10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10‑Q

(Mark One)

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

For the quarterly period ended March 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 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 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

There were22,753,503 shares of the registrant’s common stock outstanding as of the close of business on April30, 2015.

LUMOS NETWORKS CORP.
2015 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION

Item 1.  Financial Statements.	3
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.	29
Item 4.  Controls and Procedures.	30

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.	31
Item 1A.  Risk Factors.	31
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.	31
Item 5.  Other Information.	31
Item 6.  Exhibits.	32

2

Part I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

Condensed ConsolidatedBalance Sheets

Lumos Networks Corp.

(Unaudited)

(In thousands)	March 31, 2015		December 31, 2014
Assets
Current Assets
Cash and cash equivalents	$	12,654	$	14,140
Marketable securities		29,433		16,870
Restricted cash		3,154		4,208
Accounts receivable, net of allowance of $1,321 ($1,217 in 2014)		22,409		22,925
Other receivables		1,289		2,113
Income tax receivable		221		172
Prepaid expenses and other		4,719		4,321
Deferred income taxes		8,350		5,601
Total Current Assets		82,229		70,350
Securities and Investments		1,021		914
Property, Plant and Equipment
Land and buildings		20,129		19,726
Network plant and equipment		555,885		540,108
Furniture, fixtures and other equipment		46,154		45,729
Total in service		622,168		605,563
Under construction		42,746		34,426
		664,914		639,989
Less accumulated depreciation and amortization		220,254		210,538
Total Property, Plant and Equipment, net		444,660		429,451
Other Assets
Goodwill		100,297		100,297
Other intangibles, less accumulated amortization of $92,232 ($90,086 in 2014)		13,738		15,884
Deferred charges and other assets		6,107		5,718
Total Other Assets		120,142		121,899
Total Assets	$	648,052	$	622,614

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

3

Condensed ConsolidatedBalance Sheets

Lumos Networks Corp.

(Unaudited)

(In thousands, except par value per share amounts)	March 31, 2015		December 31, 2014
Liabilities and Equity
Current Liabilities
Current portion of long-term debt	$	10,506	$	10,227
Accounts payable		14,520		20,257
Dividends payable		-		3,152
Advance billings and customer deposits		13,733		14,029
Accrued compensation		1,197		1,516
Accrued operating taxes		5,257		4,618
Other accrued liabilities		4,162		4,223
Total Current Liabilities		49,375		58,022
Long-term Liabilities
Long-term debt, excluding current portion		388,872		363,156
Retirement benefits		17,812		18,257
Deferred income taxes		92,663		87,864
Other long-term liabilities		1,728		1,746
Income tax payable		93		110
Total Long-term Liabilities		501,168		471,133
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; 22,795 shares issued and 22,747 shares outstanding (22,579 shares issued and 22,544 shares outstanding in 2014)		228		226
Additional paid-in capital		144,797		143,545
Treasury stock, 48 shares at cost (35 shares in 2014)		(216)		(41)
Accumulated deficit		(35,843)		(38,567)
Accumulated other comprehensive loss, net of tax		(12,273)		(12,486)
Total Lumos Networks Corp. Stockholders' Equity		96,693		92,677
Noncontrolling Interests		816		782
Total Equity		97,509		93,459
Total Liabilities and Equity	$	648,052	$	622,614

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

Condensed ConsolidatedStatements of Income

Lumos Networks Corp.

(Unaudited)

	Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2014
Operating Revenues	$	50,495	$	50,090
Operating Expenses
Network access costs		9,712		10,714
Selling, general and administrative		19,834		17,932
Depreciation and amortization		11,868		10,659
Accretion of asset retirement obligations		34		27
Restructuring charges		633		-
Total Operating Expenses		42,081		39,332
Operating Income		8,414		10,758
Other Income (Expenses)
Interest expense		(3,486)		(3,974)
Gain on interest rate swap derivatives		82		109
Other (expenses) income , net		(243)		180
Total Other Expenses, net		(3,647)		(3,685)
Income Before Income Taxes		4,767		7,073
Income Tax Expense		2,009		2,978
Net Income		2,758		4,095
Net Income Attributable to Noncontrolling Interests		(34)		(33)
Net Income Attributable to Lumos Networks Corp.	$	2,724	$	4,062
Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders:
Earnings per share - basic and diluted	$	0.12	$	0.18
Cash Dividends Declared per Share - Common Stock	$	-	$	0.14

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

5

Condensed ConsolidatedStatements of Comprehensive Income

Lumos Networks Corp.

(Unaudited)

	Three Months Ended March 31,
(In thousands)	2015		2014
Net Income	$	2,758	$	4,095
Other Comprehensive Income, Net of Tax:
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income, net of $131 and $25 of income taxes for the three months ended March 31, 2015 and 2014, respectively (see Note 2)		206		39
Unrealized holding gain on available-for-sale marketable securities, net of $4 and $10 of income taxes for the three months ended March 31, 2015 and 2014, respectively		7		15
Other Comprehensive Income, Net of Tax		213		54
Total Comprehensive Income		2,971		4,149
Less:  Comprehensive Income Attributable to Noncontrolling Interests		(34)		(33)
Comprehensive Income Attributable to Lumos Networks Corp.	$	2,937	$	4,116

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

6

Condensed Consolidated Statements of Cash Flows

Lumos Networks Corp.

(Unaudited)

	Three Months Ended March 31,
(In thousands)	2015		2014
Cash Flows from Operating Activities:
Net income	$	2,758	$	4,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,722		8,364
Amortization		2,146		2,295
Accretion of asset retirement obligations		34		27
Deferred income taxes		1,916		2,803
Gain on interest rate swap derivatives		(82)		(109)
Equity-based compensation expense		1,225		834
Amortization of debt issuance costs		413		371
Retirement benefits, net of cash contributions and distributions		(108)		(475)
Excess tax benefits from share-based compensation		-		(148)
Other		158		135
Changes in assets and liabilities from operations:
Decrease in accounts receivable		270		902
Decrease in other current assets		21		613
Changes in income taxes		(66)		166
Decrease in accounts payable		(2,504)		(1,258)
Increase in other current liabilities		1,197		1,152
Net Cash Provided by Operating Activities		17,100		19,767
Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(29,224)		(18,117)
Broadband network expansion funded by stimulus grant		(649)		196
Purchases of available-for-sale marketable securities		(22,853)		(7,003)
Proceeds from sale or maturity of available-for-sale marketable securities		10,220		7,804
Change in restricted cash		1,054		-
Cash reimbursement received from broadband stimulus grant		1,054		-
Net Cash Used in Investing Activities		(40,398)		(17,120)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt		28,000		-
Payment of debt issuance costs		(861)		-
Principal payments on senior secured term loans		(1,938)		(688)
Cash dividends paid on common stock		(3,152)		(3,091)
Principal payments under capital lease obligations		(98)		(112)
Proceeds from stock option exercises and employee stock purchase plan		17		20
Excess tax benefits from share-based compensation		-		148
Other		(156)		(21)
Net Cash Provided by (Used in) Financing Activities		21,812		(3,744)
Decrease in cash and cash equivalents		(1,486)		(1,097)
Cash and Cash Equivalents:
Beginning of Period		14,140		14,114
End of Period	$	12,654	$	13,017

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

e accompanying

7

Notes to UnauditedCondensed 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 March 17, 2015, in a secondary offering of the Company’s common stock, Quadrangle Capital Partners LP. (“Quadrangle”) sold 1,600,000 shares on an underwritten basis.  This resulted in Quadrangle’s ownership declining from 12.3% to 5.3%. Quadrangle has a shareholder agreement that was subsequently amended and the Company did not receive any proceeds from the offering.  The Company’s total shares outstanding did not change as a result of this offering. All direct costs of this offering, which were primarily legal and accounting fees, totaled $0.3 million and are included in other expenses in the condensed consolidated statement of income for the three months ended March 31, 2015.

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The condensed 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, exercise control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2015 and for the three months ended March 31, 2014 contain all adjustments necessary to present fairly in all material respects the Company’s financial position and the results of operations and cash flows for all periods presented on the respective condensed consolidated financial statements included herein.  The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2014 has been derived from the audited consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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 consolidated 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 interest rate swap derivatives, deferred tax assets, marketable securities, asset retirement obligations and equity-based compensation; goodwill impairment assessments and reserves for employee benefit obligations and income tax uncertainties.

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. 

8

The Company periodically makes claims for recovery of access charges on certain minutes of use terminated by the Company on behalf of other carriers. The Company recognizes revenue in the period when it is determined that the amounts can be estimated and collection is reasonably assured.

Cash Equivalents and Marketable Securities

The Company considers its investment 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 March 31, 2015 and December 31, 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 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 March 31, 2015 and December 31, 2014.

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 is $16.1 million, of which 50% (approximately $8 million) is being funded by a grant from the federal government.  The project is expected to be completed before September 30, 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 can be drawn down ratably following the grant reimbursement approvals, which are contingent on adherence to the program requirements.  The Company received  $1.1 million in cash reimbursements during the three months ended March 31, 2015.  As of March 31, 2015, the Company had a $0.9 million receivable for the reimbursable portion of the qualified recoverable expenditures, and the Company’s pledged account balance was $3.2 million. The escrow account is a non-interest bearing account with the Company’s primary commercial bank. 

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 condensed consolidated statements of income.  Bad debt expense forthe three months ended March 31, 2015 and 2014 was $0.1million and $0.2 million, respectively.  The Company’s allowance for doubtful accounts was $1.3 million and $1.2 million as of March 31, 2015 and December 31, 2014, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts from December 31, 2014 to March 31, 2015:

			Additions
(In thousands)	December 31, 2014		Charged to Expense		Charged to Other Accounts		Deductions		March 31, 2015
Allowance for doubtful accounts	$	1,217	$	136	$	34	$	(66)	$	1,321

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. 

The Company believes that no impairment indicators exist as of March  31, 2015 that would require the Company 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 periodically reviews and updates based on historical experiences and future expectations.  Plant and equipment held

9

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 condensed consolidated balance sheets.  At March 31, 2015 and December 31, 2014, other intangibles were comprised of the following: 

		March 31, 2015					December 31, 2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization			Gross Amount			Accumulated Amortization
Customer relationships	5 to 15 yrs	$	103,108		$	(90,512)		$	103,108		$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862			(1,720)			2,862			(1,680)
Total		$	105,970		$	(92,232)		$	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 periodically 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 three months ended March 31, 2015.  Amortization expense for the three months ended March 31, 2015 and 2014was $2.1 million and $2.3 million, respectively.

Amortization expense for the remainder of 2015 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2015	$	2,538	$	122	$	2,660
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 certain trademarks 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 intangible assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.The Company believes there have been no events or circumstances to cause it to evaluate the carrying amount of goodwill or indefinite-lived intangible assets during the three months ended March 31, 2015.

Pension Benefits and Retirement Benefits Other Than Pensions

The Company sponsors a non-contributory defined benefit pension plan (the “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.

For the three months ended March 31, 2015 and 2014, the components of the Company’s net periodic benefit income for the Pension Plan were as follows: 

	Three Months Ended March 31,
(In thousands)	2015		2014
Service cost	$	-	$	-
Interest cost		666		656
Expected return on plan assets		(1,028)		(1,093)
Amortization of loss		248		-
Net periodic benefit income	$	(114)	$	(437)

10

Pension plan assets were valued at $57.9 million and $58.4 million at March 31, 2015 and December 31, 2014, respectively.  No funding contributions were made during the three months ended March 31, 2015, and the Company does not expect to make a funding contribution during the remainder of 2015.

The Company also provides life insurance benefits for retired employees that meet eligibility requirements through two postretirement welfare benefit plans (the “Other Postretirement Benefit Plans”).  The Company had provided retiree medical benefits under these plans until those benefits were terminated effective December 31, 2014.  The net periodic benefit cost for the Other Postretirement Benefit Plans was $0.2 million for the three months ended March 31, 2014, which included interest cost of $0.1 million and less than $0.1 million of service cost and amortization of actuarial losses. The Company did not incur any significant costs associated with these plans during the three months ended March 31, 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended March 31, 2015 and 2014 of $0.1 million, and $0.1 million and less than $0.1 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The total amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for the three months ended March 31, 2015 and 2014 was $0.3 million and $0.1 million, respectively, all of which has been reclassified to selling, general and administrative expenses on the condensed consolidated statements of income.

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 condensed 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 is 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 10).  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 and the Company’s 401(k) matching contributions was $1.2 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of income. 

Future charges for equity-based compensation related to instruments outstanding at March 31, 2015 are estimated to be $3.6 million for the remainder of 2015, $3.3 million in 2016, $2.5 million in 2017, $0.6 million in 2018,  and less than $0.1 million thereafter.

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.

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

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.  The new standard is effective for the Company on January 1, 2017.  Early application is not permitted.  The standard 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.  ASU2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company is still evaluating what impact, if any, ASU 2015-02 will have on the Company’s consolidated financial statements and disclosures. 

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs(“ASU 2015-03”), which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  ASU2015-03 requires retrospective adoption and will be effective for the company beginning January 1, 2016.  Early adoption is permitted.  The Company is still evaluating the effect that ASU 2015-03 will have on the Company’s consolidated financial statements and disclosures.

Note 3.  Cash Equivalents and Marketable Securities

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

(In thousands)	March 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	390	$	49
Corporate debt securities		-		1,357
Total cash equivalents		390		1,406
Marketable securities:
Commercial paper		1,348		998
Debt securities issued by U.S. Government agencies		6,172		2,734
Municipal bonds		352		353
Corporate debt securities		21,561		12,785
Total marketable securities, available-for-sale		29,433		16,870
Total cash equivalents and marketable securities	$	29,823	$	18,276

At March 31, 2015 and December 31, 2014, the carrying values of the investments included in cash and cash equivalents approximated fair value.  The aggregate amortized cost 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 March 31, 2015:

(In thousands)	Total
Due in one year or less	$	18,447
Due after one year through two years		10,986
Total debt securities	$	29,433

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The Company received total proceeds of $10.2 million and $7.8 million from the sale or maturity of available-for-sale marketable securities during the three months ended March 31, 2015 and 2014, respectively.  The Company did not recognize any material realized net gains or losses and net unrealized holding gains on available-for-sale marketable securities were less than $0.1 million for each of the three months ended March 31, 2015 and 2014, respectively.  Unrealized holding gains or losses are included in accumulated other comprehensive loss on the condensed consolidated balance sheets.

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: 

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2015:
Operating revenues	$	27,767	$	17,265	$	5,463	$	-	$	50,495
Network access costs		3,645		6,067		-		-		9,712
Network operating and selling costs		7,868		3,548		275		-		11,691
Other general and administrative expenses		3,887		2,023		671		1,562		8,143
Adjusted EBITDA(1)		12,367		5,627		4,517		-		22,511
Capital expenditures		23,343		2,123		-		3,758		29,224

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2014:
Operating revenues	$	26,137	$	18,647	$	5,306	$	-	$	50,090
Network access costs		4,174		6,540		-		-		10,714
Network operating and selling costs		5,922		4,115		326		-		10,363
Other general and administrative expenses		3,324		2,448		674		1,123		7,569
Adjusted EBITDA(1)		12,717		5,544		4,306		-		22,567
Capital expenditures		11,337		2,388		-		4,392		18,117

(1)     The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

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The Company’s CODMs do not currently review total assets by segment since the majority of the assets are shared by the segments and centrally-managed.  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 operating segments. 

The following table provides a reconciliation of operating income to Adjusted EBITDA, as defined by the Company, on a consolidated basis for the threemonths ended March 31, 2015 and 2014:

	Three Months Ended March 31,
(In thousands)	2015		2014
Operating income	$	8,414	$	10,758
Depreciation and amortization and accretion
of asset retirement obligations		11,902		10,686
Sub-total:		20,316		21,444
Amortization of actuarial losses		337		64
Equity-based compensation		1,225		834
Restructuring charges		633		-
Employee separation charges		-		225
Adjusted EBITDA	$	22,511	$	22,567

One of the Company’s carrier customers, AT&T, individually accounted for9% and 10%  of the Company’s total revenues for the three months ended March 31, 2015and2014, respectively.Revenues from this carrier customer were derived primarily from network access, data transport and fiber to the cell site services.

Note 5.  Long-Term Debt

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

(In thousands)	March 31, 2015		December 31, 2014
Credit Facility	$	394,438	$	368,375
Capital lease obligations		4,940		5,008
Long-term debt		399,378		373,383
Less:  current portion of long-term debt		10,506		10,227
Long-term debt, excluding current portion	$	388,872	$	363,156

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 (“Term Loan A”), a $275 million senior secured six-year term loan (“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 Term Loan A and Term Loan B were used to retire the prior first lien 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 March 31, 2015, no borrowings were outstanding under the Revolver.

On January 2, 2015, the Company entered into theTerm Loan C and amended certain terms of the Credit Facility.  The Company will use 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.   

Pricing of the 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.  Term Loan A matures in 2018 with quarterly payments of 1.25% per annum through December 31, 2016 and 2.50% per annum thereafter.  Term Loan B matures in 2019 with quarterly payments of 1% per annum.  Term Loan C matures in full 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.

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The 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 March 31, 2015, the Company’s leverage ratio was 4.00:1.00 and its interest coverage ratio was 7.08:1.00.  The Company was in compliance with its debt covenants as of March 31, 2015.  The Credit Facility has a maximum distributable amount available for restricted payments, including the payment of dividends.  The distributable amount was initially set at $12 million and is reduced by restricted payments and certain other items set forth in the Credit Agreement.  The distributable amount is increased annually by the greater of $12 million or 75% of free cash flow (as defined under the Credit Agreement).  Based on the excess cash flow calculation for the year ended December 31, 2014, the distributable amount was increased by $12 million on January 1, 2015.  The distributable amount as of March 31, 2015 was $14.2 million.

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 swaps 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 combined notional amount under the swap agreements was $183.2 million at March 31, 2015.  The Company recognized a gainon interest rate swap derivatives of $0.1 million  for each the three months ended March 31, 2015and2014.

In connection with Term Loan C financing in January 2015, the Company deferred an additional $0.9 million in debt issuance costs. Total unamortized debt issuance costs associated with the Credit Facility were $5.7 million and $5.2 million as of March 31, 2015 and December 31, 2014, respectively, which amounts are included in deferred charges and other assets on the condensed consolidated balance sheets and are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs were $0.4 millionfor each the three months ended March 31, 2015 and 2014, respectively.

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.  These credits are recorded in the condensed consolidated statements of income as an offset to interest expense.  The Patronage credits were $0.4 million and $0.1 million forthe three months ended March 31, 2015 and 2014, respectively. 

The aggregate maturities of Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $6.0 million in the remainder of 2015, $8.0 million in 2016, $13.0 million in 2017, $80.5 million in 2018 and  $286.8 million in 2019.The Revolver under the Credit Facility, under which no borrowings are outstanding as of March 31, 2015, matures in full in 2018.

The Company’s blended average interest rate on its long-term debt for the three months ended March 31, 2015 was 3.86%.

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 March 31, 2015, the carrying value and accumulated amortization of the related assets were $3.3 million and $2.0 million, respectively.  The Company also has a financing arrangement with a provider of software services related to the upgrading of internal infrastructure, including certain software licenses, which is classified as a capital lease.  The agreement extends through 2015 with payments due annually.  As of March 31, 2015, the carrying value and accumulated depreciation of the related assets were $5.9 million and $2.1 million, respectively.  As of March 31, 2015, the combined total net present value of the Company’s future minimum lease payments is $4.9 million and the principal portion of these capital lease obligations is due as follows:  $2.4 million in the remainder of 2015, $2.3 million in 2016, $0.1 million in 2017, $0.1 million in 2018 and less than $0.1 million thereafter.

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Note 6.  Supplementary Disclosures of Cash Flow Information

The following information is presented as supplementary disclosures for the condensed consolidated statements of cash flows for the three months ended March 31, 2015 and 2014: 

	Three Months Ended March 31,
(In thousands)		2015		2014
Cash payments for:
Interest (net of amounts capitalized)	$	2,533	$	2,723
Income taxes		172		31
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable and other accrued liabilities		3,800		3,151
Obligations incurred under capital leases		-		36
Dividends declared on common stock not paid		-		3,104

Cash payments for interest for the three months ended March 31, 2015 and 2014 in the table above are net of $0.8 million and $0.9 million, respectively, of cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $0.3 million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively.  

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 and the Credit Facility (including the current portion) as of March 31, 2015 and December 31, 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 March 31, 2015 and December 31, 2014.  Marketable securities and interest rate swap derivatives are recorded in the condensed consolidated balance sheets at fair value (see Notes 3 and 5).

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

	Fair Value Measurements at March 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	390	$	-	$	-	$	390
Total cash equivalents		390		-		-		390
Marketable securities:
Commercial paper		-		1,348		-		1,348
Debt securities issued by U.S. Government agencies		-		6,172		-		6,172
Municipal bonds		-		352		-		352
Corporate debt securities		-		21,561		-		21,561
Total marketable securities		-		29,433		-		29,433
Total financial assets	$	390	$	29,433	$	-	$	29,823
Financial Liabilities:
Interest rate swap derivatives	$	-	$	583	$	-	$	583
Total financial liabilities	$	-	$	583	$	-	$	583

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial 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
Financial Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

The fair value of certificates of deposits 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 derivatives were 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.

	March 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	394,438	$	382,127	$	368,375	$	370,769
Capital lease obligations		4,940		4,940		5,008		5,008

The fair value of the Credit Facility was 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 $1.0 million as of March 31, 2015 and $0.9 million as of December 31, 2014, respectively, of which $0.9 million and $0.8 million represents the Company’s investment in CoBank for the respective periods.  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.  Equity

Below is a summary of the activity and status of equity as of and for the three months ended March 31, 2015:

(In thousands, except per share amounts)	Common Shares	Treasury Shares	Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss, net of tax		Total Lumos Networks Corp. Stockholders' Equity		Noncontrolling Interests		Total Equity
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.										2,724				2,724				2,724
Other comprehensive income,
net of tax												213		213				213
Equity-based compensation expense						944								944				944
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits)	215	13		2		291		(175)						118				118
Stock option exercises	1					17								17				17
Net income attributable to
noncontrolling interests														-		34		34
Balance, March 31, 2015	22,795	48	$	228	$	144,797	$	(216)	$	(35,843)	$	(12,273)	$	96,693	$	816	$	97,509

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Note 9.  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 three months ended March 31, 2015 and 2014 are detailed in the following table.

	Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2014
Numerator:
Net income attributable to Lumos Networks Corp.	$	2,724	$	4,062
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(75)		(97)
Numerator for basic and diluted earnings per common share		2,649		3,965
Denominator:
Weighted average basic shares outstanding		22,599		22,149
Less:  weighted average participating securities and nonvested performance-based restricted shares		(646)		(548)
Denominator for basic earnings per common share		21,953		21,601
Plus:  potentially dilutive restricted shares and stock options		446		476
Denominator for diluted earnings per common share		22,399		22,077
Earnings per share - basic and diluted	$	0.12	$	0.18

For the three months ended March 31, 2015 and 2014, the denominator for diluted earnings per common share excludes 429,222and 232,482 shares, respectively,related to stock options and nonvested restricted stock which would be antidilutive for each period.

Note 10.  Stock Plans

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 March 31, 2015, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan was 5,500,000, and 1,330,976 securities remained available for issuance under the 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 did not issue anystock options during the three months ended March 31, 2015 and issued 203,487 shares of restricted stock under the Equity and Cash Incentive Plan during the three months ended March 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 of the outstanding restricted stock awards vest on a graded vesting schedule over a five year period. 

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 stock 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 terminations.    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

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achievement of market conditionsis 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 three months ended March 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	-		-
Exercised during the period	(1)		12.15
Forfeited during the period	-		-
Expired during the period	-		-
Stock options outstanding at March 31, 2015	2,225	$	12.49	6.2 years	$	6,977
Stock options exercisable at March 31, 2015	1,423	$	12.31	5.2 years	$	4,652
Total stock options outstanding, vested and expected to vest at March 31, 2015	2,156	$	12.50		$	6,742

The total fair value of options that vested during the three months ended March 31, 2015 was $0.6 million.  As of March 31, 2015, there was $2.4 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.1 years.

The summary of the activity and status of the Company’s restricted stock for the three months ended March 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	203		17.39
Vested during the period	(45)		13.82
Forfeited during the period	(5)		14.57
Restricted stock outstanding at March 31, 2015	767	$	14.31

As of March 31, 2015, there was $6.8 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 2.3 years.

In addition to the Equity and Cash Incentive Plan discussed above, the Company has an employee stock purchase plan which commenced in 2011 with 100,000 shares available.  New common shares will be issued for purchases under this plan.  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 three months ended March 31, 2015,  1,231 shares were issued under the employee stock purchase plan.  Compensation expense associated with the employee stock purchase plan was not material for the three months ended March 31, 2015.

Note 11.  Income Taxes

Income tax expense for the three months ended March 31, 2015and 2014 was $2.0 million and $3.0 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. The Company’s recurring non-deductible expenses relate primarily to certain non-cash equity-based compensation. 

At March 31, 2015, the Company had federal net operating losses (“NOLs”) of $26.5 million, net of adjustments for unrecognized income tax benefits.  The Company’s NOLs, if not utilized to reduce taxable income in future periods, will expire in varying amounts from 2022 through 2034.  Management 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.

While management believes the Company 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, tax years  2011 and thereafter remain open and subject to federal and state audit examinations.

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Note 12.  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 condensed consolidated financial statements.

The Company has purchase commitments relating to capital projects totaling $4.6 million as of March 31, 2015, which are expected to be satisfied during the remainder of 2015.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following sections provide an overview of our business strategy, our financial condition and results of operations and highlight key trends and uncertainties in our business and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this report.  Any statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations 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.See "Forward-Looking Statements" at the end of this discussion for additional factors relating to such statements, and see “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014.

Overview

Lumos Networks 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 7,955 route-mile fiber optic 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 primary 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 overall strategy is to (i) leverage our fiber network to expand to new fiber to the cell site opportunities; (ii) use our “edge-out” strategy to expand into new adjacent geographic markets to expand our addressable market; (iii) monetize our approximately 7,955 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; (iv) proactively manage our churn through several initiatives including upgrading existing customers from legacy technologies to carrier Ethernet services and 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 improve capital efficiency and expand margins.

Business Segments and Strategy

Our operating segments generally align with our major product and service offerings and coincide with the way that our chief operating decision makers measure performance and allocate resources. Our current reportable operating segments are data, residential and small business (“R&SB”) and RLEC access. 

Our data segment provided 55.0%  and 52.2%  of our total revenue for the three months ended March 31, 2015 and 2014, respectively.Revenue for our data segment increased 6.2%for the threemonths ended March 31, 2015, as compared to the respective period in 2014.  This segment, which includes our enterprise data, transportand 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 carrierand 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 “edge out” 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 and by upgrading existing customers from legacy technologies to carrier Ethernet services and respond to competition from other data service providers in existing and new markets.

The 6.2%  year-over-year growth in our data segment revenues for 2015 was achieved primarily through increases in long-term contracts with large U.S. wireless carriers, reflected by the addition of 274FTTC sites over the twelve month period ended March 31, 2015,  the addition of second tenants to existing connected cell towers and improved rates of renewal with our enterprise customers.  Our sales force is 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 “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.  As of March 31, 2015, we had 907 cell towers and 1,530 buildings connected to our fiber network, including 31 data centers.  Our FTTC revenue increased $1.6 million, or 34.9%, for the three months ended March 31, 2015as compared to the same period in 2014 as a result of the growth in connected towers.  Our enterprise data revenue increased 4.2% for the three months ended March 31, 2015 as compared to the respective period in 2014.  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

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grooming as existing customers redesign their networks and upgrade from time division multiplexing (“TDM”) technology to Ethernet products to improve efficiency.  As we continue to connectadditional cell towers to our network and make further progress with implementing our “edge out” strategy in 2015, which includes extending and upgrading our fiber optic network in the key Virginia markets of Richmond and Norfolk and in Western Pennsylvania, we believe that the effect of churn on legacy product lines will be more than offset by revenues from long-term FTTC contracts and new enterprise customers.

Our R&SB segment provided 34.2% and 37.2% of revenue for the three months ended March 31, 2015 and 2014, respectively.  This segment includes legacy voice and IP services products targeted to our residential and small business customers. Revenue declined approximately 7.4%for the first three months of 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 thesebusinesses willcontinue to decline.

Our RLEC access segment provided approximately 10.8% of our revenues for the three month period ended March 31, 2015 as compared to approximately 10.6%for the same period in 2014.  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 and regulatory actions taken to reduce intra-state tariffs by applicable regulatory authorities, principally the FCC and the Virginia 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 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”.  These new payments and revenues were also effective July 1, 2012.Our total revenues derived from cost recovery mechanisms including the USF and the CAF, were $5.1 million and $4.2 million for the three months ended March 31, 2015 and 2014, respectively.

Our operating income margins were 16.7%  and 21.5% for the three months ended March 31, 2015 and 2014, respectively.The decrease in our operating income margins  was primarily due torestructuring charges of $0.6 million, increased selling, general and administrative expenses and higher depreciation costs as compared to the same quarter in 2014.  Our Adjusted EBITDA margins, as defined below, were 44.6% and45.1% for the three months ended March 31, 2015 and 2014, respectively.

Operating Revenues

Our revenues are generated from the following segments: 

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

· R&SB, which includes legacyvoice 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 related to stock and option instruments held by employees and non-employee directorsand 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;

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· Accretion of asset retirement obligations;  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, accretion of asset retirement obligations, net income attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial gains or losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or 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 the Company’s employee compensation programs.

Note 4,  Disclosures About Segments of an Enterprise and Related Information, of the Notes to Unaudited Condensed Consolidated Financial Statements provides a reconciliation of Adjusted EBITDA to operating income on a consolidated basis.

Other Income (Expenses)

Our other income (expenses) are generated (incurred) from interest expense on debt instruments and capital lease obligations,  including amortization of debt 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 primarilythe 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 service to a number of small RLECs and to TNS (an inter-operability solution provider). 

Results of Operations

Three months ended March 31, 2015 compared to three months ended March 31, 2014

Operating revenues increased $0.4 million, or 0.8%, from the three months ended March 31, 2014 to the three months ended March 31, 2015primarily due to increases in data revenues of $1.6 million, partially offset by an aggregate decrease of $1.4 million in R&SB revenues.  For the three months ended March 31, 2015,  data revenues represented 55.0% of our total revenue, compared to 52.2% for the prior year comparative period.  For further details regarding these revenue fluctuations, see “Operating Revenues” below.

Operating income decreased $2.3 million from the three months ended March 31, 2014 to the three months ended March 31, 2015 due to a $1.9 million increase in selling, general and administrative costs, a $1.4 million increase in depreciation costs and a $0.6 million restructuring charge,partially offset bya  $1.4 million increase in gross margin (operating revenues less network access costs). For further details regarding these operating expense fluctuations, see “Operating Expenses” section below.

Adjusted EBITDA was $22.5 million and $22.6 million for the three months ended March 31, 2015  and 2014, respectively.

Net income attributable to Lumos Networks Corp.decreased $1.3 million from the three months ended March 31, 2014 to the three months ended March 31, 2015.  Reflected in these results was the  $2.3 million decrease in operating income, partially offset bylower interest expense and income taxes.

OPERATING REVENUES

The following table identifies our external operating revenues by business segment and major product groupfor thethree months ended March 31, 2015 and 2014:

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	Three Months Ended March 31,
Dollars in thousands	2015		2014		$ Variance		% Variance
Operating Revenues:
Data:
Enterprise data	$	11,027	$	10,586	$	441	4.2	%
Transport		10,473		10,907		(434)	(4.0)	%
FTTC		6,267		4,644		1,623	34.9	%
Total Data		27,767		26,137		1,630	6.2	%
R&SB:
Legacy voice		11,713		12,942		(1,229)	(9.5)	%
IP services		4,201		4,204		(3)	(0.1)	%
CLEC access		1,351		1,501		(150)	(10.0)	%
Total R&SB		17,265		18,647		(1,382)	(7.4)	%
RLEC access		5,463		5,306		157	3.0	%
Total operating revenues	$	50,495	$	50,090	$	405	0.8	%

· Data.Data revenues for the three months ended March 31, 2015 increased $1.6 million, or 6.2%, over the comparative period in 2014.  The overall increase in data revenues is due to growth incontracts with wireless carriers for FTTC site services and growth in enterprise data revenues partially offset by churn in data transport revenues due to network grooming activities as described below.

o Enterprise Data – Enterprise data revenues increased 4.2%for the three months ended March 31, 2015 as compared to the same period in 2014.  We connected to 1,530 on-net buildings as of March 31, 2015, as compared to 1,387 as of March 31, 2014. Metro Ethernet and dedicated Internet were the primary contributors to revenue growth in this segment, which growth was partially attributable to increased sales through our carrier end user distribution channel. Growth in enterprise data revenue 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 upgradingfrom TDM to Ethernet products.

o Transport  –The4.0%decreasein transport revenue for the three months ended March 31, 2015 from the comparative period in the prior yearwasprimarily attributable to network grooming activities by carriers as TDM technology is replaced by Ethernet.

o FTTC – Revenues from our FTTC site contracts grew 34.9% in the first three months of 2015 as compared to 2014.This growth is attributable to an approximate 43% increase in our fiber connections to wireless cell sites, from 633 at March 31, 2014 to 907 at March 31, 2015 and the addition of second tenants to existing connected cell towers.  Our ratio of FTTC tenants per tower increased from 1.30 at March 31, 2014 to 1.36 at March 31, 2015.

· R&SB.   Revenue from residential and small business products declined7.4% for the three month period ended March 31, 2015as compared to the prior year period.  Thisdecline was primarily driven by decreases in revenue from legacy voice productsdue to the increasing use of wireless devices and competition from cable operators in our markets as well as our shift in focus to voice over IP (which is included in data segment revenues).  As of March 31, 2015, we operated approximately 26,746 RLEC telephone access lines and 81,456 competitive voice lines, compared to approximately 28,381 and 92,440  as ofMarch 31, 2014, respectively.  This represents a 5.8% year-over-year decline in RLEC telephone access lines and an11.9% 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 offset by declines in revenue from legacy DSL products.  Our total video subscribers increased 7.9% over the last twelve months from 5,073 at March 31, 2014 to 5,472 at March 31, 2015.

· RLEC Access.The 3.0%  increase in RLEC access revenues from the three months ended March 31, 2014 to the three months ended March 31, 2015is the result of the recovery of certain additional intrastate access charges from the FCC’s Connect America Fund(“CAF”) discussed in the overview section abovepartially offset bythe decrease in RLEC telephone access lines and intrastate accessrate reductions mandated by regulatory agencies.

OPERATING EXPENSES

The following table identifies our operating expenses for the three months ended March 31, 2015 and 2014:

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	Three Months Ended March 31,
Dollars in thousands	2015		2014		$ Variance		%Variance
Operating Expenses:
Network access costs	$	9,712	$	10,714	$	(1,002)	(9.4)	%
Selling, general and administrative		19,834		17,932		1,902	10.6	%
Depreciation and amortization		11,868		10,659		1,209	11.3	%
Accretion of asset retirement obligations		34		27		7	25.9	%
Restructuring charges		633		-		633	N/M
Total operating expenses	$	42,081	$	39,332	$	2,749	7.0	%

N/M – not meaningful

Network Access Costs.  Network access costsdecreased $1.0 million, or 9.4%, for the three months endedMarch 31, 2015as compared to the same period in 2014, which is primarily attributable to the overall decrease in voice access lines and cost savings from network grooming activities, partially offset by increases in collocation costs as we expand and enhance our fiber network.

Selling, General and Administrative.  Selling, general and administrative expenses for the three months ended March 31, 2015increased$1.9 million, or 10.6%, from those incurred in the same period in 2014  primarily as a result of a $1.5 million increase in salaries, wages and benefits due to increased headcount in our data business and a $0.4 million increase in equity-based compensation primarily due to forfeiture credits recognized in the first quarter of 2014.  

Depreciation and Amortization. Depreciation and amortization increased  $1.2million, or 11.3%, for the three months ended March 31, 2015 from the same period in the prior year due to a $1.4 million increase in depreciation costs, partially offset by a  decrease in amortization expense of $0.2 million.  The increase in depreciation costs isa result of the year-over-year increase in our depreciable base of assets primarily from capitalinvestment in our network including infrastructure upgrades and FTTC site installations. The decrease in amortization cost is attributable to customer intangible assets for which an accelerated amortization method is applied based on these assets’ estimated patterns of benefit.

Restructuring Charges.  We incurred $0.6 million in restructuring charges for the three months ended March 31, 2015, which consisted of separation benefits associated with an employee reduction-in-force, primarily in our legacy businesses, that was completed in March 2015.

OTHER INCOME (EXPENSES) AND INCOME TAXES

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

	Three Months Ended March 31,
(Dollars in thousands)	2015		2014		$ Variance		%Variance
Interest expense	$	(3,486)	$	(3,974)	$	488	(12.3)	%
Gain on interest rate swap derivatives		82		109		(27)	(24.8)	%
Other (expense) income, net		(243)		180		(423)	(235.0)	%
Total other expenses, net	$	(3,647)	$	(3,685)	$	38	(1.0)	%
Income tax expense	$	2,009	$	2,978	$	(969)	(32.5)	%

Interest Expense.  Interest expense for the three months ended March 31, 2015 and 2014 primarily consists of incurred costs associated with our Credit Facility as well as amortization of debt issuance costs.  The year-over-year decrease in interest expense is primarily attributable to lower interest rates, higher interest capitalization due to increased long-term network construction projects and changes in the bank patronage credits (see Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements).

Gainon Interest Rate Swap Derivatives.  The gains or losses recorded in each period are reflective of mark-to-market adjustments to record the asset or liability associated with the interest rate swap derivatives at fair value on the condensed consolidated balances sheets, which is impacted by fluctuations in interest rates and other market factors.

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Other Income (Expenses).  Other expenses of $0.2 million for the three months ended March 31, 2015 primarily consists of costs incurred for the secondary public stock offering (see Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements)partially offset by interest income earned on marketable securities during the period.

Income Tax Expense.  Income tax expense for the three months ended March 31, 2015and 2014 was $2.0 million and $3.0 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 expenses for each period.  Our recurring non-deductible expenses relate primarily to non-cash equity-based compensation.  The decrease in income tax expense was primarily due to the decrease in income before taxes, partially offset by an increase in our effective tax rate as a result ofnon-deductible public offering costs and increased non-deductible equity-based compensation.  

At March 31, 2015, we had unused federal net operating losses (“NOLs”) of approximately $26.5 million, net of adjustments for unrecognized income tax benefits.  Our NOLs, if not utilized to reduce taxable income in future periods, will expire in varying amounts from 2022 to 2034.  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.

Liquidity and Capital Resources

For the three months ended March 31, 2015 and 2014, our cash flows from operations totaled approximately $17.1 million and $19.8 million, respectively.  Our cash flows from operations are 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, 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 funding 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 and to fund long-term FTTC contracts, may also be used to repay debt obligations or fund other capital expenditures.

As of March 31, 2015, we had $501.2 million in aggregate long-term liabilities, consisting of $386.4 million in borrowings under our Credit Facility ($394.4 million including the current portion), $2.5 million in capital lease obligations and $112.3 million in other long-term liabilities, inclusive of deferred income tax liabilities of $92.7 million, pension and other postretirement obligations of $17.8 million and other long-term liabilities of $1.8 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 March 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.

Under the Credit Agreement, we are also 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 March 31, 2015, we were in compliance with all of our debt covenants, and our ratios were as follows: 

	Actual	Covenant Requirement at March 31, 2015
Total debt outstanding to EBITDA (as defined in the Credit Agreement)	4.00	Not more than 5.00
Minimum interest coverage ratio	7.08	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”).  We will use the net proceeds from Term Loan C to fund capital expenditures for customer builds related to the new FTTC site 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.

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 condensed consolidated balance sheets as of March 31, 2015.  As of March 31, 2015, the combined total net present value of the Company’s future minimum lease payments was $4.9 million.

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The following table presents a summary of our cash flow activity for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
(In thousands)	2015		2014
Net cash provided by operating activities	$	17,100	$	19,767
Net cash used in investing activities		(40,398)		(17,120)
Net cash provided by (used in) financing activities		21,812		(3,744)
Decrease in cash and cash equivalents	$	(1,486)	$	(1,097)

Operating. The decrease in cash flows from operations is primarily due to changes in working capital largely due to timing of payments to vendors and employees and cash collections from customers.

Investing.  The increase in cash used in investing activities is primarily due to an increase in capital expenditures of $11.1millionand purchases of marketable securities in excess of proceeds from sale or maturity of marketable securities of $12.6 million as compared to net proceeds of $0.8 million in 2014,partially offset by cash received from the broadband stimulus grant for reimbursement of qualified expenditures and the corresponding release of restricted funds totaling $2.1 million.  Capital expenditures for the three months ended March 31, 2015 were comprised of (i) $24.8 million for success-based customer projects, network expansion and infrastructure upgrades, (ii) $0.6 million for network maintenance, (iii) $1.0 million for information technology and facility related projects, and (iv) $2.8 million for increases in inventory on hand for capital projects in the preceding categories.  

We currently expect total capital expenditures for fiscal year 2015 to be approximately $112 million.  We expect these capital expenditures to primarily be spent on network expansion projects, including our approximate 665 route-mile expansion between Richmond, VA and Norfolk, VA, enhancing our existing investment in our fiber network backbone and fiber rings, and improving our ability to provide carrier Ethernet transport and enterprise customer data services, FTTC site deployments and other wholesale revenue opportunities with attractive return on investment profiles.  Through March 31, 2015, we have constructed a fiber optic network of approximately 7,955 route miles.  Approximately 41% 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 59% of our network under IRU agreements.  During the remainder of 2015, we also expect 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.  The net cash provided  by financing activities for the three months ended March 31, 2015 consisted of proceeds from Term Loan C, net of debt issuance costs, of $27.1 million, partially offset by repayment of principal on the Credit Facilityand payments under capital lease obligations totaling $2.0 millionand dividend payments of approximately $3.2 million.

As of March 31, 2015, we had approximately $12.7 million in cash and cash equivalents and approximately $29.4 million in marketable securities, all of which we consider to be available for current operations and to fund new FTTC projects due to the short-term maturities and liquid nature of the holdings.  We also have $3.2 million of restricted cash, all of which represents amounts pledged for deposit for the RUS broadband stimulus grant and is expected to be released in 2015. As of March 31, 2015 we had working capital (current assets minus current liabilities) of approximately $32.9 million.  We expect that the cash we generate from operations combined with our cash on hand, marketable securities and expected borrowings  under our currently undrawn revolving line of credit will be sufficient to satisfy our working capital requirements, capital expenditures and debt service requirements for the foreseeable future.  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.  Additional equity financing may dilute our stockholders, and debt financing, if available, may restrict our ability to raise future capital.

As discussed previously in 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 Connect America Fund (“CAF”) payments to us.

On March 4, 2015, our board of directors suspended our quarterly dividend in favor of allocating capital to growth opportunities.

Off Balance Sheet Arrangements

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

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Recent Accounting Pronouncements

In May 2014, the FASB issued 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.  The new standard is effective for us on January 1, 2017.  Early application is not permitted.  The standard permits the use of either the retrospective or cumulative effect transition method.  We have not yet selected a transition method and are still evaluating the effect that ASU 2014-09 will have on our 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.  ASU2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  We are still evaluating what impact, if any, ASU 2015-02 will have on our consolidated financial statements and disclosures. 

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs(“ASU 2015-03”), which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  ASU2015-03 requires retrospective adoption and will be effective for the company beginning January 1, 2016.  Early adoption is permitted.  We are still evaluating the effect that ASU 2015-03 will have on our consolidated financial statements and disclosures.

Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes certain 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 and high speed data transport industry; our ability to offset expected revenue declines in legacy voice and access products related to the recent regulatory actions, wireless substitution, technology changes and other factors; our ability to effectively allocate capital and implement  our “edge-out” expansion plans in a timely manner; our ability to complete customer installations in a timely manner; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; our ability to maintain and enhance our network; 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 other SEC filings, including our Annual Report filed on Form 10-K for the year ended December 31, 2014.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks primarily related to interest rates.  We entered into the $425 million Credit Facility on April 30, 2013 and amended the Credit Facility to include Term Loan C for an additional $28 million on January 2, 2015.  As of March 31, 2015, $394.4 million was outstanding under our Credit Facility.  As of March 31, 2015, we had a leverage ratio of 4.00:1.00 and an interest coverage ratio 7.08:1.00, both of which are in compliance with our debt covenant requirements.  We have other fixed rate, long-term debt in the form of capital lease obligations totaling $4.9 million as of March 31, 2015.

Under the terms of our Credit Facility, we are required to enter into interest rate derivative instruments for three years on 50% of our  Term Loans A and B (approximately $183.2 million at March 31, 2015).  We entered into an interest rate swap agreement in 2012, which expires December 31, 2015, whereby we swap one-month LIBOR with a fixed rate of approximately 0.8%.  We entered into additional interest rate swap agreements in July 2013 to bring the combined notional amount of the interest rate swap instruments up to 50% of the aggregate outstanding balance of Term Loan A and Term Loan B.  Under the new interest rate swap agreements, we

29

swap one-month LIBOR with a fixed rate of approximately 0.5%.  We will be exposed to interest rate risk on the remaining 50% of the term loan balances.  We do not purchase or hold any financial derivative instruments for trading purposes.

At March 31, 2015, our financial assets in the condensed consolidated balance sheets included unrestricted cash and cash equivalents of approximately $12.7 million, substantially all of which is comprised of deposits in non-interest bearing accounts with financial institutions, and marketable securities of $29.4 million, substantially all of which are fixed income securities with maturities less than two years.  Other non-current securities and investments totaled $1.0 million at March 31, 2015.

As of March 31, 2015, our cash, cash equivalents and marketable securities were held in financial institutions, money market mutual funds, municipal bonds, 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 March 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)	Carrying Amount		Fair Value		Estimated fair value assuming noted decrease in market pricing		Estimated fair value assuming noted increase in market pricing
Credit Facility	$	394,438	$	382,127	$	388,572	$	375,832
Capital lease obligations	$	4,940	$	4,940	$	4,949	$	4,933

Item 4.  Controls and Procedures.

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 March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.

We are involved in routine litigation in the ordinary course of our business, including litigation involving disputes relating to billings by us to other carriers for access to our network.  While the results of litigation and disputes are inherently unpredictable, 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 (see Note 12, Commitments and Contingencies, of the Notes to Unaudited Condensed Consolidated Financial Statements).

Item 1A.  Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors (pages 10 to 17) in our Annual Report on Form 10-K for the year ended December 31, 2014which could materially affect our business, financial condition or future results.  The risks described in the Annual Report on Form 10-K are not the only risks facing our Company.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a materially adverse effect on our business, financial condition and/or operating results. 

We do not believe that there have been any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The Company does not have a share repurchase program in effect.  However, during the three months ended March 31, 2015, the Company repurchased 10,159 shares of Company stock in connection with the vesting of certain restricted stock grants issued pursuant to the Company’s 2011 Equity and Cash Incentive Plan.  The Company repurchased these shares from employee plan participants for settlement of tax withholding obligations.

The number of shares repurchased and the average price paid per share for each month in the three months March 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
January 1, 2015 - January 31, 2015	-	$	-	N/A	N/A
February 1, 2015 - February 28, 2015	1,199	$	18.29	N/A	N/A
March 1, 2015 - March 31, 2015	8,960	$	17.19	N/A	N/A
	10,159	$	17.32	N/A

Item 5.  Other Information.

None.

31

Item 6.  Exhibits

EXHIBIT INDEX

Exhibit No.	Description
4.1*	First Amendment, dated March 20, 2015, to Shareholders Agreement by and between Lumos Networks Corp. and the shareholders listed on the signature pages thereto
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, 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, 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.

32

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 Quarterly Report on Form 10-Q 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
	(principal executive officer)
By:	/s/ Johan G. Broekhuysen
Name:	Johan G. Broekhuysen
Title:	Executive Vice President, Chief Financial Officer and Chief Accounting Officer
	(principal financial officer and principal accounting officer)

33

EX-4.1

Exhibit 4.1

FIRST AMENDMENT

TO

SHAREHOLDERS AGREEMENT

dated as of

October 31, 2011

among

LUMOS NETWORKS CORP.

QUADRANGLE CAPITAL PARTNERS LP,

QUADRANGLE SELECT PARTNERS LP,

QUADRANGLE CAPITAL PARTNERS-A LP,

QUADRANGLE NTELOS HOLDINGS II LP

and

THE MANAGEMENT SHAREHOLDERS NAMED THEREIN

March 20, 2015

FIRST AMENDMENT TO

SHAREHOLDERS AGREEMENT

This FIRST AMENDMENT TO SHAREHOLDERS AGREEMENT (this “Amendment”) dated as of this 20thday of March, 2015, has been entered into by (i) Lumos Networks Corp., a Delaware corporation (the “Company”), and (ii) 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 “QuadrangleEntities”).

W I T N E S S E T H :

WHEREAS, the Company, the Quadrangle Entities and certain management shareholdersof the Company entered into that certain Shareholders Agreement, dated as of October 31, 2011 (the “Shareholders Agreement”);

WHEREAS, Quadrangle Capital Partners LP, Quadrangle Select Partners LP and Quadrangle Capital Partners-A LP are no longer shareholders of the Company; and

WHEREAS, the Company and the Quadrangle Entities, acting pursuant to Section 6.04 of the Shareholders Agreement, desire to amend the Shareholders Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Definitions.  Defined terms used and not otherwise defined herein shall have the meanings given to them in the Shareholders Agreement.

2.Amendment. 

(a)  The term “Quadrangle Entities” as used in the Shareholders Agreement shall mean Quadrangle NTELOS Holdings II LP.

(b)  Section 2.05(a) of the Shareholders Agreement is hereby amended and restated in its entirety to read as follows:

(a) A quorum of the Board shall consist of a majority of the directors.

3.Single Agreement.  This Amendment and the Shareholders Agreement, as amended and modified by the provisions of this Amendment, shall constitute and shall be construed as a single agreement.  The provisions of the Shareholders Agreement, as amended and modified by the provisions of this Amendment, are incorporated herein by this reference and are ratified and affirmed.  The term “Agreement” as used in the Shareholders Agreement shall be deemed to refer to the Shareholders Agreement as amended hereby.

4.Headings.  The underlined headings herein are for convenience only and shall not affect the interpretation of this Amendment.

5.Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws.

6.Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

[Signature Page to Follow]

2

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Shareholders Agreement as of the day first above written.

THE COMPANY:

Lumos Networks Corp.
By:	/s/ Timothy G. Biltz
Name:Timothy G. Biltz
Title:CEO and President

QUADRANGLE ENTITIES:

QUADRANGLE CAPITAL PARTNERS LP
By:	Quadrangle GP Investors LP, as its General Partner
By:	Quadrangle GP Investors LLC, as its General Partner
By:	/s/ Michael Huber
Name:Michael Huber
Title:President and Managing Principal

QUADRANGLE SELECT PARTNERS LP
By:	Quadrangle GP Investors LP, as its General Partner
By:	Quadrangle GP Investors LLC, as its General Partner
By:	/s/ Michael Huber
Name:Michael Huber
Title:President and Managing Principal

QUADRANGLE CAPITAL PARTNERS-A LP
By:	Quadrangle GP Investors LP, as its General Partner
By:	Quadrangle GP Investors LLC, as its General Partner
By:	/s/ Michael Huber
Name:Michael Huber
Title:President and Managing Principal

4

/
QUADRANGLE NTELOS HOLDINGS II LP
By:	Quadrangle NTELOS GP LLC, as General Partner
By:	Quadrangle (AIV2) Capital Partners II LP, as Managing Member
By:	Quadrangle GP Investors II LP, as General Partner
By:	QCP GP Investors II LLC, as General Partner
By:	/s/ Michael Huber
Name:Michael Huber
Title: President and Managing Principal

5

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Timothy G. Biltz, certify that:

1.I have reviewed this quarterly report on Form 10-Q for thethree months ended March 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:  May 5, 2015

/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 quarterly report on Form 10-Q for the three monthsended March 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:  May 5, 2015

/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 thequarterly report of Lumos Networks Corp. (the “Company”) on Form 10-Q for the three monthsended March 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

May 5, 2015

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 quarterly report of Lumos NetworksCorp. (the “Company”) on Form 10-Q for the three monthsended March 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

May 5, 2015

XML

Disclosures About Segments Of An Enterprise And Related Information (Summarized Financial Information Of Reportable Segments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Segment Reporting Information [Line Items]
Operating Revenues	$ 50,495		$ 50,090
Network access costs	9,712		10,714
Network operating and selling costs	11,691		10,363
Other general and administrative expenses	8,143		7,569
Adjusted EBITDA	22,511	[1]	22,567	[1]
Capital expenditures	29,224		18,117
Data [Member]
Segment Reporting Information [Line Items]
Operating Revenues	27,767		26,137
Network access costs	3,645		4,174
Network operating and selling costs	7,868		5,922
Other general and administrative expenses	3,887		3,324
Adjusted EBITDA	12,367	[1]	12,717	[1]
Capital expenditures	23,343		11,337
R&SB [Member]
Segment Reporting Information [Line Items]
Operating Revenues	17,265		18,647
Network access costs	6,067		6,540
Network operating and selling costs	3,548		4,115
Other general and administrative expenses	2,023		2,448
Adjusted EBITDA	5,627	[1]	5,544	[1]
Capital expenditures	2,123		2,388
RLEC Access [Member]
Segment Reporting Information [Line Items]
Operating Revenues	5,463		5,306
Network operating and selling costs	275		326
Other general and administrative expenses	671		674
Adjusted EBITDA	4,517	[1]	4,306	[1]
Corporate (Unallocated) [Member]
Segment Reporting Information [Line Items]
Other general and administrative expenses	1,562		1,123
Capital expenditures	$ 3,758		$ 4,392

[1] The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

XML

Commitments And Contingencies (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015
Commitments And Contingencies [Abstract]
Purchase commitments relating to capital expenditures	$ 4.6

XML

Earnings Per Share (Narrative) (Details) (Stock Options And Nonvested Restricted Stock [Member])	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stock Options And Nonvested Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share	429,222	232,482

XML

Fair Value Of Financial Instruments (Schedule Of Carrying Amounts And Estimated Fair Values Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Capital lease obligations	$ 4,940	$ 5,008
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit Facility	394,438	368,375
Capital lease obligations	4,940	5,008
Fair Value (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit Facility	382,127	370,769
Capital lease obligations	$ 4,940	$ 5,008

XML

Summary of Significant Accounting Policies (Schedule Of Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Remainder of 2015	$ 2,660
2016	2,575
2017	2,256
2018	1,944
2019	1,665
2020	1,194
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2015	2,538
2016	2,412
2017	2,093
2018	1,781
2019	1,513
2020	1,146
Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2015	122
2016	163
2017	163
2018	163
2019	152
2020	$ 48

XML

Supplementary Disclosures Of Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2015

Supplementary Disclosures Of Cash Flow Information [Abstract]

Supplementary Disclosures Of Consolidated Statements Of Cash Flows

	Three Months Ended March 31,
(In thousands)		2015		2014
Cash payments for:
Interest (net of amounts capitalized)	$	2,533	$	2,723
Income taxes		172		31
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable and other accrued liabilities		3,800		3,151
Obligations incurred under capital leases		-		36
Dividends declared on common stock not paid		-		3,104

XML

Stock Plans (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options issued	0
Number of shares issued during the period	203,487
Stock plan vesting description	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 of the outstanding restricted stock awards vest on a graded vesting schedule over a five year period.
Vesting schedule	5 years
Stock options to be granted, minimum percentage	100.00%
Stock options grants, maximum life, in years	10 years
Total fair value of options vested	$ 0.6
Unrecognized compensation cost	2.4
Unrecognized compensation cost recognition period, in years	3 years 1 month 6 days
Shares available for employee stock purchase plan	100,000
Shares price percentage	85.00%
Shares issued under the employee stock purchase plan	1,231
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 6.8
Unrecognized compensation cost recognition period, in years	2 years 3 months 18 days
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	1,330,976
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.
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

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Long-Term Debt [Abstract]
Credit facility	$ 394,438	$ 368,375
Capital lease obligations	4,940	5,008
Long-term debt	399,378	373,383
Less: current portion of long term debt	10,506	10,227
Long-term debt, excluding current portion	$ 388,872	$ 363,156

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Cash Equivalents And Marketable Securities (Schedule Of Contractual Maturities Of Available-For-Sale Debt Securities) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Cash Equivalents And Marketable Securities [Abstract]
Due in one year or less	$ 18,447
Due after one year through two years	10,986
Total debt securities	$ 29,433	$ 16,870

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Stock Plans (Summary Of Restricted Stock Awards Activity) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Stock Plans [Abstract]
Restricted stock outstanding at December 31, 2014, Shares	614,000
Restricted stock outstanding at December 31, 2014, Weighted Average Grant Date Fair Value per Share	$ 13.26
Granted during the period, Shares	203,487
Granted during the period, Weighted Average Grant Date Fair Value per Share	$ 17.39
Vested during the period, Shares	(45,000)
Vested during the period, Weighted Average Grant Date Fair Value per Share	$ 13.82
Forfeited during the period, Shares	(5,000)
Forfeited during the period, Weighted Average Grant Date Fair Value per Share	$ 14.57
Restricted stock outstanding at March 31, 2015, Shares	767,000
Restricted stock outstanding at March 31, 2015, Weighted Average Grant Date Fair Value per Share	$ 14.31

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Equity (Summary Of Activity And Status Of Equity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stockholders Equity [Line Items]
Balance	$ 93,459
Net income attributable to Lumos Networks Corp.	2,724	4,062
Other comprehensive income, net of tax	213	54
Equity-based compensation expense	944
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	118
Stock options exercises, shares	1
Stock option exercises	17
Net income attributable to noncontrolling interests	34
Balance	97,509
Common Stock [Member]
Stockholders Equity [Line Items]
Balance	226
Balance, December 31, 2014, shares	22,579
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	2
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	215
Stock options exercises, shares	1
Balance	228
Balance, March 31, 2015, shares	22,795
Treasury Stock [Member]
Stockholders Equity [Line Items]
Balance	(41)
Balance, December 31, 2014, shares	35
Net income attributable to Lumos Networks Corp.
Other comprehensive income, net of tax
Equity-based compensation expense
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	(175)
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	13
Stock option exercises
Net income attributable to noncontrolling interests
Balance	(216)
Balance, March 31, 2015, shares	48
Additional Paid-In Capital [Member]
Stockholders Equity [Line Items]
Balance	143,545
Equity-based compensation expense	944
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	291
Stock option exercises	17
Balance	144,797
Accumulated Deficit [Member]
Stockholders Equity [Line Items]
Balance	(38,567)
Net income attributable to Lumos Networks Corp.	2,724
Balance	(35,843)
Accumulated Other Comprehensive Loss, Net Of Tax [Member]
Stockholders Equity [Line Items]
Balance	(12,486)
Other comprehensive income, net of tax	213
Balance	(12,273)
Total Lumos Networks Corp. Stockholders' Equity [Member]
Stockholders Equity [Line Items]
Balance	92,677
Net income attributable to Lumos Networks Corp.	2,724
Other comprehensive income, net of tax	213
Equity-based compensation expense	944
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits)	118
Stock option exercises	17
Balance	96,693
Noncontrolling Interests [Member]
Stockholders Equity [Line Items]
Balance	782
Net income attributable to noncontrolling interests	34
Balance	$ 816

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The condensed 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, exercise control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2015 and for the three months ended March 31, 2014 contain all adjustments necessary to present fairly in all material respects the Company’s financial position and the results of operations and cash flows for all periods presented on the respective condensed consolidated financial statements included herein.  The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2014 has been derived from the audited consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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 consolidated 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 interest rate swap derivatives, deferred tax assets, marketable securities, asset retirement obligations and equity-based compensation; goodwill impairment assessments and reserves for employee benefit obligations and income tax uncertainties.

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. 

The Company periodically makes claims for recovery of access charges on certain minutes of use terminated by the Company on behalf of other carriers. The Company recognizes revenue in the period when it is determined that the amounts can be estimated and collection is reasonably assured.

Cash Equivalents and Marketable Securities

The Company considers its investment 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 March 31, 2015 and December 31, 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 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 March 31, 2015 and December 31, 2014.

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 is $16.1 million, of which 50% (approximately $8 million) is being funded by a grant from the federal government.  The project is expected to be completed before September 30, 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 can be drawn down ratably following the grant reimbursement approvals, which are contingent on adherence to the program requirements.  The Company received $1.1 million in cash reimbursements during the three months ended March 31, 2015.  As of March 31, 2015, the Company had a $0.9 million receivable for the reimbursable portion of the qualified recoverable expenditures, and the Company’s pledged account balance was $3.2 million. The escrow account is a non-interest bearing account with the Company’s primary commercial bank. 

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 condensed consolidated statements of income.  Bad debt expense forthe three months ended March 31, 2015 and 2014 was $0.1million and $0.2 million, respectively.  The Company’s allowance for doubtful accounts was $1.3 million and $1.2 million as of March 31, 2015 and December 31, 2014, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts from December 31, 2014 to March 31, 2015:

			Additions
(In thousands)	December 31, 2014		Charged to Expense		Charged to Other Accounts		Deductions		March 31, 2015
Allowance for doubtful accounts	$	1,217	$	136	$	34	$	(66)	$	1,321

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. 

The Company believes that no impairment indicators exist as of March 31, 2015 that would require the Company 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 periodically reviews and updates based on historical experiences and future expectations.  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 condensed consolidated balance sheets.  At March 31, 2015 and December 31, 2014, other intangibles were comprised of the following: 

		March 31, 2015					December 31, 2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization			Gross Amount			Accumulated Amortization
Customer relationships	5 to 15 yrs	$	103,108		$	(90,512)		$	103,108		$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862			(1,720)			2,862			(1,680)
Total		$	105,970		$	(92,232)		$	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 periodically 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 three months ended March 31, 2015.  Amortization expense for the three months ended March 31, 2015 and 2014 was $2.1 million and $2.3 million, respectively.

Amortization expense for the remainder of 2015 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2015	$	2,538	$	122	$	2,660
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 certain trademarks 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 intangible assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.The Company believes there have been no events or circumstances to cause it to evaluate the carrying amount of goodwill or indefinite-lived intangible assets during the three months ended March 31, 2015.

Pension Benefits and Retirement Benefits Other Than Pensions

The Company sponsors a non-contributory defined benefit pension plan (the “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.

For the three months ended March 31, 2015 and 2014, the components of the Company’s net periodic benefit income for the Pension Plan were as follows: 

	Three Months Ended March 31,
(In thousands)	2015		2014
Service cost	$	-	$	-
Interest cost		666		656
Expected return on plan assets		(1,028)		(1,093)
Amortization of loss		248		-
Net periodic benefit income	$	(114)	$	(437)

Pension plan assets were valued at $57.9 million and $58.4 million at March 31, 2015 and December 31, 2014, respectively.  No funding contributions were made during the three months ended March 31, 2015, and the Company does not expect to make a funding contribution during the remainder of 2015.

The Company also provides life insurance benefits for retired employees that meet eligibility requirements through two postretirement welfare benefit plans (the “Other Postretirement Benefit Plans”).  The Company had provided retiree medical benefits under these plans until those benefits were terminated effective December 31, 2014.  The net periodic benefit cost for the Other Postretirement Benefit Plans was $0.2 million for the three months ended March 31, 2014, which included interest cost of $0.1 million and less than $0.1 million of service cost and amortization of actuarial losses. The Company did not incur any significant costs associated with these plans during the three months ended March 31, 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended March 31, 2015 and 2014 of $0.1 million, and $0.1 million and less than $0.1 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The total amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for the three months ended March 31, 2015 and 2014 was $0.3 million and $0.1million, respectively, all of which has been reclassified to selling, general and administrative expenses on the condensed consolidated statements of income.

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 condensed 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 is 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 10).  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 and the Company’s 401(k) matching contributions was $1.2 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of income. 

Future charges for equity-based compensation related to instruments outstanding at March 31, 2015 are estimated to be $3.6 million for the remainder of 2015, $3.3 million in 2016, $2.5 million in 2017, $0.6 million in 2018, and less than $0.1 million thereafter.

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 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.  The new standard is effective for the Company on January 1, 2017.  Early application is not permitted.  The standard 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.  ASU2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company is still evaluating what impact, if any, ASU 2015-02 will have on the Company’s consolidated financial statements and disclosures. 

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  ASU 2015-03 requires retrospective adoption and will be effective for the company beginning January 1, 2016.  Early adoption is permitted.  The Company is still evaluating the effect that ASU 2015-03 will have on the Company’s consolidated financial statements and disclosures.

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Supplementary Disclosures Of Cash Flow Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Supplementary Disclosures Of Cash Flow Information [Abstract]
Interest (net of amounts capitalized)	$ 2,533,000	$ 2,723,000
Income taxes	172,000	31,000
Additions to property, plant and equipment included in accounts payable and other accrued liabilities	3,800,000	3,151,000
Obligations incurred under capital leases		36,000
Dividends declared on common stock not paid		3,104,000
Cash received from patronage credits	800,000	900,000
Interest capitalized	$ 300,000	$ 100,000

XML

Stock Plans (Tables)

3 Months Ended

Mar. 31, 2015

Stock Plans [Abstract]

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	-		-
Exercised during the period	(1)		12.15
Forfeited during the period	-		-
Expired during the period	-		-
Stock options outstanding at March 31, 2015	2,225	$	12.49	6.2 years	$	6,977
Stock options exercisable at March 31, 2015	1,423	$	12.31	5.2 years	$	4,652
Total stock options outstanding, vested and expected to vest at March 31, 2015	2,156	$	12.50		$	6,742

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	203		17.39
Vested during the period	(45)		13.82
Forfeited during the period	(5)		14.57
Restricted stock outstanding at March 31, 2015	767	$	14.31

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings Per Share

	Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2014
Numerator:
Net income attributable to Lumos Networks Corp.	$	2,724	$	4,062
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(75)		(97)
Numerator for basic and diluted earnings per common share		2,649		3,965
Denominator:
Weighted average basic shares outstanding		22,599		22,149
Less:  weighted average participating securities and nonvested performance-based restricted shares		(646)		(548)
Denominator for basic earnings per common share		21,953		21,601
Plus:  potentially dilutive restricted shares and stock options		446		476
Denominator for diluted earnings per common share		22,399		22,077
Earnings per share - basic and diluted	$	0.12	$	0.18

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Fair Value Of Financial Instruments (Narrative) (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost Method Investments	$ 1,021,000	$ 914,000
Long-term investments for which it is not practicable to estimate fair value	1,000,000	900,000
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	$ 900,000	$ 800,000

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Summary of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2010	Mar. 17, 2015	Mar. 16, 2015	Dec. 31, 2014
Summary of Significant Accounting Policies [Line Items]
Secondary Offering, Shares Sold				1,600,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				5.30%	12.30%
Sale of Stock, Consideration Received on Transaction	$ 0
Direct Offering Costs	300,000
Cash reimbursement received from broadband stimulus grant	1,054,000
Restricted cash	3,154,000					4,208,000
Bad Debt Expenses	100,000	200,000
Allowance for doubtful accounts	1,321,000					1,217,000
Capitalized costs incurred to renew or extend the term of a recognized intangible asset	0
Amortization expense	2,146,000	2,295,000
Pension benefit vesting period, years	5 years
Number of highest consecutive years of compensation subject to certain reductions	5 years
Maximum retirement age reached to be subject to reductions, years	65 years
Defined Benefit Plan, Fair Value of Plan Assets	57,900,000					58,400,000
Defined Benefit Plan, Contributions by Employer	0
Qualified Nonpension Postretirement Benefit Plans	2
Nonqualified pension plans expense	100,000	100,000
Amount of nonqualified pension plans expense related to amortization of actuarial loss	100,000
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, before Tax	300,000	100,000
Equity-based compensation expense	1,225,000	834,000
Future charges for equity-based compensation, remainder of 2015	3,600,000
Future charges for equity-based compensation, 2016	3,300,000
Future charges for equity-based compensation, 2017	2,500,000
Future charges for equity-based compensation, 2018	600,000
Future charges for equity-based compensation, 2019	100,000
Broadband Services Project Due 2015 [Member]
Summary of Significant Accounting Policies [Line Items]
Total project cost			16,100,000
Percentage funded by federal government grants			50.00%
Federal government grants			8,000,000
Percentage of deposits			100.00%
Portion of grants deposited into pledged account			8,000,000
Restricted cash reimbursement receivable	900,000
Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Amount of nonqualified pension plans expense related to amortization of actuarial loss		100,000
Other Postretirement Benefit Plans [Member]
Summary of Significant Accounting Policies [Line Items]
Net periodic benefit cost		200,000
Interest cost		100,000
Amortization of loss		$ 100,000

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Summary of Significant Accounting Policies (Schedule Of Allowance For Doubtful Accounts) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Summary of Significant Accounting Policies [Abstract]
Allowance for doubtful accounts, beginning	$ 1,217
Charged to Expense	136
Charged to Other Accounts	34
Deductions	(66)
Allowance for doubtful accounts, Balance at End of Period	$ 1,321

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Organization

3 Months Ended

Mar. 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 March 17, 2015, in a secondary offering of the Company’s common stock, Quadrangle Capital Partners LP. (“Quadrangle”) sold 1,600,000 shares on an underwritten basis.  This resulted in Quadrangle’s ownership declining from 12.3% to 5.3%. Quadrangle has a shareholder agreement that was subsequently amended and the Company did not receive any proceeds from the offering.  The Company’s total shares outstanding did not change as a result of this offering. All direct costs of this offering, which were primarily legal and accounting fees, totaled $0.3 million and are included in other expenses in the condensed consolidated statement of income for the three months ended March 31, 2015.

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Summary of Significant Accounting Policies (Finite-Lived Intangibles Assets) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross amount	105,970	$ 105,970
Accumulated Amortization	(92,232)	(90,086)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	103,108	103,108
Accumulated Amortization	(90,512)	(88,406)
Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	2,862	2,862
Accumulated Amortization	(1,720)	$ (1,680)
Minimum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	5 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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Disclosures About Segments Of An Enterprise And Related Information (Reconciliation Of Operating Income To Adjusted EBITDA) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Disclosures About Segments Of An Enterprise And Related Information [Abstract]
Operating Income	$ 8,414		$ 10,758
Depreciation and amortization and accretion of asset retirement obligations	11,902		10,686
Sub-total	20,316		21,444
Amortization of actuarial losses	337		64
Equity-based compensation	1,225		834
Restructuring charges	633
Employee separation charges			225
Adjusted EBITDA	$ 22,511	[1]	$ 22,567	[1]

[1] The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

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Income Taxes (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax [Line Items]
Income Tax Expense	$ 2,009,000	$ 2,978,000
Federal [Member]
Income Tax [Line Items]
Net operating losses	$ 26,500,000
Minimum [Member]
Income Tax [Line Items]
NOL expiration range	2022
Maximum [Member]
Income Tax [Line Items]
NOL expiration range	2034

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current Assets
Cash and cash equivalents	$ 12,654	$ 14,140
Marketable securities	29,433	16,870
Restricted cash	3,154	4,208
Accounts receivable, net of allowance of $1,321 ($1,217 in 2014)	22,409	22,925
Other receivables	1,289	2,113
Income tax receivable	221	172
Prepaid expenses and other	4,719	4,321
Deferred income taxes	8,350	5,601
Total Current Assets	82,229	70,350
Securities and Investments	1,021	914
Property, Plant and Equipment
Land and buildings	20,129	19,726
Network plant and equipment	555,885	540,108
Furniture, fixtures and other equipment	46,154	45,729
Total in service	622,168	605,563
Under construction	42,746	34,426
Property, plant and equipment, gross	664,914	639,989
Less accumulated depreciation and amortization	220,254	210,538
Total Property, Plant and Equipment, net	444,660	429,451
Other Assets
Goodwill	100,297	100,297
Other intangibles, less accumulated amortization of $92,232 ($90,086 in 2014)	13,738	15,884
Deferred charges and other assets	6,107	5,718
Total Other Assets	120,142	121,899
Total Assets	648,052	622,614
Current Liabilities
Current portion of long-term debt	10,506	10,227
Accounts payable	14,520	20,257
Dividends payable		3,152
Advance billings and customer deposits	13,733	14,029
Accrued compensation	1,197	1,516
Accrued operating taxes	5,257	4,618
Other accrued liabilities	4,162	4,223
Total Current Liabilities	49,375	58,022
Long-term Liabilities
Long-term debt, excluding current portion	388,872	363,156
Retirement benefits	17,812	18,257
Deferred income taxes	92,663	87,864
Other long-term liabilities	1,728	1,746
Income tax payable	93	110
Total Long-term Liabilities	501,168	471,133
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; 22,795 shares issued and 22,747 shares outstanding (22,579 shares issued and 22,544 shares outstanding in 2014)	228	226
Additional paid-in capital	144,797	143,545
Treasury stock, 48 shares at cost (35 shares in 2014)	(216)	(41)
Accumulated deficit	(35,843)	(38,567)
Accumulated other comprehensive loss, net of tax	(12,273)	(12,486)
Total Lumos Networks Corp. Stockholders' Equity	96,693	92,677
Noncontrolling Interests	816	782
Total Equity	97,509	93,459
Total Liabilities and Equity	$ 648,052	$ 622,614

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Fair Value Of Financial Instruments (Summary Of Financial Assets And Liabilities Measured At Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	$ 390	$ 1,406
Total marketable securities	29,433	16,870
Total financial assets	29,823	18,276
Total financial liabilities	583	665
Interest Rate Swap Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial liabilities	583	665
Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	390	49
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	1,348	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	6,172	2,734
Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	352	353
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents		1,357
Total marketable securities	21,561	12,785
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	390	49
Total financial assets	390	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	390	49
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents		1,357
Total marketable securities	29,433	16,870
Total financial assets	29,433	18,227
Total financial liabilities	583	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	583	665
Level 2 [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	1,348	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	6,172	2,734
Level 2 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	352	353
Level 2 [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents		1,357
Total marketable securities	21,561	12,785
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents
Total marketable securities
Total financial assets
Total financial liabilities
Level 3 [Member] | Interest Rate Swap Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial liabilities
Level 3 [Member] | Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents
Level 3 [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities
Level 3 [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
Level 3 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities
Level 3 [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities

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Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Condensed Consolidated Statements Of Comprehensive Income [Abstract]
Deferred income tax asset, Reclassification adjustment for amortization of actuarial loss from defined benefit plans	$ 131	$ 25
Deferred income tax asset, Unrealized gain on available-for-sale securities	$ 4	$ 10

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Cash Equivalents And Marketable Securities (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Total proceeds from the sale or maturity of available-for-sale marketable securities	$ 10,220,000	$ 7,804,000
Net realized gains or losses on available-for-sale securities	0	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 (Tables)

3 Months Ended

Mar. 31, 2015

Cash Equivalents And Marketable Securities [Abstract]

Schedule Of Cash Equivalents And Available-For-Sale Securities Reported At Fair Value

(In thousands)	March 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	390	$	49
Corporate debt securities		-		1,357
Total cash equivalents		390		1,406
Marketable securities:
Commercial paper		1,348		998
Debt securities issued by U.S. Government agencies		6,172		2,734
Municipal bonds		352		353
Corporate debt securities		21,561		12,785
Total marketable securities, available-for-sale		29,433		16,870
Total cash equivalents and marketable securities	$	29,823	$	18,276

Schedule Of Contractual Maturities Of Available-For-Sale Debt Securities

(In thousands)	Total
Due in one year or less	$	18,447
Due after one year through two years		10,986
Total debt securities	$	29,433

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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, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	$ 390	$ 1,406
Total marketable securities, available-for-sale	29,433	16,870
Total cash equivalents and marketable securities	29,823	18,276
Money Market Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	390	49
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents		1,357
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	1,348	998
Debt Securities Issued By U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	6,172	2,734
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	352	353
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	$ 21,561	$ 12,785

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2015

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

(In thousands)	March 31, 2015		December 31, 2014
Credit Facility	$	394,438	$	368,375
Capital lease obligations		4,940		5,008
Long-term debt		399,378		373,383
Less:  current portion of long-term debt		10,506		10,227
Long-term debt, excluding current portion	$	388,872	$	363,156

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash Flows from Operating Activities:
Net income	$ 2,758	$ 4,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	9,722	8,364
Amortization	2,146	2,295
Accretion of asset retirement obligations	34	27
Deferred income taxes	1,916	2,803
Gain on interest rate swap derivatives	(82)	(109)
Equity-based compensation expense	1,225	834
Amortization of debt issuance costs	413	371
Retirement benefits, net of cash contributions and distributions	(108)	(475)
Excess tax benefits from share-based compensation		(148)
Other	158	135
Changes in assets and liabilities from operations:
Decrease in accounts receivable	270	902
Decrease in other current assets	21	613
Changes in income taxes	(66)	166
Decrease in accounts payable	(2,504)	(1,258)
Increase in other current liabilities	1,197	1,152
Net Cash Provided by Operating Activities	17,100	19,767
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(29,224)	(18,117)
Broadband network expansion funded by stimulus grant	(649)	196
Purchases of available-for-sale marketable securities	(22,853)	(7,003)
Proceeds from sale or maturity of available-for-sale marketable securities	10,220	7,804
Change in restricted cash	1,054
Cash reimbursement received from broadband stimulus grant	1,054
Net Cash Used in Investing Activities	(40,398)	(17,120)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	28,000
Payment of debt issuance costs	(861)
Principal payments on senior secured term loans	(1,938)	(688)
Cash dividends paid on common stock	(3,152)	(3,091)
Principal payments under capital lease obligations	(98)	(112)
Proceeds from stock option exercises and employee stock purchase plan	17	20
Excess tax benefits from share-based compensation		148
Other	(156)	(21)
Net Cash Provided by (Used in) Financing Activities	21,812	(3,744)
Decrease in cash and cash equivalents	(1,486)	(1,097)
Cash and Cash Equivalents:
Beginning of Period	14,140	14,114
End of Period	$ 12,654	$ 13,017

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 1,321	$ 1,217
Other intangibles, accumulated amortization	$ 92,232	$ 90,086
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	55,000,000	55,000,000
Common stock, shares issued	22,795,000	22,579,000
Common stock, shares outstanding	22,747,000	22,544,000
Treasury stock, shares	48,000	35,000

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Stock Plans

3 Months Ended

Mar. 31, 2015

Stock Plans [Abstract]

Stock Plans

Note 10.  Stock Plans

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 March 31, 2015, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan was 5,500,000,and 1,330,976 securities remained available for issuance under the 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 did not issue any stock options during the three months ended March 31, 2015 and issued 203,487 shares of restricted stock under the Equity and Cash Incentive Plan during the three months ended March 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 of the outstanding restricted stock awards vest on a graded vesting schedule over a five year period. 

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 stock 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 terminations.    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 three months ended March 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	-		-
Exercised during the period	(1)		12.15
Forfeited during the period	-		-
Expired during the period	-		-
Stock options outstanding at March 31, 2015	2,225	$	12.49	6.2 years	$	6,977
Stock options exercisable at March 31, 2015	1,423	$	12.31	5.2 years	$	4,652
Total stock options outstanding, vested and expected to vest at March 31, 2015	2,156	$	12.50		$	6,742

The total fair value of options that vested during the three months ended March 31, 2015 was $0.6 million.  As of March 31, 2015, there was $2.4 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.1 years.

The summary of the activity and status of the Company’s restricted stock for the three months ended March 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	203		17.39
Vested during the period	(45)		13.82
Forfeited during the period	(5)		14.57
Restricted stock outstanding at March 31, 2015	767	$	14.31

As of March 31, 2015, there was $6.8 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 2.3 years.

In addition to the Equity and Cash Incentive Plan discussed above, the Company has an employee stock purchase plan which commenced in 2011 with 100,000 shares available.  New common shares will be issued for purchases under this plan.  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 three months ended March 31, 2015,1,231shares were issued under the employee stock purchase plan.  Compensation expense associated with the employee stock purchase plan was not material for the three months ended March 31, 2015.

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Document And Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
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		22,753,503

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Taxes [Abstract]

Income Taxes

Note 11.  Income Taxes 

Income tax expense for the three months ended March 31, 2015 and 2014 was $2.0 million and $3.0 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. The Company’s recurring non-deductible expenses relate primarily to certain non-cash equity-based compensation. 

At March 31, 2015, the Company had federal net operating losses (“NOLs”) of $26.5 million, net of adjustments for unrecognized income tax benefits.  The Company’s NOLs, if not utilized to reduce taxable income in future periods, will expire in varying amounts from 2022 through 2034.  Management 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.

While management believes the Company 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, tax years 2011 and thereafter remain open and subject to federal and state audit examinations.

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Condensed Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Condensed Consolidated Statements Of Income [Abstract]
Operating Revenues	$ 50,495	$ 50,090
Operating Expenses
Network access costs	9,712	10,714
Selling, general and administrative	19,834	17,932
Depreciation and amortization	11,868	10,659
Accretion of asset retirement obligations	34	27
Restructuring charges	633
Total Operating Expenses	42,081	39,332
Operating Income	8,414	10,758
Other Income (Expenses)
Interest expense	(3,486)	(3,974)
Gain on interest rate swap derivatives	82	109
Other (expenses) income, net	(243)	180
Total Other Expenses, net	(3,647)	(3,685)
Income Before Income Taxes	4,767	7,073
Income Tax Expense	2,009	2,978
Net Income	2,758	4,095
Net Income Attributable to Noncontrolling Interests	(34)	(33)
Net Income Attributable to Lumos Networks Corp.	$ 2,724	$ 4,062
Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders
Earnings per share - basic and diluted	$ 0.12	$ 0.18
Cash Dividends Declared per Share - Common Stock		$ 0.14

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Long-Term Debt

3 Months Ended

Mar. 31, 2015

Long-Term Debt [Abstract]

Long-Term Debt

Note 5.  Long-Term Debt

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

(In thousands)	March 31, 2015		December 31, 2014
Credit Facility	$	394,438	$	368,375
Capital lease obligations		4,940		5,008
Long-term debt		399,378		373,383
Less:  current portion of long-term debt		10,506		10,227
Long-term debt, excluding current portion	$	388,872	$	363,156

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 (“Term Loan A”), a $275 million senior secured six-year term loan (“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 Term Loan A and Term Loan B were used to retire the prior first lien 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 March 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 will use 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.   

Pricing of the 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.  Term Loan A matures in 2018 with quarterly payments of 1.25% per annum through December 31, 2016 and 2.50% per annum thereafter.  Term Loan B matures in 2019 with quarterly payments of 1% per annum.  Term Loan C matures in full 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 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 March 31, 2015, the Company’s leverage ratio was 4.00:1.00 and its interest coverage ratio was 7.08:1.00.  The Company was in compliance with its debt covenants as of March 31, 2015.  The Credit Facility has a maximum distributable amount available for restricted payments, including the payment of dividends.  The distributable amount was initially set at $12 million and is reduced by restricted payments and certain other items set forth in the Credit Agreement.  The distributable amount is increased annually by the greater of $12 million or 75% of free cash flow (as defined under the Credit Agreement).  Based on the excess cash flow calculation for the year ended December 31, 2014, the distributable amount was increased by $12 million on January 1, 2015.  The distributable amount as of March 31, 2015 was $14.2 million.

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 swaps 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 combined notional amount under the swap agreements was $183.2 million at March 31, 2015.  The Company recognized a gain on interest rate swap derivatives of $0.1 million for each the three months ended March 31, 2015 and 2014.

In connection with Term Loan C financing in January 2015, the Company deferred an additional $0.9 million in debt issuance costs. Total unamortized debt issuance costs associated with the Credit Facility were $5.7 million and $5.2 million as of March 31, 2015 and December 31, 2014, respectively, which amounts are included in deferred charges and other assets on the condensed consolidated balance sheets and are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs were $0.4 million for each the three months ended March 31, 2015 and 2014, respectively.

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.  These credits are recorded in the condensed consolidated statements of income as an offset to interest expense.  The Patronage credits were $0.4 million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively. 

The aggregate maturities of Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $6.0 million in the remainder of 2015, $8.0 million in 2016, $13.0 million in 2017, $80.5 million in 2018 and $286.8 million in 2019.  The Revolver under the Credit Facility, under which no borrowings are outstanding as of March 31, 2015, matures in full in 2018.

The Company’s blended average interest rate on its long-term debt for the three months ended March 31, 2015 was 3.86%.

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 March 31, 2015, the carrying value and accumulated amortization of the related assets were $3.3 million and $2.0 million, respectively.  The Company also has a financing arrangement with a provider of software services related to the upgrading of internal infrastructure, including certain software licenses, which is classified as a capital lease.  The agreement extends through 2015 with payments due annually.  As of March 31, 2015, the carrying value and accumulated depreciation of the related assets were $5.9 million and $2.1 million, respectively.  As of March 31, 2015, the combined total net present value of the Company’s future minimum lease payments is $4.9 million and the principal portion of these capital lease obligations is due as follows:  $2.4 million in the remainder of 2015, $2.3 million in 2016, $0.1 million in 2017, $0.1 million in 2018 and less than $0.1 million thereafter.

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Disclosures About Segments Of An Enterprise And Related Information

3 Months Ended

Mar. 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: 

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2015:
Operating revenues	$	27,767	$	17,265	$	5,463	$	-	$	50,495
Network access costs		3,645		6,067		-		-		9,712
Network operating and selling costs		7,868		3,548		275		-		11,691
Other general and administrative expenses		3,887		2,023		671		1,562		8,143
Adjusted EBITDA(1)		12,367		5,627		4,517		-		22,511
Capital expenditures		23,343		2,123		-		3,758		29,224

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2014:
Operating revenues	$	26,137	$	18,647	$	5,306	$	-	$	50,090
Network access costs		4,174		6,540		-		-		10,714
Network operating and selling costs		5,922		4,115		326		-		10,363
Other general and administrative expenses		3,324		2,448		674		1,123		7,569
Adjusted EBITDA(1)		12,717		5,544		4,306		-		22,567
Capital expenditures		11,337		2,388		-		4,392		18,117

(1)   The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

The Company’s CODMs do not currently review total assets by segment since the majority of the assets are shared by the segments and centrally-managed.  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 operating segments. 

The following table provides a reconciliation of operating income to Adjusted EBITDA, as defined by the Company, on a consolidated basis for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
(In thousands)	2015		2014
Operating income	$	8,414	$	10,758
Depreciation and amortization and accretion
of asset retirement obligations		11,902		10,686
Sub-total:		20,316		21,444
Amortization of actuarial losses		337		64
Equity-based compensation		1,225		834
Restructuring charges		633		-
Employee separation charges		-		225
Adjusted EBITDA	$	22,511	$	22,567

One of the Company’s carrier customers, AT&T, individually accounted for9% and 10%of the Company’s total revenues for the three months ended March 31, 2015 and 2014, respectively.  Revenues from this carrier customer were derived primarily from network access, data transport and fiber to the cell site services.

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Disclosures About Segments Of An Enterprise And Related Information (Tables)

3 Months Ended

Mar. 31, 2015

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

Summarized Financial Information Of Reportable Segments

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2015:
Operating revenues	$	27,767	$	17,265	$	5,463	$	-	$	50,495
Network access costs		3,645		6,067		-		-		9,712
Network operating and selling costs		7,868		3,548		275		-		11,691
Other general and administrative expenses		3,887		2,023		671		1,562		8,143
Adjusted EBITDA(1)		12,367		5,627		4,517		-		22,511
Capital expenditures		23,343		2,123		-		3,758		29,224

(In thousands)	Data		R&SB		RLECAccess		Corporate (Unallocated)		Total
For the three months ended March 31, 2014:
Operating revenues	$	26,137	$	18,647	$	5,306	$	-	$	50,090
Network access costs		4,174		6,540		-		-		10,714
Network operating and selling costs		5,922		4,115		326		-		10,363
Other general and administrative expenses		3,324		2,448		674		1,123		7,569
Adjusted EBITDA(1)		12,717		5,544		4,306		-		22,567
Capital expenditures		11,337		2,388		-		4,392		18,117

(1)   The Company evaluates performance based upon Adjusted EBITDA (a non-GAAP measure), defined by the Company as net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

Reconciliation Of Operating Income To Adjusted EBITDA

	Three Months Ended March 31,
(In thousands)	2015		2014
Operating income	$	8,414	$	10,758
Depreciation and amortization and accretion
of asset retirement obligations		11,902		10,686
Sub-total:		20,316		21,444
Amortization of actuarial losses		337		64
Equity-based compensation		1,225		834
Restructuring charges		633		-
Employee separation charges		-		225
Adjusted EBITDA	$	22,511	$	22,567

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2015

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 12.  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 condensed consolidated financial statements.

The Company has purchase commitments relating to capital projects totaling $4.6 million as of March 31, 2015, which are expected to be satisfied during the remainder of 2015.

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Equity

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Equity

Note 8.  Equity

Below is a summary of the activity and status of equity as of and for the three months ended March 31, 2015:

(In thousands, except per share amounts)	Common Shares	Treasury Shares	Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss, net of tax		Total Lumos Networks Corp. Stockholders' Equity		Noncontrolling Interests		Total Equity
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.										2,724				2,724				2,724
Other comprehensive income,
net of tax												213		213				213
Equity-based compensation expense						944								944				944
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits)	215	13		2		291		(175)						118				118
Stock option exercises	1					17								17				17
Net income attributable to
noncontrolling interests														-		34		34
Balance, March 31, 2015	22,795	48	$	228	$	144,797	$	(216)	$	(35,843)	$	(12,273)	$	96,693	$	816	$	97,509

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Supplementary Disclosures Of Cash Flow Information

3 Months Ended

Mar. 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 condensed consolidated statements of cash flows for the three months ended March 31, 2015 and 2014: 

	Three Months Ended March 31,
(In thousands)		2015		2014
Cash payments for:
Interest (net of amounts capitalized)	$	2,533	$	2,723
Income taxes		172		31
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable and other accrued liabilities		3,800		3,151
Obligations incurred under capital leases		-		36
Dividends declared on common stock not paid		-		3,104

Cash payments for interest for the three months ended March 31, 2015 and 2014 in the table above are net of $0.8 million and $0.9 million, respectively, of cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $0.3 million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively.

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Fair Value Of Financial Instruments

3 Months Ended

Mar. 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 and the Credit Facility (including the current portion) as of March 31, 2015 and December 31, 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 March 31, 2015 and December 31, 2014.  Marketable securities and interest rate swap derivatives are recorded in the condensed consolidated balance sheets at fair value (see Notes 3 and 5).

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

	Fair Value Measurements at March 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	390	$	-	$	-	$	390
Total cash equivalents		390		-		-		390
Marketable securities:
Commercial paper		-		1,348		-		1,348
Debt securities issued by U.S. Government agencies		-		6,172		-		6,172
Municipal bonds		-		352		-		352
Corporate debt securities		-		21,561		-		21,561
Total marketable securities		-		29,433		-		29,433
Total financial assets	$	390	$	29,433	$	-	$	29,823
Financial Liabilities:
Interest rate swap derivatives	$	-	$	583	$	-	$	583
Total financial liabilities	$	-	$	583	$	-	$	583

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial 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
Financial Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

The fair value of certificates of deposits 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 derivatives were 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.

	March 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	394,438	$	382,127	$	368,375	$	370,769
Capital lease obligations		4,940		4,940		5,008		5,008

The fair value of the Credit Facility was 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 $1.0 million as of March 31, 2015 and $0.9 million as of December 31, 2014, respectively, of which $0.9 million and $0.8 million represents the Company’s investment in CoBank for the respective periods.  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

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Note 9.  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 three months ended March 31, 2015 and 2014 are detailed in the following table.

	Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2014
Numerator:
Net income attributable to Lumos Networks Corp.	$	2,724	$	4,062
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(75)		(97)
Numerator for basic and diluted earnings per common share		2,649		3,965
Denominator:
Weighted average basic shares outstanding		22,599		22,149
Less:  weighted average participating securities and nonvested performance-based restricted shares		(646)		(548)
Denominator for basic earnings per common share		21,953		21,601
Plus:  potentially dilutive restricted shares and stock options		446		476
Denominator for diluted earnings per common share		22,399		22,077
Earnings per share - basic and diluted	$	0.12	$	0.18

For the three months ended March 31, 2015 and 2014, the denominator for diluted earnings per common share excludes 429,222 and 232,482shares, respectively, related to stock options and nonvested restricted stock which would be antidilutive for each period.

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Summary Of Significant Accounting Policies (Schedule Of Net Periodic Benefit Income (Defined Benefit Pension Plan [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost
Interest cost	666	656
Expected return on plan assets	(1,028)	(1,093)
Amortization of loss	248
Net periodic benefit income	$ (114)	$ (437)

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Stock Plans (Summary Of Stock Options Activity) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Stock Plans [Abstract]
Stock options outstanding at December 31, 2014, Shares	2,226,000
Stock options outstanding at December 31, 2014, Weighted-Average Exercise Price per Share	$ 12.49
Granted during the period, Shares	0
Exercised during the period, Shares	(1,000)
Exercised during the period, Weighted-Average Exercise Price per Share	$ 12.15
Forfeited during the period, Shares
Forfeited during the period, Weighted-Average Exercise Price per Share
Stock options outstanding at March 31, 2015, Shares	2,225,000
Stock options outstanding at March 31, 2015, Weighted-Average Exercise Price per Share	$ 12.49
Stock options outstanding at March 31, 2015, Weighted-Average Remaining Contractual Term, in years	6 years 2 months 12 days
Stock options outstanding at March 31, 2015, Aggregate Intrinsic Value	$ 6,977
Stock options exercisable at March 31, 2015, Shares	1,423,000
Stock options exercisable at March 31, 2015, Weighted-Average Exercise Price per Share	$ 12.31
Stock options exercisable at March 31, 2015, Weighted-Average Remaining Contractual Term, in years	5 years 2 months 12 days
Stock options exercisable at March 31, 2015, Aggregate Intrinsic Value	4,652
Total stock options outstanding, vested and expected to vest at March 31, 2015, Shares	2,156,000
Total stock options outstanding, vested and expected to vest at March 31, 2015, Weighted-Average Exercise Price per Share	$ 12.50
Total stock options outstanding, vested and expected to vest at March 31, 2015, Aggregate Intrinsic Value	$ 6,742

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2015

Defined Benefit Plan Disclosure [Line Items]

Schedule Of Allowance For Doubtful Accounts

			Additions
(In thousands)	December 31, 2014		Charged to Expense		Charged to Other Accounts		Deductions		March 31, 2015
Allowance for doubtful accounts	$	1,217	$	136	$	34	$	(66)	$	1,321

Finite-Lived Intangibles Assets

		March 31, 2015					December 31, 2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization			Gross Amount			Accumulated Amortization
Customer relationships	5 to 15 yrs	$	103,108		$	(90,512)		$	103,108		$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862			(1,720)			2,862			(1,680)
Total		$	105,970		$	(92,232)		$	105,970		$	(90,086)

Schedule Of Future Amortization Expense

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2015	$	2,538	$	122	$	2,660
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

Defined Benefit Pension Plan [Member]

Defined Benefit Plan Disclosure [Line Items]

Schedule Of Net Periodic Benefit Income

	Three Months Ended March 31,
(In thousands)	2015		2014
Service cost	$	-	$	-
Interest cost		666		656
Expected return on plan assets		(1,028)		(1,093)
Amortization of loss		248		-
Net periodic benefit income	$	(114)	$	(437)

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Fair Value Of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Of Financial Instruments [Abstract]

Summary Of Financial Assets And Liabilities Measured At Fair Value

	Fair Value Measurements at March 31, 2015
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	390	$	-	$	-	$	390
Total cash equivalents		390		-		-		390
Marketable securities:
Commercial paper		-		1,348		-		1,348
Debt securities issued by U.S. Government agencies		-		6,172		-		6,172
Municipal bonds		-		352		-		352
Corporate debt securities		-		21,561		-		21,561
Total marketable securities		-		29,433		-		29,433
Total financial assets	$	390	$	29,433	$	-	$	29,823
Financial Liabilities:
Interest rate swap derivatives	$	-	$	583	$	-	$	583
Total financial liabilities	$	-	$	583	$	-	$	583

	Fair Value Measurements at December 31, 2014
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial 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
Financial Liabilities:
Interest rate swap derivatives	$	-	$	665	$	-	$	665
Total financial liabilities	$	-	$	665	$	-	$	665

Schedule Of Carrying Amounts And Estimated Fair Values Of Long-Term Debt

	March 31, 2015				December 31, 2014
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	394,438	$	382,127	$	368,375	$	370,769
Capital lease obligations		4,940		4,940		5,008		5,008

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Earnings Per Share (Schedule Of Computation Of Basic And Diluted Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net income attributable to Lumos Networks Corp.	$ 2,724	$ 4,062
Less: net income attributable to Lumos Networks Corp. allocable to participating securities	(75)	(97)
Numerator for basic and diluted earnings per common share	$ 2,649	$ 3,965
Weighted average basic shares outstanding	22,599	22,149
Less: weighted average participating securities and nonvested performance-based restricted shares	(646)	(548)
Denominator for basic earnings per common share	21,953	21,601
Plus: potentially dilutive restricted shares and stock options	446	476
Denominator for diluted earnings per common share	22,399	22,077
Earnings per share - basic and diluted	$ 0.12	$ 0.18

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Long-Term Debt (Narrative) (Details) (USD $)	0 Months Ended	3 Months Ended		1 Months Ended
	Apr. 30, 2013	Mar. 31, 2015 item	Mar. 31, 2014	Jul. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 02, 2015
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
Line of credit, interest coverage ratio, minimum		3.25
Line of credit, leverage ratio		4.00
Line of credit, interest coverage ratio		7.08
Line of credit, initial distributable amount	12,000,000
Line of credit, distributable amount, increase each year		12,000,000
Line of credit, distributable amount, increase each year, free cash flow		75.00%
Line of credit, distributable amount, increase		12,000,000
Line of credit, distributable amount		14,200,000
Fixed interest rate						0.80%	0.50%
Notional amount remaining		183,200,000
Gain on interest rate derivative instruments not designated as hedging instruments		82,000	109,000
Debt issuance costs		861,000
Total unamortized debt issuance costs		5,700,000			5,200,000
Amortization of debt issuance costs		400,000	400,000
Patronage credits		400,000	100,000
Blended average interest rate		3.86%
Future minimum lease payments		4,900,000
Future minimum lease payments, remainder of 2015		2,400,000
Future minimum lease payments, 2016		2,300,000
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		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		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		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		4.25
After December 31, 2018
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum		4.00
Vehicles [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Capital leases		3,300,000
Accumulated amortization		2,000,000
Software Licenses [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Capital leases		5,900,000
Accumulated amortization		2,100,000
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
Term of loan	5 years
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
Term of loan	6 years
Senior Secured Revolving Credit Facility [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
Revolver [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
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]
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]
Basis spread on variable rate		3.25%
Quarterly payments per annum		1.00%
Term Loan A, B And C [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Combined notional amount of swap agreements percentage of aggregate outstanding balance of term loans				50.00%
Maturities of long-term debt, remainder of 2015		6,000,000
Maturities of long-term debt, 2016		8,000,000
Maturities of long-term debt, 2017		13,000,000
Maturities of long-term debt, 2018		80,500,000
Maturities of long-term debt, 2019		286,800,000
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%
Quarterly payments per annum		1.00%
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
Future minimum lease payments, thereafter		$ 100,000

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Condensed Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Condensed Consolidated Statements Of Comprehensive Income [Abstract]
Net Income	$ 2,758	$ 4,095
Other Comprehensive Income, Net of Tax:
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income, net of $131 and $25 of income taxes for the three months ended March 31, 2015 and 2014, respectively (see Note 2)	206	39
Unrealized holding gain on available-for-sale marketable securities, net of $4 and $10 of income taxes for the three months ended March 31, 2015 and 2014, respectively	7	15
Other Comprehensive Income, Net of Tax	213	54
Total Comprehensive Income	2,971	4,149
Less: Comprehensive Income Attributable to Noncontrolling Interests	(34)	(33)
Comprehensive Income Attributable to Lumos Networks Corp.	$ 2,937	$ 4,116

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Cash Equivalents And Marketable Securities

3 Months Ended

Mar. 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 March 31, 2015 and December 31, 2014 are summarized below:

(In thousands)	March 31, 2015		December 31, 2014
Cash equivalents:
Money market mutual funds	$	390	$	49
Corporate debt securities		-		1,357
Total cash equivalents		390		1,406
Marketable securities:
Commercial paper		1,348		998
Debt securities issued by U.S. Government agencies		6,172		2,734
Municipal bonds		352		353
Corporate debt securities		21,561		12,785
Total marketable securities, available-for-sale		29,433		16,870
Total cash equivalents and marketable securities	$	29,823	$	18,276

At March 31, 2015 and December 31, 2014, the carrying values of the investments included in cash and cash equivalents approximated fair value.  The aggregate amortized cost 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 March 31, 2015:

(In thousands)	Total
Due in one year or less	$	18,447
Due after one year through two years		10,986
Total debt securities	$	29,433

The Company received total proceeds of $10.2 million and $7.8 million from the sale or maturity of available-for-sale marketable securities during the three months ended March 31, 2015 and 2014, respectively.  The Company did not recognize any material realized net gains or losses and net unrealized holding gains on available-for-sale marketable securities were less than $0.1 million for each of the three months ended March 31, 2015 and 2014, respectively.  Unrealized holding gains or losses are included in accumulated other comprehensive loss on the condensed consolidated balance sheets.

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Equity (Tables)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Summary Of Activity And Status Of Equity

(In thousands, except per share amounts)	Common Shares	Treasury Shares	Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss, net of tax		Total Lumos Networks Corp. Stockholders' Equity		Noncontrolling Interests		Total Equity
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.										2,724				2,724				2,724
Other comprehensive income,
net of tax												213		213				213
Equity-based compensation expense						944								944				944
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits)	215	13		2		291		(175)						118				118
Stock option exercises	1					17								17				17
Net income attributable to
noncontrolling interests														-		34		34
Balance, March 31, 2015	22,795	48	$	228	$	144,797	$	(216)	$	(35,843)	$	(12,273)	$	96,693	$	816	$	97,509

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Disclosures About Segments Of An Enterprise And Related Information (Narrative) (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Number of customers that individually accounted for approximately 10% of total revenues	1
AT&T [Member]
Segment Reporting Information [Line Items]
Percentage to total revenue	9.00%	10.00%

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Summary of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Principles Of Consolidation And Basis Of Presentation

Principles of Consolidation and Basis of Presentation

The condensed 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, exercise control.  All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2015 and for the three months ended March 31, 2014 contain all adjustments necessary to present fairly in all material respects the Company’s financial position and the results of operations and cash flows for all periods presented on the respective condensed consolidated financial statements included herein.  The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2014 has been derived from the audited consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

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 consolidated 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 interest rate swap derivatives, deferred tax assets, marketable securities, asset retirement obligations and equity-based compensation; goodwill impairment assessments and reserves for employee benefit obligations and income tax uncertainties.

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. 

The Company periodically makes claims for recovery of access charges on certain minutes of use terminated by the Company on behalf of other carriers. The Company recognizes revenue in the period when it is determined that the amounts can be estimated and collection is reasonably assured.

Cash Equivalents And Marketable Securities

Cash Equivalents and Marketable Securities

The Company considers its investment 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 March 31, 2015 and December 31, 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 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 March 31, 2015 and December 31, 2014.

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 is $16.1 million, of which 50% (approximately $8 million) is being funded by a grant from the federal government.  The project is expected to be completed before September 30, 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 can be drawn down ratably following the grant reimbursement approvals, which are contingent on adherence to the program requirements.  The Company received $1.1 million in cash reimbursements during the three months ended March 31, 2015.  As of March 31, 2015, the Company had a $0.9 million receivable for the reimbursable portion of the qualified recoverable expenditures, and the Company’s pledged account balance was $3.2 million. The escrow account is a non-interest bearing account with the Company’s primary commercial bank. 

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 condensed consolidated statements of income.  Bad debt expense forthe three months ended March 31, 2015 and 2014 was $0.1million and $0.2 million, respectively.  The Company’s allowance for doubtful accounts was $1.3 million and $1.2 million as of March 31, 2015 and December 31, 2014, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts from December 31, 2014 to March 31, 2015:

			Additions
(In thousands)	December 31, 2014		Charged to Expense		Charged to Other Accounts		Deductions		March 31, 2015
Allowance for doubtful accounts	$	1,217	$	136	$	34	$	(66)	$	1,321

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 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. 

The Company believes that no impairment indicators exist as of March 31, 2015 that would require the Company 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 periodically reviews and updates based on historical experiences and future expectations.  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 condensed consolidated balance sheets.  At March 31, 2015 and December 31, 2014, other intangibles were comprised of the following: 

		March 31, 2015					December 31, 2014
(Dollars in thousands)	Estimated Life	Gross Amount		Accumulated Amortization			Gross Amount			Accumulated Amortization
Customer relationships	5 to 15 yrs	$	103,108		$	(90,512)		$	103,108		$	(88,406)
Trademarks and franchise rights	10 to 15 yrs		2,862			(1,720)			2,862			(1,680)
Total		$	105,970		$	(92,232)		$	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 periodically 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 three months ended March 31, 2015.  Amortization expense for the three months ended March 31, 2015 and 2014 was $2.1 million and $2.3 million, respectively.

Amortization expense for the remainder of 2015 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2015	$	2,538	$	122	$	2,660
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 certain trademarks 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 intangible assets annually on October 1 and whenever adverse events or changes in circumstances indicate that impairment may have occurred.The Company believes there have been no events or circumstances to cause it to evaluate the carrying amount of goodwill or indefinite-lived intangible assets during the three months ended March 31, 2015.

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 (the “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.

For the three months ended March 31, 2015 and 2014, the components of the Company’s net periodic benefit income for the Pension Plan were as follows: 

	Three Months Ended March 31,
(In thousands)	2015		2014
Service cost	$	-	$	-
Interest cost		666		656
Expected return on plan assets		(1,028)		(1,093)
Amortization of loss		248		-
Net periodic benefit income	$	(114)	$	(437)

Pension plan assets were valued at $57.9 million and $58.4 million at March 31, 2015 and December 31, 2014, respectively.  No funding contributions were made during the three months ended March 31, 2015, and the Company does not expect to make a funding contribution during the remainder of 2015.

The Company also provides life insurance benefits for retired employees that meet eligibility requirements through two postretirement welfare benefit plans (the “Other Postretirement Benefit Plans”).  The Company had provided retiree medical benefits under these plans until those benefits were terminated effective December 31, 2014.  The net periodic benefit cost for the Other Postretirement Benefit Plans was $0.2 million for the three months ended March 31, 2014, which included interest cost of $0.1 million and less than $0.1 million of service cost and amortization of actuarial losses. The Company did not incur any significant costs associated with these plans during the three months ended March 31, 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended March 31, 2015 and 2014 of $0.1 million, and $0.1 million and less than $0.1 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The total amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for the three months ended March 31, 2015 and 2014 was $0.3 million and $0.1million, respectively, all of which has been reclassified to selling, general and administrative expenses on the condensed consolidated statements of income.

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 condensed 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 is 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 10).  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 and the Company’s 401(k) matching contributions was $1.2 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of income. 

Future charges for equity-based compensation related to instruments outstanding at March 31, 2015 are estimated to be $3.6 million for the remainder of 2015, $3.3 million in 2016, $2.5 million in 2017, $0.6 million in 2018, and less than $0.1 million thereafter.

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 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.  The new standard is effective for the Company on January 1, 2017.  Early application is not permitted.  The standard 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.  ASU2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  The Company is still evaluating what impact, if any, ASU 2015-02 will have on the Company’s consolidated financial statements and disclosures. 

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  ASU 2015-03 requires retrospective adoption and will be effective for the company beginning January 1, 2016.  Early adoption is permitted.  The Company is still evaluating the effect that ASU 2015-03 will have on the Company’s consolidated financial statements and disclosures.