UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2012 (April 26, 2012)
Lumos Networks Corp.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-35180 | 80-0697274 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
One Lumos Plaza, P.O. Box 1068, Waynesboro, Virginia 22980
(Address of Principal Executive Offices) (Zip Code)
(540) 946-3500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On April 27, 2012, Lumos Networks Corp. (the “Company”) announced the appointment of Timothy G. Biltz, age 53, as the Company’s President and Chief Executive Officer, effective April 26, 2012. Mr. Biltz will replace James A. Hyde who has been serving as the Company’s interim Chief Executive Officer following the Company’s separation from NTELOS Holdings Corp. in October 2011. Mr. Biltz will become a member of the Company’s Board of Directors and Mr. Hyde will remain in his position as a member of the Company’s Board of Directors.
Prior to joining the Company, Mr. Biltz served as Chairman of the Board of Directors of iPCS, Inc. from November 2006 through December 2009. From 1999 to 2005, Mr. Biltz was the Chief Operating Officer of SpectraSite, Inc., a publicly-traded wireless and broadcast signal tower company. SpectraSite filed a Voluntary Petition under Chapter 11 of the United States Bankruptcy Code in November 2003 and emerged from bankruptcy in February 2004. From 1989 to 1999, Mr. Biltz was employed by Vanguard Cellular Systems, Inc. in a number of posts of increasing responsibility, ultimately serving as the Executive Vice President and Chief Operating Officer. Mr. Biltz also serves on the Board of Directors of Cleveland Unlimited Inc., a prepaid wireless provider, and NTELOS Holdings Corp., a digital wireless communications service provider.
In connection with his appointment as President and Chief Executive Officer, the Company has entered into an employment agreement with Mr. Biltz, dated April 26, 2012. The employment agreement has a term of four years and automatically extends from year to year thereafter, unless notice of termination is previously provided. The employment agreement provides for an annual base salary of $425,000 per year and a target incentive payment under the team incentive plan of 100% of Mr. Biltz’s base salary, which will be paid if the bonus criteria, as set by the Board of Directors, for the applicable period are met. Mr. Biltz will also receive a one-time signing bonus of $255,000 and his 2012 annual team incentive plan bonus, if any, will be offset by such amount. The employment agreement also provides that the Company will make Mr. Biltz three “initial equity” grants effective upon his appointment as President and Chief Executive Officer of (i) 250,000 performance vesting stock options, of which 50% vest upon the Company’s stock price reaching $17.50 and closing at or above that level for 20 days in a 30 day period and 50% vest upon the Company’s stock price reaching $22.50 and closing at or above that level for 20 days in a 30 day period, (ii) 165,000 shares of restricted stock, which vest in four annual installments beginning on December 31, 2012 and ending on December 31, 2015, with 33 1/3% vesting on each of the two initial vesting dates and 16 1/6% vesting on the subsequent vesting dates and (iii) 250,000 stock options, which vest in two 25% annual installments on each of December 31, 2012 and December 31, 2013, and thereafter vest on a quarterly basis until December 31, 2015. Each of the stock options have a ten-year term. The grant of the restricted stock, which is outside of the Company’s 2011 Equity and Cash Incentive Plan, was made in accordance with NASDAQ Listing Rule 5635(c)(4). The grant of the restricted stock was approved by the Compensation Committee of the Board of Directors as an inducement to Mr. Biltz entering into employment with the Company.
If Mr. Biltz is terminated by the Company for any reason other than for “cause” or Mr. Biltz terminates his employment for “good reason” (as such terms are defined in the employment agreement), Mr. Biltz will receive an amount equal to 50% of his base salary per year for two years payable in monthly installments, plus an amount equal to two times his target incentive payment.
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The employment agreement restricts Mr. Biltz from competing, directly or indirectly, with the Company or soliciting certain Company employees and officers or Company affiliates during the term of the employment and for a period of 24 months thereafter. During this non-competition period, Mr. Biltz will receive an amount equal to 50% of his base salary payable in at-least monthly installments. The employment agreement also provides Mr. Biltz with certain protections upon a change of control and provides for additional severance arrangements upon the occurrence of certain events.
On April 27, 2012, the Company also announced that Michael B. Moneymaker is retiring from his position as President of the Company and as a member of the Board of Directors, each effective as of April 26, 2012. In connection with his retirement, the Company has entered into an agreement with Mr. Moneymaker. The agreement provides that Mr. Moneymaker will receive certain benefits upon his retirement, including the following: (i) payments in an amount equal to 50% of his base salary payable in at-least monthly installments for a period of 24 months; (ii) a lump sum payment, determined on a net present value basis, equal to two times his target incentive payment (100% of his base salary) under the Company’s team incentive plan; (iii) a lump sum payment equal to one-third of his base salary; (iv) continued participation in the Company’s employee welfare benefit plans (including life insurance); and (v) an additional year of credit for purposes of determining his benefits under the Company’s retirement plan and supplemental retirement plan. The agreement restricts Mr. Moneymaker from competing, directly or indirectly, with the Company or soliciting certain Company employees and officers or Company affiliates for a period of 24 months. During this non-competition period, Mr. Moneymaker will also receive an amount equal to 50% of his base salary payable in at-least monthly installments.
A copy of the press release announcing the executive changes is attached hereto as 99.1 and is incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | Press Release, dated April 27, 2012 | |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 1, 2012
| LUMOS NETWORKS CORP. | ||
| By: | /s/ Harold L. Covert | |
| Harold L. Covert | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
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EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release, dated April 27, 2012 | |
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Exhibit 99.1
| Contact: | Harold Covert | |||
| Chief Financial Officer | ||||
| Phone: | 540-946-8174 (office) | |||
| 404-858-6752 (cell) | ||||
| Email: coverth@lumosnet.com | ||||
Lumos Networks Corp. Announces Appointment of
Timothy G. Biltz as Chief Executive Officer
Declares Cash Dividend of $0.14 per Share
WAYNESBORO, VA – April 27, 2012 – Lumos Networks Corp. (“Lumos Networks”) (Nasdaq: LMOS), a fiber-based service provider of voice, data and IP-based telecommunication services in the Mid-Atlantic region, today announced that Timothy G. Biltz has been appointed as the Company’s Chief Executive Officer, effective April 26, 2012. Mr. Biltz will replace James A. Hyde who has been serving as the interim Chief Executive Officer following the separation from NTELOS Holdings Corp. in October 2011. Mr. Hyde will remain in his position as a member of the Lumos Networks Board of Directors.
Mr. Biltz served as Chairman of the Board of Directors of iPCS, Inc. from November 2006 through December 2009. From 1999 to 2005, Mr. Biltz was the Chief Operating Officer of SpectraSite, Inc., a publicly-traded wireless and broadcast signal tower company. From 1989 to 1999, Mr. Biltz was employed by Vanguard Cellular Systems, Inc. in a number of posts of increasing responsibility, ultimately serving as the Executive Vice President and Chief Operating Officer.
Lumos Networks also announced that Michael B. Moneymaker is retiring from his position as President of Lumos Networks and as a member of the Board of Directors. Mr. Hyde commented, “The company—and I—have greatly benefited from working with Mike and we cannot thank him enough for his years of valuable contributions to NTELOS and Lumos Networks. We truly wish him the best.”
In connection with Mr. Biltz’s appointment, Lumos Networks granted Mr. Biltz certain equity awards, including 165,000 shares of restricted stock granted in accordance with NASDAQ Listing Rule 5635(c)(4). The grant of the shares of restricted stock was approved by the Compensation Committee of the Board of Directors as an inducement to Mr. Biltz entering into employment with Lumos Networks. The restricted stock will vest in four annual installments beginning December 31, 2012 and ending December 31, 2014. The equity awards will be described in detail on a Current Report on Form 8-K that Lumos Networks will file with the Securities and Exchange Commission.
In announcing Mr. Biltz’s appointment, Robert E. Guth, Chairman of the Board of Directors, remarked, “Tim Biltz brings to Lumos Networks a long track record of success and strong leadership in the telecommunications industry. His experience, combined with Lumos Networks’ outstanding assets and team, put the Company in an excellent position to succeed.”
Mr. Biltz commented, “I am thrilled to become CEO of Lumos as it enters its next phase of development. Lumos has a talented team, an extraordinary base of unique fiber assets and a strong reputation for quality service. I look forward to working with the board and the Lumos team to leverage these assets and drive growth in revenue and cash flow.”
Dividend
On April 26, 2012, the Board of Directors of Lumos Networks declared a quarterly cash dividend on its common stock in the amount of $0.14 per share to be paid on July 12, 2012 to stockholders of record on June 14, 2012.
Earnings Call
Lumos Networks will hold its first quarter 2012 earnings conference call and webcast on Friday, May 4, 2012, at 10:00 A.M. (ET). Lumos Networks will issue a press release providing further details with respect to the earnings conference call and webcast.
About Lumos Networks
Lumos Networks is a fiber-based service provider in the Mid-Atlantic region serving carrier, business and residential customers over a dense fiber network offering data, voice and IP services. With headquarters in Waynesboro, VA, Lumos Networks serves Virginia, West Virginia and portions of Pennsylvania, Kentucky, Ohio, and Maryland over a 5,800 route-mile fiber network. Detailed information about Lumos Networks is available at www.lumosnetworks.com.
SPECIAL NOTE FROM THE COMPANY REGARDING FORWARD-LOOKING STATEMENTS
Any statements contained in this presentation 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. 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. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. 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. Important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include, but are not limited to: rapid development and intense competition in the telecommunications industry; our ability to achieve benefits from our separation from NTELOS Holdings Corp; our ability to successfully increase revenues and manage churn in the recently acquired FiberNet business; our ability to offset expected revenue declines in our RLEC business related to the recent regulatory developments and carriers grooming their networks; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; the potential to experience a high rate of customer turnover; federal and state regulatory fees, requirements and developments; our reliance on certain suppliers and vendors; and other unforeseen difficulties that may occur. These risks and uncertainties are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our SEC filings, including our Annual Reports filed on Form 10-K.