Amortization expense for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
2016	$	2,412	$	163	$	2,575
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and franchise rights are considered to be indefinite-lived intangible assets.  Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired.  The Company’s policy is to assess the recoverability of indefinite-lived assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.

The Company first considers whether to take a qualitative approach in determining whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test promulgated by FASB ASC Topic 350.  If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount or if the Company elects to bypass the qualitative test for a specific period, the two-step process is used to test for goodwill impairment.  Step one requires a determination of the fair value of each of the reporting units and, to the extent that the fair value of the reporting unit exceeds its carrying value (including goodwill), the step two calculation of implied fair value of goodwill is not required and no impairment loss is recognized.  In testing for goodwill impairment, the Company utilizes a market approach that includes the use of comparable multiples of publicly traded companies whose services are comparable to ours and recent M&A activity.

As of December 31, 2015, goodwill was attributed to the Company’s segments as follows:

(In thousands)	December 31, 2015
Data	$	90,561
R&SB		9,736
RLEC Access		-
Total goodwill	$	100,297

As of October 1, 2015, the Company performed its annual goodwill impairment test for each of its reporting units with goodwill, which are two of our three operating segments (data and R&SB).  After a preliminary assessment, the Company elected to bypass the qualitative assessment and applied step one of the quantitative test as described above. Based on the results of this annual impairment testing, the Company determined that the fair values of each of the data and R&SB reporting units substantially exceed their respective carrying amounts and that no impairment exists.

The gross amount of goodwill was $133.7 million and the accumulated impairment loss was $33.4 million for a net carrying amount of $100.3 million as of December 31, 2015 and 2014. There was no activity in the consolidated goodwill accounts for the years ended December 31, 2015, 2014 and 2013.

Accounting for Asset Retirement Obligations

An asset retirement obligation is evaluated and recorded as appropriate on assets for which the Company has a legal obligation to retire.  The Company records a liability for an asset retirement obligation and the associated asset retirement cost capitalized at the time the underlying asset is acquired.  Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. 

The Company enters into various facility collocation agreements and is subject to locality franchise ordinances.  The Company constructs assets at these locations and, in accordance with the terms of many of these agreements, the Company is obligated to restore the premises to their original condition at the conclusion of the agreements, generally at the demand of the other party to these agreements.  The Company recognizes the fair value of a liability for an asset retirement obligation and capitalizes that cost as part of the cost basis of the related asset, depreciating it over the useful life of the related asset.

Included in certain of the franchise ordinances under which the Company’s RLECs and CLECs operate are clauses that require the removal of the RLEC’s and CLEC’s equipment at the termination of the franchise agreement.  The Company has not recognized an asset retirement obligation for these liabilities as the removal of the equipment is not estimable due to an indeterminable end date and the fact that the equipment is part of the public switched telephone network and it is not reasonable to assume the jurisdictions would require its removal.

The following table indicates the changes to the Company’s asset retirement obligation liability, which is included in other long-term liabilities, for the years ended December 31, 2015 and 2014:

(In thousands)	2015		2014
Asset retirement obligations, beginning	$	1,500	$	1,401
Additional asset retirement obligations recorded, net of
adjustments in estimates		81		(19)
Accretion of asset retirement obligations		139		118
Asset retirement obligations, ending	$	1,720	$	1,500

Advertising Costs

The Company expenses advertising costs and marketing production costs as incurred (included within selling, general and administrative expenses in the consolidated statements of income).  Advertising expense for the years ended December 31, 2015,  2014 and 2013 was $0.7 million, $1.4 million and $0.8 million, respectively.  

Pension Benefits and Retirement Benefits Other Than Pensions

The Company sponsors a non-contributory defined benefit pension plan (“Pension Plan”) covering all employees who meet eligibility requirements and were employed prior to October 1, 2003.  Pension benefits vest after five years of plan service and are based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee retires before reaching age 65 and elects to receive the benefit prior to age 65.  The Company froze the Pension Plan effective December 31, 2012.  As such, no further benefits are being accrued by participants for services rendered beyond that date.  The Company has a nonqualified pension plan that was also frozen as of December 31, 2012.

Sections 412 and 430 of the Internal Revenue Code and ERISA Sections 302 and 303 establish minimum funding requirements for defined benefit pension plans.  The minimum required contribution is generally equal to the target normal cost plus the shortfall amortization installments for the current plan year and each of the six preceding plan years less any calculated credit balance. The Company’s policy is to make contributions to stay at or above the threshold required in order to prevent benefit restrictions and related additional notice requirements and is intended to provide for benefits to be paid in the future. The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its consolidated balance sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income (loss). The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end balance sheet and provide the required disclosures as of the end of each fiscal year.

The Company also provides certain life insurance benefits for retired employees that meet eligibility requirements through the postretirement welfare benefit plan (the “Other Postretirement Benefit Plan”), which is contributory.  These obligations, along with all of the pension plans and other postretirement benefit plans, are assumed by the Company.  Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5, 1994 and is not eligible to employees hired after April 1993.  The Company previously provided  health care benefits for retired employees, however, the Company terminated those benefits effective December 31, 2014.  Eligible retirees received partial compensation for settlement of accrued benefits through a series of supplemental pension payments in 2014. As a result, the Company recognized a curtailment gain of $10.8 million in the year ended December 31, 2014 (see Note 11).

The Company accounts for the pension and retirement benefits other than pensions by accruing the cost of such benefits over the service lives of employees. Unrecognized actuarial gains and losses are amortized over the estimated average remaining service period for active employees and over the estimated average remaining life for retirees. The Company recognizes in its consolidated balance sheets the amount of the Company’s unfunded Accumulated Postretirement Benefit Obligation (“APBO”) at the end of the year. Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

The Company sponsors a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees.  The Company’s policy is to match 100% of each participant’s annual contributions for contributions up to 1% of each participant’s annual compensation and 50% of each participant’s annual contributions up to an additional 5% of each participant’s annual compensation.  Company contributions vest after two years of service.

Operating Leases

The Company has operating leases for administrative office space and equipment, certain of which have renewal options.  These leases, with few exceptions, provide for automatic renewal options and escalations that are either fixed or based on the consumer price index.  Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term.  The Company’s minimum lease term for most leases includes the initial non-cancelable term and at least one renewal period to the extent that the exercise of the related renewal option or options is reasonably assured.  A renewal option or options is determined to be reasonably assured if failure to renew the leases imposes an in-substance economic penalty on the Company.  Leasehold improvements are capitalized and depreciated over the shorter of the assets’ useful life or the lease term, including renewal option periods that are reasonably assured.

Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  The Company accrues interest and penalties related to unrecognized tax benefits in interest expense and income tax expense, respectively. For balance sheet presentation purposes, the Company nets its deferred tax asset and deferred tax liability positions by tax jurisdiction and classifies the resulting net deferred tax asset and/or net deferred tax liability as noncurrent in accordance with ASU 2015-17.

Equity-based Compensation

The Company accounts for share-based employee compensation plans under FASB ASC 718, Stock Compensation.  Equity-based compensation expense from share-based equity awards is recorded with an offsetting increase to additional paid-in capital on the consolidated balance sheet.  For equity awards with only service conditions, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

The fair value of common stock options granted with service-only conditions is estimated at the respective measurement date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.  The fair value of restricted stock awards granted with service-only conditions is estimated based on the market value of the common stock on the date of grant reduced by the present value of expected dividends as applicable.  Certain stock options and restricted shares granted by the Company contain vesting provisions that are conditional on achievement of a target market price for the Company’s common stock.  The grant date fair value of these options and restricted shares was adjusted to reflect the probability of the achievement of the market condition based on management’s best estimate using a Monte Carlo model (see Note 9).  The Company initially recognizes the related compensation cost for these awards that contain a market condition on a straight-line basis over the requisite service period as derived from the valuation model.  The Company accelerates expense recognition if the market conditions are achieved prior to the end of the derived requisite service period.

Total equity-based compensation expense related to all of the share-based awards (Note 9), including the Company’s 401(k) matching contributions, was $5.9 million, $4.3 million and $6.8 million for the years ended December 31, 2015,  2014 and 2013, respectively, which amounts are included in selling, general and administrative expenses in the consolidated statements of income.

Future charges for equity-based compensation related to instruments outstanding at December 31, 2015 for the years 2016 through 2018 are estimated to be $4.0 million, $3.3 million, $1.0 million and less than $0.1 million for each of 2019 and 2020, respectively.

Fair Value Measurements

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required to be recorded at fair value or for certain financial instruments for which disclosure of fair value is required, the Company uses fair value techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.  However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability.  Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

GAAP establishes a fair value hierarchy with three levels of inputs that may be used to measure fair value:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs other than quoted prices that are observable for the asset or liability.

• Level 3 – Unobservable inputs for the asset or liability.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU2015-14, Revenue from Contracts with Customers (Topic 606), which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 820): Amendments to the Consolidation Analysis (“ASU 2015-02”).  ASU 2015-02 provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities.  All legal entities will be subject to reevaluation under this revised consolidation model.  The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships.  ASU 2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company does not expect the future adoption of ASU 2015-02 to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will replace most existing lease guidance in U.S. GAAP when it becomes effective.  ASU 2016-02 requires an entity to recognize most leases, including operating leases, on the consolidated balance sheet of the lessee. ASU 2016-02 is effective for public business entities for annual reporting periods beginning after December 15, 2018, with early adoption permitted.  ASU 2016-02 requires the use of a modified retrospective transition method with elective reliefs.  The Company is still evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and disclosures.

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Cash Equivalents And Marketable Securities

12 Months Ended

Dec. 31, 2015

Cash Equivalents And Marketable Securities [Abstract]

Cash Equivalents And Marketable Securities

Note 3.  Cash Equivalents and Marketable Securities

The Company’s cash equivalents and available-for-sale securities reported at fair value as of December 31, 2015 and 2014 are summarized below.

(In thousands)	December 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	6,746	$	49
Commercial paper		1,000		-
Corporate debt securities		1,055		1,357
Total cash equivalents		8,801		1,406
Marketable securities:
Commercial paper		8,684		998
Debt securities issued by U.S. Government agencies		35,155		2,734
Municipal bonds		-		353
Corporate debt securities		44,972		12,785
Total marketable securities, available-for-sale		88,811		16,870
Total cash equivalents and marketable securities	$	97,612	$	18,276

At December 31, 2015 and 2014, the carrying values of the investments included in cash and equivalents approximated fair value.  The amortized cost basis of the available-for-sale securities was not materially different from the aggregate fair value. 

The contractual maturities of the Company’s available-for-sale debt securities were as follows as of December 31, 2015:

(In thousands)	Total
Due in one year or less	$	88,561
Due after one year through two years		250
Total debt securities	$	88,811

The Company received total proceeds of $42.2 million and $40.7 million from the sale or maturity of available-for-sale marketable securities during the years ended December 31, 2015 and 2014.  The Company did not receive any material proceeds from the sale or maturity of available-for-sale marketable securities or recognize any material realized net gains or losses during the year ended December 31, 2013.  Net unrealized holding gains on available-for-sale securities were less than $0.1 million for each of the years ended December 31, 2015 and 2014 and are included in accumulated other comprehensive loss on the consolidated balance sheets as of December 31, 2015 and 2014.  

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Disclosures About Segments Of An Enterprise And Related Information

12 Months Ended

Dec. 31, 2015

Disclosures About Segments Of An Enterprise And Related Information [Abstract]

Disclosures About Segments Of An Enterprise And Related Information

Note 4.  Disclosures About Segments of an Enterprise and Related Information

The Company’s operating segments generally align with its major product and service offerings and coincide with the way that the Company’s chief operating decision makers measure performance and allocate resources.  The Company’s chief operating decision makers are its Chief Executive Officer and its Chief Financial Officer (collectively, the “CODMs”).  The Company’s current reportable operating segments are Data, Residential and Small Business (“R&SB”) and RLEC Access. A general description of the products and services offered and the customers served by each of these segments is as follows:

· Data:  This segment includes the Company’s enterprise data (metro Ethernet, dedicated Internet, voice over IP (“VoIP”) and private line), transport, and FTTC product and service groups.  These businesses primarily serve enterprise and carrier customers utilizing the Company’s network of long-haul fiber, metro Ethernet and Ethernet rings located primarily in Virginia and West Virginia, and portions of Pennsylvania, Maryland, Ohio and Kentucky.

· R&SB:  This segment includes the following voice products:  local lines, primary rate interface (“PRI”), long distance, toll and directory advertising and other voice services (excluding VoIP which are typically provided to enterprise customers and are included in the Company’s data segment) and the following IP services products: fiber-to-the-premise broadband XL, DSL, integrated access and video.  These products are sold to residential and small business customers on the Company’s network and within the Company’s footprint.  This segment also provides carrier customers access to our network located in competitive markets.

· RLEC Access:  This segment provides carrier customers access to the Company’s network within the Company’s RLEC     footprint and primarily includes switched access services. 

Summarized financial information concerning the Company’s reportable segments is presented in the following table and includes restated segment results for the year ended December 31, 2013 to be consistent with the classification and presentation of the Company’s operating segments in 2014 and 2015.

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the year ended December 31, 2015
Operating revenues	$	114,311	$	67,214	$	22,744	$	-	$	204,269
Network access costs		16,728		22,582		-		-		39,310
Network operating and selling costs		31,477		14,835		1,058		-		47,370
Other general and administrative expenses		14,631		8,242		2,713		7,231		32,817
Adjusted EBITDA(1)		51,475		21,555		18,973		-		92,003
Capital expenditures		98,535		9,545		-		7,595		115,675
For the year ended December 31, 2014:
Operating revenues	$	106,642	$	72,028	$	22,786	$	-	$	201,456
Network access costs		15,990		24,878		-		-		40,868
Network operating and selling costs		24,833		17,656		1,544		-		44,033
Other general and administrative expenses		14,094		9,594		3,003		(5,942)		20,749
Adjusted EBITDA(1)		51,725		19,900		18,239		10,774		100,638
Capital expenditures		66,570		7,089		-		10,441		84,100
For the year ended December 31, 2013:
Operating revenues	$	104,112	$	80,659	$	22,704	$	-	$	207,475
Network access costs		15,801		26,616		-		-		42,417
Network operating and selling costs		22,616		19,869		1,850		-		44,335
Other general and administrative expenses		12,191		9,515		2,693		8,015		32,414
Adjusted EBITDA(1)		53,504		24,659		18,161		-		96,324
Capital expenditures		48,085		6,693		1,634		11,922		68,334

⁽¹⁾ The Company’s CODMs evaluate performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional disclosures, including the Company’s reasons for using this non-GAAP financial measure.

The Company’s CODMs do not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments.  However, total assets may be allocated to the segments in the future should the CODMs decide to manage the business in that manner.  Management does review capital expenditures using success-based metrics that allow the Company to determine which segment product groups are driving investment in the network.  Depreciation and amortization expense and certain corporate expenses that are excluded from the measurement of segment profit or loss are not allocated to the segments.  The Company did not allocate the curtailment gain of $10.8 million recognized in 2014 due to the discontinuance of certain medical benefits under the postretirement medical plan to the segments and this amount is included in corporate unallocated charges for the year ended December 31, 2014 in the table above.

The following table provides a reconciliation of net income attributable to Lumos Networks Corp. to Adjusted EBITDA, as defined by the Company, on a consolidated basis for the years ended December 31, 2015,  2014 and 2013:

	Year Ended December 31,
(In thousands)	2015			2014			2013
Net Income Attributable to Lumos Networks Corp.	$	10,026	$		21,528	$		17,773
Net Income Attributable to Noncontrolling Interests		157			120			121
Net income		10,183			21,648			17,894
Income tax expense		7,146			14,409			12,019
Interest expense		19,918			15,575			14,191
(Gain) loss on interest rate swap derivatives		(665)			(492)			144
Other (income) expenses, net		(114)			(664)			1,587
Operating Income		36,468			50,476			45,835
Depreciation and amortization and accretion
of asset retirement obligations		47,666			45,330			42,424
Amortization of actuarial losses		1,350			248			1,237
Equity-based compensation		5,881			4,340			6,778
Restructuring charges		638			-			50
Employee separation charges(1)		-			244			-
Adjusted EBITDA	$	92,003		$	100,638		$	96,324

⁽¹⁾ Employee separation charges in 2014 include employee separation benefits which were provided for in the separation agreements of an executive officer who left the Company.  These charges are included in selling, general and administrative expense on the consolidated statements of income.

One of the Company's carrier customers, AT&T, individually accounted for 8%,  10% and 8% of the Company's total revenue for each of the years ended December 31, 2015,2014 and 2013, respectively.  Another carrier customer, Verizon, accounted for 8% of the Company’s total revenue for each of the years ended December 31, 2015 and 2014 and 10% of the Company’s total revenue for the year ended December 31, 2013.  Revenue from these carrier customers was derived primarily from network access, data transport and FTTC services.

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Long-Term Debt

12 Months Ended

Dec. 31, 2015

Long-Term Debt [Abstract]

Long-Term Debt

Note 5.  Long-Term Debt

As of December 31, 2015 and 2014, the Company’s outstanding long-term debt consisted of the following: 

	December 31, 2015				December 31, 2014
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	348,415	$	4,705	$	368,375	$	5,206
8% Notes due 2022		150,000		29,607		-		-
Capital lease obligations		2,597		-		5,008		-
Long-term debt		501,012		34,312		373,383		5,206
Less:  Current portion of long-term debt		10,400		-		10,227		-
Long-term debt, excluding current portion	$	490,612	$	34,312	$	363,156	$	5,206

Credit Facility

On April 30, 2013, Lumos Networks Operating Company, a wholly-owned subsidiary of the Company, entered into a $425 million credit facility (the “Credit Facility”).  The Credit Facility consists of a $100 million senior secured five-year term loan (the “Term Loan A”), a $275 million senior secured six-year term loan (the “Term Loan B”); a $28 million senior secured incremental term loan facility under the existing credit facility (“Term Loan C”); and a $50 million senior secured five-year revolving credit facility (the “Revolver”).  The proceeds from the Term Loan A and the Term Loan B were used to retire the prior credit facility outstanding amount of approximately $311 million and to pay closing costs and other expenses related to the transaction, with the remaining proceeds available for normal course capital expenditures and working capital purposes.  As of December 31, 2015,  no borrowings were outstanding under the Revolver.

On January 2, 2015, the Company entered into the Term Loan C and amended certain terms of the Credit Facility.  The Company used the net proceeds from Term Loan C to fund new FTTC projects.  The amendment included changes to the maximum leverage ratio and the pricing of the Credit Facility as discussed below.

On August 6, 2015, the Company prepaid $40.0 million of the outstanding principal of the Credit Facility, which was allocated ratably to Term Loans A, B and C.  The Company used proceeds from the issuance of the 8% Notes due 2022, discussed below, to fund these prepayments.

Pricing of the amended Credit Facility is LIBOR plus 3.00% for the Revolver and Term Loan A and LIBOR plus 3.25% for Term Loan B and C.  The Credit Facility does not require a minimum LIBOR rate.  The Term Loan A matures in 2018 with quarterly payments of 1.25% per annum through December 31, 2016 and 2.50% per annum thereafter.  The Term Loan B matures in 2019 with quarterly payments of 1% per annum.  The Term Loan C matures in 2019 with quarterly payments of 1% per annum beginning on June 30, 2015.  The Revolver matures in full in 2018.  The Credit Facility is secured by a first priority pledge of substantially all property and assets of Lumos Networks Operating Company and all material subsidiaries, as guarantors, excluding the RLECs.

The amended Credit Facility includes various restrictions and conditions, including a maximum leverage ratio of 5.00:1.00 through December 31, 2015, 4.75:1.00 through December 31, 2016, 4.50:1.00 through December 31, 2017, 4.25:1.00 through December 31, 2018 and 4.00:1.00 thereafter.  The Credit Facility also sets a minimum interest rate coverage ratio of 3.25:1.00.  At December 31, 2015, the Company’s leverage ratio was 3.78:1.00 and its interest coverage ratio was 6.70:1.00.  The Company was in compliance with its debt covenants as of December 31, 2015. 

Mandatory prepayments include an excess cash flow sweep equal to 50% of Excess Cash Flow, as defined under the Credit Agreement, for each fiscal year commencing in 2013 for so long as the leverage ratio exceeds 3.25:1.00. Based on the excess cash flow calculation as of December 31, 2015, no mandatory prepayment was due for the year ended December 31, 2015.

In accordance with the terms of the Credit Facility, the Company entered into interest rate swap agreements with a combined notional amount of 50 percent of the aggregate outstanding balance of Term Loan A and Term Loan B.  Under the interest rate swap agreements, the Company swapped one-month LIBOR with a fixed rate of approximately 0.5% for certain agreements entered into in 2012 and 0.8% for certain agreements entered into in 2013.  The interest rate swap agreements expired on December 31, 2015.  The Company recognized a net gain on interest rate swap derivatives of $0.7 and $0.5 million for the years ended December 31, 2015 and 2014, respectively, and a net loss of $0.1 million for the year ended December 31, 2013. 

The Company’s effective interest rate on its Credit Facility for the year ended December 31, 2015 was 3.96%.

8% Notes due 2022

On August 6, 2015, the Company issued $150 million in unsecured promissory notes (the “8% Notes”) to an affiliate of Pamplona Capital Management LLC (“Pamplona”). The net proceeds of the 8% Notes, after a $1.5 million purchasers discount and payment of $7.1 million of closing costs, were used to prepay $40.0 million of the Company’s existing Credit Facility with the remainder to be used for general corporate purposes, including to fund future growth opportunities. The 8% Notes bear interest at an annual fixed rate of 8.00% and mature on August 15, 2022.  Interest is payable in arrears on a quarterly basis on August 15, November 15, February 15, and May 15 of each year, beginning on November 15, 2015.  Interest is payable in cash or, at the election of the Company, through the issuance of additional notes or by adding the amount of the accrued interest to the unpaid principal amount of the 8% Notes outstanding at that time. The 8% Notes were also issued with 5,500,000 warrants for no additional consideration to purchase shares of the Company’s common stock (the “Warrants”). The Company allocated the net proceeds received from the debt issuance to the 8% Notes and the equity-classified Warrants based on the relative fair value of the instruments.  As a result, the Company recognized a total discount on the 8% Notes of $24.8 million, of which $23.5 million represents the value assigned to the Warrants and $1.3 million represents the allocated portion of the aforementioned $1.5 million purchasers discount.  The discount on the 8% Notes will be amortized to interest expense over the life of the debt using the effective interest method. See Note 9 for additional information regarding the valuation of the Warrants.

In connection with the issuance of the 8% Notes in August 2015 and the Term Loan C financing in January 2015, the Company deferred an additional $6.0 million and $0.9 million, respectively, in debt issuance costs.  Total unamortized debt issuance costs associated with the 8% Notes and Credit Facility are included in the table above, which amounts are presented as a reduction of long-term debt in the consolidated balance sheets in accordance with ASU 2015-03 (Note 2.) These costs are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs for the years ended December 31, 2015,  2014 and 2013 was $2.7 million, $1.5 million and $1.3 million, respectively.

The Company’s effective interest rate on the 8% Notes for the year ended December 31, 2015 was 12.55%, which represents the contractual rate adjusted for the aforementioned discount and deferred debt issuance costs.

The Company receives patronage credits from CoBank and certain other of the Farm Credit System lending institutions (collectively referred to as “patronage banks”) which are not reflected in the interest rates above.  The patronage banks hold a portion of the credit facility and are cooperative banks that are required to distribute their profits to their members.  Patronage credits are calculated based on the patronage banks’ ownership percentage of the credit facility and are received by the Company as either a cash distribution or as equity in the patronage banks.  The current patronage credit percentages are 75% in cash and 25% in equity.  These credits are recorded in the consolidated statements of income as an offset to interest expense.  The patronage credits were $1.2 million, $0.7 million and $1.3 million for the years ended December 31, 2015,  2014 and 2013, respectively.

The aggregate maturities of the Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $8.0 million in 2016, $13.0 million in 2017, $70.8 million in 2018 and $256.5 million in 2019.  The revolver under the Credit Facility, under which no borrowings are outstanding as of December 31, 2015, matures in full in 2018.  The 8% Notes mature for $150.0 million in 2022.

Capital lease obligations

In addition to the long-term debt discussed above, the Company has capital leases on vehicles with original lease terms of four to five years.  At December 31, 2015, the historical cost and accumulated amortization of the related assets were $2.7 million and $1.4 million, respectively.  In 2013, the Company entered into a financing arrangement with a provider of software services related to the upgrading of internal infrastructure, including certain software licenses, which the Company classified as a capital lease.  The agreement extends through 2016 with payments due annually.  As of December 31, 2015, the historical cost and accumulated depreciation of the related asset were $5.9 million and $3.0 million, respectively.  As of December 31, 2015, the combined total net present value of the Company’s future minimum lease payments is $2.6 million and the principal portion of these capital lease obligations was due as follows:  $2.4 million in 2016, $0.1 million in 2017 and $0.1 million in 2018.

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Supplementary Disclosures Of Cash Flow Information

12 Months Ended

Dec. 31, 2015

Supplementary Disclosures Of Cash Flow Information [Abstract]

Supplementary Disclosures Of Cash Flow Information

Note 6.  Supplementary Disclosures of Cash Flow Information

The following information is presented as supplementary disclosures for the consolidated statements of cash flows for the years ended December 31, 2015,  2014 and 2013: 

(In thousands)	2015		2014		2013
Cash payments (receipts):
Interest (net of amounts capitalized)	$	12,467	$	13,206	$	13,278
Income taxes		843		(680)		970
Supplemental investing and financing
activities:
Additions to property and equipment
included in accounts payable and
other accrued liabilities		6,906		8,373		6,145
Capital lease obligations		-		123		6,544
Dividend declared not paid	$	-	$	3,152	$	3,091

Cash payments for interest for the years ended December 31, 2015,  2014 and 2013 in the table above are net of $0.8 million, $0.9 million and $0.7 million, respectively, of cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $1.2 million, $0.3 million and $0.2 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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Fair Value Of Financial Instruments

12 Months Ended

Dec. 31, 2015

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

Note 7.  Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, restricted cash, accounts receivable, accounts payable, capital lease obligations (including the current portion), accrued liabilities, interest rate swap derivatives, the 8% Notes and the Credit Facility (including the current portion) as of December 31, 2015 and 2014.  The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, capital lease obligations and accrued liabilities approximated their fair values at December 31, 2015 and 2014.  Marketable securities and interest rate swap derivatives are recorded in the consolidated balance sheets at fair value (see Note 3 and Note 5).

The following table presents the placement in the fair value hierarchy of financial assets and liabilities that are measured at fair value on a recurring basis at December 31, 2015 and 2014:

	Fair Value Measurements at December 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	6,746	$	-	$	-	$	6,746
Commercial paper		-		1,000		-		1,000
Corporate debt securities		-		1,055		-		1,055
Total cash equivalents		6,746		2,055		-		8,801
Marketable securities:
Commercial paper		-		8,684		-		8,684
Debt securities issued by U.S. Government agencies		-		35,155		-		35,155
Corporate debt securities		-		44,972		-		44,972
Total marketable securities		-		88,811		-		88,811
Total financial assets	$	6,746	$	90,866	$	-	$	97,612

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	49	$	-	$	-	$	49
Corporate debt securities		-		1,357		-		1,357
Total cash equivalents		49		1,357		-		1,406
Marketable securities:
Commercial paper		-		998		-		998
Debt securities issued by U.S. Government agencies		-		2,734		-		2,734
Municipal bonds		-		353		-		353
Corporate debt securities		-		12,785		-		12,785
Total marketable securities		-		16,870		-		16,870
Total financial assets	$	49	$	18,227	$	-	$	18,276
Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

The fair value of commercial paper and corporate, municipal and U.S. government debt securities are provided by a third-party pricing service and are estimated using pricing models.  The underlying inputs to the pricing models are directly observable from active markets.  However, the pricing models used do entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.  As such, the Company classifies these fair value measurements as Level 2 within the fair value hierarchy.  The fair value of interest rate swap derivatives at December 31, 2015 was derived based on bid prices obtained from the administrative agents as of the measurement date.

The following table summarizes the carrying amounts and estimated fair values of the components included in the Company’s long-term debt, including the current portion.

	December 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	343,710	$	298,400	$	363,169	$	370,769
8% Notes		120,393		132,028		-		-
Capital lease obligations		2,597		2,597		5,008		5,008

The respective fair values of the Credit Facility and the 8% Notes were estimated based on an internal discounted cash flows analysis that schedules out the estimated cash flows for the future debt and interest repayments and applies a discount factor that is adjusted to reflect estimated changes in market conditions and credit factors.

The Company also has certain non-marketable long-term investments for which it is not practicable to estimate fair value with a total carrying value of $1.2 million and $0.9 million as of December 31, 2015 and 2014, respectively, of which $1.1 million and $0.8 million, respectively, represents the Company’s investment in CoBank.  This investment is primarily related to patronage distributions of restricted equity and is a required investment related to the portion of the Credit Facility held by CoBank.  This investment is carried under the cost method.

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Earnings Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Note 8.  Earnings per Share

The Company computes basic earnings per share by dividing net income attributable to Lumos Networks Corp. applicable to common shares by the weighted average number of common shares outstanding during the period.  The impact on earnings per share of nonvested restricted shares outstanding that contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares is included in the computation of basic earnings per share pursuant to the two-class method.  The Company issues restricted shares from time to time with vesting terms that are based on achievement of certain stock price performance conditions.  These nonvested restricted shares are excluded from the computation of basic and diluted weighted average shares until the period in which the applicable performance or market conditions are attained.  The Company uses the treasury stock method to determine the number of potentially dilutive common shares from stock options and nonvested restricted shares during the period.

The computations of basic and diluted earnings per share for the years ended December 31, 2015,  2014 and 2013 are as follows: 

(In thousands, except per share amounts)	2015		2014		2013
Numerator:
Net income attributable to Lumos Networks Corp.	$	10,026	$	21,528	$	17,773
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(338)		(540)		(425)
Numerator for basic and diluted earnings per common share		9,688		20,988		17,348
Denominator:
Weighted average basic shares outstanding		22,825		22,328		21,887
Less:  weighted average participating securities and nonvested performance-based restricted shares		(791)		(581)		(579)
Denominator for basic earnings per common share		22,034		21,747		21,308
Plus:  potentially dilutive stock options		275		363		368
Denominator for diluted earnings per common share		22,309		22,110		21,676
Basic earnings per share	$	0.44	$	0.97	$	0.81
Diluted earnings per share	$	0.43	$	0.95	$	0.80

For the year ended December 31, 2015, the denominator for diluted earnings per common share excludes 740,214 shares related to stock options and 24,000 shares related to restricted stock awards which would be antidilutive for the period.  For the year ended December 31, 2014, the denominator for diluted earnings per common share excludes 598,463 shares related to stock options and 17,383 shares related to restricted stock awards which would be antidilutive for the period.  For the year ended December 31, 2013,  the denominator for diluted earnings per common share excludes 310,933 shares related to stock options and 20,100 shares related to restricted stock awards which would be antidilutive for the period. The earnings per share calculation for the year ended December 31, 2015 also excludes the 5,500,000 outstanding stock warrants described in Note 9 as they would be antidilutive for the period.

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Stock Options, Restricted Stock and Stock Warrants

12 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments And Stock Warrant [Abstract]

Stock Options, Restricted Stock and Stock Warrants

Note 9.  Stock Options, Restricted Stock and Stock Warrants

Stock Options and Restricted Stock

The Company has an Equity and Cash Incentive Plan administered by the Compensation Committee of the Company’s board of directors, which permits the grant of long-term incentives to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, incentive awards, other stock-based awards and dividend equivalents.  As of December 31, 2015, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan is 5,500,000 and1,182,061 securities remained available for issuance under the Equity and Cash Incentive Plan.  Upon the exercise of stock options or upon the grant of restricted stock under the Equity and Cash Incentive Plan, new common shares are issued or treasury stock is reissued.

The Company issued 6,680 stock options and 388,984 shares of restricted stock under the Equity and Cash Incentive Plan during the year ended December 31, 2015.  Options issued to employees with service-only conditions generally vest on a graded vesting schedule over a four to five year period.  Options generally cliff vest on the first anniversary of the grant date for non-employee directors.Restricted shares generally cliff vest on the third anniversary of the grant date for employees and generally cliff vest on the first anniversary of the grant date for non-employee directors.  Some restricted stock awards vest on a graded vesting schedule over a five year period.  Certain stock options and restricted shares granted by the Company contain vesting provisions that are conditional on achievement of a target market price for the Company’s common stock.  In 2013, the Company recognized compensation expense totaling $1.8 million related to the accelerated vesting of equity awards for which the target market price had been achieved.

Dividend rights applicable to restricted stock with service-only vesting conditions are equivalent to the Company’s common stock.  Restricted stock awards that vest based on achievement of a market condition are not eligible for dividends during the vesting period unless the Compensation Committee determines otherwise.

Stock options must be granted under the Equity and Cash Incentive Plan at not less than 100% of fair value on the date of grant and have a maximum life of ten years from the date of grant.  Options and other awards under the Equity and Cash Incentive Plan may be exercised in compliance with such requirements as determined by a committee of the board of directors.  Substantially all options outstanding were issued at a strike price equal to or greater than the fair value on the date of grant. 

The fair value of each option award with service-only vesting conditions is estimated on the grant date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.  The risk-free rate is based on the zero-coupon U.S. Treasury rate in effect at the time of grant, with a term equal to the expected life of the options.  For awards granted in 2014 and 2015, the Company used historical trading prices for its common stock to estimate volatility assumptions.  Prior to 2014, the Company used peer group and other publicly available market data to estimate volatility assumptions due to limited trading history of its own common stock.  The expected option life represents the period of time that the options granted are expected to be outstanding and is determined using the simplified method.  The expected dividend yield is estimated based on the Company’s actual dividend yield at the date of the grant. 

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2015,  2014 and 2013 was $8.09,  $6.68 and $3.33, respectively.  The following weighted-average assumptions were used in estimating the grant date fair value of these awards:

	Year Ended December 31, 2015	Year Ended December 31, 2014	Year Ended December 31, 2013
Risk-free interest rate	1.90%	1.96%	1.34%
Expected volatility	55.93%	59.52%	44.19%
Expected dividend yield	0.00%	3.54%	4.70%
Expected term	6.3 years	6.1 years	6.6 years

The fair value of each restricted stock award with service-only vesting conditions is based on the closing price of the Company’s common stock on the grant date.  The fair value for option awards and restricted stock awards with vesting that is conditional on achievement of market conditions is adjusted to reflect the probability of satisfying the market condition based on a Monte Carlo valuation model.

The summary of the activity and status of the Company’s stock options for the year ended December 31, 2015 is as follows: 

(In thousands, except per share amounts)	Shares	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2014	2,226	$	12.49
Granted during the period	7		14.87
Exercised during the period	(27)		9.97
Forfeited during the period	(8)		14.23
Expired during the period	(16)		5.70
Stock options outstanding at December 31, 2015	2,182	$	12.57	5.6 years	$	1,575
Stock options exercisable at December 31, 2015	1,545	$	12.40	4.9 years	$	1,175
Total stock options outstanding, vested and expected to vest
at December 31, 2015	2,136	$	12.58		$	1,528

The total intrinsic value of stock options exercised during the years ended December 31, 2015, 2014 and 2013 was $0.1 million, $0.3 million and $0.9 million, respectively.  The total fair value of options that vested during the years ended December 31, 2015,  2014 and 2013 was $1.3 million, $0.5 million and $2.3 million, respectively.  As of December 31, 2015, there was $1.7 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.5 years.

The summary of the activity and status of the Company’s restricted stock for the year ended December 31, 2015 is as follows: 

(In thousands, except per share amounts)	Shares		Weighted-Average Grant Date Fair Value per Share
Restricted stock outstanding at December 31, 2014	614	$	13.26
Granted during the period	389		15.39
Vested during the period	(117)		11.17
Forfeited during the period	(25)		18.04
Restricted stock outstanding at December 31, 2015	861	$	14.37

As of December 31, 2015, there was $6.0 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 2.0 years.  The total fair value of restricted stock awards that vested during the years ended December 31, 2015,2014 and 2013 was $1.7 million, $1.7 million and $4.6 million, respectively.   

In addition to the Equity and Cash Incentive Plan discussed above, the Company has an employee stock purchase plan which commenced in November 2011 with 100,000 shares available.  As of December 31, 2015,  67,783 shares remained available for issuance under the employee stock purchase plan.  New common shares will be issued for purchases under this plan or treasury shares will be reissued.  Shares are priced at 85% of the closing price on the last trading day of the month and settle on the second business day of the following month.  During the year ended December 31, 2015,  5,787 shares were issued under the employee stock purchase plan.  Compensation expense associated with the employee stock purchase plan was less than $0.1 million for the years ended December 31, 2015,  2014 and 2013.

Stock Warrants

On August 6, 2015, in conjunction with the 8% Notes issuance discussed in Note 5, the Company issued for no additional consideration 5,500,000 warrants (the “Warrants”) to purchase shares of the Company’s common stock at an exercise price of $13.99. The Warrants are fully vested and exerciseable and may be net-share settled on a cashless basis only until they expire on August 6, 2022.  The grant date fair value of the Warrants was $4.44 per share, which was estimated using the Black-Scholes option pricing model and the following assumptions:

Risk-free interest rate	1.61	%
Expected volatility	41.53	%
Expected dividend yield	0	%
Expected term	5 years

A portion of the net proceeds from the 8% Notes issuance was allocated to the equity-classified Warrants based on the relative fair value of the instruments. The allocated proceeds of $23.5 million were recorded in additional paid-in capital on the consolidated balance sheet as of December 31, 2015, net of $1.3 million in issuance costs.

A summary of the activity and status of the Company’s stock warrants for the year ended December 31, 2015, is as follows:

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2014	-	$	-
Granted during the period	5,500		13.99
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at December 31, 2015	5,500	$	13.99

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Income Taxes

Note 10.  Income Taxes

The components of income tax expense (benefit) are as follows for the years ended December 31, 2015,  2014 and 2013:  

(In thousands)	2015		2014		2013
Current tax expense (benefit):
Federal	$	-	$	-	$	-
State		379		(68)		516
Total current tax expense (benefit)		379		(68)		516
Deferred tax expense:
Federal		6,319		11,908		10,102
State		448		2,569		1,401
Total deferred tax expense		6,767		14,477		11,503
Total income tax expense	$	7,146	$	14,409	$	12,019

Total income tax expense was different than an amount computed by applying the graduated federal statutory income tax rates to income before taxes.  The reasons for the differences are as follows for the years ended December 31, 2015,  2014 and 2013:  

(In thousands)	2015		2014		2013
Computed tax expense at federal statutory
rate of 35%	$	6,065	$	12,620	$	10,470
Nondeductible compensation		122		27		307
Noncontrolling interests		(61)		(47)		(50)
Nondeductible public offering costs		112		-		285
State income taxes, net of federal income
tax impact		538		1,626		1,246
Nondeductible interest		578		-		-
Other, net		(208)		183		(239)
Total income tax expense	$	7,146	$	14,409	$	12,019

During the years ended December 31, 2015 and 2013, the Company recognized excess tax benefits of approximately $0.2 million and $1.1 million, respectively, in additional paid-in-capital related to stock compensation plans.  During the year ended December 31, 2014, the Company reclassified tax benefits of approximately $1.5 million from additional paid-in capital to deferred tax liabilities associated with unrealized excess tax benefits related to stock compensation plans.  As of December 31, 2015, these tax benefits are available to offset future taxable income.  The Company recognized tax expense (benefits) of $0.4 million, $(5.4) million and $5.5 million in accumulated other comprehensive income associated with the adjustments to various employee benefit plan liabilities for the years ended December 31, 2015,  2014 and 2013, respectively, in accordance with FASB ASC 715.

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities at December 31, 2015 and 2014 are presented below:

(In thousands)	2015		2014
Deferred income tax assets:
Retirement benefits other than pension	$	2,167	$	2,337
Pension and related plans		4,588		4,872
Net operating loss		16,509		9,488
Accrued expenses		6,848		4,588
Other		425		725
Total deferred income tax assets		30,537		22,010
Deferred income tax liabilities:
Property and equipment		(111,846)		(97,460)
Intangibles		(7,884)		(6,813)
Total deferred income tax liabilities		(119,730)		(104,273)
Net deferred income tax liability	$	(89,193)	$	(82,263)

At December 31, 2015, the Company had federal net operating losses (“NOLs”) of $48.0 million, net of adjustments for unrecognized income tax benefits (“UTBs”).  The Company’s NOLs, if not utilized to reduce taxable income in future periods, will expire in varying amounts from 2022 through 2035.  The Company believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. 

The Company recognizes interest related to UTBs in interest expense and penalties on UTBs in income tax expense.  A reconciliation of the change in the UTB balance for the years ended December 31, 2015 and 2014 is as follows:

(In thousands)	2015		2014
Balance at beginning of year	$	1,112	$	1,125
Additions for tax positions related to the current year		297		344
Increases for tax positions related to prior years		109		11
Statute of limitations expiration		(162)		(368)
Balance at end of year	$	1,356	$	1,112

All of the Company’s UTBs as of December 31, 2015 and 2014 were adjusted through income tax expense.  The Company does not expect to have any material changes to its UTBs over the next twelve months.

While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than its accrued position.  Accordingly, additional provisions could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.  In general, the tax years that remain open and subject to federal and state audit examinations are 2012-2015 as of December 31, 2015.

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Pension Plans And Other Postretirement Benefits

12 Months Ended

Dec. 31, 2015

Pension Plans And Other Postretirement Benefits [Abstract]

Pension Plans And Other Postretirement Benefits

Note 11.  Pension Plans and Other Postretirement Benefits 

The Company sponsors a non-contributory defined benefit pension plan (“Pension Plan”), as well as non-qualified pension plans and other postretirement benefit plan (“OPEB”) for its eligible employees.  The Company recognized total income of $1.3 million, $1.1 million (excluding the curtailment gain discussed below) and $0.7 million  in 2015, 2014 and 2013, respectively, for all qualified and non-qualified pension and OPEB plans.  Effective December 31, 2012, the Company froze the accumulation of benefits under the Pension Plan and the supplemental executive retirement plan.  As such, no further benefits will be accrued by plan participants for services rendered after that date under either of these plans.  Effective December 31, 2014, the Company terminated the health care benefits under the Other Postretirement Benefit Plans.  Eligible retirees will receive partial compensation for settlement of accrued benefits through a series of supplemental pension payments.  As a result, the Company recognized a curtailment gain of approximately $10.8 million in the year ended December 31, 2014, which was calculated as the decrease in the accumulated benefit obligation resulting from the termination of the medical portion of the Other Postretirement Benefit Plans less unrecognized losses in accumulated other comprehensive loss and less the actuarially determined cost of the benefit obligation that was transferred to the Pension Plan in the form of supplemental benefit payments on December 31, 2014. 

The following tables provide a reconciliation of the changes in the qualified plans’ benefit obligations and fair value of assets and a statement of the funded status as of December 31, 2015,  2014 and 2013 and the classification of amounts recognized in the consolidated balance sheets:

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Change in benefit obligations:
Benefit obligations, beginning of period	$	70,892	$	57,209	$	64,511	$	844	$	12,800	$	12,874
Service cost		-		-		-		-		80		91
Interest cost		2,664		2,622		2,432		31		373		485
Actuarial loss (gain)		(4,550)		13,547		(7,199)		(83)		887		26
Benefits paid, net		(3,281)		(2,956)		(2,756)		(27)		(671)		(676)
Curtailment gain		-		-		-		-		(12,625)		-
Transfer		-		470		221		-		-		-
Benefit obligations, end of period		65,725		70,892		57,209		765		844		12,800
Change in plan assets:
Fair value of plan assets, beginning of period		58,403		57,847		51,675		-		-		-
Actual return on plan assets		(1,166)		3,555		8,897		-		-		-
Employer contributions		-		-		-		27		671		676
Benefits paid		(3,325)		(2,999)		(2,812)		(27)		(671)		(676)
Transfer		-		-		87		-		-		-
Fair value of plan assets, end of period		53,912		58,403		57,847		-		-		-
Funded status:
Non-current asset		-		-		(638)		-		-		-
Current liabilities		-		-		-		72		72		671
Non-current liabilities		11,813		12,489		-		693		772		12,129
Funded status recognized in the consolidated balance sheets	$	11,813	$	12,489	$	(638)	$	765	$	844	$	12,800
Amounts recognized in accumulated other comprehensive loss:
Net actuarial (loss) gain		(17,899)		(18,119)		(3,711)		18		(65)		(1,211)
Income taxes		6,981		7,066		1,444		(7)		25		471
Net amount recognized in accumulated other comprehensive loss	$	(10,918)	$	(11,053)	$	(2,267)	$	11	$	(40)	$	(740)

The accumulated benefit obligation for the defined benefit pension plan at December 31, 2015 and 2014 was $65.7 million and $70.9 million, respectively.  The decrease in the projected benefit obligation is primarily attributable to actuarial gains resulting from an increase in the discount rate from 3.85%  at December 31, 2014 to 4.20% at December 31, 2015 and adjusted mortality tables.  The accumulated benefit obligation represents the present value of pension benefits based on service and salary earned to date.  The benefit obligation indicated in the table above is the projected benefit obligation which represents the present value of pension benefits taking into account projected future service and salary increases.  The projected benefit obligation is equal to the accumulated benefit obligation as of December 31, 2015 and 2014 since the Pension Plan was frozen effective as of December 31, 2012.

The total amounts reclassified out of accumulated other comprehensive income related to amortization of actuarial losses for the pension and other postretirement benefit plans for the years ended December 31, 2015,  2014 and 2013 were $1.0 million, less than $0.1 million, and $1.0 million, respectively.  Amortization of actuarial losses is included in selling, general and administrative expenses on the consolidated statements of income.

The following table provides the components of net periodic (benefit) expense for the plans for the years ended December 31, 2015,  2014 and 2013:  

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Components of net periodic (benefit) expense:
Service cost	$	-	$	-	$	-	$	-	$	80	$	91
Interest cost		2,664		2,622		2,432		31		373		485
Expected return on plan assets		(4,111)		(4,373)		(3,901)		-		-		-
Amortization of loss		991		-		918		-		23		28
Net periodic (benefit) expense	$	(456)	$	(1,751)	$	(551)	$	31	$	476	$	604

Actuarial gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants.  

The assumptions used in the measurements of the Company’s benefit obligations at December 31, 2015 and 2014 are shown in the following table:

	Defined Benefit Pension Plan				Other Postretirement Benefit Plans
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Discount rate	4.20	%	3.85	%	4.20	%	3.85	%
Rate of compensation increase	N/A		N/A		N/A		N/A

The assumptions used in the measurements of the Company’s net income or expense for the consolidated statements of income for the years ended December 31, 2015,  2014 and 2013 were as follows:

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Discount rate	3.85	%	4.70	%	3.85	%	3.85	%	4.70	%	3.85	%
Expected return on plan assets	7.25	%	7.75	%	7.75	%	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A		N/A		N/A		N/A

The Company reviews the assumptions noted in the above table annually or more frequently to reflect anticipated future changes in the underlying economic factors used to determine these assumptions.  The discount rates assumed reflect the rate at which the Company could invest in high quality corporate bonds in order to settle future obligations.  In doing so, the Company utilizes a Citigroup Pension Discount Curve applied against the Company’s estimated defined benefit payments to derive a blended rate.  The Citigroup Pension Discount Curve is derived from over 350 Aa corporate bonds.  The Company also compares this to a Moody’s ten year Aa bond index for reasonableness. 

In developing the expected long-term rate of return assumption for the assets of the Pension Plan, the Company evaluated input from its third party pension plan asset managers, including their review of asset class return expectations and long-term inflation assumptions.  The Company also considered the related historical ten-year average asset return at December 31, 2015 as well as considering input from the Company’s third party pension plan asset managers. 

The weighted average actual asset allocations by asset category and the fair value by asset category as of December 31, 2015 and 2014 were as follows:

(Dollars in thousands)	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Fair Value		Actual Allocation		Fair Value
Large Cap Value	23	%	$	12,193	23	%	$	13,120
Large Cap Blend	11	%		6,085	11	%		6,622
Mid Cap Blend	6	%		3,342	6	%		3,585
Small Cap Blend	4	%		2,080	4	%		2,511
Foreign Stock - Large Cap	7	%		3,817	7	%		3,969
Bond	34	%		18,239	34	%		19,806
Cash and cash equivalents	15	%		8,156	15	%		8,790
Total	100	%	$	53,912	100	%	$	58,403

The actual and target allocation for plan assets is broadly defined and measured as follows:

	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Target Allocation		Actual Allocation		Target Allocation
Equity securities	51	%	50	%	51	%	50	%
Bond securities and cash equivalents	49	%	50	%	49	%	50	%
Total	100	%	100	%	100	%	100	%

It is the Company’s policy to invest pension plan assets in a diversified portfolio consisting of an array of asset classes.  The investment risk of the assets is limited by appropriate diversification both within and between asset classes.  The assets are primarily invested in investment funds that invest in a broad mix of publicly traded equities, bonds and cash equivalents (and fair value is based on quoted market prices (Level 1 input within the fair value hierarchy previously defined)).  The allocation between equity and bonds is reset quarterly to the target allocations.  Updates to the allocation are considered in the normal course and changes may be made when appropriate.  The bond holdings consist of three bond funds split relatively evenly between these funds at December 31, 2015.  At December 31, 2015, the Company believes that there are no material concentrations of risk within the portfolio of plan assets.

The assumed long term return noted above is the target long term return.  Overall return, risk adjusted return, and management fees are assessed against a peer group and benchmark indices.  Reporting on asset performance is provided quarterly and review meetings are held semi-annually.  In addition to normal rebalancing to maintain an adequate cash reserve, projected cash flow needs of the plan are reviewed at least annually to ensure liquidity is properly managed. 

The Company did not contribute to the Pension Plan in 2015, 2014 or 2013 and does not expect to contribute to the Pension Plan in 2016.  The Company expects the net periodic expense for the Pension Plan in 2016 to be $0.2million and the expense for the other postretirement benefit plans in 2016 to be less than $0.1 million. 

The following estimated future pension benefit payments and other postretirement benefit plan payments which reflect expected future service, as appropriate, are expected to be paid in the years indicated:

(In thousands) Year	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
2016	$	3,048	$	111
2017		3,104		57
2018		3,105		57
2019		3,194		56
2020		3,237		55
2021-2025		17,210		256

Other Benefit Plans

The Company also has a supplemental executive retirement plan (“SERP”).  The Company froze the SERP effective December 31, 2012.  As such, no further benefits will be accrued by plan participants for services rendered and the accumulated benefit obligation is equivalent to the projected benefit obligation for periods ending after that date.  The projected benefit obligation was $4.6 million, $4.9 million and $4.3 million as of December 31, 2015,  2014 and 2013, respectively.  The Company recognized $0.4 million, $0.2 million and$0.3 million of expense from previously unrecognized loss related to the supplemental executive retirement plan during the years ended December 31, 2015, 2014 and 2013, respectively, all of which is included in selling, general and administrative expenses in the consolidated statements of income.  The total amount of unrecognized actuarial losses recognized in accumulated other comprehensive income at December 31, 2015 and 2014 related to this plan was $1.0 million, net of income taxes of $0.6 million, and $1.4 million, net of income taxes of $0.9 million, respectively. 

The estimated future benefit payments are expected to be $0.2 million annually for each of the years2016 through 2020 and $1.4 million in aggregate for the years 2021 through 2025.

The Company also has certain other nonqualified postretirement plans assumed from a prior merger.  The projected benefit obligation related to these plans at December 31, 2013 was $0.4 million.  The Company curtailed the medical benefits under these plans as of December 31, 2014, as such there is no material future obligation associated with these plans.

The Company also sponsors a defined contribution 401(k) plan.  The Company’s matching contributions to this plan were $1.1 million, $1.0 million and $0.9 million for the years ended December 31, 2015,  2014 and 2013, respectively.  The Company funds its 401(k) matching contributions in shares of the Company’s common stock.

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Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 12. Related Party Transactions

ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement.  Facility lease revenue from ValleyNet was approximately $4.7 million, $5.0 million and $4.7 million in the years ended December 31, 2015, 2014 and 2013, respectively, which is presented in the Company’s data segment revenue.  At both December 31, 2015 and 2014, the Company had accounts receivable from ValleyNet of approximately $0.4 million.  The Company also leases and resells capacity from ValleyNet. The total lease expense was $1.2 million, $0.9 million and $0.9 million in the years ended December 31, 2015, 2014 and 2013, respectively, which is presented as network access costs in the consolidated statements of income.

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 13.  Commitments and Contingencies

Operating Leases

Rental expense for all operating leases for the years ended December 31, 2015,  2014 and 2013 was $2.7 million, $2.4 million and $2.9 million, respectively.  The total amount committed under these lease agreements at December 31, 2015 is:  $1.5 million in 2016, $1.3 million in 2017, $1.2 million in 2018, $0.9 million in 2019, $0.3 million in 2020 and $0.8 million for the years thereafter.

Other Commitments and Contingencies

The Company periodically makes claims or receives disputes and is involved in legal actions related to billings to other carriers for access to the Company’s network.  The Company does not recognize revenue related to such matters until collection of the claims is reasonably assured.  In addition to this, the Company periodically disputes access charges that are assessed by other companies with which the Company interconnects and is involved in other disputes and legal and tax proceedings and filings arising from normal business activities. 

The Company is involved in routine litigation and disputes in the ordinary course of its business.  While the results of litigation and disputes are inherently unpredictable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows, and believes that adequate provision for any probable and estimable losses has been made in the Company’s consolidated financial statements.

The Company has other purchase commitments relating to capital expenditures totaling $6.9 million as of December 31, 2015, which are expected to be satisfied during 2016.

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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Accounting Estimates

Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the allowance for doubtful accounts; the valuation of deferred tax assets and/or liabilities, asset retirement obligations and equity-based compensation; goodwill impairment assessments; actuarial determination of employee benefit obligations; stock warrants; and reserve for uncertain income tax positions.                                     

Changes in Accounting Principle

Changes in Accounting Principle

The Company historically presented unamortized debt issuance costs, or fees directly related to issuing debt, as long-term assets on the consolidated balance sheets in accordance with existing GAAP. In the third quarter of 2015, the Company elected early adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and applied it retrospectively to all prior periods presented in the consolidated financial statements. The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense over the life of the associated debt instrument.The adoption of ASU 2015-03 resulted in the presentation of $10.5 million of debt issuance costs as a reduction to long-term debt in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.2 million of debt issuance costs from deferred charges and other assets to a reduction to long-term debt on the consolidated balance sheet as of December 31, 2014. The adoption of ASU 2015-03 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

The Company historically  classified its deferred tax asset and/or deferred tax liability as either current or noncurrent on the consolidated balance sheets in accordance with existing GAAP. In the fourth quarter of 2015, the Company elected early adoption of FASB ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) and applied it retrospectively to all prior periods presented in the financial statements. ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and deferred tax liabilities be offset by tax jurisdiction and the resulting net deferred tax asset and/or net deferred tax liability amount be classified as noncurrent in the consolidated balance sheet. The adoption of ASU 2015-17 resulted in the presentation of $2.4 million of deferred tax assets as a reduction to the noncurrent deferred liability in the consolidated balance sheet as of December 31, 2015. The Company also reclassified $5.6 million of deferred tax assets from current assets to a reduction to the noncurrent net deferred tax liability as of December 31, 2014. The adoption of ASU 2015-07 did not impact net income or any other amounts previously reported on the consolidated statements of income or comprehensive income or cash flows.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services are rendered or products are delivered, installed and functional, as applicable, the price to the buyer is fixed and determinable and collectability is reasonably assured.  Certain services of the Company require payment in advance of service performance.  In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue ratably over the service period.  The Company bills customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

The Company earns revenue by providing services through access to and usage of its networks.  Local service revenues are recognized as services are provided.  Carrier data revenues are earned by providing switched access and other switched and dedicated services to other carriers.  Revenues for equipment sales are recognized at the point of sale.

Cash Equivalents And Marketable Securities

Cash Equivalents and Marketable Securities

The Company considers its investments in all highly liquid debt instruments with an original maturity of three months or less, when purchased, to be cash equivalents.  The Company’s marketable securities at December 31, 2015 and 2014 consist of debt securities not classified as cash equivalents.  The Company classifies such debt securities as either held-to-maturity, when the Company has the positive intent and ability to hold the securities to maturity, or available-for-sale.  Held-to-maturity debt securities are carried at amortized cost, adjusted for the amortization of premiums or accretion of discounts.  Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in other comprehensive income or loss, net of tax.  All of the Company’s debt securities not classified as cash equivalents were classified as available-for-sale securities as of December 31, 2015 and 2014.

The Company previously utilized a swingline credit facility that it had with its primary commercial bank.  This swingline facility was terminated in April 2013, concurrent with the closing of the Company’s debt refinancing (see Note 5).  The Company had a book overdraft related to this master cash account of $1.8 million as of December 31, 2012.  The Company classified the changes in the book overdraft amount in cash flows from operating activities on the consolidated statement of cash flows for the year ended December 31, 2013.

Restricted Cash

Restricted Cash

During 2010, the Company received a federal broadband stimulus award to bring broadband services and infrastructure to Alleghany County, Virginia.  The total project was $16.1 million, of which 50% (approximately $8 million) was funded by a grant from the federal government.  The project was completed as of December 31, 2015.  The Company was required to deposit 100% of its portion for the grant (approximately $8 million) into a pledged account in advance of any reimbursements, which was to be drawn down ratably following the grant reimbursement approvals which were contingent on adherence to the program requirements.  The Company received $3.8 million, $0.1 million and $1.0 million in the years ended December 31, 2015,  2014 and 2013, respectively, for the reimbursable portion of the qualified recoverable expenditures.  The Company has no remaining receivable for the reimbursable portion of the qualified recoverable expenditures as of December 31, 2015 and all amounts from the pledged account were released as of December 31, 2015.

Trade Accounts Receivable

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires deposits on certain sales.  The Company estimates an allowance for doubtful accounts based on a review of specific customers with large receivable balances and for the remaining customer receivables the Company uses historical results, current and expected trends and changes in credit policies.  Management believes the allowance adequately covers all anticipated losses with respect to trade receivables.  Actual credit losses could differ from such estimates. The Company includes bad debt expense in selling, general and administrative expense in the consolidated statements of income.  The following table shows the activity in the allowance for doubtful accounts and customer credits for the years ended December 31, 2015,  2014 and 2013:

(In thousands)	2015		2014		2013
Allowance for doubtful accounts and customer credits, beginning	$	1,217	$	1,485	$	1,822
Additions:
Charged to expense		461		604		249
Charged to other accounts		96		(19)		346
Deductions		(539)		(853)		(932)
Allowance for doubtful accounts and customer credits, ending	$	1,235	$	1,217	$	1,485

Property, Plant and Equipment and Other Long-Lived Assets (Excluding Goodwill and Indefinite-Lived Intangible Assets)

Property, Plant and Equipment and Other Long-Lived Assets (Excluding Goodwill and Indefinite-Lived Intangible Assets)

Property, plant and equipment, finite-lived intangible assets and long-term deferred charges are recorded at cost and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be evaluated pursuant to the subsequent measurement guidance described in FASBAccounting Standards Codification (“ASC”) 360-10-35.  Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of future undiscounted cash flows expected to result from the use of the assets.  If the carrying value exceeds the estimated undiscounted cash flows, the excess of the asset’s carrying value over the estimated fair value is recorded as an impairment charge.

The Company believes that no impairment indicators exist as of December 31, 2015 that would require it to perform impairment testing for long-lived assets, including property, plant and equipment, long-term deferred charges and finite-lived intangible assets to be held and used.

Depreciation of property, plant and equipment is calculated on a straight-line basis over the estimated useful lives of the assets, which the Company reviews and updates based on historical experience and future expectations.  As of December 31, 2015 the estimated lives for each category of property, plant and equipment are as follows:

	Estimated Life
Buildings	50 years
Network plant and equipment	3 to 25 years
Furniture, fixtures and other equipment	2 to 24 years

Leasehold improvements, which are categorized in land and buildings, are depreciated over the shorter of the estimated useful lives or the remaining lease terms.  Plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.  Amortization of assets held under capital leases, including certain software licenses, is included with depreciation expense.

Intangibles with a finite life are classified as other intangibles on the consolidated balance sheets.  At December 31, 2015 and 2014, other intangibles were comprised of the following: 

		2015				2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$	103,108	$	(93,051)	$	103,108	$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862		(1,841)		2,862		(1,680)
Total		$	105,970	$	(94,892)	$	105,970	$	(90,086)

The Company amortizes its finite-lived intangible assets using the straight-line method unless it determines that another systematic method is more appropriate.  The amortization for certain customer relationship intangibles is being recognized using an accelerated amortization method based on the pattern of estimated earnings from these assets.

The estimated life of amortizable intangible assets is determined from the unique factors specific to each asset and the Company reviews and updates estimated lives based on current events and future expectations. The Company capitalizes costs incurred to renew or extend the term of a recognized intangible asset and amortizes such costs over the remaining life of the asset. No such costs were incurred during the years ended December 31, 2015 or 2014.  Amortization expense for the years ended December 31, 2015,  2014 and 2013 was $4.8 million, $9.2 million and $9.8 million, respectively.

Amortization expense for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
2016	$	2,412	$	163	$	2,575
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and franchise rights are considered to be indefinite-lived intangible assets.  Indefinite-lived intangible assets are not subject to amortization but are instead tested for impairment annually or more frequently if an event indicates that the asset might be impaired.  The Company’s policy is to assess the recoverability of indefinite-lived assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.

The Company first considers whether to take a qualitative approach in determining whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test promulgated by FASB ASC Topic 350.  If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount or if the Company elects to bypass the qualitative test for a specific period, the two-step process is used to test for goodwill impairment.  Step one requires a determination of the fair value of each of the reporting units and, to the extent that the fair value of the reporting unit exceeds its carrying value (including goodwill), the step two calculation of implied fair value of goodwill is not required and no impairment loss is recognized.  In testing for goodwill impairment, the Company utilizes a market approach that includes the use of comparable multiples of publicly traded companies whose services are comparable to ours and recent M&A activity.

As of December 31, 2015, goodwill was attributed to the Company’s segments as follows:

(In thousands)	December 31, 2015
Data	$	90,561
R&SB		9,736
RLEC Access		-
Total goodwill	$	100,297

As of October 1, 2015, the Company performed its annual goodwill impairment test for each of its reporting units with goodwill, which are two of our three operating segments (data and R&SB).  After a preliminary assessment, the Company elected to bypass the qualitative assessment and applied step one of the quantitative test as described above. Based on the results of this annual impairment testing, the Company determined that the fair values of each of the data and R&SB reporting units substantially exceed their respective carrying amounts and that no impairment exists.

The gross amount of goodwill was $133.7 million and the accumulated impairment loss was $33.4 million for a net carrying amount of $100.3 million as of December 31, 2015 and 2014. There was no activity in the consolidated goodwill accounts for the years ended December 31, 2015, 2014 and 2013.

Accounting For Asset Retirement Obligations

Accounting for Asset Retirement Obligations

An asset retirement obligation is evaluated and recorded as appropriate on assets for which the Company has a legal obligation to retire.  The Company records a liability for an asset retirement obligation and the associated asset retirement cost capitalized at the time the underlying asset is acquired.  Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. 

The Company enters into various facility collocation agreements and is subject to locality franchise ordinances.  The Company constructs assets at these locations and, in accordance with the terms of many of these agreements, the Company is obligated to restore the premises to their original condition at the conclusion of the agreements, generally at the demand of the other party to these agreements.  The Company recognizes the fair value of a liability for an asset retirement obligation and capitalizes that cost as part of the cost basis of the related asset, depreciating it over the useful life of the related asset.

Included in certain of the franchise ordinances under which the Company’s RLECs and CLECs operate are clauses that require the removal of the RLEC’s and CLEC’s equipment at the termination of the franchise agreement.  The Company has not recognized an asset retirement obligation for these liabilities as the removal of the equipment is not estimable due to an indeterminable end date and the fact that the equipment is part of the public switched telephone network and it is not reasonable to assume the jurisdictions would require its removal.

The following table indicates the changes to the Company’s asset retirement obligation liability, which is included in other long-term liabilities, for the years ended December 31, 2015 and 2014:

(In thousands)	2015		2014
Asset retirement obligations, beginning	$	1,500	$	1,401
Additional asset retirement obligations recorded, net of
adjustments in estimates		81		(19)
Accretion of asset retirement obligations		139		118
Asset retirement obligations, ending	$	1,720	$	1,500

Advertising Costs

Advertising Costs

The Company expenses advertising costs and marketing production costs as incurred (included within selling, general and administrative expenses in the consolidated statements of income).  Advertising expense for the years ended December 31, 2015,  2014 and 2013 was $0.7 million, $1.4 million and $0.8 million, respectively.  

Pension Benefits and Retirement Benefits Other Than Pensions

Pension Benefits and Retirement Benefits Other Than Pensions

The Company sponsors a non-contributory defined benefit pension plan (“Pension Plan”) covering all employees who meet eligibility requirements and were employed prior to October 1, 2003.  Pension benefits vest after five years of plan service and are based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee retires before reaching age 65 and elects to receive the benefit prior to age 65.  The Company froze the Pension Plan effective December 31, 2012.  As such, no further benefits are being accrued by participants for services rendered beyond that date.  The Company has a nonqualified pension plan that was also frozen as of December 31, 2012.

Sections 412 and 430 of the Internal Revenue Code and ERISA Sections 302 and 303 establish minimum funding requirements for defined benefit pension plans.  The minimum required contribution is generally equal to the target normal cost plus the shortfall amortization installments for the current plan year and each of the six preceding plan years less any calculated credit balance. The Company’s policy is to make contributions to stay at or above the threshold required in order to prevent benefit restrictions and related additional notice requirements and is intended to provide for benefits to be paid in the future. The Company is required to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in its consolidated balance sheets and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income (loss). The Company is required to measure plan assets and benefit obligations as of the date of the Company’s fiscal year-end balance sheet and provide the required disclosures as of the end of each fiscal year.

The Company also provides certain life insurance benefits for retired employees that meet eligibility requirements through the postretirement welfare benefit plan (the “Other Postretirement Benefit Plan”), which is contributory.  These obligations, along with all of the pension plans and other postretirement benefit plans, are assumed by the Company.  Eligibility for the life insurance plan is restricted to active pension participants age 50-64 as of January 5, 1994 and is not eligible to employees hired after April 1993.  The Company previously provided  health care benefits for retired employees, however, the Company terminated those benefits effective December 31, 2014.  Eligible retirees received partial compensation for settlement of accrued benefits through a series of supplemental pension payments in 2014. As a result, the Company recognized a curtailment gain of $10.8 million in the year ended December 31, 2014 (see Note 11).

The Company accounts for the pension and retirement benefits other than pensions by accruing the cost of such benefits over the service lives of employees. Unrecognized actuarial gains and losses are amortized over the estimated average remaining service period for active employees and over the estimated average remaining life for retirees. The Company recognizes in its consolidated balance sheets the amount of the Company’s unfunded Accumulated Postretirement Benefit Obligation (“APBO”) at the end of the year. Amounts recognized in accumulated other comprehensive income (loss) are adjusted out of accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

The Company sponsors a contributory defined contribution plan under Internal Revenue Code Section 401(k) for substantially all employees.  The Company’s policy is to match 100% of each participant’s annual contributions for contributions up to 1% of each participant’s annual compensation and 50% of each participant’s annual contributions up to an additional 5% of each participant’s annual compensation.  Company contributions vest after two years of service.

Operating Leases

Operating Leases

The Company has operating leases for administrative office space and equipment, certain of which have renewal options.  These leases, with few exceptions, provide for automatic renewal options and escalations that are either fixed or based on the consumer price index.  Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term.  The Company’s minimum lease term for most leases includes the initial non-cancelable term and at least one renewal period to the extent that the exercise of the related renewal option or options is reasonably assured.  A renewal option or options is determined to be reasonably assured if failure to renew the leases imposes an in-substance economic penalty on the Company.  Leasehold improvements are capitalized and depreciated over the shorter of the assets’ useful life or the lease term, including renewal option periods that are reasonably assured.

Income Taxes

Income Taxes

Deferred income taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  The Company accrues interest and penalties related to unrecognized tax benefits in interest expense and income tax expense, respectively. For balance sheet presentation purposes, the Company nets its deferred tax asset and deferred tax liability positions by tax jurisdiction and classifies the resulting net deferred tax asset and/or net deferred tax liability as noncurrent in accordance with ASU 2015-17.

Equity-Based Compensation

Equity-based Compensation

The Company accounts for share-based employee compensation plans under FASB ASC 718, Stock Compensation.  Equity-based compensation expense from share-based equity awards is recorded with an offsetting increase to additional paid-in capital on the consolidated balance sheet.  For equity awards with only service conditions, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

The fair value of common stock options granted with service-only conditions is estimated at the respective measurement date using the Black-Scholes option-pricing model with assumptions related to risk-free interest rate, expected volatility, dividend yield and expected term.  The fair value of restricted stock awards granted with service-only conditions is estimated based on the market value of the common stock on the date of grant reduced by the present value of expected dividends as applicable.  Certain stock options and restricted shares granted by the Company contain vesting provisions that are conditional on achievement of a target market price for the Company’s common stock.  The grant date fair value of these options and restricted shares was adjusted to reflect the probability of the achievement of the market condition based on management’s best estimate using a Monte Carlo model (see Note 9).  The Company initially recognizes the related compensation cost for these awards that contain a market condition on a straight-line basis over the requisite service period as derived from the valuation model.  The Company accelerates expense recognition if the market conditions are achieved prior to the end of the derived requisite service period.

Total equity-based compensation expense related to all of the share-based awards (Note 9), including the Company’s 401(k) matching contributions, was $5.9 million, $4.3 million and $6.8 million for the years ended December 31, 2015,  2014 and 2013, respectively, which amounts are included in selling, general and administrative expenses in the consolidated statements of income.

Future charges for equity-based compensation related to instruments outstanding at December 31, 2015 for the years 2016 through 2018 are estimated to be $4.0 million, $3.3 million, $1.0 million and less than $0.1 million for each of 2019 and 2020, respectively.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required to be recorded at fair value or for certain financial instruments for which disclosure of fair value is required, the Company uses fair value techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.  However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability.  Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

GAAP establishes a fair value hierarchy with three levels of inputs that may be used to measure fair value:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs other than quoted prices that are observable for the asset or liability.

• Level 3 – Unobservable inputs for the asset or liability.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU2015-14, Revenue from Contracts with Customers (Topic 606), which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 820): Amendments to the Consolidation Analysis (“ASU 2015-02”).  ASU 2015-02 provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities.  All legal entities will be subject to reevaluation under this revised consolidation model.  The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships.  ASU 2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company does not expect the future adoption of ASU 2015-02 to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will replace most existing lease guidance in U.S. GAAP when it becomes effective.  ASU 2016-02 requires an entity to recognize most leases, including operating leases, on the consolidated balance sheet of the lessee. ASU 2016-02 is effective for public business entities for annual reporting periods beginning after December 15, 2018, with early adoption permitted.  ASU 2016-02 requires the use of a modified retrospective transition method with elective reliefs.  The Company is still evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and disclosures.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Schedule Of Valuation And Qualifying Accounts [Table Text Block]

(In thousands)	2015		2014		2013
Allowance for doubtful accounts and customer credits, beginning	$	1,217	$	1,485	$	1,822
Additions:
Charged to expense		461		604		249
Charged to other accounts		96		(19)		346
Deductions		(539)		(853)		(932)
Allowance for doubtful accounts and customer credits, ending	$	1,235	$	1,217	$	1,485

Property, Plant and Equipment [Table Text Block]

	Estimated Life
Buildings	50 years
Network plant and equipment	3 to 25 years
Furniture, fixtures and other equipment	2 to 24 years

Finite-Lived Intangibles Assets

		2015				2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$	103,108	$	(93,051)	$	103,108	$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862		(1,841)		2,862		(1,680)
Total		$	105,970	$	(94,892)	$	105,970	$	(90,086)

Schedule Of Future Amortization Expense

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
2016	$	2,412	$	163	$	2,575
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194

Schedule Of Goodwill Attributed To Segments

(In thousands)	December 31, 2015
Data	$	90,561
R&SB		9,736
RLEC Access		-
Total goodwill	$	100,297

Schedule Of Changes In Asset Retirement Obligations

(In thousands)	2015		2014
Asset retirement obligations, beginning	$	1,500	$	1,401
Additional asset retirement obligations recorded, net of
adjustments in estimates		81		(19)
Accretion of asset retirement obligations		139		118
Asset retirement obligations, ending	$	1,720	$	1,500

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Cash Equivalents And Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2015

Cash Equivalents And Marketable Securities [Abstract]

Schedule Of Cash Equivalents And Available-For-Sale Securities Reported At Fair Value

(In thousands)	December 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	6,746	$	49
Commercial paper		1,000		-
Corporate debt securities		1,055		1,357
Total cash equivalents		8,801		1,406
Marketable securities:
Commercial paper		8,684		998
Debt securities issued by U.S. Government agencies		35,155		2,734
Municipal bonds		-		353
Corporate debt securities		44,972		12,785
Total marketable securities, available-for-sale		88,811		16,870
Total cash equivalents and marketable securities	$	97,612	$	18,276

Schedule Of Contractual Maturities Of Available-For-Sale Debt Securities

(In thousands)	Total
Due in one year or less	$	88,561
Due after one year through two years		250
Total debt securities	$	88,811

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Disclosures About Segments of an Enterprise and Related Information (Tables)

12 Months Ended

Dec. 31, 2015

Disclosures About Segments Of An Enterprise And Related Information [Abstract]

Summarized Financial Information Of Reportable Segments

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the year ended December 31, 2015
Operating revenues	$	114,311	$	67,214	$	22,744	$	-	$	204,269
Network access costs		16,728		22,582		-		-		39,310
Network operating and selling costs		31,477		14,835		1,058		-		47,370
Other general and administrative expenses		14,631		8,242		2,713		7,231		32,817
Adjusted EBITDA(1)		51,475		21,555		18,973		-		92,003
Capital expenditures		98,535		9,545		-		7,595		115,675
For the year ended December 31, 2014:
Operating revenues	$	106,642	$	72,028	$	22,786	$	-	$	201,456
Network access costs		15,990		24,878		-		-		40,868
Network operating and selling costs		24,833		17,656		1,544		-		44,033
Other general and administrative expenses		14,094		9,594		3,003		(5,942)		20,749
Adjusted EBITDA(1)		51,725		19,900		18,239		10,774		100,638
Capital expenditures		66,570		7,089		-		10,441		84,100
For the year ended December 31, 2013:
Operating revenues	$	104,112	$	80,659	$	22,704	$	-	$	207,475
Network access costs		15,801		26,616		-		-		42,417
Network operating and selling costs		22,616		19,869		1,850		-		44,335
Other general and administrative expenses		12,191		9,515		2,693		8,015		32,414
Adjusted EBITDA(1)		53,504		24,659		18,161		-		96,324
Capital expenditures		48,085		6,693		1,634		11,922		68,334

⁽¹⁾ The Company’s CODMs evaluate performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional disclosures, including the Company’s reasons for using this non-GAAP financial measure.

Reconciliation Of Net Income Attributable to Lumos Networks Corp. to Adjusted EBITDA

	Year Ended December 31,
(In thousands)	2015			2014			2013
Net Income Attributable to Lumos Networks Corp.	$	10,026	$		21,528	$		17,773
Net Income Attributable to Noncontrolling Interests		157			120			121
Net income		10,183			21,648			17,894
Income tax expense		7,146			14,409			12,019
Interest expense		19,918			15,575			14,191
(Gain) loss on interest rate swap derivatives		(665)			(492)			144
Other (income) expenses, net		(114)			(664)			1,587
Operating Income		36,468			50,476			45,835
Depreciation and amortization and accretion
of asset retirement obligations		47,666			45,330			42,424
Amortization of actuarial losses		1,350			248			1,237
Equity-based compensation		5,881			4,340			6,778
Restructuring charges		638			-			50
Employee separation charges(1)		-			244			-
Adjusted EBITDA	$	92,003		$	100,638		$	96,324

⁽¹⁾ Employee separation charges in 2014 include employee separation benefits which were provided for in the separation agreements of an executive officer who left the Company.  These charges are included in selling, general and administrative expense on the consolidated statements of income.

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2015

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

	December 31, 2015				December 31, 2014
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	348,415	$	4,705	$	368,375	$	5,206
8% Notes due 2022		150,000		29,607		-		-
Capital lease obligations		2,597		-		5,008		-
Long-term debt		501,012		34,312		373,383		5,206
Less:  Current portion of long-term debt		10,400		-		10,227		-
Long-term debt, excluding current portion	$	490,612	$	34,312	$	363,156	$	5,206

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Supplementary Disclosures Of Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2015

Supplementary Disclosures Of Cash Flow Information [Abstract]

Supplementary Disclosures of Cash Flow Information

(In thousands)	2015		2014		2013
Cash payments (receipts):
Interest (net of amounts capitalized)	$	12,467	$	13,206	$	13,278
Income taxes		843		(680)		970
Supplemental investing and financing
activities:
Additions to property and equipment
included in accounts payable and
other accrued liabilities		6,906		8,373		6,145
Capital lease obligations		-		123		6,544
Dividend declared not paid	$	-	$	3,152	$	3,091

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Fair Value Of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Of Financial Instruments [Abstract]

Summary Of Financial Assets And Liabilities Measured At Fair Value

	Fair Value Measurements at December 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	6,746	$	-	$	-	$	6,746
Commercial paper		-		1,000		-		1,000
Corporate debt securities		-		1,055		-		1,055
Total cash equivalents		6,746		2,055		-		8,801
Marketable securities:
Commercial paper		-		8,684		-		8,684
Debt securities issued by U.S. Government agencies		-		35,155		-		35,155
Corporate debt securities		-		44,972		-		44,972
Total marketable securities		-		88,811		-		88,811
Total financial assets	$	6,746	$	90,866	$	-	$	97,612

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents:
Money market mutual funds	$	49	$	-	$	-	$	49
Corporate debt securities		-		1,357		-		1,357
Total cash equivalents		49		1,357		-		1,406
Marketable securities:
Commercial paper		-		998		-		998
Debt securities issued by U.S. Government agencies		-		2,734		-		2,734
Municipal bonds		-		353		-		353
Corporate debt securities		-		12,785		-		12,785
Total marketable securities		-		16,870		-		16,870
Total financial assets	$	49	$	18,227	$	-	$	18,276
Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

Schedule Of Carrying Amounts And Estimated Fair Values Of Long-Term Debt

	December 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	343,710	$	298,400	$	363,169	$	370,769
8% Notes		120,393		132,028		-		-
Capital lease obligations		2,597		2,597		5,008		5,008

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings Per Share

(In thousands, except per share amounts)	2015		2014		2013
Numerator:
Net income attributable to Lumos Networks Corp.	$	10,026	$	21,528	$	17,773
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(338)		(540)		(425)
Numerator for basic and diluted earnings per common share		9,688		20,988		17,348
Denominator:
Weighted average basic shares outstanding		22,825		22,328		21,887
Less:  weighted average participating securities and nonvested performance-based restricted shares		(791)		(581)		(579)
Denominator for basic earnings per common share		22,034		21,747		21,308
Plus:  potentially dilutive stock options		275		363		368
Denominator for diluted earnings per common share		22,309		22,110		21,676
Basic earnings per share	$	0.44	$	0.97	$	0.81
Diluted earnings per share	$	0.43	$	0.95	$	0.80

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Stock Options, Restricted Stock and Stock Warrants (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments And Stock Warrant [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Year Ended December 31, 2015	Year Ended December 31, 2014	Year Ended December 31, 2013
Risk-free interest rate	1.90%	1.96%	1.34%
Expected volatility	55.93%	59.52%	44.19%
Expected dividend yield	0.00%	3.54%	4.70%
Expected term	6.3 years	6.1 years	6.6 years

Summary Of Stock Options Activity

(In thousands, except per share amounts)	Shares	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2014	2,226	$	12.49
Granted during the period	7		14.87
Exercised during the period	(27)		9.97
Forfeited during the period	(8)		14.23
Expired during the period	(16)		5.70
Stock options outstanding at December 31, 2015	2,182	$	12.57	5.6 years	$	1,575
Stock options exercisable at December 31, 2015	1,545	$	12.40	4.9 years	$	1,175
Total stock options outstanding, vested and expected to vest
at December 31, 2015	2,136	$	12.58		$	1,528

Summary Of Restricted Stock Awards Activity

(In thousands, except per share amounts)	Shares		Weighted-Average Grant Date Fair Value per Share
Restricted stock outstanding at December 31, 2014	614	$	13.26
Granted during the period	389		15.39
Vested during the period	(117)		11.17
Forfeited during the period	(25)		18.04
Restricted stock outstanding at December 31, 2015	861	$	14.37

Summary of Fair Value Assumptions, Warrants

Risk-free interest rate	1.61	%
Expected volatility	41.53	%
Expected dividend yield	0	%
Expected term	5 years

Summary of Warrant Activity

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2014	-	$	-
Granted during the period	5,500		13.99
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at December 31, 2015	5,500	$	13.99

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Schedule Of Components Of Income Tax Expense (Benefit)

(In thousands)	2015		2014		2013
Current tax expense (benefit):
Federal	$	-	$	-	$	-
State		379		(68)		516
Total current tax expense (benefit)		379		(68)		516
Deferred tax expense:
Federal		6,319		11,908		10,102
State		448		2,569		1,401
Total deferred tax expense		6,767		14,477		11,503
Total income tax expense	$	7,146	$	14,409	$	12,019

Schedule Of Effective Income Tax Rate Reconciliation

(In thousands)	2015		2014		2013
Computed tax expense at federal statutory
rate of 35%	$	6,065	$	12,620	$	10,470
Nondeductible compensation		122		27		307
Noncontrolling interests		(61)		(47)		(50)
Nondeductible public offering costs		112		-		285
State income taxes, net of federal income
tax impact		538		1,626		1,246
Nondeductible interest		578		-		-
Other, net		(208)		183		(239)
Total income tax expense	$	7,146	$	14,409	$	12,019

Schedule Of Net Deferred Tax Assets And Liabilities

(In thousands)	2015		2014
Deferred income tax assets:
Retirement benefits other than pension	$	2,167	$	2,337
Pension and related plans		4,588		4,872
Net operating loss		16,509		9,488
Accrued expenses		6,848		4,588
Other		425		725
Total deferred income tax assets		30,537		22,010
Deferred income tax liabilities:
Property and equipment		(111,846)		(97,460)
Intangibles		(7,884)		(6,813)
Total deferred income tax liabilities		(119,730)		(104,273)
Net deferred income tax liability	$	(89,193)	$	(82,263)

Reconciliation Of Change In Unrecognized Income Tax Benefits

(In thousands)	2015		2014
Balance at beginning of year	$	1,112	$	1,125
Additions for tax positions related to the current year		297		344
Increases for tax positions related to prior years		109		11
Statute of limitations expiration		(162)		(368)
Balance at end of year	$	1,356	$	1,112

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Pension Plans And Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2015

Pension Plans And Other Postretirement Benefits [Abstract]

Schedule Of Defined Benefit Plan Disclosures

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Change in benefit obligations:
Benefit obligations, beginning of period	$	70,892	$	57,209	$	64,511	$	844	$	12,800	$	12,874
Service cost		-		-		-		-		80		91
Interest cost		2,664		2,622		2,432		31		373		485
Actuarial loss (gain)		(4,550)		13,547		(7,199)		(83)		887		26
Benefits paid, net		(3,281)		(2,956)		(2,756)		(27)		(671)		(676)
Curtailment gain		-		-		-		-		(12,625)		-
Transfer		-		470		221		-		-		-
Benefit obligations, end of period		65,725		70,892		57,209		765		844		12,800
Change in plan assets:
Fair value of plan assets, beginning of period		58,403		57,847		51,675		-		-		-
Actual return on plan assets		(1,166)		3,555		8,897		-		-		-
Employer contributions		-		-		-		27		671		676
Benefits paid		(3,325)		(2,999)		(2,812)		(27)		(671)		(676)
Transfer		-		-		87		-		-		-
Fair value of plan assets, end of period		53,912		58,403		57,847		-		-		-
Funded status:
Non-current asset		-		-		(638)		-		-		-
Current liabilities		-		-		-		72		72		671
Non-current liabilities		11,813		12,489		-		693		772		12,129
Funded status recognized in the consolidated balance sheets	$	11,813	$	12,489	$	(638)	$	765	$	844	$	12,800
Amounts recognized in accumulated other comprehensive loss:
Net actuarial (loss) gain		(17,899)		(18,119)		(3,711)		18		(65)		(1,211)
Income taxes		6,981		7,066		1,444		(7)		25		471
Net amount recognized in accumulated other comprehensive loss	$	(10,918)	$	(11,053)	$	(2,267)	$	11	$	(40)	$	(740)

Schedule Of Net Periodic (Benefit) Expense

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
(In thousands)	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Components of net periodic (benefit) expense:
Service cost	$	-	$	-	$	-	$	-	$	80	$	91
Interest cost		2,664		2,622		2,432		31		373		485
Expected return on plan assets		(4,111)		(4,373)		(3,901)		-		-		-
Amortization of loss		991		-		918		-		23		28
Net periodic (benefit) expense	$	(456)	$	(1,751)	$	(551)	$	31	$	476	$	604

Schedule Of Assumptions Used

	Defined Benefit Pension Plan				Other Postretirement Benefit Plans
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Discount rate	4.20	%	3.85	%	4.20	%	3.85	%
Rate of compensation increase	N/A		N/A		N/A		N/A

The assumptions used in the measurements of the Company’s net income or expense for the consolidated statements of income for the years ended December 31, 2015,  2014 and 2013 were as follows:

	Defined Benefit Pension Plan						Other Postretirement Benefit Plans
	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013		Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013
Discount rate	3.85	%	4.70	%	3.85	%	3.85	%	4.70	%	3.85	%
Expected return on plan assets	7.25	%	7.75	%	7.75	%	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A		N/A		N/A		N/A

Schedule Of Plan Asset Allocation

(Dollars in thousands)	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Fair Value		Actual Allocation		Fair Value
Large Cap Value	23	%	$	12,193	23	%	$	13,120
Large Cap Blend	11	%		6,085	11	%		6,622
Mid Cap Blend	6	%		3,342	6	%		3,585
Small Cap Blend	4	%		2,080	4	%		2,511
Foreign Stock - Large Cap	7	%		3,817	7	%		3,969
Bond	34	%		18,239	34	%		19,806
Cash and cash equivalents	15	%		8,156	15	%		8,790
Total	100	%	$	53,912	100	%	$	58,403

The actual and target allocation for plan assets is broadly defined and measured as follows:

	December 31, 2015				December 31, 2014
Asset Category	Actual Allocation		Target Allocation		Actual Allocation		Target Allocation
Equity securities	51	%	50	%	51	%	50	%
Bond securities and cash equivalents	49	%	50	%	49	%	50	%
Total	100	%	100	%	100	%	100	%

Schedule Of Expected Future Pension Benefit Payments

(In thousands) Year	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
2016	$	3,048	$	111
2017		3,104		57
2018		3,105		57
2019		3,194		56
2020		3,237		55
2021-2025		17,210		256

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Organization (Details) $ / shares in Units, $ in Thousands					12 Months Ended
	Sep. 14, 2015 USD ($) shares	Mar. 17, 2015 USD ($) shares	Nov. 20, 2013 USD ($) $ / shares shares	Oct. 31, 2011 $ / shares	Dec. 31, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($) $ / shares	Dec. 31, 2013 USD ($)	Dec. 31, 2011 $ / shares
Organization [Abstract]
Stockholders' Equity, Reverse Stock Split				1-for-2
Stockholders' Equity Note, Stock Split, Conversion Ratio				0.5
Common stock, par value | $ / shares				$ 0.01	$ 0.01	$ 0.01		$ 0.01
Common stock sold by Quadrangle in secondary offering, shares | shares		1,600,000	2,888,939
Sale of Stock, Number of Shares Issued in Transaction | shares	591,898
Sale of Stock, Price Per Share | $ / shares			$ 20.00
Sale of Stock, Consideration Received on Transaction | $	$ 0	$ 0	$ 0
Other nonoperating costs | $					$ 300	$ 0	$ 800

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2010
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ (10,500,000)	$ (5,200,000)
New Accounting Pronouncement, ASU 2015-17 Reclassification	2,400,000	5,600,000
Book overdraft reclassified				$ 1,800,000
Cash reimbursement received from government grant	3,838,000	116,000	$ 979,000
Amortization	4,806,000	9,187,000	9,824,000
Goodwill, Gross	133,700,000	133,700,000
Goodwill, Impaired, Accumulated Impairment Loss	33,400,000	33,400,000
Goodwill, Impairment Loss	0	0
Advertising Expense	$ 700,000	1,400,000	800,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Number Of Highest ConsecutiveYears Of Compensation Subject To Certain Reductions	5 years
Maximum Retirement Age Reached To Be Subject To Reductions	65 years
Contribution vesting period	2 years
Equity-based compensation	$ 5,881,000	$ 4,340,000	$ 6,778,000
Future Charges For Equity-Based Compensation Year 1	4,000,000
Future Charges For Equity-Based Compensation Year 2	3,300,000
Future Charges For Equity-Based Compensation Year 3	1,000,000
Maximum [Member]
Future Charges For Equity-Based Compensation Year 4	100,000
Future Charges For Equity Based Compensation Year 5	$ 100,000
Broadband Services Project Due 2015 [Member]
Investment in capital project from government grant					$ 16,100,000
Broad Band Project Percentage Funded By Federal Government Grant					50.00%
Broad Band Project Amount Funded By Federal Government Grant					$ 8,000,000
Percentage Of Deposits On Grants To Pledged Accounts					100.00%
Portion of grants deposited into pledged accounts					$ 8,000,000
First Portion Match [Member]
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	100.00%
Defined Contribution Plan, Employer Matching Contribution, Percent	1.00%
Second Portion Match [Member]
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	50.00%
Defined Contribution Plan, Employer Matching Contribution, Percent	5.00%

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Summary of Significant Accounting Policies (Schedule Of Allowance For Doubtful Accounts) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Summary of Significant Accounting Policies [Abstract]
Allowance for doubtful accounts, beginning	$ 1,217	$ 1,485	$ 1,822
Charged to Expense	461	604	249
Charged to Other Accounts	96	(19)	346
Deductions	(539)	(853)	(932)
Allowance for doubtful accounts, Balance at End of Period	$ 1,235	1,217	1,485
Valuation Allowances and Reserves, Balance		$ 1,217	$ 1,485

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Summary of Significant Accounting Policies (Estimated Useful Lives) (Details)	12 Months Ended
	Dec. 31, 2015
Telephony Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Estimated Useful Lives	25
Telephony Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Estimated Useful Lives	3
Land, Buildings and Improvements [Member]
Property, Plant and Equipment, Estimated Useful Lives	50
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment, Estimated Useful Lives	24
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment, Estimated Useful Lives	2

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Summary of Significant Accounting Policies (Finite-Lived Intangibles Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross amount	$ 105,970	$ 105,970
Accumulated Amortization	(94,892)	(90,086)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	103,108	103,108
Accumulated Amortization	(93,051)	(88,406)
Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	2,862	2,862
Accumulated Amortization	$ (1,841)	$ (1,680)
Minimum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	6 years
Minimum [Member] | Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	10 years
Maximum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	15 years
Maximum [Member] | Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	15 years

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Summary of Significant Accounting Policies (Schedule Of Future Amortization Expense) (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Finite-Lived Intangible Assets [Line Items]
2016	$ 2,575
2017	2,256
2018	1,944
2019	1,665
2020	1,194
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
2016	2,412
2017	2,093
2018	1,781
2019	1,513
2020	1,146
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
2016	163
2017	163
2018	163
2019	152
2020	$ 48

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Summary of Significant Accounting Policies (Schedule Of Changes In Asset Retirement Obligations) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Summary of Significant Accounting Policies [Abstract]
Asset retirement obligations, beginning	$ 1,500	$ 1,401
Additional asset retirement obligations recorded, net of adjustments in estimates	81	(19)
Accretion of asset retirement obligations	139	118	$ 104
Asset retirement obligations, ending	$ 1,720	$ 1,500	$ 1,401

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Summary of Significant Accounting Policies (Schedule Of Goodwill Attributed To Segments) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Goodwill [Line Items]
Total goodwill	$ 100,297	$ 100,297
Data [Member]
Goodwill [Line Items]
Total goodwill	90,561
R&SB [Member]
Goodwill [Line Items]
Total goodwill	$ 9,736

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Cash Equivalents And Marketable Securities (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Total proceeds from the sale or maturity of available-for-sale marketable securities	$ 42,200,000	$ 40,679,000
Net realized gains or losses on available-for-sale securities		0
Maximum [Member]
Net unrealized holding gains on available-for-sale securities	$ 100,000	$ 100,000

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Cash Equivalents And Marketable Securities (Schedule Of Cash Equivalents And Available-For-Sale Securities Reported At Fair Value) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	$ 8,801	$ 1,406
Total marketable securities, available-for-sale	88,811	16,870
Total cash equivalents and marketable securities	97,612	18,276
Money Market Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	6,746	49
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	1,055	1,357
Commercial Paper ST [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	1,000
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	8,684	998
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale		353
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	44,972	12,785
Debt Securities issued by U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	$ 35,155	$ 2,734

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Cash Equivalents And Marketable Securities (Schedule Of Contractual Maturities Of Available-For-Sale Debt Securities) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Cash Equivalents And Marketable Securities [Abstract]
Due in one year or less	$ 88,561
Due after one year through two years	250
Total debt securities	$ 88,811	$ 16,870

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Disclosures About Segments of an Enterprise and Related Information (Narrative) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
AT&T [Member]
Segment Reporting Information [Line Items]
Percentage to total revenue	8.00%	10.00%	8.00%
Verizon [Member]
Segment Reporting Information [Line Items]
Percentage to total revenue	8.00%	8.00%	10.00%

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Disclosures About Segments of an Enterprise and Related Information (Summarized Financial Information Of Reportable Segments) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Operating Revenues		$ 204,269	$ 201,456	$ 207,475
Network access costs		39,310	40,868	42,417
Network operating and selling costs		47,370	44,033	44,335
Other general and administrative expenses		32,817	20,749	32,414
Adjusted EBITDA	[1]	92,003	100,638	96,324
Capital expenditures		115,675	84,100	68,334
Data [Member]
Segment Reporting Information [Line Items]
Operating Revenues		114,311	106,642	104,112
Network access costs		16,728	15,990	15,801
Network operating and selling costs		31,477	24,833	22,616
Other general and administrative expenses		14,631	14,094	12,191
Adjusted EBITDA	[1]	51,475	51,725	53,504
Capital expenditures		98,535	66,570	48,085
R&SB [Member]
Segment Reporting Information [Line Items]
Operating Revenues		67,214	72,028	80,659
Network access costs		22,582	24,878	26,616
Network operating and selling costs		14,835	17,656	19,869
Other general and administrative expenses		8,242	9,594	9,515
Adjusted EBITDA	[1]	21,555	19,900	24,659
Capital expenditures		9,545	7,089	6,693
RLEC Access [Member]
Segment Reporting Information [Line Items]
Operating Revenues		22,744	22,786	22,704
Network operating and selling costs		1,058	1,544	1,850
Other general and administrative expenses		2,713	3,003	2,693
Adjusted EBITDA	[1]	18,973	18,239	18,161
Capital expenditures				1,634
Corporate (Unallocated) [Member]
Segment Reporting Information [Line Items]
Other general and administrative expenses		7,231	(5,942)	8,015
Adjusted EBITDA	[1]		10,774
Capital expenditures		$ 7,595	$ 10,441	$ 11,922

[1] The Company's CODMs evaluate performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional disclosures, including the Company's reasons for using this non-GAAP financial measure.

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Disclosures About Segments of an Enterprise and Related Information (Reconciliation Of Net Income To Adjusted EBITDA) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosures About Segments Of An Enterprise And Related Information [Abstract]
Net Income Attributable to Lumos Networks Corp.		$ 10,026	$ 21,528	$ 17,773
Net Income Attributable to Noncontrolling Interests		157	120	121
Net Income		10,183	21,648	17,894
Income Tax Expense		7,146	14,409	12,019
Interest expense		19,918	15,575	14,191
(Gain) loss on interest rate swap derivatives		(665)	(492)	144
Other (income) expenses, net		(114)	(664)	1,587
Operating Income	[1]	36,468	50,476	45,835
Depreciation and amortization and accretion of asset retirement obligations		47,666	45,330	42,424
Amortization of actuarial losses		1,350	248	1,237
Equity-based compensation		5,881	4,340	6,778
Restructuring charges		638		50
Employee separation charges	[1]		244
Adjusted EBITDA	[2]	$ 92,003	$ 100,638	$ 96,324

[1] Employee separation charges in 2014 include employee separation benefits which were provided for in the separation agreements of an executive officer who left the Company. These charges are included in selling, general and administrative expense on the consolidated statements of income

[2] The Company's CODMs evaluate performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges and gain (loss) on interest rate swap derivatives. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional disclosures, including the Company's reasons for using this non-GAAP financial measure.

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Long-Term Debt (Narrative) (Details)				12 Months Ended
	Aug. 06, 2015 USD ($) shares	Jan. 02, 2015 USD ($)	Apr. 30, 2013 USD ($)	Dec. 31, 2015 USD ($) item shares	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit borrowing capacity			$ 425,000,000
Amount outstanding retired			311,000,000
Principal payments on senior secured term loans				$ 47,960,000	$ 5,250,000	$ 308,876,000
Line of credit, interest coverage ratio, minimum | item				3.25
Line Of Credit Percentage Of Excess Cash Flow Equal To Excess Cash Flow Sweep Included In Mandatory Prepayments				50.00%
Line of credit, leverage ratio | item				3.78
Line of credit, interest coverage ratio | item				6.70
Fixed interest rate						0.80%	0.50%
Gain (loss) on interest rate swap derivatives				$ 665,000	492,000	$ (144,000)
Payment of financing costs				$ 8,192,000		4,872,000
Granted during the period, shares | shares	5,500,000			5,500,000
Debt Instrument, Unamortized Discount	$ 24,800,000
Proceeds from Issuance of Warrants	23,500,000
Portion of Debt Discount offset from proceeds allocated to debt	1,300,000
Amortization of debt issuance costs				$ 2,700,000	1,500,000	1,300,000
Write off of unamortized debt issuance costs						890,000
Patronage refunds percentage, cash				75.00%
Patronage refunds percentage, equity				25.00%
Patronage credits				$ 1,200,000	$ 700,000	$ 1,300,000
Line of credit, percentage of excess cash flow equal to excess cash flow sweep included in mandatory prepayments				50.00%
Line of credit, leverage ratio, minimum for mandatory prepayments to include excess cash flow sweep | item				3.25
Future minimum lease payments				$ 2,600,000
Future minimum lease payments, 2016				2,400,000
Future minimum lease payments, 2017				100,000
Future minimum lease payments, 2018				$ 100,000
January 1, 2015 Through December 31, 2015 [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item				5.00
January 1, 2016 Through December 31, 2016
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item				4.75
January 1, 2017 Through December 31, 2017
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item				4.50
January 1, 2018 Through December 31, 2018
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item				4.25
After December 31, 2018
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item				4.00
Vehicles [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Capital leases				$ 2,700,000
Accumulated amortization				1,400,000
Software Licenses [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Capital leases				5,900,000
Accumulated amortization				$ 3,000,000
Senior Secured Five Year Amortizing Term Loan [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity			100,000,000
Senior Secured Six Year Amortizing Term Loan [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity			275,000,000
Revolver [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity			$ 50,000,000
Term of loan				5 years
Line of Credit Facility, Amount Outstanding				$ 0
Amount outstanding, credit facility				$ 0
Basis spread on variable rate				3.00%
Term Loan A [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of loan				5 years
Basis spread on variable rate				3.00%
Term Loan A [Member] | September 30, 2014 Through December 31, 2016 [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Quarterly payments per annum				1.25%
Term Loan A [Member] | After December 31, 2016 [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Quarterly payments per annum				2.50%
Term Loan B [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of loan				6 years
Basis spread on variable rate				3.25%
Term Loan B [Member] | Beginning On September 30, 2013 [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Quarterly payments per annum				1.00%
Term Loan A, B And C [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Principal payments on senior secured term loans	40,000,000
Debt Instrument, Interest Rate, Effective Percentage				3.96%
Maturities of long-term debt, 2016				$ 8,000,000
Maturities of long-term debt, 2017				13,000,000
Maturities of long-term debt, 2018				70,800,000
Maturities of long-term debt, 2019				$ 256,500,000
Term Loan C [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity		$ 28,000,000
Basis spread on variable rate				3.25%
Debt issuance costs		$ 900,000
Term Loan C [Member] | Beginning on June 30, 2015
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Quarterly payments per annum				1.00%
Unsecured Debt [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Debt Instrument, Interest Rate, Effective Percentage				12.55%
Debt Instrument, Face Amount	150,000,000
Payment of financing costs	7,100,000
Debt Instrument, Interest Rate, Stated Percentage				8.00%
Debt discount, amount offset from proceeds	1,500,000
Debt issuance costs	$ 6,000,000
Maturities of long-term debt, thereafter				$ 150,000,000
Minimum [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of capital leases				4 years
Maximum [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of capital leases				5 years

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Less: current portion of long term debt	$ 10,400	$ 10,227
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	456,300	357,950
Long-term Debt [Member]
Credit facility	348,415	368,375
8% Notes	150,000
Capital lease obligations	2,597	5,008
Long-term debt	501,012	373,383
Less: current portion of long term debt	10,400	10,227
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	490,612	363,156
Unamortized Discount and Debt Issuance Costs [Member]
Credit facility	4,705	5,206
8% Notes	29,607
Long-term debt	34,312	5,206
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	$ 34,312	$ 5,206

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Supplementary Disclosures Of Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Supplementary Disclosures Of Cash Flow Information [Abstract]
Interest (net of amounts capitalized)	$ 12,467	$ 13,206	$ 13,278
Income taxes	843	(680)	970
Additions to property, plant and equipment included in accounts payable and other accrued liabilities	6,906	8,373	6,145
Obligations incurred under capital leases		123	6,544
Dividends declared on common stock not paid		3,152	3,091
Cash received from patronage credits	800	900	700
Interest capitalized	$ 1,200	$ 300	$ 200

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Fair Value Of Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost Method Investments	$ 1,180	$ 914
CoBank [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments for which it is not practicable to estimate fair value	$ 1,100	$ 800

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Fair Value Of Financial Instruments (Summary Of Financial Assets And Liabilities Measured At Fair Value) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	$ 8,801	$ 1,406
Total marketable securities	88,811	16,870
Total financial assets	97,612	18,276
Total financial liabilities		665
Interest Rate Swap Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial liabilities		665
Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,746	49
Commercial Paper ST [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,000
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	8,684	998
Debt Securities issued by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	35,155	2,734
Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities		353
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,055	1,357
Total marketable securities	44,972	12,785
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,746	49
Total financial assets	6,746	49
Level 1 [Member] | Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,746	49
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	2,055	1,357
Total marketable securities	88,811	16,870
Total financial assets	90,866	18,227
Total financial liabilities		665
Level 2 [Member] | Interest Rate Swap Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial liabilities		665
Level 2 [Member] | Commercial Paper ST [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,000
Level 2 [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	8,684	998
Level 2 [Member] | Debt Securities issued by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	35,155	2,734
Level 2 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities		353
Level 2 [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,055	1,357
Total marketable securities	$ 44,972	$ 12,785

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Fair Value Of Financial Instruments (Schedule Of Carrying Amounts And Estimated Fair Values Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit facility	$ 343,710	$ 363,169
8% Notes	120,393
Capital lease obligations	2,597	5,008
Fair Value (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit facility	298,400	370,769
8% Notes	132,028
Capital lease obligations	$ 2,597	$ 5,008

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Earnings Per Share (Narrative) (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share	740,214	598,463	310,933
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share	24,000	17,383	20,100
Warrants and Rights Subject to Mandatory Redemption [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share	5,500,000

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Earnings Per Share (Schedule Of Computation Of Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Net income attributable to Lumos Networks Corp.	$ 10,026	$ 21,528	$ 17,773
Less: net income attributable to Lumos Networks Corp. allocable to participating securities	(338)	(540)	(425)
Numerator for basic and diluted earnings per common share	$ 9,688	$ 20,988	$ 17,348
Weighted average basic shares outstanding	22,825	22,328	21,887
Less: weighted average participating securities and nonvested performance-based restricted shares	(791)	(581)	(579)
Denominator for basic earnings per common share	22,034	21,747	21,308
Plus: potentially dilutive stock options	275	363	368
Denominator for diluted earnings per common share	22,309	22,110	21,676
Basic earnings per share	$ 0.44	$ 0.97	$ 0.81
Diluted earnings per share	$ 0.43	$ 0.95	$ 0.80

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Stock Options, Restricted Stock and Stock Warrants (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Aug. 06, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued		7,000
Number of shares issued during the period		389,000
Vesting schedule		5 years
Recognized compensation expense on the vesting date				$ 1.8
Stock options to be granted, minimum exercise price as a percentage of grant date fair value		100.00%
Stock options grants, maximum life, in years		10 years
Weighted-average grant date fair value per share of stock options granted		$ 8.09	$ 6.68	$ 3.33
Total intrinsic value of stock options exercised		$ 0.1	$ 0.3	$ 0.9
Total fair value of options vested		1.3	0.5	2.3
Unrecognized compensation cost		$ 1.7
Unrecognized compensation cost recognition period, in years		2 years 6 months
Shares available for employee stock purchase plan		100,000
Remaining shares available for employee stock purchase plan		67,783
Shares price percentage		85.00%
Shares issued under the employee stock purchase plan		5,787
Warrants issued, shares	5,500,000	5,500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 13.99
Proceeds from Issuance of Warrants	$ 23.5
GrantDateFairValueofWarrants	$ 4.44
Portion of Debt Discount offset from proceeds allocated to debt	$ 1.3
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock plan vesting description		Options issued to employees with service-only conditions generally vest on a graded vesting schedule over a four to five year period. Options generally cliff vest on the first anniversary of the grant date for non-employee directors.
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock plan vesting description		Restricted shares generally cliff vest on the third anniversary of the grant date for employees and generally cliff vest on the first anniversary of the grant date for non-employee directors. Some restricted stock awards vest on a graded vesting schedule over a five year period.
Vesting schedule		5 years
Total fair value of options vested		$ 1.7	1.7	4.6
Unrecognized compensation cost		$ 6.0
Unrecognized compensation cost recognition period, in years		2 years
Equity And Cash Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of common stock available for awards		5,500,000
Securities remained available for issuance		1,182,061
Number of stock options issued		6,680
Equity And Cash Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issued during the period		388,984
Unsecured Debt [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Debt instrument, interest rate, stated percentage		8.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for options issued to employees with service-only conditions		4 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for options issued to employees with service-only conditions		5 years
Compensation expense associated with employee stock purchase plan		$ 0.1	$ 0.1	$ 0.1

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Stock Options, Restricted Stock and Stock Warrants (Schedule Of Valuation Assumptions) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock Plans [Abstract]
Risk-free interest rate	1.90%	1.96%	1.34%
Expected volatility	55.93%	59.52%	44.19%
Expected dividend yield	0.00%	3.54%	4.70%
Expected term	6 years 3 months 20 days	6 years 1 month 6 days	6 years 7 months 6 days

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Stock Options, Restricted Stock and Stock Warrants (Summary Of Stock Options Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares shares
Stock Plans [Abstract]
Stock options outstanding at December 31, 2014, Shares | shares	2,226
Stock options outstanding at December 31, 2014, Weighted-Average Exercise Price per Share | $ / shares	$ 12.49
Granted during the period, Shares | shares	7
Granted during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 14.87
Exercised during the period, Shares | shares	(27)
Exercised during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 9.97
Forfeited during the period, Shares | shares	(8)
Forfeited during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 14.23
Expired during the period, Shares | shares	(16)
Expired during the period, Weighted Average Exercise Price per Share | $ / shares	$ 5.70
Stock options outstanding at December 31, 2015, Shares | shares	2,182
Stock options outstanding at December 31, 2015, Weighted-Average Exercise Price per Share | $ / shares	$ 12.57
Stock options outstanding at December 31, 2015, Weighted-Average Remaining Contractual Term, in years	5 years 7 months 9 days
Stock options outstanding at December 31, 2015, Aggregate Intrinsic Value | $	$ 1,575
Stock options exercisable at December 31, 2015, Shares | shares	1,545
Stock options exercisable at December 31, 2015, Weighted-Average Exercise Price per Share | $ / shares	$ 12.40
Stock options exercisable at December 31, 2015, Weighted-Average Remaining Contractual Term, in years	4 years 10 months 29 days
Stock options exercisable at December 31, 2015, Aggregate Intrinsic Value | $	$ 1,175
Total stock options outstanding, vested and expected to vest at December 31, 2015, Shares | shares	2,136
Total stock options outstanding, vested and expected to vest at December 31, 2015, Weighted-Average Exercise Price per Share | $ / shares	$ 12.58
Total stock options outstanding, vested and expected to vest at December 31, 2015, Aggregate Intrinsic Value | $	$ 1,528

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Stock Options, Restricted Stock and Stock Warrants (Summary Of Restricted Stock Awards Activity) (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Stock Plans [Abstract]
Restricted stock outstanding at December 31, 2014, Shares | shares	614
Stock outstanding at December 31, 2014, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 13.26
Granted during the period, Shares | shares	389
Granted during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 15.39
Vested during the period, Shares | shares	(117)
Vested during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 11.17
Forfeited during the period, Shares | shares	(25)
Forfeited during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 18.04
Restricted stock outstanding at December 31, 2015, Shares | shares	861
Stock outstanding at December 31, 2015, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 14.37

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Stock Options, Restricted Stock and Stock Warrants (Grant Date Fair Value of Warrants estimated using Black-Scholes Option Pricing Model and Assumptions) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.90%	1.96%	1.34%
Expected volatility	55.93%	59.52%	44.19%
Expected dividend yield	0.00%	3.54%	4.70%
Expected term	6 years 3 months 20 days	6 years 1 month 6 days	6 years 7 months 6 days
Stock Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.61%
Expected volatility	41.53%
Expected dividend yield	0.00%
Expected term	5 years

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Stock Options, Restricted Stock and Stock Warrants (Summary of Stock Warrant Activity) (Details) - $ / shares		12 Months Ended
	Aug. 06, 2015	Dec. 31, 2015
Granted during the period, shares	5,500,000	5,500,000
Granted during the period, weighted average exercise price		$ 13.99
Stock Warrants [Member]
Stock warrants outstanding at December 31, 2015, Shares		5,500,000
Stock warrants outstanding at December 31, 2015, weighted average exercise price		$ 13.99

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Tax [Line Items]
Adjustments to excess tax benefit from stock-based compensation	$ 165	$ (1,488)	$ 1,060
Tax expense (benefit) for adjustments to pension and postretirement benefit plans in other comprehensive income	400	$ (5,400)	$ 5,500
Federal [Member]
Income Tax [Line Items]
Net operating losses	$ 48,000
Minimum [Member]
Income Tax [Line Items]
NOL expiration range	2022
Maximum [Member]
Income Tax [Line Items]
NOL expiration range	2035

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Income Taxes (Schedule Of Components Of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Abstract]
Federal
State	$ 379	$ (68)	$ 516
Total current tax expense (benefit)	379	(68)	516
Deferred tax expense, Federal	6,319	11,908	10,102
Deferred tax expense, State	448	2,569	1,401
Total deferred tax expense	6,767	14,477	11,503
Total income tax expense	$ 7,146	$ 14,409	$ 12,019

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Income Taxes (Schedule Of Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Abstract]
Computed tax expense at statutory federal rate of 35%	$ 6,065	$ 12,620	$ 10,470
Nondeductible compensation	122	27	307
Noncontrolling interests	(61)	(47)	(50)
Nondeductible public offering costs	112		285
State income taxes, net of federal income tax impact	538	1,626	1,246
Nondeductible AHYDO Interest	578
Other, net	(208)	183	(239)
Total income tax expense	$ 7,146	$ 14,409	$ 12,019
Statutory federal rate	35.00%	35.00%	35.00%

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Income Taxes (Schedule Of Net Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Abstract]
Retirement benefits other than pension	$ 2,167	$ 2,337
Pension and related plans	4,588	4,872
Net operating loss	16,509	9,488
Accrued expenses	6,848	4,588
Other	425	725
Total deferred income tax assets	30,537	22,010
Property and equipment	(111,846)	(97,460)
Intangibles	(7,884)	(6,813)
Total deferred income tax liabilities	(119,730)	(104,273)
Net non-current deferred income tax liability	(89,193)	(82,263)
Net deferred income tax liability	$ (89,193)	$ (82,263)

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Income Taxes (Reconciliation Of Change In Unrecognized Income Tax Benefits) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Abstract]
Balance at beginning of year	$ 1,112	$ 1,125
Additions for tax positions related to the current year	297	344
Increases for tax positions related to prior years	109	11
Statute of limitations expiration	(162)	(368)
Balance at end of year	$ 1,356	$ 1,112

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Pension Plans And Other Postretirement Benefits (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Total expense (income) recognized for all pension and OPEBs plans	$ (314,000)	$ (1,628,000)	$ (330,000)
Further benefits that will be accrued by plan participants	0
Curtailment gain recognized in net income		10,774,000
Expense recognized from previously unrecognized loss	(824,000)	(151,000)	(756,000)
Income tax from unrecognized actuarial loss	600,000
Company matching contribution for a defined contribution plan	1,100,000	1,000,000	900,000
Qualified And Non-Qualified Pension And OPEBs Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Total expense (income) recognized for all pension and OPEBs plans	(1,300,000)	$ (1,100,000)	(700,000)
Expense recognized from previously unrecognized loss	$ 1,000,000		1,000,000
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.20%	3.85%
Expected net periodic (benefit) expense	$ 200,000
Benefit obligation	65,725,000	$ 70,892,000	57,209,000	$ 64,511,000
Income tax from unrecognized actuarial loss	(6,981,000)	$ (7,066,000)	(1,444,000)
Expected future benefit payments, 2016	3,048,000
Expected future benefit payments, 2017	3,104,000
Expected future benefit payments, 2018	3,105,000
Expected future benefit payments, 2019	3,194,000
Expected future benefit payments, 2020	3,237,000
Expected future benefit payments, 2021-2025	$ 17,210,000
Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.20%	3.85%
Benefit obligation	$ 765,000	$ 844,000	12,800,000	$ 12,874,000
Income tax from unrecognized actuarial loss	7,000	(25,000)	(471,000)
Expected future benefit payments, 2016	111,000
Expected future benefit payments, 2017	57,000
Expected future benefit payments, 2018	57,000
Expected future benefit payments, 2019	56,000
Expected future benefit payments, 2020	55,000
Expected future benefit payments, 2021-2025	256,000
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Further benefits that will be accrued by plan participants	0
Benefit obligation	4,600,000	4,900,000	4,300,000
Expense recognized from previously unrecognized loss	400,000	200,000	300,000
Amount of unrecognized actuarial losses recorded in AOCI	1,000,000	1,400,000
Income tax from unrecognized actuarial loss		900,000
Expected future benefit payments, 2016	200,000
Expected future benefit payments, 2017	200,000
Expected future benefit payments, 2018	200,000
Expected future benefit payments, 2019	200,000
Expected future benefit payments, 2020	200,000
Expected future benefit payments, 2021-2025	1,400,000
Other Nonqualified Defined Benefit Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Benefit obligation	0		$ 400,000
Maximum [Member] | Qualified And Non-Qualified Pension And OPEBs Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Expense recognized from previously unrecognized loss		$ 100,000
Maximum [Member] | Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected net periodic (benefit) expense	$ 100,000

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Pension Plans And Other Postretirement Benefits (Schedule Of Defined Benefit Plan Disclosures) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Change in plan assets:
Fair value of plan assets, beginning of period	$ 58,403
Fair value of plan assets, end of period	53,912	$ 58,403
Funded status:
Non-current liabilities	17,029	18,257
Amounts recognized in accumulated other comprehensive loss:
Income taxes	(600)
Defined Benefit Pension Plan [Member]
Change in benefit obligations:
Benefit obligations, beginning of period	70,892	57,209	$ 64,511
Interest cost	2,664	2,622	2,432
Actuarial loss (gain)	(4,550)	13,547	(7,199)
Benefits paid, net	$ (3,281)	$ (2,956)	$ (2,756)
Curtailment gain
Transfer		$ 470	$ 221
Benefit obligations, end of period	$ 65,725	70,892	57,209
Change in plan assets:
Fair value of plan assets, beginning of period	58,403	57,847	51,675
Actual return on plan assets	(1,166)	3,555	8,897
Benefits paid	(3,325)	(2,999)	(2,812)
Transfer			87
Fair value of plan assets, end of period	$ 53,912	$ 58,403	57,847
Funded status:
Non-current asset			$ (638)
Current liabilities
Non-current liabilities	$ 11,813	$ 12,489
Funded status recognized in the consolidated balance sheets	11,813	12,489	$ (638)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	(17,899)	(18,119)	(3,711)
Income taxes	6,981	7,066	1,444
Net amount recognized in accumulated other comprehensive loss	(10,918)	(11,053)	(2,267)
Other Postretirement Benefit Plans [Member]
Change in benefit obligations:
Benefit obligations, beginning of period	844	12,800	12,874
Service cost		80	91
Interest cost	31	373	485
Actuarial loss (gain)	(83)	887	26
Benefits paid, net	$ (27)	(671)	$ (676)
Curtailment gain		$ (12,625)
Transfer
Benefit obligations, end of period	$ 765	$ 844	$ 12,800
Change in plan assets:
Employer contributions	27	671	676
Benefits paid	(27)	(671)	(676)
Funded status:
Current liabilities	72	72	671
Non-current liabilities	693	772	12,129
Funded status recognized in the consolidated balance sheets	765	844	12,800
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	18	(65)	(1,211)
Income taxes	(7)	25	471
Net amount recognized in accumulated other comprehensive loss	$ 11	$ (40)	$ (740)

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Pension Plans And Other Postretirement Benefits (Schedule Of Net Periodic (Benefit) Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 2,664	$ 2,622	$ 2,432
Expected return on plan assets	(4,111)	(4,373)	(3,901)
Amortization of loss	991		918
Net periodic benefit income	(456)	(1,751)	(551)
Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost		80	91
Interest cost	31	373	485
Amortization of loss		23	28
Net periodic benefit income	$ 31	$ 476	$ 604

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Pension Plans And Other Postretirement Benefits (Schedule Of Assumptions Used) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.20%	3.85%
Discount rate	3.85%	4.70%	3.85%
Expected return on plan assets	7.25%	7.75%	7.75%
Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.20%	3.85%
Discount rate	3.85%	4.70%	3.85%

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Pension Plans And Other Postretirement Benefits (Schedule Of Plan Asset Allocation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	100.00%	100.00%
Fair Value	$ 53,912	$ 58,403
Target Allocation	100.00%	100.00%
Large Cap Value [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	23.00%	23.00%
Fair Value	$ 12,193	$ 13,120
Large Cap Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	11.00%	11.00%
Fair Value	$ 6,085	$ 6,622
Mid Cap Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	6.00%	6.00%
Fair Value	$ 3,342	$ 3,585
Small Cap Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	4.00%	4.00%
Fair Value	$ 2,080	$ 2,511
Foreign Stock - Large Cap [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	7.00%	7.00%
Fair Value	$ 3,817	$ 3,969
Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	34.00%	34.00%
Fair Value	$ 18,239	$ 19,806
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	15.00%	15.00%
Fair Value	$ 8,156	$ 8,790
Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	51.00%	51.00%
Target Allocation	50.00%	50.00%
Bond Securities And Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Actual Allocation	49.00%	49.00%
Target Allocation	50.00%	50.00%

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Pension Plans And Other Postretirement Benefits (Schedule Of Expected Future Pension Benefit Payments) (Details) $ in Thousands	Dec. 31, 2015 USD ($)
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
2015	$ 3,048
2016	3,104
2017	3,105
2018	3,194
2019	3,237
2020-2024	17,210
Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
2015	111
2016	57
2017	57
2018	56
2019	55
2020-2024	$ 256

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Related Party Transactions (Details) - ValleyNet[Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Due from Related Party	$ 400	$ 400
Related Party Transaction, Other Revenues from Transactions with Related Party	4,700	5,000	$ 4,700
Related Party Transaction, Expenses from Transactions with Related Party	$ 1,200	$ 900	$ 900

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Commitments And Contingencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Commitments And Contingencies [Abstract]
Rental expense for operating leases	$ 2.7	$ 2.4	$ 2.9
Amount committed under lease agreements, 2016	1.5
Amount committed under lease agreements, 2017	1.3
Amount committed under lease agreements, 2018	1.2
Amount committed under lease agreements, 2019	0.9
Amount committed under lease agreements, 2020	0.3
Amount committed under lease agreements, thereafter	0.8
Purchase commitments relating to capital expenditures	$ 6.9