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 September 30, 2016

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 were 23,576,258shares of the registrant’s common stock outstanding as of the close of business on November 4, 2016.

LUMOS NETWORKS CORP.
2016 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.	24
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4.  Controls and Procedures.	36

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.	37
Item 1A.  Risk Factors.	37
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.	37
Item 5.  Other Information.	37
Item 6.  Exhibits.	38

2

Part I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

Condensed ConsolidatedBalance Sheets

Lumos Networks Corp.

(Unaudited)

(In thousands)	September 30, 2016		December 31, 2015
Assets
Current Assets
Cash and cash equivalents	$	33,176	$	13,267
Marketable securities		38,790		88,811
Accounts receivable, net of allowance of $1,074  ($1,235 in 2015)		24,306		20,796
Other receivables		1,606		852
Income tax receivable		447		568
Prepaid expenses and other		5,614		7,215
Total Current Assets		103,939		131,509
Securities and Investments		1,501		1,180
Property, Plant and Equipment
Land and buildings		24,134		23,019
Network plant and equipment		713,754		624,360
Furniture, fixtures and other equipment		51,117		48,266
Total in service		789,005		695,645
Under construction		26,217		51,663
		815,222		747,308
Less accumulated depreciation and amortization		283,167		248,364
Total Property, Plant and Equipment, net		532,055		498,944
Other Assets
Goodwill		100,297		100,297
Other intangibles, less accumulated amortization of $96,823  ($94,892 in 2015)		9,147		11,078
Deferred charges and other assets		6,765		2,364
Total Other Assets		116,209		113,739
Total Assets	$	753,704	$	745,372

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)	September 30, 2016		December 31, 2015
Liabilities and Equity
Current Liabilities
Current portion of long-term debt	$	12,303	$	10,400
Accounts payable		9,292		14,182
Advance billings and customer deposits		14,231		13,849
Accrued compensation		1,602		1,191
Accrued operating taxes		5,143		3,907
Other accrued liabilities		4,642		4,974
Total Current Liabilities		47,213		48,503
Long-term Liabilities
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion		457,095		456,300
Retirement benefits		16,357		17,029
Deferred income taxes, net		91,129		89,193
Other long-term liabilities		2,104		2,016
Total Long-term Liabilities		566,685		564,538
Commitments and Contingencies
Equity
Preferred stock, par value $0.01 per share, authorized 100 shares, none issued		-		-
Common stock, par value $0.01 per share, authorized 55,000 shares; 23,558 shares issued and 23,539 outstanding (23,005 shares issued and 22,992 shares outstanding in 2015)		236		230
Additional paid-in capital		179,327		171,746
Treasury stock, 19 shares at cost (13 shares in 2015)		(127)		(103)
Accumulated deficit		(29,168)		(28,541)
Accumulated other comprehensive loss, net of tax		(11,306)		(11,940)
Total Lumos Networks Corp. Stockholders' Equity		138,962		131,392
Noncontrolling Interests		844		939
Total Equity		139,806		132,331
Total Liabilities and Equity	$	753,704	$	745,372

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

Condensed ConsolidatedStatements of Operations

Lumos Networks Corp.

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	2016		2015		2016		2015
Operating Revenues	$	51,771	$	50,969	$	155,013	$	152,417
Operating Expenses
Cost of Revenue, exclusive of depreciation and amortization shown separately below		9,657		10,546		29,948		31,682
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		20,505		19,940		64,056		58,531
Depreciation and amortization		12,739		11,803		37,028		35,112
Accretion of asset retirement obligations		23		33		91		105
Restructuring charges		(384)		-		1,823		637
Total Operating Expenses		42,540		42,322		132,946		126,067
Operating Income		9,231		8,647		22,067		26,350
Other Income (Expenses)
Interest expense		(7,164)		(5,817)		(21,165)		(13,022)
Gain on interest rate swap derivatives		-		198		-		445
Other income (expenses), net		48		58		320		(89)
Total Other Expenses, net		(7,116)		(5,561)		(20,845)		(12,666)
Income Before Income Taxes		2,115		3,086		1,222		13,684
Income Tax Expense		1,046		1,774		1,712		6,221
Net Income (Loss)		1,069		1,312		(490)		7,463
Net Income Attributable to Noncontrolling Interests		(46)		(33)		(137)		(111)
Net Income (Loss) Attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Basic and Diluted Earnings (Loss) per Common Share Attributable to Lumos Networks Corp. Stockholders:
Basic and diluted earnings (loss) per share	$	0.04	$	0.06	$	(0.03)	$	0.32

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

5

Condensed ConsolidatedStatements of ComprehensiveIncome (Loss)

Lumos Networks Corp.

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Net Income (Loss)	$	1,069	$	1,312	$	(490)	$	7,463
Other Comprehensive Income (Loss):
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income (see Note 2)		338		337		1,013		1,012
Unrealized holding (loss) gain on available-for-sale marketable securities		(11)		20		27		31
Income Taxes		(128)		(139)		(406)		(406)
Other Comprehensive Income, Net of Tax		199		218		634		637
Total Comprehensive Income		1,268		1,530		144		8,100
Less:  Comprehensive Income Attributable to Noncontrolling Interests		(46)		(33)		(137)		(111)
Comprehensive Income Attributable to Lumos Networks Corp.	$	1,222	$	1,497	$	7	$	7,989

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

6

Condensed Consolidated Statements of Cash Flows

Lumos Networks Corp.

(Unaudited)

	Nine Months Ended September 30,
(In thousands)	2016		2015
Cash Flows from Operating Activities:
Net (Loss) Income	$	(490)	$	7,463
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		35,097		31,035
Amortization		1,931		4,077
Accretion of asset retirement obligations		91		105
Deferred income taxes		1,374		5,802
Gain on interest rate swap derivatives		-		(445)
Equity-based compensation expense		8,477		4,236
Amortization of debt discounts and issuance costs		3,345		1,648
Retirement benefits, net of cash contributions and distributions		340		(171)
Other		649		206
Changes in assets and liabilities from operations:
(Increase) decrease in accounts receivable		(3,732)		836
Increase in other assets		(3,484)		(2,689)
Changes in income taxes		28		(24)
Increase (decrease) in accounts payable		436		(2,776)
Increase in other current liabilities		1,725		2,702
Net Cash Provided by Operating Activities		45,787		52,005
Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(65,280)		(80,118)
Broadband network expansion funded by stimulus grant		-		(2,578)
Purchases of available-for-sale marketable securities		(57,142)		(74,088)
Proceeds from sale or maturity of available-for-sale marketable securities		107,075		29,903
Change in restricted cash		-		3,838
Cash reimbursement received from broadband stimulus grant		-		3,838
Net Cash Used in Investing Activities		(15,347)		(119,205)
Cash Flows from Financing Activities:
Proceeds from issuance of senior secured term loan		-		28,000
Proceeds from issuance of unsecured notes, net of debt discount		-		148,500
Payment of financing costs		-		(8,192)
Principal payments on senior secured term loans		(6,024)		(45,953)
Capital distribution to noncontrolling interests		(232)		-
Cash dividends paid on common stock		-		(3,152)
Principal payments under capital lease obligations		(2,551)		(2,378)
Proceeds from stock option exercises and employee stock purchase plan		630		293
Repurchases of common stock to settle tax withholding obligations on employee stock awards		(2,354)		(295)
Other		-		28
Net Cash (Used in) Provided by Financing Activities		(10,531)		116,851
Increase in cash and cash equivalents		19,909		49,651
Cash and Cash Equivalents:
Beginning of Period		13,267		14,140
End of Period	$	33,176	$	63,791

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.

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 and nine months ended September 30, 2016 and three and nine months ended September 30, 2015 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 and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2015 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, 2015.Certain presentation changes have been made within the operating expense line items on the condensed consolidated statements of operations and prior period amounts have been reclassified in order to conform to the current year presentation. Specifically, the previously reported line item “network access costs” has been removed and the new line item “cost of revenue” has been added along with the necessary operating expense reclassifications. These reclassifications were not the result of an error and have no effect on previously reported operating income, net income or earnings per share.

Accounting Estimates

The preparation of condensed 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 condensed 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 and customer credits, deferred tax assets, marketable securities, asset retirement obligations, stock warrants and equity-based compensation,goodwill impairment assessments, 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 or 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

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 September 30, 2016 and December 31, 2015 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 September 30, 2016 and December 31, 2015.

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires advance payment for certain services.  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 in the condensed consolidated statements of operations.  Bad debt expense forthe three months ended September 30, 2016 and 2015 was less than $0.1million and $0.2 million, respectively, and bad debt expense for the nine months ended September 30, 2016 and 2015 was $0.2 million and $0.4 million, respectively.  The Company’s allowance for doubtful accounts and customer credits was $1.1 million and $1.2 million as of September 30, 2016 and December 31, 2015, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts and customer credits from December 31, 2015 to September 30, 2016:

			Additions
(In thousands)	December 31, 2015		Charged to Expense		Charged to Other Accounts		Deductions		September 30, 2016
Allowance for doubtful accounts and customer credits	$	1,235	$	213	$	(76)	$	(298)	$	1,074

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 September 30, 2016 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 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 an indefeasible right of use agreement, is included with depreciation expense.

9

Intangibles with a finite life are classified as other intangibles on the condensed consolidated balance sheets.  At September 30, 2016 and December 31, 2015, other intangibles were comprised of the following:

			September 30, 2016				December 31, 2015
(Dollars in thousands)	Estimated Life	Gross Amount			Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$		103,108	$	(94,860)	$	103,108	$	(93,051)
Trademarks and franchise rights	10 to 15 yrs			2,862		(1,963)		2,862		(1,841)
Total		$		105,970	$	(96,823)	$	105,970	$	(94,892)

Included in the above amounts are indefinite-lived intangible assetsof $0.3 million, which are not subject to amortization.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 or nine months ended September 30, 2016.  Amortization expense for the three months ended September 30, 2016 and 2015was $0.6 million and $0.7 million, respectively, and amortization for the nine months ended September 30, 2016 and 2015 was $1.9 million and $4.1 million, respectively.

Amortization expense for the remainder of 2016 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2016	$	603	$	41	$	644
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194
2021		1,112		1		1,113

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 nine months ended September 30, 2016.

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.  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 and nine months ended September 30, 2016 and 2015, the components of the Company’s net periodic benefit cost (income) for the Pension Plan were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Service cost	$	-	$	-	$	-	$	-
Interest cost		674		666		2,022		1,998
Expected return on plan assets		(884)		(1,028)		(2,652)		(3,084)
Amortization of loss		262		248		786		743
Net periodic benefit cost (income)	$	52	$	(114)	$	156	$	(343)

10

Pension Plan assets were valued at $54.8 million and $53.9 million at September 30, 2016 and December 31, 2015, respectively.  No funding contributions were madeduring the three or nine months ended September 30, 2016, and the Company does not expect to make a funding contribution during the remainder of 2016.

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 Company did not incur any significant costs associated with these plans during the three ornine months ended September 30, 2016 or 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended September 30, 2016 and 2015 of $0.1 million, and less than $0.1 million of this expense for each of these periods relates to the amortization of actuarial loss.  Expense for nonqualified pension plans for each of the nine months ended September 30, 2016 and 2015 was $0.4 million, and $0.2 million and $0.3 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The gross amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for each of the three months ended September 30, 2016 and 2015was $0.3 million and $1.0 million for each of the nine months ended September 30, 2016 and 2015,  all of which has been reclassified to selling, general and administrative on the condensed consolidated statements of operations. Income taxes associated with these reclassifications were $0.1 million for each of the three months ended September 30, 2016 and 2015 and $0.4 million for each of the nine months ended September 30, 2016 and 2015.  

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.

Total equity-based compensation expense related to all of the share-based awards, annual employee bonuses paid in the form of immediately vested shares and the Company’s 401(k) matching contributions was $1.7 million and $1.5 million for the three months ended September 30, 2016 and 2015, respectively,and $8.5 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of operations. 

Future charges for equity-based compensation related to instruments outstanding at September 30, 2016 are estimated to be $1.1 million for the remainder of 2016, $3.4 million in 2017, $1.5 million in 2018, $0.2 million in 2019, 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 FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606)-  Deferral of the

11

Effective Date, which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Gross versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which addresses narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in ASU 2016-12 provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The Company will implement the provisions of ASU 2014-09, ASU 2016-08, ASU 2016-10, and ASU 2016-12 as of January 1, 2018. The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

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

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company does not expect the future adoption of ASU 2016-01 to have a material impact on its consolidated financial statements and disclosures.

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

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplifies the accounting for share-based payment transactions.  Among other things, ASU 2016-09 provides for (i) the simplification of accounting presentation of excess tax benefits and tax deficiencies, (ii) an accounting policy election regarding forfeitures to use an estimate or account for when incurred, and (iii) simplification of cash flow presentation for statutory tax rate withholding. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, with early adoption permitted.  The transition method required by ASU 2016-09varies by amendment. The Company is still evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and disclosures.

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Note 3.  Cash Equivalents and Marketable Securities

The Company’s cash equivalents and available-for-sale marketable securities reported at fair value as of September 30, 2016 and December 31, 2015 are summarized below:

(In thousands)	September 30, 2016		December 31, 2015
Cash equivalents:
Money market mutual funds	$	6,352	$	6,746
Commercial paper		11,970		1,000
Municipal bonds		1,860		-
Corporate debt securities		1,149		1,055
Total cash equivalents		21,331		8,801
Marketable securities:
Variable rate demand notes		13,395		-
Commercial paper		9,955		8,684
Debt securities issued by U.S. Government agencies		-		35,155
Corporate debt securities		15,440		44,972
Total marketable securities, available-for-sale		38,790		88,811
Total cash equivalents and marketable securities	$	60,121	$	97,612

At September 30, 2016 and December 31, 2015, 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 September 30, 2016:

(In thousands)	Total
Due in one year or less	$	25,395
Due after one year through five years		1,400
Due after five years through ten years		5,195
Due after ten years		6,800
Total debt securities	$	38,790

The Company received total proceeds of $32.3 million and $11.9 million from the sale or maturity of available-for-sale marketable securities during the three months ended September 30, 2016 and 2015, respectively, and $107.1 million and $29.9 million during the nine months ended September 30, 2016 and 2015, respectively.  The Company did not recognize any material realized net gains or losses and net unrealized holding gains or losses on available-for-sale marketable securities were less than $0.1 million for each of the three and nine months ended September 30, 2016 and 2015, 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- 13  

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 the Company’s 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		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2016:
Operating revenues	$	31,373		15,863		4,535		-	$	51,771
Cost of revenue		4,537		5,120		-		-		9,657
Gross profit		26,836		10,743		4,535		-		N/A
Direct operating and selling costs		2,014		1,227		175		-		3,416
Indirect operating costs		6,717		2,354		50		-		9,121
Corporate general and administrative costs		3,538		1,439		340		2,651		7,968
Adjusted EBITDA(1),(2)		14,567		5,723		3,970		-		N/A
Capital expenditures		18,197		2,565		-		(673)		20,089
For the nine months ended September 30, 2016:
Operating revenues	$	91,958		47,840		15,215		-	$	155,013
Cost of revenue		13,669		16,279		-		-		29,948
Gross profit		78,289		31,561		15,215		-		N/A
Direct operating and selling costs		5,600		3,509		492		-		9,601
Indirect operating costs		19,470		7,031		156		-		26,657
Corporate general and administrative costs		11,512		4,810		1,334		10,142		27,798
Adjusted EBITDA(1),(2)		41,707		16,211		13,233		-		N/A
Capital expenditures		60,379		6,988		-		(2,087)		65,280

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2015:
Operating revenues	$	28,623		16,560		5,786		-	$	50,969
Cost of revenue		4,658		5,888		-		-		10,546
Gross profit		23,965		10,672		5,786		-		N/A
Direct operating and selling costs		1,465		1,329		177		-		2,971
Indirect operating costs		6,606		2,586		58		-		9,250
Corporate general and administrative costs		3,679		1,737		512		1,791		7,719
Adjusted EBITDA(1),(2)		12,215		5,020		5,039		-		N/A
Capital expenditures		25,418		1,538		-		(2,187)		24,769
For the nine months ended September 30, 2015:
Operating revenues	$	84,479		50,835		17,103		-	$	152,417
Cost of revenue		12,957		18,725		-		-		31,682
Gross profit		71,522		32,110		17,103		-		N/A
Direct operating and selling costs		4,449		3,535		511		-		8,495
Indirect operating costs		19,379		7,560		170		-		27,109
Corporate general and administrative costs		11,015		5,193		1,471		5,248		22,927
Adjusted EBITDA(1),(2)		36,679		15,822		14,951		-		N/A
Capital expenditures		72,055		6,924		-		1,139		80,118

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(1)     Adjusted EBITDA is used by the Company’s CODMs to evaluate performance. Adjusted EBITDA, as defined by the Company, is 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, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, acquisition andseparation related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

(2)In the first quarter of 2016, the Company refined its methodology for allocating certain operating costs to the segments, resulting in immaterial changes to previously reported segment Adjusted EBITDA amounts for the three and nine months ended September 30, 2015.

N/A – Not Applicable (as totals are not presented in the consolidated statements of operations)

The Company’s CODMs do not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments.  However, total assets may be allocated to the segments in the future should the CODMs decide to manage the business in that manner.  Management does review capital expenditures using success-based metrics that allow the Company to determine which segment product groups are driving investment in the network.  Depreciation and amortization expense and certain corporate expenses that are excluded from the measurement of segment profit or loss are not allocated to the operating segments.

The following table provides a reconciliation of the total of the Company’s reportable segments measure of profit to the Company’s consolidated income before income taxesfor the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015			2016	2015
Data Adjusted EBITDA	$	14,567	$	12,215	$	41,707	$	36,679
R&SB Adjusted EBITDA		5,723		5,020		16,211		15,822
RLEC Access Adjusted EBITDA		3,970		5,039		13,233		14,951
Total reportable segments measure of profit		24,260		22,274		71,151		67,452
Interest expense		(7,164)		(5,817)		(21,165)		(13,022)
Gain on interest rate swap derivatives		-		198		-		445
Other income (expense), net		48		58		320		(89)
Depreciation and amortization and accretion of asset retirement obligations		(12,762)		(11,836)		(37,119)		(35,217)
Amortization of actuarial losses		(338)		(337)		(1,013)		(1,012)
Equity-based compensation		(1,661)		(1,454)		(8,477)		(4,236)
Restructuring charges		384		-		(1,823)		(637)
Acquisition and separation related charges		(652)		-		(652)		-
Income before income taxes	$	2,115	$	3,086	$	1,222	$	13,684

The Company does not currently have any single customer that individually accounted for more than 10% of the Company’s total operating revenues. The Company’s five largest carrier customers, in the aggregate, accounted for32%of the Company’s total operating revenues for each of the three and nine months ended September 30, 2016 and 31%of the Company’s total operating revenues for each of the three and nine months ended September 30, 2015. Revenues from these carrier customers were derived primarily from network access, data transport and FTTC services.

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Note 5.  Long-Term Debt

As of September 30, 2016 and December 31, 2015, the Company’s outstanding long-term debt consisted of the following: 

	September 30, 2016				December 31, 2015
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	342,393	$	3,634	$	348,415	$	4,705
8% Notes due 2022		150,000		27,333		150,000		29,607
Capital lease obligations		7,972		-		2,597		-
Long-term debt		500,365		30,967		501,012		34,312
Less:  Current portion of long-term debt		12,303		-		10,400		-
Long-term debt, excluding current portion	$	488,062	$	30,967	$	490,612	$	34,312

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, which was added through an amendment to the Credit Facility dated January 2, 2015, (“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.  The Company used the net proceeds from Term Loan C to fund new FTTC projects. As of September 30, 2016,  no borrowings were outstanding under the Revolver.

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

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

The amended Credit Facility includes various restrictions and conditions, including a maximum leverage ratio of 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 amended Credit Facility also sets a minimum interest rate coverage ratio of 3.25:1.00.  At September 30, 2016, the Company’s leverage ratio was 3.67:1.00 and its interest coverage ratio was 7.28:1.00.  The Company was in compliance with its debt covenants as of September 30, 2016.  

The Company’s effective interest rate on its Credit Facility for the nine months ended September 30, 2016 was 4.13%.

8% Notes due 2022

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

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of the aforementioned $1.5 million purchasers discount.  The discount on the 8% Notes is being amortized to interest expense over the life of the debt using the effective interest method. See Note 10 for additional details regarding the Warrants.

In connection with the issuance of the 8% Notes in August 2015 and the Term Loan C financing in January 2015, the Company deferred an additional $6.0 million and $0.9 million, respectively, in debt issuance costs.  Total unamortized debt issuance costs associated with the 8% Notes and Credit Facility are included in the table above, which amounts are included as a reduction of long-term debt in the condensed consolidated balance sheets in accordance with ASU2015-03, Simplifying the Presentation of Debt Issuance Costs. These costs are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs was  $1.1 million and $0.8 million for the three months ended September 30, 2016 and 2015, respectively,  and $3.3 million and $1.6 million for the nine months ended September 30, 2016 and 2015, respectively.

The Company’s effective interest rate on the 8% Notes for the nine months ended September 30, 2016 was 12.55%, which represents the contractual rate adjusted for the aforementioned discount and deferred debt issuance costs.

CoBank Patronage Credits

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 operations as an offset to interest expense.  The Patronage credits were $0.3 million and $0.2 million for the three months ended September 30, 2016 and 2015, respectively, and $0.8million and $1.0 million for the nine months ended September 30, 2016 and 2015. 

The aggregate maturities of Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $2.0 million in the remainder of 2016, $13.0 million in 2017, $70.9 million in 2018 and $256.5 million in 2019. The Revolver under the Credit Facility, under which no borrowings are outstanding as of September 30, 2016, matures in full in 2018. The 8% Notes mature for $150.0 million in 2022. 

Capital lease obligations

In addition to the long-term debt discussed above, the Company has capital leases on vehicles with original lease terms of four to five years.  The Company also has a  financing arrangement classified as a capital lease related to a fiber indefeasible right of use (“IRU”), which was entered into in January 2016.  The IRU network capacity arrangement extends through 2035 with payments due monthly. During the second quarter of 2016, the Company fully satisfied afinancing obligation related to a software licensing agreemententered into during 2013.  As of September 30, 2016, the combined total net present value of the Company’s future minimum lease payments is $8.0 million and the principal portion of these capital lease obligations is due as follows:  $0.2 million in the remainder of 2016, $0.5 million in 2017, $0.5 million in 2018, $0.4 million in 2019, $0.4 million in 2020 and $6.0 million thereafter. 

The historical cost and accumulated amortization for each of the related assets associated with the capital leases is as follows as of September 30, 2016:

	September 30, 2016
(In thousands)	Historical Cost		Accumulated Amortization
Vehicles	$	2,723	$	(1,666)
Network capacity IRU		8,871		(332)
Total	$	11,594	$	(1,998)

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 nine months ended September 30, 2016 and 2015: 

	Nine Months Ended September 30,
(In thousands)		2016		2015
Cash payments for:
Interest (net of amounts capitalized)	$	17,634	$	9,462
Income taxes		304		393
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable		2,930		7,683
Obligations incurred under capital leases		7,936		-

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Cash payments for interest for the nine months ended September 30, 2016 in the table above areeach net of $0.8 millionof cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $0.8 million and $0.9 millionfor the nine months ended September 30, 2016 and 2015, respectively.  

Note 7.  Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, accounts payable, capital lease obligations (including the current portion), accrued liabilities, the Credit Facility (including the current portion) and the 8% Notes as of September 30, 2016 and December 31, 2015.  The carrying values of cash and cash equivalents, accounts receivable, accounts payable, capital lease obligations and accrued liabilities approximated their fair values at September 30, 2016 and December 31, 2015.  Marketable securities are recorded in the condensed consolidated balance sheets at fair value (see Note 3).

The following tables present the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at September 30, 2016
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	6,352	$	-	$	-	$	6,352
Commercial paper		-		11,970		-		11,970
Municipal bonds		-		1,860		-		1,860
Corporate debt securities		-		1,149		-		1,149
Total cash equivalents		6,352		14,979		-		21,331
Marketable securities:
Variable rate demand notes		-		13,395		-		13,395
Commercial paper		-		9,955		-		9,955
Corporate debt securities		-		15,440		-		15,440
Total marketable securities		-		38,790		-		38,790
Total financial assets	$	6,352	$	53,769	$	-	$	60,121

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

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The fair value of commercial paper, variable rate demand notes 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 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.

	September 30, 2016				December 31, 2015
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	338,759	$	306,922	$	343,710	$	298,400
8% Notes Due 2022		122,667		133,462		120,393		132,028
Capital Lease Obligations		7,972		7,972		2,597		2,597

The respective fair values of the Credit Facility and the 8% Noteswere 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 $1.5 million as of September 30, 2016 and $1.2 millionDecember 31, 2015, of which $1.3 million and $1.1 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 nine months ended September 30, 2016:

(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, 2015	23,005	13	$	230	$	171,746	$	(103)	$	(28,541)	$	(11,940)	$	131,392	$	939	$	132,331
Net loss attributable to
Lumos Networks Corp.	-	-		-		-		-		(627)		-		(627)		-		(627)
Other comprehensive income,
net of tax	-	-		-		-		-		-		634		634		-		634
Equity-based compensation expense	-	-		-		7,848		-		-		-		7,848		-		7,848
Tax shortfalls from share-based
compensation	-	-		-		(158)		-		-		-		(158)		-		(158)
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits\
and settlement of tax withholding
obligations on vesting of shares)	517	72		6		(683)		(752)		-		-		(1,429)		-		(1,429)
Stock option exercises	36	(66)		-		574		728		-		-		1,302		-		1,302
Capital distribution to noncontrolling
interests	-	-		-		-		-		-		-		-		(232)		(232)
Net income attributable to
noncontrolling interests	-	-		-		-		-		-		-		-		137		137
Balance, September 30, 2016	23,558	19	$	236	$	179,327	$	(127)	$	(29,168)	$	(11,306)	$	138,962	$	844	$	139,806

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Note 9.  Earnings (Loss) per Share

The Company computes basic earnings (loss) per share by dividing net income (loss) 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 (loss) 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 (loss) per share for the three and nine months ended September 30, 2016 and 2015 are detailed in the following table.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	2016		2015		2016		2015
Numerator:
Net income (loss) attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(36)		(44)		-		(241)
Numerator for basic and diluted earnings (loss) per common share		987		1,235		(627)		7,111
Denominator:
Weighted average basic shares outstanding		23,463		22,872		23,300		22,775
Less:  weighted average participating securities and nonvested performance-based restricted shares		(846)		(806)		(804)		(767)
Denominator for basic earnings (loss) per common share		22,617		22,066		22,496		22,008
Plus:  potentially dilutive restricted shares and stock options		237		202		-		319
Denominator for diluted earnings (loss) per common share		22,854		22,268		22,496		22,327
Basic and diluted earnings (loss) per share	$	0.04	$	0.06	$	(0.03)	$	0.32

For the three months ended September 30, 2016 and 2015, the denominator for diluted earnings per share excludes 1,117,585 and 1,016,756shares, respectively, related to stock options and nonvested restricted stock which would be antidilutive for each period.For thenine months ended September 30, 2016, the denominator for diluted loss per common share is equivalent to the denominator for basic loss per common share because the addition of stock options and unvested restricted stock (1,008,939 and 469,509, respectively) would be antidilutive for the period. For the nine months ended September 30, 2015, the denominator for diluted earnings per common share excludes 836,149 shares related to stock options and nonvested restricted stock which would be antidilutive for the period.The earnings (loss)per share calculations for the three and nine months ended September 30, 2016 and 2015also exclude the 5,500,000outstanding stock warrants described in Note 10 as they would be antidilutive for eachperiod.

Note 10.  Stock Options, Restricted Stock and Stock Warrants

Stock Options and Restricted Stock

The Company has an Equity and Cash Incentive Plan administered by the Compensation Committee of the Company’s board of directors, which permits the grant of long-term incentives to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, incentive awards, other stock-based awards and dividend equivalents.  As of September 30, 2016, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan was 5,500,000and 920,672 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 issued no stock options and292,804shares of restricted stock under the Equity and Cash Incentive Plan during the nine months ended September 30, 2016.  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. 

A summary of the activity and status of the Company’s stock options for the nine months ended September 30, 2016 is as follows:

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(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, 2015	2,182	$	12.57
Granted during the period	-		-
Exercised during the period	(102)		12.73
Forfeited during the period	(33)		14.04
Expired during the period	(269)		13.71
Stock options outstanding at September 30, 2016	1,778	$	12.36	5.5 years	$	4,249
Stock options exercisable at September 30, 2016	1,317	$	12.12	5 years	$	3,364
Total stock options outstanding, vested and expected to vest at September 30, 2016	1,751	$	12.37		$	4,167

The total fair value of options that vested during the nine months ended September 30, 2016 was $0.6  million. As of September 30, 2016, there was $1.0 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.8 years.

A summary of the activity and status of the Company’s restricted stock for the nine months ended September 30, 2016, is as follows: 

(In thousands, except per share amounts)	Shares		Weighted-Average Grant Date Fair Value per Share
Restricted stock outstanding at December 31, 2015	861	$	14.37
Granted during the period	293		11.97
Vested during the period	(229)		12.20
Forfeited during the period	(93)		16.04
Restricted stock outstanding at September 30, 2016	832	$	13.89

As of September 30, 2016, there was $5.3 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 1.8 years.

Stock Warrants

A summary of the activity and status of the Company’s stock warrants for the nine months ended September 30, 2016, is as follows:

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2015	5,500	$	13.99
Granted during the period	-		-
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at September 30, 2016	5,500	$	13.99

Outstanding warrants consist of those issued on August 6, 2015 in conjunction with the 8% Notes issuance discussed in Note 5 (the “Warrants”). The Warrants are fully vested and exercisable and may be net-share settled on a cashless basis only until they expire on August 6, 2022.  A portion of the net proceeds from the 8% Notes issuance was allocated to the equity-classified Warrants based on the relative fair value of the instruments.

Note 11.  Income Taxes

Income tax expensefor the three and nine months ended September 30, 2016was $1.0 million and $1.7 million, respectively,  which represents the federal statutory tax rate applied to pre-tax income (loss) and the effects of state income taxes and certain non-deductible charges for each period.  Income tax expense for the three and nine months ended September 30, 2015was $1.8 million and $6.2 million, respectively. The Company’s recurring non-deductible expenses relate primarily to certain non-cash equity-based

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compensation andnon-deductible interest on the 8% Notes, which are treated as applicable high yield discount obligations (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code, as amended.

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  2013 and thereafter remain open and subject to federal and state audit examinations.

Note 12.  Related Party Transactions

ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement.  Facility lease revenue from ValleyNet was approximately $1.3 million and $1.2 million forthe three months ended September 30, 2016 and 2015,  respectively,and $3.7 million and $3.5million for the nine months ended September 30, 2016 and 2015, respectively,which is presented in the Company’s data segment revenues.  The Company had accounts receivable from ValleyNet of $0.4 million at both September 30, 2016 and December 31, 2015.  The Company also leases and resells capacity from ValleyNet.  The total lease expense was $0.3 million and $0.4 millionforthe three months ended September 30, 2016 and 2015, respectively,and $0.9 million for each of the nine months ended September 30, 2016 and 2015.

Note 13. Restructuring Charges

In January 2016, the Company commenced an employee reduction-in-force. Restructuring costs, consisting of employee severance and termination benefits, of $1.8 million were recognized during the nine months ended September 30, 2016. This amount is net of an adjustment of  $0.4 million recorded in the three months ended September 30, 2016 to reduce previously accrued amounts to reflect changes in estimated severance obligations. The Company does not expect to incur additional costs associated with these restructuring activities in future periods.

The following table provides a break-down of these costs by business segment for the nine months ended September 30, 2016:

(In thousands)	Data		R&SB		RLEC Access		Total
Employee severance and termination benefits	$	1,382	$	376	$	65	$	1,823
Total restructuring charges	$	1,382	$	376	$	65	$	1,823

A liability for restructuring charges in the amount of $0.4 million is included in the Company’s condensed consolidated balance sheet as of September 30, 2016, related to employee termination costs accrued, but not yet paid. Below is a summary of the restructuring liability balance as of September 30, 2016:

(In thousands)		Employee Severance and Termination Benefits		Total
Beginning balance at December 31, 2015	$	-	$	-
Additions, net of adjustments		1,823		1,823
Payments		(1,445)		(1,445)
Ending balance at September 30, 2016	$	378	$	378

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Note 14.  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 $2.9 million as of September 30, 2016, which are expected to be satisfied during the remainder of 2016.

Note 15. Subsequent Event

On November 2, 2016, the Company entered into an agreement to acquire Clarity Communications, LLC, a North Carolina based fiber bandwidth provider for a total purchase price of $15 million, $10 million of which is due in cash upon closing with the remaining $5 million subject to certain earnout provisions over a two year period following the closing date.

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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, 2015.

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 9,200route-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 overall strategy is to transition into a pure-play fiber bandwidth infrastructure company through pursuit of expansion opportunities, both organic and inorganic. To achieve organic growth, our objective is to leverage and expand our fiber assets to capture the growing demand for data and mobility services among our carrier and enterprise customers in our marketplace. Our operating strategy is to (i) leverage our fiber network to expand to new fiber to the cell opportunities; (ii) monetize our approximately 9,200 route-mile fiber optic network by selling bandwidth infrastructure services to new and existing carrier and enterprise customers while maintaining a ratio of approximately 80% of our data revenue from on-net traffic;  (iii) use our “expansion” and "edge-out” strategies to expand into new markets and markets adjacent to our existing footprint to increase our addressable market size and better serve our customers; (iv) proactively manage our churn through several initiatives including upgrading existing customers from legacy technologies to carrier Ethernet services and continually improving the network and operational performance; (v) focus on managing resources from the declining legacy voice products into our faster growing and more profitable data products; and (vi) execute our success-based investment strategy to maintain our capital efficiency and expand margins.

Business Segments 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 60.6% and 56.2% of our total revenue for the three months ended September 30, 2016 and 2015, respectively.  Revenue for our data segment increased 8.9%for the nine months ended September 30, 2016, as compared to the respective period in 2015.  This segment, which includes our enterprise data, transportand FTTC product groups, represents the main growth opportunity and is the key focal point of our strategy.  We market and sell these services primarily to carrierand enterprise customers, including healthcare providers, state and local government agencies, financial institutions and educational institutions.  Our data product lines are growing at a pace that significantly exceeds the decline in our legacy product lines, and in the aggregate, due to our focus on on-net customers, they also provide a higher gross margin.  A significant majority of our capital expenditures and sales force are dedicated to increasing revenue and profit from our data segment.  We believe that a balanced split between enterprise and carrier revenue results in the most effective capital allocation and resulting profitability.  Our ability to sustain or accelerate revenue growth in our data segment depends on our ability to obtain and effectively deploy capital to upgrade and expand our fiber network and implement our expansion and edge-out strategies in a timely and disciplined manner, attract new customers and successfully manage churn downwards through customer retention programs, including upgrading existing customers from legacy technologies to carrier Ethernet services.

The 8.9% year-over-year growth in our data segment revenues for 2016 was achieved primarily through new long-term FTTC contracts with wireless carriers deploying long-term evolution (“LTE”) services and bandwidth upgrades on existing contracts, improving enterprise penetration within our existing and new markets and providing greater Ethernet bandwidth to enterprise customers. This is reflected by the addition of 267 FTTC sites and 342 lit buildings over the twelve-month period ended September 30, 2016.   Our marketing and sales efforts are focused on taking advantage of increased carrier bandwidth demand, particularly for long-term FTTC contracts from wireless carriers that are deploying LTEdata services, selling into our expansion and edge out markets (with an emphasis on targeting large local enterprise customers in our expansion markets of Richmond, VA and Norfolk, VA), maximizing the use of our carrier end user distribution channel, connecting our enterprise customers to data centers and improving penetration in existing markets.  As of September 30, 2016, we had 1,297cell towers and 1,984 buildings connected to our fiber network, including 36 data centers.  Our FTTC revenue increased $1.8 million, or 23.4%, for the three months ended September

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30, 2016 and increased $6.5 million, or 31.4%, for the nine months ended September 30, 2016as compared to the same periods in 2015 as a result of the growth in connected towers as well as the addition of second tenants and bandwidth upgrades on existing towers.  Revenues from our enterprise data productsincreased 17.2% for the three months ended September 30, 2016and increased 13.4% for the nine months ended September 30, 2016as compared to the respective periods in 2015. Growth in FTTC and enterprise data revenues was partially offset by the year-over-year decline in our revenue from data transport products, which have been negatively impacted by network grooming as existing customers redesign their networks and upgrade from time division multiplexing (“TDM”) technology to Ethernet products to improve efficiency.  As we continue to implement our data growth strategy, which includes monetizing our newly expanded fiber optic network in the key Virginia markets of Richmond and Norfolk, we believe that the effect of churn on legacy product lines will be more than offset by revenues from carrier Ethernet products, long-term FTTC contracts and new enterprise customers.

Our R&SB segment provided 30.6% and 32.5% of revenue for the three months ended September 30, 2016 and 2015, respectively, and 30.9% and 33.4% for the respective nine-monthperiods.  This segment includes legacy voice and IP services products targeted at our residential and small business customers.  Revenue declined approximately 5.9% for the first ninemonths of 2016 as compared to 2015 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 expect aggregate revenue from these businesses will continue to decline.

Our RLEC access segment provided approximately8.8% and9.8%of our revenues for the three and nine months ended September 30, 2016,  respectively,  as compared to approximately 11.4% and 11.2% for the respective periods in 2015.This decline is attributable to voice 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.  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 $4.2million and $5.4 million for the three months ended September 30, 2016 and 2015, respectively,and $14.3 million and $16.1 million for the nine months ended September 30, 2016 and 2015, respectively.

Our R&SB and RLEC access segments require limited incremental capital to maintain the underlying assets and deliver reasonably predictable cash flows. Despite declining revenues, we expect cash flows from these legacy businesses to continue to significantly contribute to funding the capital investment in our growing data segment. In parallel, we are exploring the possible separation of these assetsto enable us to be in a position to monetize them more expediently through a sale or some other transaction, should such an opportunity become available.  

Our operating income margins were 17.8% and17.0% for the three months ended September 30, 2016 and 2015, respectively, and 14.2% and 17.3% for the nine months ended September 30, 2016 and 2015, respectively. Theslight increase in our operating income margins for the three  month period was primarilydueto an   increase in operating revenues and lower cost of revenues, partially offset by increases in selling, general and administrative expenses and depreciation and amortization.  The decrease in our operating margins for the nine month period was primarily due to increased selling, general and administrative expenses and depreciation and amortization and higher restructuring costs as compared to the same period in 2015, partially offset by lower cost of revenues and an increase in operating revenues. Our Contribution Margin ratios, as defined below, were 74.7% and 73.5% for the three months ended September 30, 2016 and 2015, respectively, and 74.5% and  73.6% for the nine months ended September 30, 2016 and 2015, respectively.  Our Adjusted EBITDA margins, as defined below, were 46.9% and 43.7% for the three months ended September 30, 2016 and 2015, respectively, and 45.9% and 44.3% for the respectivenine month periods.

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

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

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Operating Expenses

Our operating expenses are incurred from the following categories:

· Cost of revenue, exclusive of depreciation and amortization, including usage-based access charges, long distance, directory, operator services 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, exclusive of depreciation and amortization, including:

o Direct operating and selling costs,  which include salaries, wages and benefits of field personnel, subscriber based third party licensing and maintenance fees, sales commissions and property taxes, repair and maintenance and utilities necessary to own and operate customer equipment,  

o Indirect operating costs,  which include salaries, wages and benefits of network operations, customer care, engineering, program management, sales, warehousing, product management and service delivery personnel and costs to maintain and operate our core network, and

o Corporate general and administrative costs,  which includes billing, bad debt expenses, taxes other than income and property taxes allocable to categories above, executive services, accounting, legal, purchasing, information technology, human resources and other corporate general and administrative expenses, including earned bonuses and equity-based compensation expense related to stock and option instruments held by employees and non-employee directors and amortization of actuarial losses and other gains or losses related to retirement plans;

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

· Accretion of asset retirement obligations; and

· Restructuring charges.

Contribution Margin

Contribution Margin, as defined by us, is net income or loss 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) expenses, net, employee separation charges, restructuring charges, gain or loss on interest rate swap derivatives, corporate general and administrative costs (as defined above), inclusive of equity-based compensation, acquisition and separation related costs and amortization of actuarial gains or losses and indirect operating costs(as defined above). Contribution Margin ratio is calculated as Contribution Margin over operating revenues.

Contribution Margin 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 Contribution Margin is a meaningful measure related to the incremental cash flow delivered by new billings that provides relevant and useful information to investors for comparing performance period to period against peer companies and for comparing profitability of the Company’s businesses.   Management utilizes Contribution Margin internally to assess the profitability of the Company’s product groups and for capital allocation decision-making. Management also uses Contribution Margin for budget planning purposes and for other strategic planning initiatives.

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See a reconciliation of net income (loss)attributable to Lumos Networks Corp. to Contribution Margin, as defined by the Company, on a consolidated basis for the three and nine months ended September 30, 2016 and 2015, as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Net Income (Loss) Attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Net Income Attributable to Noncontrolling Interests		46		33		137		111
Net Income (loss)		1,069		1,312		(490)		7,463
Income tax expense		1,046		1,774		1,712		6,221
Interest expense		7,164		5,817		21,165		13,022
Gain on interest rate swap derivatives		-		(198)		-		(445)
Other (income) expenses, net		(48)		(58)		(320)		89
Operating Income		9,231		8,647		22,067		26,350
Depreciation and amortization and accretion
of asset retirement obligations		12,762		11,836		37,119		35,217
Restructuring charges		(384)		-		1,823		637
Indirect operating costs		9,121		9,250		26,657		27,109
Corporate general and administrative costs, including equity-based compensation and acquisition and separation related charges		7,968		7,719		27,798		22,927
Contribution Margin	$	38,698	$	37,452	$	115,464	$	112,240

Adjusted EBITDA

Adjusted EBITDA, as defined by us, is net incomeor loss 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) expenses, net, equity-based compensation, amortization of actuarial gains or losses, employee separation charges, restructuring charges, acquisition and separation related charges and gain on interest rate swap derivatives. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA 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 business performance, the 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 for budget planning purposes and as factors in the Company’s employee compensation programs.

The following table provides a reconciliation of net income (loss) attributable to Lumos Networks Corp. to Adjusted EBITDA, as defined by the Company, on a consolidated basis for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015			2016	2015
Net Income (Loss) Attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Net Income Attributable to Noncontrolling Interests		46		33		137		111
Net Income (Loss)		1,069		1,312		(490)		7,463
Income tax expense		1,046		1,774		1,712		6,221
Interest expense		7,164		5,817		21,165		13,022
Gain on interest rate swap derivatives		-		(198)		-		(445)
Other (income) expenses, net		(48)		(58)		(320)		89
Operating Income		9,231		8,647		22,067		26,350
Depreciation and amortization and accretion
of asset retirement obligations		12,762		11,836		37,119		35,217
Amortization of actuarial losses		338		337		1,013		1,012
Equity-based compensation		1,661		1,454		8,477		4,236
Restructuring charges		(384)		-		1,823		637
Acquisition and separation related charges		652		-		652		-
Adjusted EBITDA	$	24,260	$	22,274	$	71,151	$	67,452

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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 and debt discounts, gains or losses on interest rate swap derivatives and other income or expense, which includes interest income and fees, expenses related to our senior secured credit facility and, as appropriate under the circumstances, secondary public offering and stock registration costs and write-off of unamortized debt issuance costs. 

Income Taxes

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

Noncontrolling Interests in Earnings of Subsidiaries

We have a partnership through our RLECs 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 and nine months ended September 30, 2016 compared to three and nine months ended September 30, 2015

Operating revenues increased $0.8 million, or 1.6%, from the three months ended September 30, 2015 to the three months ended September 30, 2016 primarily due to increases in data revenues of $2.8 million, partially offset bydecreases in RLEC access revenues of $1.3 million and decreases in R&SB revenues of $0.7 million.  For the three months ended September 30, 2016, data revenues represented 60.6% of our total revenue, compared to 56.2% for the prior year comparative period.  Operating revenues increased $2.6 million, or 1.7%, from the nine months ended September 30, 2015 to the nine months ended September 30, 2016 due to increases in data revenue of $7.5 million, partially offset by decreases in RLEC access revenues of $1.9 million and decreases in R&SB revenues of $3.0 million. For further details regarding these revenue fluctuations, see “Operating Revenues” below.

Operating income increased $0.6million from the three months ended September 30, 2015 to the three months ended September 30, 2016 due to the aforementioned $0.8 million increase in operating revenues anda  $0.9 million decrease in cost of revenue and a decrease in restructuring charges, partially offset by a $0.9 million increase in depreciation and amortization and a $0.6 millionincrease in selling, general and administrative expenses.Operating income decreased $4.3 million for the nine months ended September 30, 2016compared to the same period in the prior year  primarily as a result of an increase in selling, general and administrative expenses of $5.5 million, an increase in depreciation and amortization of $1.9 million and an increase in restructuring charges, partially offset by an increase in gross profit (operating revenues less cost of revenue) of $4.3million. For further details regarding these operating expense fluctuations, see “Operating Expenses” section below.

Net income attributable to Lumos Networks decreased  $0.3 million from the three months ended September 30, 2015to the three months ended September 30, 2016.  Reflected in these results was an increase in interest expense of $1.3 million and a $0.2 million decrease in gain on interest rate swap derivatives due to its  expiration on December 31, 2015, partially offset by a $0.6 million increase in operating income and a decrease in income taxes of $0.7 million.

Net income attributable to Lumos Networks decreased $8.0 million from the nine months ended September 30, 2015to thenine months ended September 30, 2016primarily as a result of the $4.3 million decrease in operating income and an increase in interest expense of $8.1 million, partially offset by a decrease in income taxes of $4.5 million.

Contribution Margin increased $1.2 million and $3.2 million for the three and nine months ended September 30, 2016,respectively, as compared to the same period in the prior year due to the revenue increases and cost of revenue decreases discussed above.

Adjusted EBITDA was $24.3 million and $22.3 million forthe three months ended September 30, 2016 and 2015,  respectively, and $71.2 million and $67.5 million for the nine months ended September 30, 2016 and 2015, respectively. Adjusted EBITDA increased due tothe increases in gross profit discussed above.

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OPERATING REVENUES

The following table identifies our external operating revenues by business segment and major product group for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,
Dollars in thousands	2016		2015		$ Variance		% Variance
Operating Revenues:
Data:
Enterprise data	$	13,549	$	11,560	$	1,989	17.2	%
Transport		8,499		9,507		(1,008)	(10.6)	%
FTTC		9,325		7,556		1,769	23.4	%
Total Data		31,373		28,623		2,750	9.6	%
R&SB:
Legacy voice		10,340		11,141		(801)	(7.2)	%
IP services		4,399		4,134		265	6.4	%
CLEC access		1,124		1,285		(161)	(12.5)	%
Total R&SB		15,863		16,560		(697)	(4.2)	%
RLEC access		4,535		5,786		(1,251)	(21.6)	%
Total operating revenues	$	51,771	$	50,969	$	802	1.6	%

	Nine Months Ended September 30,
Dollars in thousands	2016		2015		$ Variance		% Variance
Operating Revenues:
Data:
Enterprise data	$	38,428	$	33,885	$	4,543	13.4	%
Transport		26,500		30,016		(3,516)	(11.7)	%
FTTC		27,030		20,578		6,452	31.4	%
Total Data		91,958		84,479		7,479	8.9	%
R&SB:
Legacy voice		31,285		34,383		(3,098)	(9.0)	%
IP services		13,028		12,495		533	4.3	%
CLEC access		3,527		3,957		(430)	(10.9)	%
Total R&SB		47,840		50,835		(2,995)	(5.9)	%
RLEC access		15,215		17,103		(1,888)	(11.0)	%
Total operating revenues	$	155,013	$	152,417	$	2,596	1.7	%

· Data.  Data revenues for the three months ended September 30, 2016increased $2.8 million, or 9.6%, over the comparative period in 2015, and data revenues for the nine months ended September 30, 2016 increased $7.5 million, or 8.9%, over the comparative period in 2015.  The overall increase in data revenues is due to growth in contracts 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 17.2%and 13.4%for the three and nine months ended September 30, 2016,  respectively, as compared to the respective periods in 2015.  We were connected to 1,984 on-net buildings as of September 30, 2016, as compared to 1,642 as of September 30, 2015.  Metro Ethernet and dedicated Internet were the primary contributors to revenue growth in this segment, which growth was partially attributable to increased installation of services sold through our carrier end user distribution channel. Growth in these product lines was partially offset by declines in private line and other legacy enterprise data products as a result of churn from competition from national carriers and cable operators in our markets and to a lesser extent due to customers upgrading from TDM to Ethernet products.

o Transport – The  10.6% and 11.7% decreases in transport revenue for the three and nine months ended September 30, 2016,respectively, as compared to the respective periods in 2015, was primarily attributable to continued network grooming activities by carriers as TDM technology is replaced by Ethernet.

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o FTTC – Revenues from our FTTC contracts grew 23.4% and 31.4%for thethree and nine months ended September 30, 2016, respectively, as compared to the respective periods in 2015.  This growth is attributable to an approximate 25.9% increase in our fiber connections to wireless cell sites, from 1,030 at September 30, 2015to 1,297 at September 30, 2016and to a lesser extent the addition of second tenants to existing connected cell towers.  Our ratio of FTTC tenants per tower was approximately1.3 at September 30, 2016.

· R&SB.   Revenue from residential and small business products declined 4.2% and 5.9%for thethree and nine months ended September 30, 2016,respectively, as compared to the respective period in 2015.  This decline was primarily driven by decreases in revenue from legacy voice products due to the increasing use of wireless devices and competition from cable operators in our markets as well as our shift in focus to voice over IP (which is included in data segment revenues).  As of September 30, 2016, we operated approximately 24,299 RLEC telephone access lines and 67,569 competitive voice lines, compared to approximately 25,902 and 76,380 as of September 30, 2015, respectively.  This represents a 6.2% year-over-year decline in RLEC telephone access lines and an11.5% 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 partially offset by declines in revenue from legacy DSL products.  Our total video subscribers increased 1.4% over the last twelve months from 5,760 at September 30, 2015to 5,841 at September 30, 2016.

· RLEC Access.  The 21.6%decrease in RLEC access revenues from the three months ended September 30, 2015 to the three months ended September 30, 2016 and the 11.0% decrease in RLEC access revenues from the nine months ended September 30, 2015 to the nine months ended September 30, 2016is the result of the intrastate access rate reductions mandated by regulatory reform and a step-down in the recovery amounts of certain intrastate access charges from the FCC’s Connect America Fund (“CAF”) discussed in the overview section above and a decrease in RLEC telephone access lines.

OPERATING EXPENSES

The following table identifies our operating expenses for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,
Dollars in thousands	2016		2015		$ Variance		%Variance
Operating Expenses:
Cost of Revenue, exclusive of depreciation and amortization shown separately below	$	9,657	$	10,546	$	(889)	(8.4)	%
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		20,505		19,940		565	2.8	%
Depreciation and amortization		12,739		11,803		936	7.9	%
Accretion of asset retirement obligations		23		33		(10)	(30.3)	%
Restructuring charges		(384)		-		(384)	N/M
Total operating expenses	$	42,540	$	42,322	$	218	0.5	%

	Nine Months Ended September 30,
Dollars in thousands	2016		2015		$ Variance		%Variance
Operating Expenses:
Cost of Revenue, exclusive of depreciation and amortization shown separately below	$	29,948	$	31,682	$	(1,734)	(5.5)	%
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		64,056		58,531		5,525	9.4	%
Depreciation and amortization		37,028		35,112		1,916	5.5	%
Accretion of asset retirement obligations		91		105		(14)	(13.3)	%
Restructuring charges		1,823		637		1,186	186.2	%
Total operating expenses	$	132,946	$	126,067	$	6,879	5.5	%

N/M -  NotMeaningful

Cost of Revenue, exclusive of Depreciation and Amortization.  Cost of revenue decreased $0.9 million, or 8.4%, for thethree months ended September 30, 2016and $1.7 million, or 5.5%, for the nine months ended September 30, 2016,  as compared to the same periods in the prior year, which is primarily attributable to the overall decrease in voice access lines, partially offset by increasedcolocation costs as we expand and enhance our fiber network.

Selling, General and Administrative, exclusive of Depreciation and Amortization.  Selling, general and administrative expensesincreased $0.6 million, or 2.8%,for the three months ended September 30, 2016as compared to the same period in the prior year primarily as a result of  increases in network maintenance and operating costs in addition to acquisition and separation costs incurred during the three months ended September 30, 2016.Selling, general and administrative expensesincreased $5.5 million, or9.4%, for

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the nine months ended September 30, 2016 as compared to the same period in the prior year  primarily as a result of a $4.2 million increase in equity-based compensation due primarily to an annual employee bonus paid in the form of immediately vested shares of our common stock and an increase in network maintenance and operating costs of $2.7 million, partially offset by a $1.4 million decrease in salaries, wages and benefits primarily due to the aforementioned employee reduction-in-force commenced in January 2016 and increased capitalized labor.

Depreciation and Amortization. Depreciation and amortizationincreased $0.9 million, or 7.9%,for the three months ended September 30, 2016as compared to the same period in the prior year due toa  $1.0  million increase in depreciation costs, partially offset by a decrease in amortization expense of $0.1 million.Depreciation and amortization increased $1.9 million, or 5.5%,for the nine months ended September 30, 2016as compared to the same period in the prior year due toa  $4.1  million increase in depreciation costs, partially offset by a decrease in amortization expense of  $2.2 million.  The increase in depreciation costs is a result of the year-over-year increase in our depreciable base of assets primarily from capital investment in our fiber network including infrastructure upgrades and FTTC site installations.  The decrease in amortization cost is attributable to run off of amortization for customer intangible assets under an accelerated amortization method based on these assets’ estimated patterns of benefit.

Restructuring Charges.  We incurred $1.8 million in restructuring charges for the nine months ended September 30, 2016, which consisted of separation benefits associated with an employee reduction-in-force  that commenced in January 2016 (see Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements).

OTHER INCOME (EXPENSES) AND INCOME TAXES

The following table summarizes our other income (expenses) and income taxes for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,
(Dollars in thousands)	2016		2015		$ Variance		%Variance
Interest expense	$	(7,164)	$	(5,817)	$	(1,347)	23.2	%
Gain on interest rate swap derivatives		-		198		(198)	(100.0)	%
Other income, net		48		58		(10)	(17.2)	%
Total other expenses, net	$	(7,116)	$	(5,561)	$	(1,555)	28.0	%
Income tax expense	$	1,046	$	1,774	$	(728)	(41.0)	%

	Nine Months Ended September 30,
(Dollars in thousands)	2016		2015		$ Variance		%Variance
Interest expense	$	(21,165)	$	(13,022)	$	(8,143)	62.5	%
Gain on interest rate swap derivatives		-		445		(445)	(100.0)	%
Other (expense) income, net		320		(89)		409	(459.6)	%
Total other expenses, net	$	(20,845)	$	(12,666)	$	(8,179)	64.6	%
Income tax expense	$	1,712	$	6,221	$	(4,509)	(72.5)	%

Interest Expense.  Interest expense for the three months ended September 30, 2016 and 2015 primarily consists of incurred costs associated with our Credit Facility as well as amortization of debt issuance costs and interest incurred on the 8% Notes, as well as amortization of associated debt discounts and debt issuance costs.  The 8% Notes were issued in August, 2015, therefore the three months ended September 30, 2015 did not include a full quarter of the related expenses.  The year-over-year increase in interest expense is primarily attributable to the interest on the 8% Notes for the full year of 2016, partially offset by higher interest capitalization due to increased long-term network construction projects and changes in bank patronage credits (see Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements).

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Other Income (Expenses).  Other income (expenses) primarily consists of interest income earned on marketable securities for the three and nine months ended September 30, 2016.  

Income Tax Expense.  Income tax expense for the three months ended September 30, 2016 and 2015 was $1.0 million and $1.8 million, respectively,  and $1.7 million and $6.2 million for the nine months ended September 30, 2016 and 2015, 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 decrease in income tax expense and changes in our effective tax rate were primarily due to the changes in income before taxes and the effect of certain permanent book and tax differences.Our recurring non-deductible expenses relate primarily to the 8% Notes issued in August 2015, which are subject to the AHYDO interest limitation. Other recurring non-deductible expenses include non-cash equity-based compensation. 

Liquidity and Capital Resources

For the nine months ended September 30, 2016 and 2015, our cash flows from operations totaled approximately $45.8million and$52.0 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 September 30, 2016, we had $566.7 million in aggregate long-term liabilities, consisting of $457.1million in long-term debt, net of $31.0 million in debt discounts and deferred issuance costs,and $109.6 million in other long-term liabilities, inclusive of deferred income tax liabilities of$91.1 million, pension and other postretirement obligations of $16.4 million and other long-term liabilities of $2.1 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 September 30, 2016.  

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, certain of our subsidiaries 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 September 30, 2016, we were in compliance with all of our debt covenants, and our ratios were as follows:

	Actual	Covenant Requirement at September 30, 2016
Total debt outstanding to EBITDA (as defined in the Credit Agreement)	3.67	Not more than 4.75
Minimum interest coverage ratio	7.28	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”).  Weused the net proceeds from Term Loan C to fund capital expenditures for customer builds related to 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 4.75:1.00 through December 31, 2016, 4.50:1.00 through December 31, 2017, 4.25:1.00 through December 31, 2018 and 4.00:1.00 thereafter.

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

In addition to the Credit Facility, we have capital leases on vehicles with original lease terms of four to five years and an IRU network capacity arrangement that are included in capital lease obligations as a component of current portion of long-term debt on the condensed consolidated balance sheets as of September 30, 2016.  As of September 30, 2016, the combined total net present value of our future minimum lease payments was $8.0 million.

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The following table presents a summary of our cash flow activity for the nine months ended September 30, 2016 and 2015:

	Nine Months Ended September 30,
(In thousands)	2016		2015
Net cash provided by operating activities	$	45,787	$	52,005
Net cash used in investing activities		(15,347)		(119,205)
Net cash (used in) provided by financing activities		(10,531)		116,851
Increase in cash and cash equivalents	$	19,909	$	49,651

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 cash collections from customers.

Investing.  The change in cash used ininvesting activities is primarily due to an increase in proceeds from sale or maturity of marketable securitiesof $77.2 million, a decrease in purchases of marketable securities of $16.9million,  a decrease of purchases of property plant and equipment of $14.8 million, and a decrease in broadband network stimulus grant work of $2.6million, partially offset by a decrease in cash received from the broadband stimulus grant for reimbursement of qualified expenditures and the corresponding release of restricted funds totaling $7.7 million.  Capital expenditures for the nine months ended September 30, 2016were comprised of (i) $63.1 million for success-based customer projects, network expansion and infrastructure upgrades, (ii) $4.3million for network maintenance, (iii) $2.5 million for information technology and facility related projects, and less (iv) $4.6 million for decreases in inventory on hand for capital projects in the preceding categories.

We currently expect total capital expenditures for fiscal year 2016 to be approximately $85 million to $95 million, of which, approximately $26 million was spent on network expansion projects, including the completion of our approximate 822 route-mile expansion between Richmond, VA and Norfolk, VA. The remaining planned capital expenditures has been allocated to enterprise and carrier installations, data network enhancements to significantly improve our ability to provide carrier Ethernet transport and enterprise customer data services and, to a lesser extent, to fund essential network facility upgrades and fiber-to-the-premise deployments for our R&SB segment. Our fiber optic network consists of approximately 9,200 route miles.  Approximately 46% 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 54% of our network under IRU network capacity agreements.

Financing.  The net cash used in financing activities for the nine months ended September 30, 2016consisted of common stock repurchased for a total of $2.4 million to cover tax withholding obligations on employee stock awards,  the repayment of principal on the Credit Facility and payments under capital lease obligations totaling $8.6 million and a capital distribution to noncontrolling interests of $0.2 million, partially offset by proceeds from stock option exercises of $0.6 million.

As of September 30, 2016, we had approximately $33.2 million in cash and cash equivalents and approximately  $38.8 million in marketable securities, all of which we consider to be available for current operations due to the short-term maturities and/or liquid nature of the holdings.  As of September 30, 2016,we had working capital (current assets minus current liabilities) of approximately $56.7 million.  We expect that the cash we generate from operations combined with our cash on hand and marketable securitieswill be sufficient to satisfy our working capital requirements, capital expenditures and debt service requirements for the foreseeable future.  Additionally, we have access to the Revolver, which is currently undrawn. However, if our assumptions prove incorrect or if there are other factors that increase our need for additional liquidity, such as material unanticipated losses, loss of customers or a significant reduction in demand for our services or other factors, or if we are successful in obtaining additional major FTTC contracts or we make acquisitions, we would expect to seek additional sources of funds through refinancing or other means including additional equity financing.  There is no assurance that we could obtain such additional financing on acceptable terms, if at all.  If available, additional equity financing may dilute our stockholders and debt financing may restrict our ability to raise future capital.

As discussed previously in 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 terminated 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.

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

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transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606)-  Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Gross versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which addresses narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in ASU 2016-12 provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. We will implement the provisions of ASU 2014-09, ASU 2016-08, ASU 2016-10, and ASU 2016-12 as of January 1, 2018. 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.  ASU 2015-02 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016.  We do not expect the future adoption of ASU 2015-02 to have a material impact on our consolidated financial statements and disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for public business entities forfiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. We do not expect the future adoption of ASU 2016-01 to have a material impact on our consolidated financial statements and disclosures.

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

In April 2016, the FASB issued ASU 2016-09,  Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplifies the accounting for share-based payment transactions.Among other things,  ASU 2016-09provides for (i) the simplification of accounting presentation of excess tax benefits and tax deficiencies, (ii) an accounting policy election regarding forfeitures to use an estimate or account for when incurred, and (iii) simplification of cash flow presentation for statutory tax rate withholding. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, with early adoption permitted.  The transition method required by ASU 2016-09varies by amendment. We are still evaluating the effect that ASU 2016-09 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

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differ from those contained in the forward-looking statements, include, but are not limited to: rapid development and intense competition with resulting pricing pressure in the telecommunications and high speed data transport industry; our ability to grow our data business on an organic or inorganic basis in order to offset expected revenue declines in legacy voice and access products; our ability to obtain new carrier contracts or expand services under existing carrier contracts at competitive pricing levels to offset churn and achieve revenue growth from our carrier businesses; our ability to divest our legacy business on a timely basis; our ability to effectively allocate capital and timely implement network expansion plans necessary to accommodate organic growth initiatives; our ability to complete customer installations in a timely manner; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility and our unsecured debt obligations; our cash and capital requirements; 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, 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks primarily related to interest rates on our variable-rate debt obligations.  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 September 30, 2016,  $342.4 million was outstanding under our Credit Facility.  As of September 30, 2016, we had a leverage ratio of 3.67.00 and an interest coverage ratio of 7.28:1.00, both of which are in compliance with our debt covenant requirements.  We have other fixed rate, long-term debt obligations in the form of unsecured notes and capital leases totaling $150.0 million and  $8.0 million, respectively, as of September 30, 2016.

At September 30, 2016, our financial assets in the condensed consolidated balance sheets included unrestricted cash and cash equivalents of approximately $33.2 million, substantially all of which is comprised of deposits in non-interest bearing accounts with financial institutions, and marketable securities of $38.8 million, all of which we consider to be available for current operations due to the short-term maturities and/or liquid nature of the holdings. Other non-current securities and investments totaled $1.5 million at September 30, 2016.

As of September 30, 2016, our cash, cash equivalents and marketable securities were held in financial institutions, money market mutual funds, municipal bonds, commercial paperand 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 September 30, 2016, 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	$	338,759	$	306,922	$	315,351	$	298,782
8% Notes due 2022		122,667		133,462		140,126		127,179
Capital lease obligations		7,972		7,972		8,330		7,630

35

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 nine months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

36

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 14, 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 9 to 16) in our Annual Report on Form 10-K for the year ended December 31, 2015which 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, 2015.

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 September 30, 2016, the Company repurchased 5,167shares of Company stock in connection with the vesting of certain restricted stock grants.  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 ended September 30, 2016 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
July 1, 2016 - July 31, 2016	1,972	$	12.32	N/A	N/A
August 1, 2016 - August 31, 2016	1,306	$	12.42	N/A	N/A
September 1, 2016 - September 30, 2016	1,889	$	13.88	N/A	N/A
	5,167	$	12.92	N/A

Item 5.  Other Information.

None.

37

Item 6.  Exhibits

EXHIBIT INDEX

Exhibit No.	Description
10.1*	Lumos Severance Plan for Eligible Officers
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.

38

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.

Date: November 9, 2016

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)

39

EX-10.1

Exhibit 10.1

EXECUTION VERSION

Lumos Networks Operating Company

Severance Plan For Eligible Officers

(Effective August 2,  2016)

Exhibit 10.1

TABLE OF CONTENTS
ARTICLE I	PURPOSE	1
1.1	General	1
ARTICLE II	DEFINITIONS	1
2.1	Definitions	1
2.2	Special Purpose Definitions	5
2.3	Construction	5
2.4	Governing Law	6
ARTICLE III	ELIGIBILITY	6
3.1	Participation	6
3.2	Eligibility for Regular Severance Benefits	6
3.3	Ineligible for Benefits	8
ARTICLE IV	BENEFITS	8
4.1	Regular Severance Benefits	8
4.2	Ineligible for Benefits	9
4.3	No Duplication of Benefits	9
4.4	Effect of Rehire	10
ARTICLE V	COVENANTS	10
5.1	Covenants	10
5.2	Confidentiality of Trade Secrets and Confidential Information	10
5.3	Non-Disparagement	10
5.4	Return of Documents	11
5.5	Reaffirm Obligations	11
5.6	Non-Competition and Non-Solicitation	11
5.7	Remedies	13
5.8	Post-Employment Assistance	14
ARTICLE VI	PARACHUTE PAYMENTS; SECTION 409A	14
6.1	Excise Taxes	14
6.2	Section 409A	16
ARTICLE VII	PLAN ADMINISTRATION	17
7.1	Plan Administration	17
7.2	Claims Procedures	17
ARTICLE VIII	BINDING AGREEMENT	22
8.1	General	22
ARTICLE IX	NOTICE	22
9.1	General	22
ARTICLE X	AMENDMENT AND TERMINATION	22
10.1	General	22
ARTICLE XI	MISCELLANEOUS	23
11.1	Withholding	23

Exhibit 10.1

11.2	No Right of Assignment	23
11.3	No Employment Contract	23
11.4	Mitigation of Benefits	23
11.5	Service of Process	23
11.6	ERISA Plan	23
11.7	Compliant Operation and Interpretation	23

Exhibit 10.1

LUMOS NETWORKS OPERATING COMPANY

SEVERANCE PLAN FOR ELIGIBLE OFFICERS

INTRODUCTION

By execution of this document, Lumos Networks Operating Company (“Lumos”) hereby adopts the Lumos Networks Operating Company Severance Plan for Eligible Officers, as set forth herein, effective as of August 2, 2016 (the "Effective Date"). 

ARTICLE I

PURPOSE

1.1General.  The purpose of the Plan is to provide severance benefits to eligible officers in the event their employment with Lumos and its Affiliates terminates under the circumstances set forth herein.

ARTICLE II

DEFINITIONS

2.1Definitions.  When a word or phrase appears in the Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be a term defined in this Article II or in the Introduction.  The following words and phrases used in the Plan with the initial letter capitalized shall have the meanings set forth below, unless a clearly different meaning is required by the context in which the word or phrase is used or the word or phrase is defined for a limited purpose elsewhere in the Plan document:

(a)"Affiliate" means (1) any member of a "controlled group of corporations" (within the meaning of Section 414(b) of the Code as modified by Section 415(h) of the Code) that includes Lumos as a member of the group; and (2) any member of a group of trades or businesses (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code as modified by Section 415(h) of the Code) that includes Lumos as a member of the group, except that, for purposes of determining the members of a “controlled group of corporations," the language "at least 50 percent" shall be used instead of "at least 80 percent" each place it appears in Section 1563(a)(1), (2) and (3); and for purposes of determining the members of a group of trades or businesses (whether or not incorporated) that are under common control, the language "at least 50 percent" shall be used instead of "at least 80 percent" each place it appears in Treas. Reg. § 1.414(c)-2.

(b)"Base Salary" means the annual rate of base earnings of a Participant immediately preceding his or her Separation from Service:

(1)exclusive of overtime pay, bonuses, commission, payments for accrued vacations or other special payments; and

Exhibit 10.1

(2)before any deductions, including, but not limited to, any federal, state or other taxes, and salary reduction amounts contributed to benefit plans or programs.

(c)"Benefits Department" means the organizational unit of Lumos with responsibility for administering benefit programs sponsored by Lumos and its Affiliates.

(d)"Board" means the Board of Directors of Holdings.

(e)"Cause" shall exist where the termination of a Participant's employment by Lumos or an Affiliate is upon:

(1)the Participant’s gross or willful misconduct or gross negligence involving Lumos or an Affiliate;

(2)the Participant's repeated failure to comply with the lawful directives of the Board or any supervisory personnel;

(3)any criminal act or act of dishonesty or willful misconduct by the Participant that has a material adverse impact on the property, operations, business or reputation of Lumos or any Affiliate or any act of fraud, dishonesty or misappropriation by the Participant involving Lumos or an Affiliate;

(4)the Participant's indictment, conviction or plea of guilty or nolocontendere to a felony or a crime involving dishonesty;

(5)the material breach by the Participant of the terms of any confidentiality, non-competition, non-solicitation or employment agreement the Participant has with Lumos or any Affiliate;

(6)acts of malfeasance or negligence by the Participant in a matter of material importance to Lumos or an Affiliate;

(7)the material failure by the Participant to perform the duties and responsibilities of Participant’s position after written notice and a reasonable opportunity to cure (not to exceed ninety (90) days); or

(8)activities of the Participant that are materially damaging to the property, operations, business or reputation of Lumos or any Affiliate.

(f)“Change in Control” means any of the following described in clauses (1) through (4) below:

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

Exhibit 10.1

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

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

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

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

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

(g)“Change in Control Protection Period” means (i) any period in which Lumos or any of its Affiliates has initiated a transaction process or is engaged in discussions with a third party about a specific transaction that, if consummated, would result in a Change in Control (and before the complete abandonment of such discussions without the transaction being consummated), (ii) during any period Lumos or any of its Affiliates has become a party to a definitive agreement to consummate a transaction that would result in a Change in Control (and before the complete termination of such agreement without the transaction being consummated) and (iii) at any time on or within twelve (12) months after a Change in Control occurs.

(h)"COBRA" means the continuation coverage mandated under Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA or other applicable laws.

(i)"Code" means the Internal Revenue Code of 1986, as amended.

(j)"Committee" means the Lumos Benefits Governance Committee.

(k)"Company" means, collectively, Lumos and each Affiliate of Lumos.

(l)“Compensation Committee” means the Compensation Committee of the Board of Directors of Holdings.

Exhibit 10.1

(m)"Disability" means that the Participant is unable to perform the essential functions of the Participant's job with Lumos or its Affiliates, with or without reasonable accommodation, by reason of physical or mental disability or incapacity.  The Participant's employment may be terminated on account of a Disability after the Disability shall have continued for any period aggregating six (6) months within any twelve (12) consecutive months.

(n)"Effective Date" means August 2, 2016.

(o)"Eligible Employee" means an Employee who is employed by Lumos or an Affiliate in the position of Vice President or higher and who is not a party to an employment, severance, termination, change in control or similar agreement with Lumos or an Affiliate.  The Compensation Committee in its sole discretion shall determine each Employee's eligibility to participate in the Plan.

(p)"Employee" means a common law employee who is a full-time employee of Lumos or an Affiliate who is scheduled to work at least thirty (30) hours per week.  Examples of individuals who are not "Employees" for this purpose include: (1) consultants; (2) leased employees or workers; (3) individuals providing services to Lumos or an Affiliate pursuant to a contract with a third party; (4) temporary employees or workers; (5) independent contractors; (6) employees of independent contractors; (7) interns; and (8) co-op employees.

(q)"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

(r)"Health Plan" means the Lumos group health plan as it may be amended or restated from time to time or any successor plan or plans that provide the health benefits currently provided under such plan.

(s)"Holdings" means Lumos Networks Corp., a Delaware corporation and parent of Lumos.  As used in the Plan, “Holdings” also means any successor in interest to Holdings resulting from merger, consolidation or transfer of substantially all of Holdings’ assets.

(t)"Incentive Payment" means the annual bonus under the Company's Team Incentive Plan which the Participant is eligible to receive, subject to achievement of specified performance objectives established by the Board from time to time.  The Incentive Payment that the Participant is eligible to receive generally will be denoted as an annual incentive target equal to a percentage of the Participant's Base Salary.

(u)"Lumos" means Lumos Networks Operating Company, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings.  As used in the Plan, "Lumos" also means any successor in interest to Lumos resulting from merger, consolidation, or transfer of substantially all of Lumos' assets.

(v)"Notice of Termination" means a written notice issued by the Company or an Affiliate, at either’s sole discretion, to the Participant stating that his or her employment with Lumos and its Affiliates is to be terminated.

Exhibit 10.1

(w)"Participant" means any Eligible Employee who has satisfied the eligibility requirements and is selected by the Compensation Committee for participation in the Plan as set forth in Section 3.1 (Participation).

(x)"Plan" means the Lumos Networks Operating Company Severance Plan for Eligible Officers, as set forth in this document and as it may be amended from time to time.

(y)"Plan Year" means a twelve (12) month period commencing on each January 1 and ending on each following December 31.

(z)"Regular Severance Benefits" means the benefits described in Section 4.1 (Regular Severance Benefits).

(aa)"Release Agreement" means the Employment Termination and Release Agreement to be executed by a Participant in order to be eligible for and receive Regular Severance Benefits pursuant to Section 4.1 (Regular Severance Benefits).  The Release Agreement shall be prepared only by the Company.

(bb)"Separation from Service" means the termination of a Participant's employment with the Company and all Affiliates due to death, retirement or other reasons.  The Participant's employment relationship is treated as continuing while the Participant is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant's right to reemployment with the Company or an Affiliate is provided either by statute or contract).  If the Participant's period of leave exceeds six (6) months and the Participant's right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month period.  Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations under Section 409A of the Code.

(cc)"Severance Period" means the period of months beginning immediately after the Termination Date with respect to which the Participant will be entitled to continuation of his or her Base Salary upon receipt of Regular Severance Benefits.

(dd)"Standard Termination Payments" means the Participant's (i) earned and unpaid base salary to the date of termination and (ii) unreimbursed business and entertainment expenses in accordance with the Company's reimbursement policy.

(ee)"Team Incentive Plan" means the Company's annual team incentive plan which provides an annual bonus opportunity to eligible employees subject to achievement of specified performance objectives established by the Board from time to time.

(ff)"Termination Date"  means the effective date of the termination of the Participant's employment with Lumos and its Affiliates.

2.2Special Purpose Definitions.  Additional definitions of terms that have limited application may be set forth in the Section or Sections to which they apply.

Exhibit 10.1

2.3Construction.  The masculine gender, when appearing in the Plan, shall include the feminine gender (and vice versa), and the singular shall include the plural, unless the Plan clearly states to the contrary.  Headings and subheadings are for the purpose of reference only and are not to be considered in the construction of the Plan.  If any provision of the Plan is determined to be for any reason invalid or unenforceable, the remaining provisions shall continue in full force and effect. 

2.4Governing Law.  All of the provisions of the Plan shall be construed and enforced according to the laws of the Commonwealth of Virginia and shall be administered according to the laws of such state, except as otherwise required by ERISA, the Code, or other applicable Federal law.  To the extent lawful, the Company and each Participant or person claiming benefits under the Plan consents irrevocably to jurisdiction, service and venue in connection with any claim or controversy arising out of this Plan in the courts of the Commonwealth of Virginia located in Waynesboro, Virginia, and in the federal courts in the Western District of Virginia, Charlottesville Division.

ARTICLE III

ELIGIBILITY

3.1Participation.  

(a)Eligibility.  Only an Eligible Employee may be selected to become a Participant in the Plan.  An Eligible Employee will become a Participant in the Plan as of the day on which the Compensation Committee determines that such Eligible Employee shall become a Participant.  The Compensation Committee may terminate the Participant's status as a Participant from time to time, provided that (i) the Compensation Committee may not act to terminate a Participant's participation in the Plan during the Change in Control Protection Period, (ii) no Participant's participation in the Plan may be terminated once the Participant has received a Notice of Termination and (iii) no Participant's participation in the Plan may be terminated earlier than six (6) months after the Compensation Committee acts to terminate the Participant's participation in the Plan and so notifies the Participant.  The Plan's Participants shall be listed on Exhibit A to the Plan, which may be amended from time to time subject to the provisions of Article X hereof, except as described herein.

(b)Annual Designation.  No less frequently than annually, subject to Section 3.1(a) and Article X hereof, the Compensation Committee will reaffirm (i) the Eligible Employees who are designated to be Participants in the Plan and the effective date of their participation and (ii) the Participants who will no longer participate in the Plan and the effective date on which they will no longer participate in the Plan.

3.2Eligibility for Regular Severance Benefits. 

(a)Terms and Conditions.  In order to be eligible for Regular Severance Benefits, (i) the Participant's employment must be terminated by Lumos and its Affiliates without Cause and other than by reason of the Participant’s death or Disability, (ii) the Participant must not be ineligible to receive Regular Severance Benefits under Section 3.2(b)

Exhibit 10.1

below, and (iii) the Participant must sign and deliver a Release Agreement in accordance with Section 3.2(c) below.  The Participant's employment will be considered to be terminated only if the Participant incurs a Separation from Service.

(b)Certain Participants Ineligible for Benefits.  Notwithstanding any other provision of the Plan, a Participant shall not be eligible to receive Regular Severance Benefits under this Plan if:

(1)the Participant is involuntarily terminated by the Company for Cause;

(2)the Participant retires, resigns or quits for any reason whatsoever;

(3)the Participant terminates employment on account of the Participant’s Disability or death;

(4)the Participant is offered another position with Lumos or an Affiliate, and the Participant accepts such offer.

(5)in case of a sale of a business operation, or part of a business operation, the Participant is offered employment with the purchaser and the Participant accepts such offer;

(6)if, for whatever reason, including in the case of a sale of Lumos or an Affiliate or substantially all of its or an Affiliate’s business operations, Lumos' headquarters is moved within three hundred fifty (350) miles of its current location and the Participant is (i) offered a position with Lumos or an Affiliate and (ii) entitled to moving and relocation benefits consistent with Lumos' normal moving and relocation policy, whether or not the Participant accepts the offer;

(7)the termination of the Participant’s employment entitles the Participant to benefits under any employment agreement, severance agreement or other termination or separation agreement between the Participant and the Company; or

(8)the Plan is terminated pursuant to Section 10.1 of the Plan prior to issuance of the Participant’s Notice of Termination.

(c)Release Agreement.  The Release Agreement required by Section 3.2(a) must comply with the requirements of this Section 3.2(c).

(1)The Release Agreement shall contain such terms and conditions as are satisfactory to Lumos, including, but not limited to, the release of any and all claims that the Participant may then have, as of the signing of such release, against Lumos, its Affiliates and their employees, officers and directors and confirmation of the covenants to which the Participant is subject under Article V.  The Participant generally shall have up to forty-five (45) days following the date the Release Agreement is given to the Participant to sign and return the Release Agreement to Lumos.

Exhibit 10.1

(2)Within seven (7) days after delivery of the signed Release Agreement to Lumos by the Participant, the Participant shall be entitled to revoke the Release Agreement by returning the signed copy or counterpart original of the Release Agreement to the Benefits Department (Attention: Human Resources Department).  To be effective, such notice of revocation must be received by the Benefits Department by the close of business on the seventh (7th) day following the date Participant returned his or her signed and notarized Release Agreement.  The parties acknowledge and agree that this Release Agreement will not become effective until after the seven (7)-day revocation period expires.

(3)The revocation of a previously signed and delivered Release Agreement pursuant to the above shall be deemed to constitute an irrevocable election by the Participant to have declined benefits under the Plan.

(4)Notwithstanding the foregoing, the Participant must sign and return the Release Agreement to the Benefits Department (Attention: Human Resources Department), and the seven (7) days to revoke the Release Agreement must expire without the Participant having elected to revoke the Release Agreement, within the sixty (60) days immediately following the termination of the Participant's employment with Lumos and its Affiliates, in order for the Participant to be eligible to receive Regular Severance Benefits under the Plan.

(d)Notice of Termination.  If the Company desires to terminate the Participant’s employment with or without Cause, the Company shall provide the Participant with a Notice of Termination which shall specify the effective date of such termination and the reason(s) for the termination.  If the Termination Date is later than the date of the notice, then from the date of the notice until the Termination Date, the Participant shall continue to perform the normal duties of the Participant’s employment and shall be entitled to receive when due all compensation and benefits applicable to the Participant in connection with Participant’s employment, payable in the ordinary course. 

3.3Ineligible for Benefits.  A Participant is not eligible to receive Regular Severance Benefits under this Plan if the Company or an Affiliate terminates the Participant's employment for Cause, the Participant retires, quits or resigns his or her employment for any reason whatsoever or the Participant’s employment terminates on account of the Participant’s death or Disability.

ARTICLE IV

BENEFITS

4.1Regular Severance Benefits.  Participants satisfying the eligibility requirements of Section 3.2 (Eligibility for Regular Severance Benefits) shall be entitled to receive the following severance benefits, subject to Sections 4.1(e) and 6.2 below:

(a)Severance Pay.  The Participant's Base Salary shall continue to be paid for the period of twelve (12) months (the "Severance Period") in such periodic installments as were being paid prior to the termination of the Participant's employment (but no less frequently

Exhibit 10.1

than monthly), less any sums required to be deducted or withheld under applicable law, beginning immediately after the Termination Date.

(b)Medical, Dental and Vision Coverage.  During the Severance Period, the Company will subsidize the Participant's COBRA rates (no less frequently than monthly) for continuation of medical, dental and vision coverage for the Participant and the Participant's eligible dependants under the Company's Health Plan in which the Participant and the Participant's dependants participated as of the Termination Date, on the same terms as active employees.

(c)Incentive Payment.  Only with respect to Participants who are classified as being in Level I on Exhibit A, Lumos shall pay the Participant a lump sum, determined on a net present value basis, using a reasonable discount rate determined by the Board, equal to the Participant's full target Incentive Payment for the year that includes the Termination Date, no later than two and a half (2-1/2) months after the Termination Date.

(d)Standard Termination Payments; Benefits.  Lumos also shall pay to the Participant (i) any Incentive Payments which are vested and payable to the Participant under the Team Incentive Plan as of the Termination Date that remain unpaid, in accordance with the terms of the Team Incentive Plan (and no later than two and one-half (2-1/2) months after the end of the year to which the Incentive Payment relates),(ii) the Standard Termination Payments within the thirty (30) days following the Termination Date and (iii) any vested accrued benefits owed to the Participant under the Company's employee benefit plan in which the Participant participated, if any, prior to the Termination Date in accordance with the terms and conditions of such plans.

(e)Delay of Payment for Release.  Notwithstanding any of the foregoing, any payments to be made or benefits to be delivered under this Section 4.1 (other than under subsection 4.1(d)) within the sixty (60) days after the Termination Date shall be accumulated and paid, subject to Section 6.2 below, in a lump sum on the first payroll date occurring more than sixty (60) days after the Termination Date, provided the Participant executes the required Release Agreement and the applicable revocation period thereunder expires within such sixty (60)-day period without the Participant having elected to revoke the Release Agreement.  Any benefits to be provided to the Participant during such time may be provided at the Participant's expense with the Participant having the right to reimbursement of such amounts on the first payroll date occurring more than sixty (60) days after the Termination Date.

4.2Ineligible for Benefits.  Subject to Section 6.2 below, Participants not satisfying the eligibility requirements of Section 3.2 (Eligibility for Regular Severance Benefits) shall only be entitled to receive (i) the Standard Termination Payments within the thirty (30) days following the Termination Date and (ii) any vested accrued benefits owed to the Participant under any Company employee benefit plan in which the Participant participated prior to the Termination Date in accordance with the terms and conditions of such plans.  Additionally, so long as the Participant's employment is not terminated by the Company for Cause, subject to Section 6.2 below, the Participant also shall be entitled to receive any Incentive Payments which are vested and payable to the Participant under the Team Incentive Plan as of the Termination Date that remain unpaid,in accordance with theterms of the Team Incentive Plan (and no later than two and one half (2-1/2) months after the end of the year to which the Incentive Payment relates).

Exhibit 10.1

4.3No Duplication of Benefits.  Notwithstanding anything herein to the contrary, the right to receive any benefits under the Plan by any Participant is specifically conditioned upon the Participant either waiving or being ineligible for any and all benefits under any other change in control or severance benefit plans otherwise available to the Participant or any other severance, retention or change in control plan, program or agreement sponsored by the Company.

4.4Effect of Rehire.  Notwithstanding any provision to the contrary, the Company may require a Participant to repay some or all of the benefits received under the Plan as a condition of reemployment.  Additionally, all payments and benefits hereunder shall cease if the Participant is reemployed by Lumos or any Affiliate

ARTICLE V

COVENANTS

5.1Covenants.  As a condition to eligibility to participate in the Plan, each Eligible Employee must agree to comply with the restrictive covenants set forth in this Article V.  In the event the Participant breaches any of the restrictions or provisions set forth in this Article V, the Participant waives and forfeits any and all rights to any payments or benefits under the Plan and agrees to return to the Company the gross amount of any amounts paid previously under the Plan and pay to the Company the value of any benefits delivered previously under the Plan.  This waiver and forfeiture shall be effective even in the event a court refuses to enforce the restrictions or provisions set forth in this Article V.

5.2Confidentiality of Trade Secrets and Confidential Information.  The Participant agrees to keep all of the Company’s trade secrets, as defined by the Virginia Uniform Trade Secrets Act (“Trade Secrets”) confidential for so long as the information continues to constitute a trade secret under applicable law.  The Participant further agrees that, for a period of three (3) years following the cessation of his or her employment, he or she will keep confidential all other confidential information of the Company (“Confidential Information”), which does not constitute a Trade Secret but which is valuable and related to the business of the Company and the details of which are generally unknown to the public or to competitors of the Company.  “Confidential Information” includes, but is not limited to (i) business and employment policies, marketing methods and the targets of those methods, finances, business plans, promotional materials and price lists; (ii) the terms upon which the Company obtains products from its suppliers and sells them to customers; (iii) the nature, origin, composition and development of the Company’s products or services; and (iv) the manner in which the Company provides products and services to its customers.  If the Participant is questioned about any Confidential Information or Trade Secrets by anyone (including law enforcement authorities or the media), the Participant will promptly notify the Benefits Department (Attention: Human Resources Department).

5.3Non-Disparagement.  The Participant agrees that he or she will not make any negative, disparaging or unflattering statements about the Company or any of its current or former parents, subsidiaries, affiliates, predecessors, successors, assigns, agents, employees, plan administrators, representatives, attorneys, insurers, related business entities and benefits plans to

Exhibit 10.1

any individual or entity (regardless of whether or not the Participant believes such statements to be true).  This provision shall not apply to any statement made in the context of a regulatory, judicial or administrative proceeding or to any statement required by any legal, regulatory or judicial entity, division or department.

5.4Return of Documents. The Participant agrees to return all of the Company’s property to the Company immediately upon request or termination of the Participant's employment.  Such property includes, but is not limited to, the original and any copy (regardless of the manner in which it is recorded) of all documents provided by the Company to the Participant or which the Participant developed or collected in the scope of his or her employment, as well as all Company-issued equipment, supplies, accessories, keys, access cards, computers, cell phones, Blackberries, pagers, materials, files, or records.

5.5Reaffirm Obligations. Upon termination of the Participant’s employment with the Company, the Participant shall, if requested by the Company, reaffirm in writing Participant's recognition of the importance of maintaining the confidentiality of the Company’s proprietary information and trade secrets and reaffirm all of the obligations set forth in this Article V.

5.6Non-Competition and Non-Solicitation. 

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

(b)For a period of twelve (12) months after the Participant’s employment with the Company ends for any reason (the “Non-Competition Period”), the Participant will not compete with the Company by performing or causing to be performed the same or similar types of duties or services that the Participant performed for the Company, during the twenty-four (24) months preceding the Termination Date, for a Competitor of the Company in any capacity whatsoever, directly or indirectly, within any city or county of the continental United States in which, at the time the Participant’s employment with the Company ends, the Company provides services or products, offers to provide services or products, or has documented plans to provide or offer to provide services or products within the Non-Competition Period, provided that the Participant has knowledge of those plans at the time the Participant’s employment with the Company ends (the “Service Area”).  The Participant acknowledges and agrees that because of the nature of the Company’s business, the nature of the Participant’s job responsibilities, and the nature of the Confidential Information and Trade Secrets which the Company has provided the Participant access to, any breach of this provision by the Participant would result in the inevitable disclosure of the Trade Secrets and Confidential Information to the direct competitors of the Company.

(c)During the Non-Competition Period, the Participant will not, directly or indirectly, sell, attempt to sell, provide or attempt to provide, any products or services that are the same as or substantially similar to, and competitive with, the products or services provided by the Company as of the Termination Date, to any person or entity who was a Customer or an Actively Sought Prospective Customer of the Company, at the time the Participant’s employment with the Company ceased.

Exhibit 10.1

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

(e)The Participant acknowledges and agrees that the Company has a legitimate business interest in preventing the Participant from engaging in activities competitive with the Company as described in this Article V and that any breach of this Article V would constitute a material breach of this Article V.

(f)The Company may notify anyone employing the Participant or evidencing an intention to employ the Participant during the Non-Competition Period as to the existence and provisions of this Article V and may provide such person or organization a copy of this Article V.  The Participant agrees that the Participant will provide the Company the identity of any employer the Participant plans to go to work for during the Non-Competition Period along with the Participant’s anticipated job title, anticipated job duties with any such employer, and anticipated start date.  The Company will analyze the proposed employment and make a determination as to whether it would violate this Article V. If the Company determines that the proposed employment would not pose an unacceptable threat to its interests, the Company will notify the Participant in writing that it does not object to the employment.  The Participant further agrees to provide a copy of this Article V to anyone who employs the Participant during the Non-Competition Period.

(g)The Participant acknowledges and agrees that this Article V is intended to limit the Participant’s right to compete only to the extent necessary to protect the legitimate business interests of the Company.  The Participant acknowledges and agrees that the Participant will be reasonably able to earn a livelihood without violating the terms of this Article V.  If any of the provisions of this Article V should ever be deemed to exceed the time, geographic area, or activity limitations permitted by applicable law, the Participant agrees that such provisions may be reformed to the maximum time, geographic area and activity limitations permitted by applicable law, and the Participant authorizes a court or other trier of fact having jurisdiction to so reform such provisions.  In the event the Participant breaches any of the restrictions or provisions set forth in this Article V, the Participant waives and forfeits any and all rights to any further benefits under this Plan.  Additionally, in the event the Participant breaches any of the restrictions or provisions set forth in this Article V, the Participant agrees to repay the Company for any of the consideration that the Participant received prior to the breach.

(h)For purposes of this Article V, the following definitions will apply:

(i)“Directly or indirectly” as used in this Plan includes an interest in or participation in a business as an individual, partner, shareholder, owner, director, officer, principal, agent, employee, consultant, trustee, lender of money, or in any other capacity or relation whatsoever. The term includes actions taken on behalf of the Participant or on behalf of any other person. “Directly or indirectly” does not include the ownership of less than five percent

Exhibit 10.1

(5%) of the outstanding shares of any corporation, if such shares are publicly traded in the over-the-counter market or listed on a national securities exchange.

(ii) “Competitor” as used in this Plan means any person, firm, association, partnership, corporation or other entity that competes or attempts to compete with Lumos or the Company by providing or offering to provide wireless or wireline telecommunication services, including but not limited to internet services, that are the same as or substantially similar to, and competitive with, the products or services offered by the Company as of the Termination Date, within any city or county in which the Company provides or offers those services or products as of the Termination Date.

(iii)“Customer” as used in this Plan means any person or entity who purchased products or services from the Company within the twenty-four (24) months preceding the Termination Date, and about whom the Participant obtained information in the course of his or her employment or with whom he or she had contact. 

(iv)The term “Actively Sought Prospective Customer,” as used in this Plan, means any person or entity with whom the Participant, within twenty-four (24) months preceding the Termination Date, had contact or obtained information in the course of his or her employment with the Company and in connection with the Company offering or attempting to offer for sale their products or services. 

(i)Notwithstanding any other provision of this Article V, the Participant will not be considered to have violated any prohibition against competing with the Company by engaging in any of the following activities: (1) being employed or retained by (i) any parent, subsidiary or affiliate organization of any Competitor where that parent, subsidiary or affiliate organization does not itself, and the Participant’s employment will not cause the Participant to, compete or attempt to compete with the Company by providing or offering to provide products or services that are the same as or substantially similar to, and competitive with, those offered by the Company as of the Termination Date, within the Service Area or (ii) any Competitor, directly or indirectly, so long as the Participant is not providing products or services within the Service Area that are the same as or substantially similar to, and competitive with, those products or services provided by the Company as of the Termination Date within the Service Area; or (2) selling or attempting to sell products or services so long as the services or products, which the Participant is selling or attempting to sell, are not competitive with the type of services or products provided or offered by the Company or for which the Company had documented plans to provide, offer or supply to such customer at the time of the Participant’s cessation of employment.

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

Exhibit 10.1

5.7Remedies.  The parties hereto agree that the Company would suffer irreparable harm from a breach by the Participant of any of the covenants or agreements contained herein. Therefore, in the event of the actual or threatened breach by the Participant of any of the provisions of this Article V, the Company may, in addition and supplementary to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions hereof.  The Participant agrees that if a lawsuit or other proceeding is brought to enforce the terms of this Article V or determine the validity of its terms and the Company prevails, the Company will be entitled to recover from the Participant its reasonable attorneys’ fees and court costs.  The Participant agrees that these provisions are reasonable.

5.8Post-Employment Assistance.  So long as it does not unreasonably interfere with any employment or any attempts by the Participant to obtain future employment, the Participant agrees that, although he or she shall not be an employee of the Company, he or she shall provide, for a period of ninety (90) days after the Termination Date, whatever information is requested by the Company and such other lawful assistance as reasonably requested by the Company, to aid it in connection with the continuation of its business.  The Participant further agrees that he or she shall cooperate with the Company in connection with any reasonable and lawful requests made to assist it in any litigation or investigation related to alleged acts or omissions occurring during the Participant’s employment by the Company; provided, however, that the Company shall provide reasonable notice of any such requests and shall cooperate with the Participant to ensure that its requests do not unreasonably interfere with the Participant’s employment or attempts to obtain future employment. 

ARTICLE VI

PARACHUTE PAYMENTS; SECTION 409A

6.1Excise Taxes.

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

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

Exhibit 10.1

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

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

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

(e)Definitions.  For purposes of this Article VI, the following terms shall have their respective meanings:

(1)“Accounting Firm” means the independent accounting firm currently engaged by the Company; and

(2)“Net After Tax Amount” means the amount of any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Code Sections 1, 3101 (b) and 4999 and any State or local income taxes applicable to the Participant on the date of

Exhibit 10.1

payment.  The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable, in effect on the date of payment.

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

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

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

6.2Section 409A.  It is intended that any payment or benefit which the Participant is to be paid or provided in connection with this Plan which is considered to be non-qualified deferred compensation subject to Section 409A of the Code, shall be paid and provided in a manner, and at such time, as complies with, or is exempt from, the applicable requirements of Section 409A of the Code.  In connection with effecting such compliance with, or exemption from, Section 409A of the Code, the following shall apply:

(a)No Acceleration or Deferral.  Neither the Participant nor the Company shall take any action to accelerate or delay the payment of any monies and/or provision of any benefits in any matter which would not be in compliance with, or exempt from, Section 409A of the Code.

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

Exhibit 10.1

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

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

(e)Specified Employee Identification Date.  A “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code shall be determined on the basis of the applicable twelve (12)-month period ending on the specified employee identification date designated by the Company consistently for purposes of this Plan and similar agreements or, if no such designation is made, based on the default rules and regulations under Section 409A(a)(2)(B)(i) of the Code.

(f)No Company Liability.  Notwithstanding any of the provisions of this Plan, Lumos and its Affiliates shall not be liable to the Participant if any payment or benefit which is to be provided pursuant to this Plan and which is non-qualified deferred compensation subject to Section 409A of the Code otherwise fails to comply with, or be exempt from, the requirements of Section 409A of the Code.

ARTICLE VII

PLAN ADMINISTRATION

7.1Plan Administration.  Except as otherwise provided herein, the Committee shall administer the Plan.  The Committee shall be the "Named Fiduciary" for purposes of ERISA and shall have the authority to control, interpret and construe the Plan and manage the operations thereof.  Any such interpretation and construction of any provisions of the Plan by the Committee shall be final.  The Committee shall, in addition to the foregoing, exercise such other powers and perform such other duties as it may deem advisable in the administration of the Plan.  The Committee may delegate some (or all) of its authority hereunder to the Benefits Department.  The Committee also may engage agents and obtain other assistance from the Company, including Company counsel.  The Committee shall not be responsible for any action taken or not taken on the advice of legal counsel.  The Committee is given specific authority to allocate and revoke responsibilities among its members or designees.  When the Committee has allocated authority pursuant to the foregoing, the Committee shall not be liable for the acts or omissions of the party to whom such responsibility has been allocated, except to the extent provided by law.

7.2Claims Procedures.

Exhibit 10.1

(a)Initial Claim.  A claim for benefits under the Plan must be submitted to the Benefits Department.  All claims for benefits under the Plan shall be submitted, in writing, to the Committee on forms prescribed by the Committee and must be signed by the Participant or, in the case of a death benefit, by Participant’s Beneficiary or legal representative.  Any Participant or Beneficiary who disputes the amount of his or her entitlement to Plan benefits must file a claim in writing within one hundred eighty (180) days of the event that the Participant or Beneficiary is asserting constitutes an entitlement to such Plan benefits or, if later, within ninety (90) days of the date the payment is due.  Failure by the Participant or Beneficiary to submit such claim within such time periods shall bar the Participant or Beneficiary from any claim for benefits under the Plan as the result of the occurrence of such event or the failure to make such payment.  In no event shall the Participant or other claimant be entitled to challenge a decision of the Committee with respect to a claim unless and until the claims procedures herein have been complied with and exhausted. 

(1)Notice of Decision.  Written notice of the disposition of the claim shall be furnished to the claimant within a reasonable period of time, but not later than ninety (90) days after receipt of the claim by the Benefits Department, unless the Benefits Department determines that special circumstances require an extension of time for processing the claim.  If the Benefits Department determines that an extension is required, written notice (including an explanation of the special circumstances requiring an extension and the date by which the Benefits Department expects to render the benefits determination) shall be furnished to the claimant prior to the termination of the original ninety (90) day period.  In no event shall such extension exceed a period of ninety (90) days from the end of the initial ninety (90) day period.  If the claim is denied, the notice required pursuant to this Section shall set forth the following:

(A)The specific reason or reasons for the adverse determination;

(B)Special reference to the specific Plan provisions upon which the determination is based;

(C)A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(D)An explanation of the Plan's appeal procedure and the time limits applicable to an appeal, including a statement of the claimant's right to bring a civil action under Section 502(a) of ERISA.

(b)Appeal Procedures.  Every claimant shall have the right to appeal an adverse benefits determination to the Committee (including, but not limited to, whether the Participant's Separation from Service was for Cause).  Such an appeal may be accomplished by a written notice of appeal filed with the Committee within sixty (60) days after receipt by the claimant of written notification of the adverse benefits determination.  Claimants shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits.  Claimants will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's

Exhibit 10.1

claim for benefits, such relevance to be determined in accordance with Section 7.2(c) (Claims  Procedures — Definition of Relevant) below.  The appeal shall take into account all comments, documents, records, and other information submitted by claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(1)Notice of Decision.  Notice of a decision on appeal shall be furnished to the claimant within a reasonable period of time, but not later than sixty (60) days after receipt of the appeal by the Committee unless the Committee determines that special circumstances (such as the need to hold a hearing if the Committee determines that a hearing is required) require an extension of time for processing the claim.  If the Committee determines that an extension is required, written notice (including an explanation of the special circumstances requiring an extension and the date by which the Committee expects to render the benefits determination) shall be furnished to the claimant prior to the termination of the original sixty (60) day period.  In no event shall such extension exceed a period of sixty (60) days from the end of the initial sixty (60) day period.  The notice required by the first sentence of this Section shall be in writing, shall be set forth in a manner calculated to be understood by the claimant and, in the case of an adverse benefit determination, shall set forth the following:

(A)The specific reason or reasons for the adverse determination;

(B)Reference to the specific Plan provisions upon which the determination is based;

(C)A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits, such relevance to be determined in accordance with Section 5.2(c) (Claims Procedures — Definition of Relevant), below; and

(D)An explanation of the claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on appeal.

(c)Definition of Relevant.  For purposes of this Section, a document, or other information shall be considered "relevant" to the claimant's claim if such document, record or other information:

(1)Was relied upon in making the benefit determination;

(2)Was submitted, considered or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in making the benefit determination; or

(3)Demonstrates compliance with the administrative processes and safeguards required pursuant to this Section 7.2 on making the benefit determination.

(d)Disability.  Notwithstanding the claims procedures above, the following claims procedures shall apply for any claim based on a Disability.

Exhibit 10.1

(1)If a Participant applies for a benefit under the Plan based on a Disability, and in the event a claim for benefits is wholly or partially denied by the Benefits Department, the Benefits Department shall, within a reasonable period of time, but no later than forty-five (45) days after receipt of the claim, notify the claimant in writing of the denial of the claim.  This forty-five (45) day period may be extended up to thirty (30) days if such an extension is necessary due to matters beyond the control of the Plan, and the claimant is notified, prior to the expiration of the initial forty-five (45) day period, of the circumstances requiring the extension of time and the date by which the Benefits Department expects to render a decision.  If, prior to the end of the first thirty (30) day extension period, the Benefits Department determines that, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to an additional thirty (30) days, provided that the Benefits Department notifies the claimant, prior to the expiration of the first thirty (30) days extension period, of the circumstances requiring the extension and the date as of which the Benefits Department expects to render a decision.  In the case of any extension, the notice of extension also shall specifically explain the standards on which entitlement to a benefit upon Disability is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and the claimant shall be afforded at least forty-five (45) days within which to provide the specified information, if any.

(2)If the Benefits Department denies the claim for a Disability benefit in whole or in part, the claimant shall be provided with written notice of the denial stating the specific reason for the denial; reference to the specific Plan provisions on which the denial is based; a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and a description of the Plan’s review procedures (as set forth below) and the time limits applicable to such procedures, including the claimant’s right to bring civil action following an adverse benefit determination.  If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion shall be provided to the claimant free of charge, or the claimant shall be informed that such rule, guideline, protocol, or other criterion shall be provided free of charge upon request.

(3)If the claim for a Disability benefit is denied in full or in part, the claimant shall have the right to appeal the decision by sending a written request for review to the Committee within one hundred eighty (180) days of his receipt of the claim denial notification.  The claimant may submit written comments, documents, records, and other information relating to his or her claim for benefits.  Upon request, the claimant shall be provided free of charge and reasonable access to, and copies of, all documents, records and other information relevant to his claim.

(4)Upon receipt of the claimant’s appeal of the denial of his claim, the Committee shall conduct a review that takes into account all comments, documents, records, and other information submitted by the claimant or his authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The review shall not afford deference to the initial benefit determination and shall be conducted by an individual who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual.  The

Exhibit 10.1

Committee shall consult a medical professional who has appropriate training and experience in the field of medicine relating to the claimant’s disability and who is neither consulted as part of the initial denial nor is the subordinate to such individual and shall identify the medical or vocational experts whose advice is obtained with respect to the initial benefit denial, without regard to whether the advice was relied upon in making the decisions.  If a claim is denied due a medical judgment, the Committee will consult with a healthcare professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The healthcare professional consulted will not be the same person consulted in connection with the initial benefit decision (nor be the subordinate of that person).  The decision on review also will identify any medical or vocational experts who advised the Company’s benefits department in connection with the original benefit decision, even if the advice was not relied upon in making the decision.

(5)The Committee shall notify the claimant of its determination on review within a reasonable period of time, but generally not later than forty-five (45) days after receipt of the request for review, unless the Committee determines that special circumstances require an extension of time for processing the claim.  If the Committee determines that an extension of time for processing is required, written notice of the extension will be furnished to the claimant prior to the termination of the initial forty-five (45) day period.  In no event shall such extension exceed a period of forty-five (45) days from the end of the initial period.  The extension notice shall indicate the special circumstances requiring extension of time and the date by which the Plan Administrative Committee expects to render the determination on review.

(6)If the Committee denies the claim on appeal, it shall notify the claimant in a manner to be understood by him of the specific reason or reasons for the adverse determination; reference to the specific Plan provisions on which the adverse determination is based; a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his claim; and a statement indicating the claimant’s right to file a lawsuit upon completion of the claims procedure process.  If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion shall be provided free of charge, or the claimant may be informed that such rule, guideline, protocol, or other criterion shall be provided free of charge upon request. 

(e)Decisions Final; Procedures Mandatory.  To the extent permitted by law, a decision on review or appeal shall be binding and conclusive upon all persons whomsoever.  To the extent permitted by law, completion of the claims procedures described in this Section shall be a mandatory precondition that must be complied with prior to commencement of a legal or equitable action in connection with the Plan by a person claiming rights under the Plan.  The Committee may, in its sole discretion, waive these procedures as a mandatory precondition to such an action.

(f)Time For Filing Legal Or Equitable Action.  Any legal or equitable action filed in connection with the Plan by a person claiming rights under the Plan must be commenced not later than the earlier of: (1) the shortest applicable statute of limitations provided by law; or (2) one (1) year of the date the written copy of the Committee's decision on review is delivered to the claimant in accordance with Section 7.2(b) or (d).

Exhibit 10.1

ARTICLE VIII

BINDING AGREEMENT

8.1General.  Subject to the right of the Company to amend or terminate the Plan, and the Committee's right to interpret the Plan, the Plan shall be for the benefit of and be enforceable by, a Participant's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If a Participant should die after satisfying the requirements for the receipt of benefits hereunder, any amount remaining unpaid to him or her, unless otherwise provided herein, shall be paid in accordance with the terms of the Plan to the Participant's spouse or, if there is no such spouse, to the Participant's estate.

ARTICLE IX

NOTICE

9.1General.  For the purpose of the Plan, and except as specifically set forth herein, notices and all other communications provided for in the Plan shall be in writing and shall be deemed to have been duly given when hand-delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the Participant at his or her last known address, and to Lumos at Lumos Networks Operating Company, 1 Lumos Plaza, Waynesboro, Virginia 22980, provided that all notices to the Company shall be directed to the attention of the Benefits Department (Attention: Human Resources Department); or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

ARTICLE X

AMENDMENT AND TERMINATION

10.1General.  The Plan may be amended, in whole or in part, or terminated at any time, by the Board or the Compensation Committee subject to the following exceptions:

(a)No amendment or termination of the Plan shall impair or abridge the obligations of the Company that have become vested and payable as the result of the previous termination of the Participant's employment.

(b)No amendment or termination of the Plan shall affect the rights of a Participant who received a Notice of Termination before the effective date of such amendment.

(c)Notwithstanding the foregoing, the Plan may be amended at will at any time and from time to time by the Board to reflect changes necessary due to revisions to, or interpretations of: (1) ERISA; (2) the Code; or (3) any other provision of applicable state or federal law.

(d)Notwithstanding any provision of this Plan to the contrary, no amendment may be made if it will result in a violation of Section 409A of the Code and any such amendment shall at no time have any legal validity.

Exhibit 10.1

(e)Notwithstanding any other provision of the Plan, the Plan may not be amended or terminated during the Change in Control Protection Period in any way that would adversely affect the rights of any Participant under the Plan without the written consent of the affected Participant. 

ARTICLE XI

MISCELLANEOUS

11.1Withholding.  Any payments or benefits provided for hereunder shall be paid or delivered subject to any applicable withholding required under federal, state or local law.

11.2No Right of Assignment.  Neither a Participant nor any person taking on behalf of a Participant may anticipate, assign or alienate (either by law or equity) any benefit provided under the Plan and the Company shall not recognize any such anticipation, assignment or alienation.  Furthermore, to the extent permitted by law, a benefit under the Plan is not subject to attachment, garnishment, levy, execution or other legal or equitable process.

11.3No Employment Contract.  Notwithstanding anything to the contrary contained in the Plan, by the execution of the Plan, the Company does not intend to change the employment-at-will relationship with any of its employees.  Instead, the Company retains its absolute right to terminate any employee at any time.

11.4Mitigation of Benefits.  The Participant shall not be required to mitigate the amount of payment provided for in the Plan by seeking other employment or otherwise, and except as set forth in the Plan, the amount of any payment or benefit provided for shall not be reduced by any compensation earned by the Participant as the result of employment by another employer, or by retirement benefits received.

11.5Service of Process.  The Secretary of Lumos shall be the agent for service of process in matters relating to the Plan.

11.6ERISA Plan.  The Plan shall be interpreted as, and is intended to qualify as, a severance pay plan under ERISA, and therefore does not constitute an employee pension benefit plan pursuant to Section 3(2) of ERISA.

11.7Compliant Operation and Interpretation.  This Plan shall be operated in compliance with Section 409A or an exception thereto and each provision of this Plan shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto. 

Exhibit 10.1

IN WITNESS WHEREOF, Lumos has caused this Plan document to be executed by its duly authorized representative on this 2nd day of August, 2016.

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

Exhibit 10.1

General Plan Information

Plan Name

Lumos Networks Operating Company Severance Plan For Eligible Officers

Plan Sponsor

Lumos Networks Operating Company

1 Lumos Plaza

Waynesboro, Virginia 22980
(540) 946-2000

Employer Identification Number (EIN)

90-0673286

Plan Number

504

Plan Type

The Plan is a welfare benefit plan that pays severance benefits.

Plan Administrator

Plan Administrator, Lumos Networks Operating Company Severance Plan for Eligible Officers

c/o Lumos Networks Operating Company
1 Lumos Plaza

Waynesboro, Virginia 22980
(540) 946-2000

Agent for Service of Legal Process

c/o Lumos Networks Operating Company
1 Lumos Plaza

Waynesboro, Virginia 22980
(540) 946-2000

Plan Year

The calendar year.

ERISA Rights Statement

As participant in this Plan, you are entitled to certain rights and protections under ERISA.  ERISA provides that all Plan participants shall be entitled to:

Exhibit 10.1

examine, without charge at the Plan Administrator’s office and at other specified locations, such as worksites and union halls, all documents governing the Plan, including collective bargaining agreements, and a copy of the latest Annual Report (Form 5500 series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration (f/k/a the Pension Welfare Benefits Administration).

obtain copies of all documents governing the operation of the Plan including collective bargaining agreements and copies of the latest Annual Report (Form 5500 series), if any, and an updated summary plan description, by making a written request to the Plan Administrator and paying a reasonable charge for the copies.

receive a summary of the Plan’s annual financial report.  The Plan Administrator is required by law to furnish each participant under the Plan with a copy of this summary annual report.

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in your interest and in the interest of the other Plan participants and beneficiaries.

No one, including your employer, your union, or any other person may fire you or otherwise discriminate against you, in any way solely to prevent you from getting a benefit or exercising your rights under ERISA.  If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan documents or the latest Annual Report from the Plan and do not receive them within thirty (30) days, you may file suit in federal court.  In such a case, the court may require the Plan Administrator to provide the documents and pay you up to $110 a day until you receive them, unless they were not sent because of reasons beyond the control of the Plan Administrator.

If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court.  If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If your suit is successful, the court may order the person you have sued to pay costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

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 thethreeand ninemonths ended September 30, 2016 of 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:  November9, 2016

/s/Timothy G. Biltz

Timothy G. Biltz

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Johan G. Broekhuysen, certify that:

1.I have reviewed this quarterly report on Form 10-Q for the three and nine monthsended September 30, 2016 of 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:  November 9, 2016

/s/ Johan G. Broekhuysen

Johan G. Broekhuysen

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

EX-32.1

Exhibit 32.1

LUMOS NETWORKS CORP.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with thequarterly report of Lumos Networks Corp. (the “Company”) on Form 10-Q for the threeand ninemonthsended September 30,  2016(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

November9, 2016

EX-32.2

Exhibit 32.2

LUMOS NETWORKS CORP.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Lumos NetworksCorp. (the “Company”) on Form 10-Q for the three and ninemonthsendedSeptember 30, 2016(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

November  9, 2016

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 04, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Entity Registrant Name	Lumos Networks Corp.
Entity Central Index Key	0001520744
Trading Symbol	LMOS
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		23,576,258

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 33,176	$ 13,267
Marketable securities	38,790	88,811
Accounts receivable, net of allowance of $1,074 ($1,235 in 2015)	24,306	20,796
Other receivables	1,606	852
Income tax receivable	447	568
Prepaid expenses and other	5,614	7,215
Total Current Assets	103,939	131,509
Securities and Investments	1,501	1,180
Property, Plant and Equipment
Land and buildings	24,134	23,019
Network plant and equipment	713,754	624,360
Furniture, fixtures and other equipment	51,117	48,266
Total in service	789,005	695,645
Under construction	26,217	51,663
Property, plant and equipment, gross	815,222	747,308
Less accumulated depreciation and amortization	283,167	248,364
Total Property, Plant and Equipment, net	532,055	498,944
Other Assets
Goodwill	100,297	100,297
Other intangibles, less accumulated amortization of $96,823 ($94,892 in 2015)	9,147	11,078
Deferred charges and other assets	6,765	2,364
Total Other Assets	116,209	113,739
Total Assets	753,704	745,372
Current Liabilities
Current portion of long-term debt	12,303	10,400
Accounts payable	9,292	14,182
Advance billings and customer deposits	14,231	13,849
Accrued compensation	1,602	1,191
Accrued operating taxes	5,143	3,907
Other accrued liabilities	4,642	4,974
Total Current Liabilities	47,213	48,503
Long-term Liabilities
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	457,095	456,300
Retirement benefits	16,357	17,029
Deferred income taxes, net	91,129	89,193
Other long-term liabilities	2,104	2,016
Total Long-term Liabilities	566,685	564,538
Commitments and Contingencies
Equity
Preferred stock, par value $0.01 per share, authorized 100 shares, none issued
Common stock, par value $0.01 per share, authorized 55,000 shares; 23,558 shares issued and 23,539 shares outstanding (23,005 shares issued and 22,992 shares outstanding in 2015)	236	230
Additional paid-in capital	179,327	171,746
Treasury stock, 19 shares at cost (13 shares in 2015)	(127)	(103)
Accumulated deficit	(29,168)	(28,541)
Accumulated other comprehensive loss, net of tax	(11,306)	(11,940)
Total Lumos Networks Corp. Stockholders' Equity	138,962	131,392
Noncontrolling Interests	844	939
Total Equity	139,806	132,331
Total Liabilities and Equity	$ 753,704	$ 745,372

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 1,074	$ 1,235
Other intangibles, accumulated amortization	$ 96,823	$ 94,892
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	23,558,000	23,005,000
Common stock, shares outstanding	23,539,000	22,992,000
Treasury stock, shares	19,000	13,000

XML

Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Income [Abstract]
Operating Revenues	$ 51,771	$ 50,969	$ 155,013	$ 152,417
Operating Expenses
Cost of Revenue, exclusive of depreciation and amortization shown separately below	9,657	10,546	29,948	31,682
Selling, general and administrative, exclusive of depreciation and amortization shown separately below	20,505	19,940	64,056	58,531
Depreciation and amortization	12,739	11,803	37,028	35,112
Accretion of asset retirement obligations	23	33	91	105
Restructuring charges	(384)		1,823	637
Total Operating Expenses	42,540	42,322	132,946	126,067
Operating Income	9,231	8,647	22,067	26,350
Other Income (Expenses)
Interest expense	(7,164)	(5,817)	(21,165)	(13,022)
Gain on interest rate swap derivatives		198		445
Other income (expenses), net	48	58	320	(89)
Total Other Expenses, net	(7,116)	(5,561)	(20,845)	(12,666)
Income Before Income Taxes	2,115	3,086	1,222	13,684
Income Tax Expense	1,046	1,774	1,712	6,221
Net Income (Loss)	1,069	1,312	(490)	7,463
Net Income Attributable to Noncontrolling Interests	(46)	(33)	(137)	(111)
Net Income (Loss) Attributable to Lumos Networks Corp.	$ 1,023	$ 1,279	$ (627)	$ 7,352
Basic and Diluted Earnings (Loss) per Common Share Attributable to Lumos Networks Corp. Stockholders
Basic and diluted earnings (loss) per share	$ 0.04	$ 0.06	$ (0.03)	$ 0.32

XML

Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Comprehensive Income [Abstract]
Net Income (Loss)	$ 1,069	$ 1,312	$ (490)	$ 7,463
Other Comprehensive Income (Loss):
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income (loss) (see Note 2)	338	337	1,013	1,012
Unrealized holding (loss) gain on available-for-sale marketable securities	(11)	20	27	31
Income Taxes	(128)	(139)	(406)	(406)
Other Comprehensive Income, Net of Tax	199	218	634	637
Total Comprehensive Income	1,268	1,530	144	8,100
Less: Comprehensive Income Attributable to Noncontrolling Interests	(46)	(33)	(137)	(111)
Comprehensive Income Attributable to Lumos Networks Corp.	$ 1,222	$ 1,497	$ 7	$ 7,989

XML

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows from Operating Activities:
Net (Loss) Income	$ (490)	$ 7,463
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	35,097	31,035
Amortization	1,931	4,077
Accretion of asset retirement obligations	91	105
Deferred income taxes	1,374	5,802
Gain on interest rate swap derivatives		(445)
Equity-based compensation expense	8,477	4,236
Amortization of debt discounts and issuance costs	3,345	1,648
Retirement benefits, net of cash contributions and distributions	340	(171)
Other	649	206
Changes in assets and liabilities from operations:
(Increase) decrease in accounts receivable	(3,732)	836
Increase in other assets	(3,484)	(2,689)
Changes in income taxes	28	(24)
Increase (decrease) in accounts payable	436	(2,776)
Increase in other current liabilities	1,725	2,702
Net Cash Provided by Operating Activities	45,787	52,005
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(65,280)	(80,118)
Broadband network expansion funded by stimulus grant		(2,578)
Purchases of available-for-sale marketable securities	(57,142)	(74,088)
Proceeds from sale or maturity of available-for-sale marketable securities	107,075	29,903
Change in restricted cash		3,838
Cash reimbursement received from broadband stimulus grant		3,838
Net Cash Used in Investing Activities	(15,347)	(119,205)
Cash Flows from Financing Activities:
Proceeds from issuance of senior secured term loan		28,000
Proceeds from issuance of unsecured notes, net of debt discount		148,500
Payment of financing costs		(8,192)
Principal payments on senior secured term loans	(6,024)	(45,953)
Capital distribution to noncontrolling interests	(232)
Cash dividends paid on common stock		(3,152)
Principal payments under capital lease obligations	(2,551)	(2,378)
Proceeds from stock option exercises and employee stock purchase plan	630	293
Repurchases of common stock to settle tax withholding obligations on employee stock awards	(2,354)	(295)
Other		28
Net Cash (Used in) Provided by Financing Activities	(10,531)	116,851
Increase in cash and cash equivalents	19,909	49,651
Cash and Cash Equivalents:
Beginning of Period	13,267	14,140
End of Period	$ 33,176	$ 63,791

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Organization

9 Months Ended

Sep. 30, 2016

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.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The 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 and nine months ended September 30, 2016 and three and nine months ended September 30, 2015 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 and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2015 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, 2015.Certain presentation changes have been made within the operating expense line items on the condensed consolidated statements of operations and prior period amounts have been reclassified in order to conform to the current year presentation. Specifically, the previously reported line item “network access costs” has been removed and the new line item “cost of revenue” has been added along with the necessary operating expense reclassifications. These reclassifications were not the result of an error and have no effect on previously reported operating income, net income or earnings per share.

Accounting Estimates

The preparation of condensed 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 condensed 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 and customer credits, deferred tax assets, marketable securities, asset retirement obligations, stock warrants and equity-based compensation, goodwill impairment assessments, 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 or determinable and collectability is reasonably assured.  Certain services of the Company require payment in advance of service performance.  In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue ratably over the service period.  The Company bills customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

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

Cash Equivalents and Marketable Securities

The Company considers its 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 September 30, 2016 and December 31, 2015 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 September 30, 2016 and December 31, 2015.

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires advance payment for certain services.  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 in the condensed consolidated statements of operations.  Bad debt expense forthe three months ended September 30, 2016 and 2015 was less than $0.1million and $0.2 million, respectively, and bad debt expense for the nine months ended September 30, 2016 and 2015 was $0.2 million and $0.4 million, respectively.  The Company’s allowance for doubtful accounts and customer credits was $1.1 million and $1.2 million as of September 30, 2016 and December 31, 2015, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts and customer credits from December 31, 2015 to September 30, 2016:

			Additions
(In thousands)	December 31, 2015		Charged to Expense		Charged to Other Accounts		Deductions		September 30, 2016
Allowance for doubtful accounts and customer credits	$	1,235	$	213	$	(76)	$	(298)	$	1,074

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 September 30, 2016 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 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 an indefeasible right of use agreement, is included with depreciation expense.

Intangibles with a finite life are classified as other intangibles on the condensed consolidated balance sheets.  At September 30, 2016 and December 31, 2015, other intangibles were comprised of the following:

			September 30, 2016				December 31, 2015
(Dollars in thousands)	Estimated Life	Gross Amount			Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$		103,108	$	(94,860)	$	103,108	$	(93,051)
Trademarks and franchise rights	10 to 15 yrs			2,862		(1,963)		2,862		(1,841)
Total		$		105,970	$	(96,823)	$	105,970	$	(94,892)

Included in the above amounts are indefinite-lived intangible assets of $0.3 million, which are not subject to amortization. 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 or nine months ended September 30, 2016.  Amortization expense for the three months ended September 30, 2016 and 2015 was $0.6 million and $0.7 million, respectively, and amortization for the nine months ended September 30, 2016 and 2015 was $1.9 million and $4.1 million, respectively.

Amortization expense for the remainder of 2016 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2016	$	603	$	41	$	644
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194
2021		1,112		1		1,113

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 thenine months ended September 30, 2016.

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.  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 and nine months ended September 30, 2016 and 2015, the components of the Company’s net periodic benefit cost (income) for the Pension Plan were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Service cost	$	-	$	-	$	-	$	-
Interest cost		674		666		2,022		1,998
Expected return on plan assets		(884)		(1,028)		(2,652)		(3,084)
Amortization of loss		262		248		786		743
Net periodic benefit cost (income)	$	52	$	(114)	$	156	$	(343)

Pension Plan assets were valued at $54.8million and $53.9 million at September 30, 2016 and December 31, 2015, respectively.  No funding contributions were made during the three or nine months ended September 30, 2016, and the Company does not expect to make a funding contribution during the remainder of 2016.

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 Company did not incur any significant costs associated with these plans during the three or nine months ended September 30, 2016 or 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended September 30, 2016 and 2015 of $0.1 million,  and less than $0.1 millionof this expense for each of these periods relates to the amortization of actuarial loss.  Expense for nonqualified pension plans for each of the nine months ended September 30, 2016 and 2015was $0.4 million, and $0.2 million and $0.3 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The gross amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for each of the three months ended September 30, 2016 and 2015 was $0.3 million and $1.0 million for each of the nine months ended September 30, 2016 and 2015, all of which has been reclassified to selling, general and administrative on the condensed consolidated statements of operations. Income taxes associated with these reclassifications were $0.1 million for each of the three months ended September 30, 2016 and 2015 and $0.4 million for each of the nine months ended September 30, 2016 and 2015.

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.

Total equity-based compensation expense related to all of the share-based awards, annual employee bonuses paid in the form of immediately vested shares and the Company’s 401(k) matching contributions was $1.7 million and $1.5 million for the three months ended September 30, 2016 and 2015, respectively, and $8.5 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of operations. 

Future charges for equity-based compensation related to instruments outstanding at September 30, 2016 are estimated to be $1.1 million for the remainder of 2016, $3.4 million in 2017, $1.5 million in 2018, $0.2 million in 2019, 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 FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Gross versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which addresses narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in ASU 2016-12 provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The Company will implement the provisions of ASU 2014-09, ASU 2016-08, ASU 2016-10, and ASU 2016-12 as of January 1, 2018. The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

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

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company does not expect the future adoption of ASU 2016-01 to have a material impact on its consolidated financial statements and disclosures.

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

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplifies the accounting for share-based payment transactions.  Among other things, ASU 2016-09 provides for (i) the simplification of accounting presentation of excess tax benefits and tax deficiencies, (ii) an accounting policy election regarding forfeitures to use an estimate or account for when incurred, and (iii) simplification of cash flow presentation for statutory tax rate withholding. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, with early adoption permitted.  The transition method required by ASU 2016-09 varies by amendment. The Company is still evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and disclosures.

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Cash Equivalents And Marketable Securities

9 Months Ended

Sep. 30, 2016

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 marketable securities reported at fair value as of September 30, 2016 and December 31, 2015 are summarized below:

(In thousands)	September 30, 2016		December 31, 2015
Cash equivalents:
Money market mutual funds	$	6,352	$	6,746
Commercial paper		11,970		1,000
Municipal bonds		1,860		-
Corporate debt securities		1,149		1,055
Total cash equivalents		21,331		8,801
Marketable securities:
Variable rate demand notes		13,395		-
Commercial paper		9,955		8,684
Debt securities issued by U.S. Government agencies		-		35,155
Corporate debt securities		15,440		44,972
Total marketable securities, available-for-sale		38,790		88,811
Total cash equivalents and marketable securities	$	60,121	$	97,612

At September 30, 2016 and December 31, 2015, 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 September 30, 2016:

(In thousands)	Total
Due in one year or less	$	25,395
Due after one year through five years		1,400
Due after five years through ten years		5,195
Due after ten years		6,800
Total debt securities	$	38,790

The Company received total proceeds of $32.3 million and $11.9 million from the sale or maturity of available-for-sale marketable securities during the three months ended September 30, 2016 and 2015, respectively, and $107.1 million and $29.9 million during the nine months ended September 30, 2016 and 2015, respectively.  The Company did not recognize any material realized net gains or losses and net unrealized holding gains or losses on available-for-sale marketable securities were less than $0.1 million for each of the three and nine months ended September 30, 2016 and 2015, respectively.  Unrealized holding gains or losses are included in accumulated other comprehensive loss on the condensed consolidated balance sheets.

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Disclosures About Segments Of An Enterprise And Related Information

9 Months Ended

Sep. 30, 2016

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 the Company’s 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		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2016:
Operating revenues	$	31,373		15,863		4,535		-	$	51,771
Cost of revenue		4,537		5,120		-		-		9,657
Gross profit		26,836		10,743		4,535		-		N/A
Direct operating and selling costs		2,014		1,227		175		-		3,416
Indirect operating costs		6,717		2,354		50		-		9,121
Corporate general and administrative costs		3,538		1,439		340		2,651		7,968
Adjusted EBITDA(1),(2)		14,567		5,723		3,970		-		N/A
Capital expenditures		18,197		2,565		-		(673)		20,089
For the nine months ended September 30, 2016:
Operating revenues	$	91,958		47,840		15,215		-	$	155,013
Cost of revenue		13,669		16,279		-		-		29,948
Gross profit		78,289		31,561		15,215		-		N/A
Direct operating and selling costs		5,600		3,509		492		-		9,601
Indirect operating costs		19,470		7,031		156		-		26,657
Corporate general and administrative costs		11,512		4,810		1,334		10,142		27,798
Adjusted EBITDA(1),(2)		41,707		16,211		13,233		-		N/A
Capital expenditures		60,379		6,988		-		(2,087)		65,280

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2015:
Operating revenues	$	28,623		16,560		5,786		-	$	50,969
Cost of revenue		4,658		5,888		-		-		10,546
Gross profit		23,965		10,672		5,786		-		N/A
Direct operating and selling costs		1,465		1,329		177		-		2,971
Indirect operating costs		6,606		2,586		58		-		9,250
Corporate general and administrative costs		3,679		1,737		512		1,791		7,719
Adjusted EBITDA(1),(2)		12,215		5,020		5,039		-		N/A
Capital expenditures		25,418		1,538		-		(2,187)		24,769
For the nine months ended September 30, 2015:
Operating revenues	$	84,479		50,835		17,103		-	$	152,417
Cost of revenue		12,957		18,725		-		-		31,682
Gross profit		71,522		32,110		17,103		-		N/A
Direct operating and selling costs		4,449		3,535		511		-		8,495
Indirect operating costs		19,379		7,560		170		-		27,109
Corporate general and administrative costs		11,015		5,193		1,471		5,248		22,927
Adjusted EBITDA(1),(2)		36,679		15,822		14,951		-		N/A
Capital expenditures		72,055		6,924		-		1,139		80,118

(1)     Adjusted EBITDA is used by the Company’s CODMs to evaluate performance. Adjusted EBITDA, as defined by the Company, is 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, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, acquisition and separation related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

(2)In the first quarter of 2016, the Company refined its methodology for allocating certain operating costs to the segments, resulting in immaterial changes to previously reported segment Adjusted EBITDA amounts for the three and nine months ended September 30, 2015.

N/A – Not Applicable (as totals are not presented in the consolidated statements of operations)

The Company’s CODMs do not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments.  However, total assets may be allocated to the segments in the future should the CODMs decide to manage the business in that manner.  Management does review capital expenditures using success-based metrics that allow the Company to determine which segment product groups are driving investment in the network.  Depreciation and amortization expense and certain corporate expenses that are excluded from the measurement of segment profit or loss are not allocated to the operating segments.

The following table provides a reconciliation of the total of the Company’s reportable segments measure of profit to the Company’s consolidated income before income taxesfor the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015			2016	2015
Data Adjusted EBITDA	$	14,567	$	12,215	$	41,707	$	36,679
R&SB Adjusted EBITDA		5,723		5,020		16,211		15,822
RLEC Access Adjusted EBITDA		3,970		5,039		13,233		14,951
Total reportable segments measure of profit		24,260		22,274		71,151		67,452
Interest expense		(7,164)		(5,817)		(21,165)		(13,022)
Gain on interest rate swap derivatives		-		198		-		445
Other income (expense), net		48		58		320		(89)
Depreciation and amortization and accretion of asset retirement obligations		(12,762)		(11,836)		(37,119)		(35,217)
Amortization of actuarial losses		(338)		(337)		(1,013)		(1,012)
Equity-based compensation		(1,661)		(1,454)		(8,477)		(4,236)
Restructuring charges		384		-		(1,823)		(637)
Acquisition and separation related charges		(652)		-		(652)		-
Income before income taxes	$	2,115	$	3,086	$	1,222	$	13,684

The Company does not currently have any single customer that individually accounted formore than 10% of the Company’s total operating revenues. The Company’s five largest carrier customers, in the aggregate, accounted for32%of the Company’s total operating revenues for each of the three and nine months ended September 30, 2016 and 31% of the Company’s total operating revenues for each of the three and nine months ended September 30, 2015.   Revenues from these carrier customers were derived primarily from network access, data transport and FTTC services.

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Long-Term Debt

9 Months Ended

Sep. 30, 2016

Long-Term Debt [Abstract]

Long-Term Debt

Note 5.  Long-Term Debt

As of September 30, 2016 and December 31, 2015, the Company’s outstanding long-term debt consisted of the following: 

	September 30, 2016				December 31, 2015
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	342,393	$	3,634	$	348,415	$	4,705
8% Notes due 2022		150,000		27,333		150,000		29,607
Capital lease obligations		7,972		-		2,597		-
Long-term debt		500,365		30,967		501,012		34,312
Less:  Current portion of long-term debt		12,303		-		10,400		-
Long-term debt, excluding current portion	$	488,062	$	30,967	$	490,612	$	34,312

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, which was added through an amendment to the Credit Facility dated January 2, 2015, (“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.  The Company used the net proceeds from Term Loan C to fund new FTTC projects. As of September 30, 2016,  no borrowings were outstanding under the Revolver.

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

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

The amended Credit Facility includes various restrictions and conditions, including a maximum leverage ratio of 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 amended Credit Facility also sets a minimum interest rate coverage ratio of 3.25:1.00.  At September 30, 2016, the Company’s leverage ratio was 3.67:1.00 and its interest coverage ratio was 7.28:1.00.  The Company was in compliance with its debt covenants as of September 30, 2016.  

The Company’s effective interest rate on its Credit Facility for the nine months ended September 30, 2016 was 4.13%.

8% Notes due 2022

On August 6, 2015, the Company issued $150 million in unsecured promissory notes (the “8% Notes”) to an affiliate of Pamplona Capital Management LLC (“Pamplona”). The net proceeds of the 8% Notes, after a $1.5 million purchasers discount and payment of $7.1 million of closing costs, were used to prepay $40.0 million of the Company’s existing Credit Facility with the remainder to be used for general corporate purposes, including to fund future growth opportunities. The 8% Notes bear interest at an annual fixed rate of 8.00% and mature on August 15, 2022.  Interest is payable in arrears on a quarterly basis on August 15, November 15, February 15, and May 15 of each year.  Interest is payable in cash or, at the election of the Company, through the issuance of additional notes or by adding the amount of the accrued interest to the unpaid principal amount of the 8% Notes outstanding at that time. The 8% Notes were also issued with 5,500,000 warrants for no additional consideration to purchase shares of the Company’s common stock (the “Warrants”). The Company allocated the net proceeds received from the debt issuance to the 8% Notes and the equity-classified Warrants based on the relative fair value of the instruments.  As a result, the Company recognized a total discount on the 8% Notes of $24.8 million of which $23.5 million represents the value assigned to the Warrants, and $1.3 million represents the allocated portion of the aforementioned $1.5 million purchasers discount.  The discount on the 8% Notes is being amortized to interest expense over the life of the debt using the effective interest method. See Note 10 for additional details regarding the Warrants.

In connection with the issuance of the 8% Notes in August 2015 and the Term Loan C financing in January 2015, the Company deferred an additional $6.0 million and $0.9 million, respectively, in debt issuance costs.  Total unamortized debt issuance costs associated with the 8% Notes and Credit Facility are included in the table above, which amounts are included as a reduction of long-term debt in the condensed consolidated balance sheets in accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. These costs are being amortized to interest expense over the life of the debt using the effective interest method.  Amortization of debt issuance costs was $1.1 million and $0.8 million for the three months ended September 30, 2016 and 2015, respectively, and $3.3 million and $1.6 million for the nine months ended September 30, 2016 and 2015, respectively.

The Company’s effective interest rate on the 8% Notes for the nine months ended September 30, 2016 was 12.55%, which represents the contractual rate adjusted for the aforementioned discount and deferred debt issuance costs.

CoBank Patronage Credits

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 operations as an offset to interest expense.  The Patronage credits were $0.3 million and $0.2 million for the three months ended September 30, 2016 and 2015, respectively, and $0.8 million and $1.0 million for the nine months ended September 30, 2016 and 2015. 

The aggregate maturities of Term Loan A, Term Loan B and Term Loan C under the Credit Facility are $2.0 million in the remainder of 2016, $13.0 million in 2017, $70.9 million in 2018 and $256.5 million in 2019. The Revolver under the Credit Facility, under which no borrowings are outstanding as of September 30, 2016, matures in full in 2018. The 8% Notes mature for$150.0 million in 2022. 

Capital lease obligations

In addition to the long-term debt discussed above, the Company has capital leases on vehicles with original lease terms of four to five years.  The Company also has a financing arrangement classified as a capital lease related to a fiber indefeasible right of use (“IRU”), which was entered into in January 2016.  The IRU network capacity arrangement extends through 2035 with payments due monthly. During the second quarter of 2016, the Company fully satisfied a financing obligation related to a software licensing agreement entered into during 2013.  As of September 30, 2016, the combined total net present value of the Company’s future minimum lease payments is $8.0 million and the principal portion of these capital lease obligations is due as follows:  $0.2 million in the remainder of 2016, $0.5 million in 2017, $0.5 million in 2018, $0.4 million in 2019, $0.4 million in 2020 and $6.0 million thereafter. 

The historical cost and accumulated amortization for each of the related assets associated with the capital leases is as follows as of September 30, 2016:

	September 30, 2016
(In thousands)	Historical Cost		Accumulated Amortization
Vehicles	$	2,723	$	(1,666)
Network capacity IRU		8,871		(332)
Total	$	11,594	$	(1,998)

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Supplementary Disclosures Of Cash Flow Information

9 Months Ended

Sep. 30, 2016

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 nine months ended September 30, 2016 and 2015: 

	Nine Months Ended September 30,
(In thousands)		2016		2015
Cash payments for:
Interest (net of amounts capitalized)	$	17,634	$	9,462
Income taxes		304		393
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable		2,930		7,683
Obligations incurred under capital leases		7,936		-

Cash payments for interest for the nine months ended September 30, 2016 in the table above are each net of $0.8 million of cash received from CoBank for patronage credits (Note 5).  The amount of interest capitalized was $0.8 million and $0.9 million for the nine months ended September 30, 2016 and 2015, respectively.

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Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2016

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, accounts receivable, accounts payable, capital lease obligations (including the current portion), accrued liabilities, the Credit Facility (including the current portion) and the 8% Notes as of September 30, 2016 and December 31, 2015.  The carrying values of cash and cash equivalents, accounts receivable, accounts payable, capital lease obligations and accrued liabilities approximated their fair values at September 30, 2016 and December 31, 2015.  Marketable securities are recorded in the condensed consolidated balance sheets at fair value (see Note 3).

The following tables present the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at September 30, 2016
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	6,352	$	-	$	-	$	6,352
Commercial paper		-		11,970		-		11,970
Municipal bonds		-		1,860		-		1,860
Corporate debt securities		-		1,149		-		1,149
Total cash equivalents		6,352		14,979		-		21,331
Marketable securities:
Variable rate demand notes		-		13,395		-		13,395
Commercial paper		-		9,955		-		9,955
Corporate debt securities		-		15,440		-		15,440
Total marketable securities		-		38,790		-		38,790
Total financial assets	$	6,352	$	53,769	$	-	$	60,121

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

The fair value of commercial paper, variable rate demand notes 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 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.

	September 30, 2016				December 31, 2015
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	338,759	$	306,922	$	343,710	$	298,400
8% Notes Due 2022		122,667		133,462		120,393		132,028
Capital Lease Obligations		7,972		7,972		2,597		2,597

The respective fair values of the Credit Facility and the 8% Noteswere 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 $1.5 million as of September 30, 2016 and $1.2 millionDecember 31, 2015, of which $1.3 million and $1.1 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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Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Equity

Note 8.  Equity

Below is a summary of the activity and status of equity as of and for the nine months ended September 30, 2016:

(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, 2015	23,005	13	$	230	$	171,746	$	(103)	$	(28,541)	$	(11,940)	$	131,392	$	939	$	132,331
Net loss attributable to
Lumos Networks Corp.	-	-		-		-		-		(627)		-		(627)		-		(627)
Other comprehensive income,
net of tax	-	-		-		-		-		-		634		634		-		634
Equity-based compensation expense	-	-		-		7,848		-		-		-		7,848		-		7,848
Tax shortfalls from share-based
compensation	-	-		-		(158)		-		-		-		(158)		-		(158)
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits\
and settlement of tax withholding
obligations on vesting of shares)	517	72		6		(683)		(752)		-		-		(1,429)		-		(1,429)
Stock option exercises	36	(66)		-		574		728		-		-		1,302		-		1,302
Capital distribution to noncontrolling
interests	-	-		-		-		-		-		-		-		(232)		(232)
Net income attributable to
noncontrolling interests	-	-		-		-		-		-		-		-		137		137
Balance, September 30, 2016	23,558	19	$	236	$	179,327	$	(127)	$	(29,168)	$	(11,306)	$	138,962	$	844	$	139,806

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Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2016

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

Note 9.  Earnings (Loss) per Share

The Company computes basic earnings (loss) per share by dividing net income (loss) 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 (loss) 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 (loss) per share for the three and nine months ended September 30, 2016 and 2015 are detailed in the following table.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	2016		2015		2016		2015
Numerator:
Net income (loss) attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(36)		(44)		-		(241)
Numerator for basic and diluted earnings (loss) per common share		987		1,235		(627)		7,111
Denominator:
Weighted average basic shares outstanding		23,463		22,872		23,300		22,775
Less:  weighted average participating securities and nonvested performance-based restricted shares		(846)		(806)		(804)		(767)
Denominator for basic earnings (loss) per common share		22,617		22,066		22,496		22,008
Plus:  potentially dilutive restricted shares and stock options		237		202		-		319
Denominator for diluted earnings (loss) per common share		22,854		22,268		22,496		22,327
Basic and diluted earnings (loss) per share	$	0.04	$	0.06	$	(0.03)	$	0.32

For the three months ended September 30, 2016 and 2015, the denominator for diluted earnings per share excludes1,117,585 and 1,016,756shares, respectively, related to stock options and nonvested restricted stock which would be antidilutive for each period.For thenine months ended September 30, 2016, the denominator for diluted loss per common share is equivalent to the denominator for basic loss per common share because the addition of stock options and unvested restricted stock (1,008,939and 469,509, respectively) would be antidilutive for the period. For the nine months ended September 30, 2015, the denominator for diluted earnings per common share excludes 836,149 shares related to stock options and nonvested restricted stock which would be antidilutive for the period.The earnings (loss) per share calculations for the three and nine months ended September 30, 2016 and 2015 also exclude the 5,500,000 outstanding stock warrants described in Note 10 as they would be antidilutive for each period.

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Stock Options, Restricted Stock and Stock Warrants

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments And Stock Warrant [Abstract]

Stock Options, Restricted Stock and Stock Warrants

Note 10.  Stock Options, Restricted Stock and Stock Warrants

Stock Options and Restricted Stock

The Company has an Equity and Cash Incentive Plan administered by the Compensation Committee of the Company’s board of directors, which permits the grant of long-term incentives to employees and non-employee directors, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, incentive awards, other stock-based awards and dividend equivalents.  As of September 30, 2016, the maximum number of shares of common stock available for awards under the Equity and Cash Incentive Plan was 5,500,000and 920,672 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 issued no stock options and292,804shares of restricted stock under the Equity and Cash Incentive Plan during the nine months ended September 30, 2016.  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. 

A summary of the activity and status of the Company’s stock options for the  nine months ended September 30, 2016 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, 2015	2,182	$	12.57
Granted during the period	-		-
Exercised during the period	(102)		12.73
Forfeited during the period	(33)		14.04
Expired during the period	(269)		13.71
Stock options outstanding at September 30, 2016	1,778	$	12.36	5.5 years	$	4,249
Stock options exercisable at September 30, 2016	1,317	$	12.12	5 years	$	3,364
Total stock options outstanding, vested and expected to vest at September 30, 2016	1,751	$	12.37		$	4,167

The total fair value of options that vested during the nine months ended September 30, 2016 was $0.6million. As of September 30, 2016, there was $1.0 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of1.8years.

A summary of the activity and status of the Company’s restricted stock for the nine months ended September 30, 2016, is as follows: 

(In thousands, except per share amounts)	Shares		Weighted-Average Grant Date Fair Value per Share
Restricted stock outstanding at December 31, 2015	861	$	14.37
Granted during the period	293		11.97
Vested during the period	(229)		12.20
Forfeited during the period	(93)		16.04
Restricted stock outstanding at September 30, 2016	832	$	13.89

As of September 30, 2016, there was $5.3 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted-average period of 1.8 years.

Stock Warrants

A summary of the activity and status of the Company’s stock warrants for the nine months ended September 30, 2016, is as follows:

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2015	5,500	$	13.99
Granted during the period	-		-
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at September 30, 2016	5,500	$	13.99

Outstanding warrants consist of those issued on August 6, 2015 in conjunction with the 8% Notes issuance discussed in Note 5 (the “Warrants”). The Warrants are fully vested and exercisable and may be net-share settled on a cashless basis only until they expire on August 6, 2022.  A portion of the net proceeds from the 8% Notes issuance was allocated to the equity-classified Warrants based on the relative fair value of the instruments.

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Taxes [Abstract]

Income Taxes

Note 11.  Income Taxes 

Income tax expense for the three and nine months ended September 30, 2016 was $1.0 million and $1.7 million, respectively, which represents the federal statutory tax rate applied to pre-tax income (loss)  and the effects of state income taxes and certain non-deductible charges for each period. Income tax expense for the three and nine months ended September 30, 2015 was $1.8 million and $6.2 million, respectively. The Company’s recurring non-deductible expenses relate primarily to certain non-cash equity-based compensation andnon-deductible interest on the 8% Notes, which are treated as applicable high yield discount obligations (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code, as amended.

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 2013 and thereafter remain open and subject to federal and state audit examinations.

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Related Party Transactions

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 12.  Related Party Transactions

ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement.  Facility lease revenue from ValleyNet was approximately $1.3 million and $1.2 million for the three months ended September 30, 2016 and 2015,  respectively, and $3.7 million and $3.5 million for the nine months ended September 30, 2016 and 2015, respectively, which is presented in the Company’s data segment revenues.  The Company had accounts receivable from ValleyNet of $0.4 million at both September 30, 2016 and December 31, 2015.  The Company also leases and resells capacity from ValleyNet.  The total lease expense was $0.3 million and $0.4 million forthe three months ended September 30, 2016 and 2015, respectively, and $0.9 million for each of the nine months ended September 30, 2016 and 2015.

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Restructuring Charges

9 Months Ended

Sep. 30, 2016

Restructuring Charges [Abstract]

Restructuring Charges

Note 13. Restructuring Charges

In January 2016, the Company commenced an employee reduction-in-force. Restructuring costs, consisting of employee severance and termination benefits, of $1.8 million were recognized during the nine months ended September 30, 2016. This amount is net of an adjustment of  $0.4 million recorded in the three months ended September 30, 2016 to reduce previously accrued amounts to reflect changes in estimated severance obligations. The Company does not expect to incur additional costs associated with these restructuring activities in future periods.

The following table provides a break-down of these costs by business segment for the nine months ended September 30, 2016:

(In thousands)	Data		R&SB		RLEC Access		Total
Employee severance and termination benefits	$	1,382	$	376	$	65	$	1,823
Total restructuring charges	$	1,382	$	376	$	65	$	1,823

A liability for restructuring charges in the amount of $0.4 million is included in the Company’s condensed consolidated balance sheet as of September 30, 2016, related to employee termination costs accrued, but not yet paid. Below is a summary of the restructuring liability balance as of September 30, 2016:

(In thousands)		Employee Severance and Termination Benefits		Total
Beginning balance at December 31, 2015	$	-	$	-
Additions, net of adjustments		1,823		1,823
Payments		(1,445)		(1,445)
Ending balance at September 30, 2016	$	378	$	378

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2016

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 14.  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 $2.9 million as of September 30, 2016, which are expected to be satisfied during the remainder of 2016.

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Subsequent Event

9 Months Ended

Sep. 30, 2016

Subsequent Event [Abstract]

Subsequent Event

Note 15. Subsequent Event

On November 2, 2016, the Company entered into an agreement to acquire Clarity Communications, LLC, a North Carolina based fiber bandwidth provider for a total purchase price of $15 million, $10 million of which is due in cash upon closing with the remaining $5 million subject to certain earnout provisions over a two year period following the closing date.

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Summary of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2016

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 and nine months ended September 30, 2016 and three and nine months ended September 30, 2015 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 and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.  The accompanying condensed consolidated balance sheet as of December 31, 2015 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, 2015.Certain presentation changes have been made within the operating expense line items on the condensed consolidated statements of operations and prior period amounts have been reclassified in order to conform to the current year presentation. Specifically, the previously reported line item “network access costs” has been removed and the new line item “cost of revenue” has been added along with the necessary operating expense reclassifications. These reclassifications were not the result of an error and have no effect on previously reported operating income, net income or earnings per share.

Accounting Estimates

Accounting Estimates

The preparation of condensed 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 condensed 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 and customer credits, deferred tax assets, marketable securities, asset retirement obligations, stock warrants and equity-based compensation, goodwill impairment assessments, 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 or determinable and collectability is reasonably assured.  Certain services of the Company require payment in advance of service performance.  In such cases, the Company records a service liability at the time of billing and subsequently recognizes revenue ratably over the service period.  The Company bills customers certain transactional taxes on service revenues.  These transactional taxes are not included in reported revenues as they are recognized as liabilities at the time customers are billed.

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

Cash Equivalents And Marketable Securities

Cash Equivalents and Marketable Securities

The Company considers its 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 September 30, 2016 and December 31, 2015 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 September 30, 2016 and December 31, 2015.

Trade Accounts Receivable

Trade Accounts Receivable

The Company sells its services to other communication carriers and to business and residential customers primarily in Virginia and West Virginia and portions of Maryland, Pennsylvania, Ohio and Kentucky.  The Company has credit and collection policies to maximize collection of trade receivables and requires advance payment for certain services.  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 in the condensed consolidated statements of operations.  Bad debt expense forthe three months ended September 30, 2016 and 2015 was less than $0.1million and $0.2 million, respectively, and bad debt expense for the nine months ended September 30, 2016 and 2015 was $0.2 million and $0.4 million, respectively.  The Company’s allowance for doubtful accounts and customer credits was $1.1 million and $1.2 million as of September 30, 2016 and December 31, 2015, respectively.

The following table presents a roll-forward of the Company’s allowance for doubtful accounts and customer credits from December 31, 2015 to September 30, 2016:

			Additions
(In thousands)	December 31, 2015		Charged to Expense		Charged to Other Accounts		Deductions		September 30, 2016
Allowance for doubtful accounts and customer credits	$	1,235	$	213	$	(76)	$	(298)	$	1,074

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 September 30, 2016 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 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 an indefeasible right of use agreement, is included with depreciation expense.

Intangibles with a finite life are classified as other intangibles on the condensed consolidated balance sheets.  At September 30, 2016 and December 31, 2015, other intangibles were comprised of the following:

			September 30, 2016				December 31, 2015
(Dollars in thousands)	Estimated Life	Gross Amount			Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$		103,108	$	(94,860)	$	103,108	$	(93,051)
Trademarks and franchise rights	10 to 15 yrs			2,862		(1,963)		2,862		(1,841)
Total		$		105,970	$	(96,823)	$	105,970	$	(94,892)

Included in the above amounts are indefinite-lived intangible assets of $0.3 million, which are not subject to amortization. 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 or nine months ended September 30, 2016.  Amortization expense for the three months ended September 30, 2016 and 2015 was $0.6 million and $0.7 million, respectively, and amortization for the nine months ended September 30, 2016 and 2015 was $1.9 million and $4.1 million, respectively.

Amortization expense for the remainder of 2016 and for the next five years is expected to be as follows:

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2016	$	603	$	41	$	644
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194
2021		1,112		1		1,113

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 nine months ended September 30, 2016.

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.  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 and nine months ended September 30, 2016 and 2015, the components of the Company’s net periodic benefit cost (income) for the Pension Plan were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Service cost	$	-	$	-	$	-	$	-
Interest cost		674		666		2,022		1,998
Expected return on plan assets		(884)		(1,028)		(2,652)		(3,084)
Amortization of loss		262		248		786		743
Net periodic benefit cost (income)	$	52	$	(114)	$	156	$	(343)

Pension Plan assets were valued at $54.8million and $53.9 million at September 30, 2016 and December 31, 2015, respectively.  No funding contributions were made during the three or nine months ended September 30, 2016, and the Company does not expect to make a funding contribution during the remainder of 2016.

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 Company did not incur any significant costs associated with these plans during the three or nine months ended September 30, 2016 or 2015.

The Company recognized expense for certain nonqualified pension plans for each of the three months ended September 30, 2016 and 2015 of $0.1 million,  and less than $0.1 millionof this expense for each of these periods relates to the amortization of actuarial loss.  Expense for nonqualified pension plans for each of the nine months ended September 30, 2016 and 2015was $0.4 million, and $0.2 million and $0.3 million of this expense for each period, respectively, relates to the amortization of actuarial loss.

The gross amount reclassified out of accumulated other comprehensive loss related to amortization of actuarial losses for retirement plans for each of the three months ended September 30, 2016 and 2015 was $0.3 million and $1.0 million for each of the nine months ended September 30, 2016 and 2015, all of which has been reclassified to selling, general and administrative on the condensed consolidated statements of operations. Income taxes associated with these reclassifications were $0.1 million for each of the three months ended September 30, 2016 and 2015 and $0.4 million for each of the nine months ended September 30, 2016 and 2015.

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.

Total equity-based compensation expense related to all of the share-based awards, annual employee bonuses paid in the form of immediately vested shares and the Company’s 401(k) matching contributions was $1.7 million and $1.5 million for the three months ended September 30, 2016 and 2015, respectively, and $8.5 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively, which amounts are included in selling, general and administrative expenses on the condensed consolidated statements of operations. 

Future charges for equity-based compensation related to instruments outstanding at September 30, 2016 are estimated to be $1.1 million for the remainder of 2016, $3.4 million in 2017, $1.5 million in 2018, $0.2 million in 2019, 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 FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for public business entities from annual reporting periods beginning after December 15, 2016, to annual reporting periods beginning after December 15, 2017.  Early application is permitted only as of annual reporting periods beginning after December 15, 2016.  ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method.  In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Gross versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which addresses narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in ASU 2016-12 provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The Company will implement the provisions of ASU 2014-09, ASU 2016-08, ASU 2016-10, and ASU 2016-12 as of January 1, 2018. The Company has not yet selected a transition method and is still evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and disclosures.

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

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company does not expect the future adoption of ASU 2016-01 to have a material impact on its consolidated financial statements and disclosures.

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

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplifies the accounting for share-based payment transactions.  Among other things, ASU 2016-09 provides for (i) the simplification of accounting presentation of excess tax benefits and tax deficiencies, (ii) an accounting policy election regarding forfeitures to use an estimate or account for when incurred, and (iii) simplification of cash flow presentation for statutory tax rate withholding. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, with early adoption permitted.  The transition method required by ASU 2016-09 varies by amendment. The Company is still evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and disclosures.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Schedule of Allowance for Doubtful Accounts

			Additions
(In thousands)	December 31, 2015		Charged to Expense		Charged to Other Accounts		Deductions		September 30, 2016
Allowance for doubtful accounts and customer credits	$	1,235	$	213	$	(76)	$	(298)	$	1,074

Finite-Lived Intangibles Assets

			September 30, 2016				December 31, 2015
(Dollars in thousands)	Estimated Life	Gross Amount			Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer relationships	6 to 15 yrs	$		103,108	$	(94,860)	$	103,108	$	(93,051)
Trademarks and franchise rights	10 to 15 yrs			2,862		(1,963)		2,862		(1,841)
Total		$		105,970	$	(96,823)	$	105,970	$	(94,892)

Schedule Of Future Amortization Expense

(In thousands)	Customer Relationships		Trademarks and Franchise Rights		Total
Remainder of 2016	$	603	$	41	$	644
2017		2,093		163		2,256
2018		1,781		163		1,944
2019		1,513		152		1,665
2020		1,146		48		1,194
2021		1,112		1		1,113

Schedule Of Net Periodic (Benefit) Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015		2016		2015
Service cost	$	-	$	-	$	-	$	-
Interest cost		674		666		2,022		1,998
Expected return on plan assets		(884)		(1,028)		(2,652)		(3,084)
Amortization of loss		262		248		786		743
Net periodic benefit cost (income)	$	52	$	(114)	$	156	$	(343)

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Cash Equivalents And Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2016

Cash Equivalents And Marketable Securities [Abstract]

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

(In thousands)	September 30, 2016		December 31, 2015
Cash equivalents:
Money market mutual funds	$	6,352	$	6,746
Commercial paper		11,970		1,000
Municipal bonds		1,860		-
Corporate debt securities		1,149		1,055
Total cash equivalents		21,331		8,801
Marketable securities:
Variable rate demand notes		13,395		-
Commercial paper		9,955		8,684
Debt securities issued by U.S. Government agencies		-		35,155
Corporate debt securities		15,440		44,972
Total marketable securities, available-for-sale		38,790		88,811
Total cash equivalents and marketable securities	$	60,121	$	97,612

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

(In thousands)	Total
Due in one year or less	$	25,395
Due after one year through five years		1,400
Due after five years through ten years		5,195
Due after ten years		6,800
Total debt securities	$	38,790

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Disclosures About Segments of an Enterprise and Related Information (Tables)

9 Months Ended

Sep. 30, 2016

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

Summarized Financial Information Of Reportable Segments

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2016:
Operating revenues	$	31,373		15,863		4,535		-	$	51,771
Cost of revenue		4,537		5,120		-		-		9,657
Gross profit		26,836		10,743		4,535		-		N/A
Direct operating and selling costs		2,014		1,227		175		-		3,416
Indirect operating costs		6,717		2,354		50		-		9,121
Corporate general and administrative costs		3,538		1,439		340		2,651		7,968
Adjusted EBITDA(1),(2)		14,567		5,723		3,970		-		N/A
Capital expenditures		18,197		2,565		-		(673)		20,089
For the nine months ended September 30, 2016:
Operating revenues	$	91,958		47,840		15,215		-	$	155,013
Cost of revenue		13,669		16,279		-		-		29,948
Gross profit		78,289		31,561		15,215		-		N/A
Direct operating and selling costs		5,600		3,509		492		-		9,601
Indirect operating costs		19,470		7,031		156		-		26,657
Corporate general and administrative costs		11,512		4,810		1,334		10,142		27,798
Adjusted EBITDA(1),(2)		41,707		16,211		13,233		-		N/A
Capital expenditures		60,379		6,988		-		(2,087)		65,280

(In thousands)	Data		R&SB		RLEC Access		Corporate (Unallocated)		Total
For the three months ended September 30, 2015:
Operating revenues	$	28,623		16,560		5,786		-	$	50,969
Cost of revenue		4,658		5,888		-		-		10,546
Gross profit		23,965		10,672		5,786		-		N/A
Direct operating and selling costs		1,465		1,329		177		-		2,971
Indirect operating costs		6,606		2,586		58		-		9,250
Corporate general and administrative costs		3,679		1,737		512		1,791		7,719
Adjusted EBITDA(1),(2)		12,215		5,020		5,039		-		N/A
Capital expenditures		25,418		1,538		-		(2,187)		24,769
For the nine months ended September 30, 2015:
Operating revenues	$	84,479		50,835		17,103		-	$	152,417
Cost of revenue		12,957		18,725		-		-		31,682
Gross profit		71,522		32,110		17,103		-		N/A
Direct operating and selling costs		4,449		3,535		511		-		8,495
Indirect operating costs		19,379		7,560		170		-		27,109
Corporate general and administrative costs		11,015		5,193		1,471		5,248		22,927
Adjusted EBITDA(1),(2)		36,679		15,822		14,951		-		N/A
Capital expenditures		72,055		6,924		-		1,139		80,118

(1)     Adjusted EBITDA is used by the Company’s CODMs to evaluate performance. Adjusted EBITDA, as defined by the Company, is 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, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, acquisition and separation related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

(2)In the first quarter of 2016, the Company refined its methodology for allocating certain operating costs to the segments, resulting in immaterial changes to previously reported segment Adjusted EBITDA amounts for the three and nine months ended September 30, 2015.

N/A – Not Applicable (as totals are not presented in the consolidated statements of operations)

Reconciliation of Total of Reportable Segments Measure of Profit to Consolidated Income (Loss) Before Income Taxes

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2016		2015			2016	2015
Data Adjusted EBITDA	$	14,567	$	12,215	$	41,707	$	36,679
R&SB Adjusted EBITDA		5,723		5,020		16,211		15,822
RLEC Access Adjusted EBITDA		3,970		5,039		13,233		14,951
Total reportable segments measure of profit		24,260		22,274		71,151		67,452
Interest expense		(7,164)		(5,817)		(21,165)		(13,022)
Gain on interest rate swap derivatives		-		198		-		445
Other income (expense), net		48		58		320		(89)
Depreciation and amortization and accretion of asset retirement obligations		(12,762)		(11,836)		(37,119)		(35,217)
Amortization of actuarial losses		(338)		(337)		(1,013)		(1,012)
Equity-based compensation		(1,661)		(1,454)		(8,477)		(4,236)
Restructuring charges		384		-		(1,823)		(637)
Acquisition and separation related charges		(652)		-		(652)		-
Income before income taxes	$	2,115	$	3,086	$	1,222	$	13,684

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2016

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

	September 30, 2016				December 31, 2015
(In thousands)	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Credit Facility	$	342,393	$	3,634	$	348,415	$	4,705
8% Notes due 2022		150,000		27,333		150,000		29,607
Capital lease obligations		7,972		-		2,597		-
Long-term debt		500,365		30,967		501,012		34,312
Less:  Current portion of long-term debt		12,303		-		10,400		-
Long-term debt, excluding current portion	$	488,062	$	30,967	$	490,612	$	34,312

Schedule of Capital Leased Assets [Table Text Block]

	September 30, 2016
(In thousands)	Historical Cost		Accumulated Amortization
Vehicles	$	2,723	$	(1,666)
Network capacity IRU		8,871		(332)
Total	$	11,594	$	(1,998)

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Supplementary Disclosures Of Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2016

Supplementary Disclosures Of Cash Flow Information [Abstract]

Supplementary Disclosures of Cash Flow Information

	Nine Months Ended September 30,
(In thousands)		2016		2015
Cash payments for:
Interest (net of amounts capitalized)	$	17,634	$	9,462
Income taxes		304		393
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable		2,930		7,683
Obligations incurred under capital leases		7,936		-

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Fair Value Of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instruments [Abstract]

Summary Of Financial Assets Measured At Fair Value

	Fair Value Measurements at September 30, 2016
(In thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial Assets:
Cash equivalents:
Money market mutual funds	$	6,352	$	-	$	-	$	6,352
Commercial paper		-		11,970		-		11,970
Municipal bonds		-		1,860		-		1,860
Corporate debt securities		-		1,149		-		1,149
Total cash equivalents		6,352		14,979		-		21,331
Marketable securities:
Variable rate demand notes		-		13,395		-		13,395
Commercial paper		-		9,955		-		9,955
Corporate debt securities		-		15,440		-		15,440
Total marketable securities		-		38,790		-		38,790
Total financial assets	$	6,352	$	53,769	$	-	$	60,121

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

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

	September 30, 2016				December 31, 2015
(In thousands)	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Credit Facility	$	338,759	$	306,922	$	343,710	$	298,400
8% Notes Due 2022		122,667		133,462		120,393		132,028
Capital Lease Obligations		7,972		7,972		2,597		2,597

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Equity (Tables)

9 Months Ended

Sep. 30, 2016

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, 2015	23,005	13	$	230	$	171,746	$	(103)	$	(28,541)	$	(11,940)	$	131,392	$	939	$	132,331
Net loss attributable to
Lumos Networks Corp.	-	-		-		-		-		(627)		-		(627)		-		(627)
Other comprehensive income,
net of tax	-	-		-		-		-		-		634		634		-		634
Equity-based compensation expense	-	-		-		7,848		-		-		-		7,848		-		7,848
Tax shortfalls from share-based
compensation	-	-		-		(158)		-		-		-		(158)		-		(158)
Restricted shares issued, shares
issued through the employee
stock purchase plan and
401(k) matching contributions
(net of shares reacquired
through restricted stock forfeits\
and settlement of tax withholding
obligations on vesting of shares)	517	72		6		(683)		(752)		-		-		(1,429)		-		(1,429)
Stock option exercises	36	(66)		-		574		728		-		-		1,302		-		1,302
Capital distribution to noncontrolling
interests	-	-		-		-		-		-		-		-		(232)		(232)
Net income attributable to
noncontrolling interests	-	-		-		-		-		-		-		-		137		137
Balance, September 30, 2016	23,558	19	$	236	$	179,327	$	(127)	$	(29,168)	$	(11,306)	$	138,962	$	844	$	139,806

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Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings (Loss) Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings (Loss) Per Share

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	2016		2015		2016		2015
Numerator:
Net income (loss) attributable to Lumos Networks Corp.	$	1,023	$	1,279	$	(627)	$	7,352
Less: net income attributable to Lumos Networks Corp. allocable to participating securities		(36)		(44)		-		(241)
Numerator for basic and diluted earnings (loss) per common share		987		1,235		(627)		7,111
Denominator:
Weighted average basic shares outstanding		23,463		22,872		23,300		22,775
Less:  weighted average participating securities and nonvested performance-based restricted shares		(846)		(806)		(804)		(767)
Denominator for basic earnings (loss) per common share		22,617		22,066		22,496		22,008
Plus:  potentially dilutive restricted shares and stock options		237		202		-		319
Denominator for diluted earnings (loss) per common share		22,854		22,268		22,496		22,327
Basic and diluted earnings (loss) per share	$	0.04	$	0.06	$	(0.03)	$	0.32

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Stock Options, Restricted Stock and Stock Warrants (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments And Stock Warrant [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, 2015	2,182	$	12.57
Granted during the period	-		-
Exercised during the period	(102)		12.73
Forfeited during the period	(33)		14.04
Expired during the period	(269)		13.71
Stock options outstanding at September 30, 2016	1,778	$	12.36	5.5 years	$	4,249
Stock options exercisable at September 30, 2016	1,317	$	12.12	5 years	$	3,364
Total stock options outstanding, vested and expected to vest at September 30, 2016	1,751	$	12.37		$	4,167

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, 2015	861	$	14.37
Granted during the period	293		11.97
Vested during the period	(229)		12.20
Forfeited during the period	(93)		16.04
Restricted stock outstanding at September 30, 2016	832	$	13.89

Summary of Warrant Activity

(In thousands, except per share amounts)	Shares		Weighted Average Exercise Price per Share
Stock warrants outstanding at December 31, 2015	5,500	$	13.99
Granted during the period	-		-
Exercised during the period	-		-
Expired during the period	-		-
Stock warrants outstanding at September 30, 2016	5,500	$	13.99

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Restructuring Charges (Tables)

9 Months Ended

Sep. 30, 2016

Restructuring Charges [Abstract]

Schedule Of Restructuring Costs By Business Segments

(In thousands)	Data		R&SB		RLEC Access		Total
Employee severance and termination benefits	$	1,382	$	376	$	65	$	1,823
Total restructuring charges	$	1,382	$	376	$	65	$	1,823

Summary Of Restucturing Liability Balance

(In thousands)		Employee Severance and Termination Benefits		Total
Beginning balance at December 31, 2015	$	-	$	-
Additions, net of adjustments		1,823		1,823
Payments		(1,445)		(1,445)
Ending balance at September 30, 2016	$	378	$	378

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Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Bad Debt Expenses		$ 200	$ 200	$ 400
Accounts receivable, allowance	$ 1,074		1,074		$ 1,235
Finite-Lived Intangible Assets, Cost Incurred to Renew or Extend	0		0
Amortization	600	700	1,931	4,077
Indefinite-Lived Intangible Assets (Excluding Goodwill)	300		300
Defined Benefit Plan, Fair Value of Plan Assets	54,800		54,800		$ 53,900
Defined Benefit Plan, Contributions by Employer	0		$ 0
Qualified Nonpension Postretirement Benefit Plans			2
Nonqualified Pension Plans Expense	100	100	$ 400	400
Amortization Of Unrealized Gain Loss On Nonqualified Pension Plans			200	300
Reclassification adjustment for amortization of actuarial loss from defined benefit plans included in net income (loss) (see Note 2)	338	337	1,013	1,012
Income Taxes	(128)	(139)	(406)	(406)
Equity-based compensation, exclusive of restructuring charges	1,661	1,454	8,477	4,236
Future Charges For Equity-Based Compensation 2016	1,100		1,100
Future Charges For Equity-Based Compensation 2017	3,400		3,400
Future Charges For Equity-Based Compensation 2018	1,500		1,500
Future Charges For Equity-Based Compensation 2019	200		200
Other Postretirement Benefit Plans [Member]
Net periodic benefit cost (income)	0	0	0	0
Defined Benefit Pension Plan [Member]
Net periodic benefit cost (income)	52	(114)	156	$ (343)
Maximum [Member]
Bad Debt Expenses	100
Amortization Of Unrealized Gain Loss On Nonqualified Pension Plans	100	$ 100
Future Charges For Equity Based Compensation thereafter	$ 100		$ 100

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Summary of Significant Accounting Policies (Schedule Of Allowance For Doubtful Accounts) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Summary of Significant Accounting Policies [Abstract]
Allowance for doubtful accounts, beginning	$ 1,235
Charged to Expense	213
Charged to Other Accounts	(76)
Deductions	(298)
Allowance for doubtful accounts, Balance at End of Period	$ 1,074

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Summary of Significant Accounting Policies (Finite-Lived Intangibles Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Accumulated Amortization	$ (96,823)	$ (94,892)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	103,108
Accumulated Amortization	(94,860)	(93,051)
Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	2,862
Accumulated Amortization	(1,963)	(1,841)
Finite-Lived Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross amount	105,970
Accumulated Amortization	$ (96,823)	$ (94,892)
Minimum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	6 years
Minimum [Member] | Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	10 years
Maximum [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	15 years
Maximum [Member] | Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life	15 years

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Summary of Significant Accounting Policies (Schedule Of Future Amortization Expense) (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Finite-Lived Intangible Assets [Line Items]
Remainder of 2016	$ 644
2017	2,256
2018	1,944
2019	1,665
2020	1,194
2021	1,113
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2016	603
2017	2,093
2018	1,781
2019	1,513
2020	1,146
2021	1,112
Trademarks And Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Remainder of 2016	41
2017	163
2018	163
2019	152
2020	48
2021	$ 1

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Summary Of Significant Accounting Policies (Schedule Of Net Periodic Benefit Cost (Income)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 674	$ 666	$ 2,022	$ 1,998
Expected return on plan assets	(884)	(1,028)	(2,652)	(3,084)
Amortization of loss	262	248	786	743
Net periodic benefit cost (income)	52	(114)	156	(343)
Other Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Net periodic benefit cost (income)	$ 0	$ 0	$ 0	$ 0

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Cash Equivalents And Marketable Securities (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Total proceeds from the sale or maturity of available-for-sale marketable securities	$ 32,300,000	$ 11,900,000	$ 107,075,000	$ 29,903,000
Net realized gains or losses on available-for-sale securities	0	0	0	0
Maximum [Member]
Net unrealized holding gains on available-for-sale securities	$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Cash Equivalents And Marketable Securities (Schedule Of Cash Equivalents And Available-For-Sale Marketable Securities Reported At Fair Value) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	$ 21,331	$ 8,801
Total marketable securities, available-for-sale	38,790	88,811
Total cash equivalents and marketable securities	60,121	97,612
Money Market Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	6,352	6,746
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	1,149	1,055
Commercial Paper ST [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	11,970	1,000
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	9,955	8,684
Variable Rate Demand Obligation [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	13,395
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total cash equivalents	1,860
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale	$ 15,440	44,972
Debt Securities issued by U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total marketable securities, available-for-sale		$ 35,155

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Cash Equivalents And Marketable Securities (Schedule Of Contractual Maturities Of Available-For-Sale Debt Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Cash Equivalents And Marketable Securities [Abstract]
Due in one year or less	$ 25,395
Due after one year through five years	1,400
Due after five years through ten years	5,195
Due after ten years	6,800
Total debt securities	$ 38,790	$ 88,811

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Disclosures About Segments of an Enterprise and Related Information (Narrative) (Details) - customer	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Segment Reporting Information [Line Items]
Number of customers that individually accounted for approximately 10% of total revenues	0	0	0	0
Top Five Customers [Member]
Segment Reporting Information [Line Items]
Percentage to total revenue	32.00%	31.00%	32.00%	31.00%

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Disclosures About Segments of an Enterprise and Related Information (Summarized Financial Information Of Reportable Segments) (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015		Sep. 30, 2016	Sep. 30, 2015
Segment Reporting Information [Line Items]
Operating Revenues	$ 51,771		$ 50,969		$ 155,013	$ 152,417
Cost of revenue	9,657		10,546		29,948	31,682
Gross profit	42,369		40,270		82,951	80,312
Direct operating and selling costs	3,416		2,971		9,601	8,495
Indirect operating costs	9,121		9,250		26,657	27,109
Corporate general and administrative costs	7,968		7,719		27,798	22,927
Capital expenditures	20,089		24,769		65,280	80,118
Data [Member]
Segment Reporting Information [Line Items]
Operating Revenues	31,373		28,623		91,958	84,479
Cost of revenue	4,537		4,658		13,669	12,957
Gross profit	26,836		23,965		78,289	71,522
Direct operating and selling costs	2,014		1,465		5,600	4,449
Indirect operating costs	6,717		6,606		19,470	19,379
Corporate general and administrative costs	3,538		3,679		11,512	11,015
Adjusted EBITDA	14,567	[1],[2]	12,215	[1],[2]	41,707	36,679
Capital expenditures	18,197		25,418		60,379	72,055
R&SB [Member]
Segment Reporting Information [Line Items]
Operating Revenues	15,863		16,560		47,840	50,835
Cost of revenue	5,120		5,888		16,279	18,725
Gross profit	10,743		10,672		31,561	32,110
Direct operating and selling costs	1,227		1,329		3,509	3,535
Indirect operating costs	2,354		2,586		7,031	7,560
Corporate general and administrative costs	1,439		1,737		4,810	5,193
Adjusted EBITDA	5,723	[1],[2]	5,020	[1],[2]	16,211	15,822
Capital expenditures	2,565		1,538		6,988	6,924
RLEC Access [Member]
Segment Reporting Information [Line Items]
Operating Revenues	4,535		5,786		15,215	17,103
Gross profit	4,535		5,786		15,215	17,103
Direct operating and selling costs	175		177		492	511
Indirect operating costs	50		58		156	170
Corporate general and administrative costs	340		512		1,334	1,471
Adjusted EBITDA	3,970	[1],[2]	5,039	[1],[2]	13,233	14,951
Corporate (Unallocated) [Member]
Segment Reporting Information [Line Items]
Corporate general and administrative costs	2,651		1,791		10,142	5,248
Capital expenditures	$ (673)		$ (2,187)		$ (2,087)	$ 1,139

[1] Adjusted EBITDA is used by the Company's CODMs to evaluate performance. Adjusted EBITDA, as defined by the Company, is 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, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, acquisition and separation related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

[2] In the first quarter of 2016, the Company refined its methodology for allocating certain operating costs to the segments, resulting in immaterial changes to previously reported segment Adjusted EBITDA amounts for the three and nine months ended September 30, 2015.

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Disclosures About Segments of an Enterprise and Related Information (Reconciliation of Reportable Segments Measure of Profit to Consolidated Income Before Income Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015		Sep. 30, 2016	Sep. 30, 2015
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total reportable segments measure of profit	$ 24,260		$ 22,274		$ 71,151	$ 67,452
Interest expense	(7,164)		(5,817)		(21,165)	(13,022)
Gain on interest rate swap derivatives			198			445
Other income (expenses), net	48		58		320	(89)
Depreciation and amortization and accretion of asset retirement obligations	(12,762)		(11,836)		(37,119)	(35,217)
Amortization of actuarial losses	(338)		(337)		(1,013)	(1,012)
Equity-based compensation, exclusive of restructuring charges	(1,661)		(1,454)		(8,477)	(4,236)
Restructuring charges	(384)				1,823	637
Acquisition and Separation Related Charges	(652)				(652)
Income Before Income Taxes	2,115		3,086		1,222	13,684
Data [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	14,567	[1],[2]	12,215	[1],[2]	41,707	36,679
Restructuring charges					1,382
R&SB [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	5,723	[1],[2]	5,020	[1],[2]	16,211	15,822
Restructuring charges					376
RLEC Access [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Adjusted EBITDA	$ 3,970	[1],[2]	$ 5,039	[1],[2]	13,233	$ 14,951
Restructuring charges					$ 65

[1] Adjusted EBITDA is used by the Company's CODMs to evaluate performance. Adjusted EBITDA, as defined by the Company, is 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, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, acquisition and separation related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.

[2] In the first quarter of 2016, the Company refined its methodology for allocating certain operating costs to the segments, resulting in immaterial changes to previously reported segment Adjusted EBITDA amounts for the three and nine months ended September 30, 2015.

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Long-Term Debt (Narrative) (Details)				3 Months Ended		9 Months Ended
	Aug. 06, 2015 USD ($) shares	Jan. 02, 2015 USD ($)	Apr. 30, 2013 USD ($)	Sep. 30, 2016 USD ($) item	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) item	Sep. 30, 2015 USD ($)
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit borrowing capacity			$ 425,000,000
Term of loan			5 years
Amount outstanding retired			$ 311,000,000
Principal payments on senior secured term loans						$ 6,024,000	$ 45,953,000
Line of credit, interest coverage ratio, minimum | item						3.25
Line of credit, leverage ratio | item				3.67		3.67
Line of credit, interest coverage ratio | item				7.28		7.28
Payment of financing costs							8,192,000
Granted during the period, shares | shares	5,500,000
Amortization of debt discounts and issuance costs				$ 1,100,000	$ 800,000	$ 3,345,000	1,648,000
Patronage credits				300,000	$ 200,000	800,000	$ 1,000,000
Future minimum lease payments				8,000,000		8,000,000
Future minimum lease payments, remainder of 2016				200,000		200,000
Future minimum lease payments, 2017				500,000		500,000
Future minimum lease payments, 2018				500,000		500,000
Future minimum lease payments, 2019				400,000		400,000
Future minimum lease payments, 2020				400,000		400,000
Future minimum lease payments, thereafter				6,000,000		$ 6,000,000
January 1, 2016 Through December 31, 2016
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item						4.75
January 1, 2017 Through December 31, 2017
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item						4.50
January 1, 2018 Through December 31, 2018
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item						4.25
After December 31, 2018
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit, leverage ratio, maximum | item						4.00
Revolver [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity			50,000,000
Line of Credit Facility, Amount Outstanding				0		$ 0
Amount outstanding, credit facility				$ 0		$ 0
Basis spread on variable rate						3.00%
Term Loan A [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
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%		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%		2.50%
Term Loan B [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
Basis spread on variable rate				3.25%
Quarterly payments per annum				1.00%		1.00%
Term Loan A, B And C [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Principal payments on senior secured term loans	$ 40,000,000
Debt Instrument, Interest Rate, Effective Percentage				4.13%		4.13%
Debt issuance costs		$ 900,000
Maturities of long-term debt, remainder of 2016				$ 2,000,000		$ 2,000,000
Maturities of long-term debt, 2017				13,000,000		13,000,000
Maturities of long-term debt, 2018				70,900,000		70,900,000
Maturities of long-term debt, 2019				$ 256,500,000		$ 256,500,000
Term Loan C [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Line of credit current borrowing capacity		$ 28,000,000
Basis spread on variable rate				3.25%		3.25%
Quarterly payments per annum				1.00%		1.00%
Unsecured Debt [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Debt Instrument, Interest Rate, Effective Percentage				12.55%		12.55%
Debt Instrument, Face Amount	150,000,000
Payment of financing costs	7,100,000
Debt Instrument, Interest Rate, Stated Percentage				8.00%		8.00%
Debt Instrument, Unamortized Discount	24,800,000
Proceeds from Issuance of Warrants	23,500,000
Portion of Debt Discount offset from proceeds allocated to debt	1,300,000
Debt discount, amount offset from proceeds	1,500,000
Debt issuance costs	$ 6,000,000
Maturities of long-term debt, thereafter				$ 150,000,000		$ 150,000,000
Minimum [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of capital leases				4 years
Maximum [Member]
Schedule of Long Term Debt and Capital Lease Obligations [Line Items]
Term of capital leases				5 years

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Less: current portion of long term debt	$ 12,303	$ 10,400
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	457,095	456,300
Long-term Debt [Member]
Credit facility	342,393	348,415
8% Notes due 2022	150,000	150,000
Capital lease obligations	7,972	2,597
Long-term debt	500,365	501,012
Less: current portion of long term debt	12,303	10,400
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	488,062	490,612
Unamortized Discount and Debt Issuance Costs [Member]
Credit facility	3,634	4,705
8% Notes due 2022	27,333	29,607
Long-term debt	30,967	34,312
Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion	$ 30,967	$ 34,312

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Long-Term Debt (Schedule of Capitalized Lease Assets) (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Vehicles [Member]
Historical cost	$ 2,723
Accumulated amortization	(1,666)
Telephony Equipment [Member]
Historical cost	8,871
Accumulated amortization	(332)
Assets Held under Capital Leases [Member]
Historical cost	11,594
Accumulated amortization	$ (1,998)

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Supplementary Disclosures Of Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Supplementary Disclosures Of Cash Flow Information [Abstract]
Interest (net of amounts capitalized)	$ 17,634	$ 9,462
Income taxes	304	393
Additions to property, plant and equipment included in accounts payable	2,930	7,683
Obligations incurred under capital leases	7,936
Cash received from patronage credits	800
Interest capitalized	$ 800	$ 900

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Fair Value Of Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost Method Investments	$ 1,501	$ 1,180
CoBank [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments for which it is not practicable to estimate fair value	$ 1,300	$ 1,100

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Fair Value Of Financial Instruments (Summary Of Financial Assets Measured At Fair Value) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	$ 21,331	$ 8,801
Total marketable securities	38,790	88,811
Total financial assets	60,121	97,612
Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,352	6,746
Commercial Paper ST [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	11,970	1,000
Variable Rate Demand Obligation [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	13,395
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	9,955	8,684
Debt Securities issued by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities		35,155
Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,860
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,149	1,055
Total marketable securities	15,440	44,972
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,352	6,746
Total financial assets	6,352	6,746
Level 1 [Member] | Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	6,352	6,746
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	14,979	2,055
Total marketable securities	38,790	88,811
Total financial assets	53,769	90,866
Level 2 [Member] | Commercial Paper ST [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	11,970	1,000
Level 2 [Member] | Variable Rate Demand Obligation [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	13,395
Level 2 [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	9,955	8,684
Level 2 [Member] | Debt Securities issued by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities		35,155
Level 2 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,860
Level 2 [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	1,149	1,055
Total marketable securities	15,440	$ 44,972
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
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 ST [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents
Level 3 [Member] | Variable Rate Demand Obligation [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities
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] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents
Level 3 [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents
Total marketable securities

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Fair Value Of Financial Instruments (Schedule Of Carrying Amounts And Estimated Fair Values Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Capital lease obligations	$ 7,972	$ 2,597
Fair Value (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Capital lease obligations	7,972	2,597
Term Loan A, B And C [Member] | Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit facility	338,759	343,710
Term Loan A, B And C [Member] | Fair Value (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Credit facility	306,922	298,400
Unsecured Debt [Member] | Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
8% Notes due 2022	122,667	120,393
Unsecured Debt [Member] | Fair Value (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
8% Notes due 2022	$ 133,462	$ 132,028

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Equity (Summary Of Activity And Status Of Equity) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stockholders Equity [Line Items]
Balance, December 31, 2015			$ 132,331
Net (Loss) Income Attributable to Lumos Networks Corp.	$ 1,023	$ 1,279	(627)	$ 7,352
Other comprehensive income, net of tax	199	$ 218	634	$ 637
Equity-based compensation expense			7,848
Tax shortfalls from share-based compensation			(158)
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares)			$ (1,429)
Stock options exercises, shares			102
Stock option exercises			$ 1,302
Capital distribution to noncontrolling interests			(232)
Net income attributable to noncontrolling interests			137
Balance, September 30, 2016	139,806		139,806
Common Stock [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			$ 230
Balance, December 31, 2015, shares			23,005
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares)			$ 6
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares), shares			517
Stock options exercises, shares			36
Balance, September 30, 2016	$ 236		$ 236
Balance, September 30, 2016, shares	23,558		23,558
Treasury Stock [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			$ (103)
Balance, December 31, 2015, shares			13
Net (Loss) Income Attributable to Lumos Networks Corp.
Other comprehensive income, net of tax
Equity-based compensation expense
Tax shortfalls from share-based compensation
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares)			$ (752)
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares), shares			72
Stock options exercises, shares			(66)
Stock option exercises			$ 728
Capital distribution to noncontrolling interests
Net income attributable to noncontrolling interests
Balance, September 30, 2016	$ (127)		$ (127)
Balance, September 30, 2016, shares	19		19
Additional Paid-In Capital [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			$ 171,746
Equity-based compensation expense			7,848
Tax shortfalls from share-based compensation			(158)
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares)			(683)
Stock option exercises			574
Balance, September 30, 2016	$ 179,327		179,327
Accumulated Deficit [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			(28,541)
Net (Loss) Income Attributable to Lumos Networks Corp.			(627)
Balance, September 30, 2016	(29,168)		(29,168)
Accumulated Other Comprehensive Loss [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			(11,940)
Other comprehensive income, net of tax			634
Balance, September 30, 2016	(11,306)		(11,306)
Total Lumos Networks Corp. Stockholders' Equity [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			131,392
Net (Loss) Income Attributable to Lumos Networks Corp.			(627)
Other comprehensive income, net of tax			634
Equity-based compensation expense			7,848
Tax shortfalls from share-based compensation			(158)
Restricted shares issued, shares issued through the employee stock purchase plan and 401(k) matching contributions (net of shares reacquired through restricted stock forfeits and settlement of tax withholding obligations on vesting of shares)			(1,429)
Stock option exercises			1,302
Balance, September 30, 2016	138,962		138,962
Noncontrolling Interests [Member]
Stockholders Equity [Line Items]
Balance, December 31, 2015			939
Capital distribution to noncontrolling interests			(232)
Net income attributable to noncontrolling interests			137
Balance, September 30, 2016	$ 844		$ 844

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Earnings (Loss) Per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
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	1,117,585	1,016,756		836,149
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share			1,008,939
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share			469,509
Warrants and Rights Subject to Mandatory Redemption [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded from computation of diluted earnings per common share	5,500,000	5,500,000	5,500,000	5,500,000

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Earnings (Loss) Per Share (Schedule Of Computation Of Basic And Diluted Earnings (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings (Loss) Per Share [Abstract]
Net income (loss) attributable to Lumos Networks Corp.	$ 1,023	$ 1,279	$ (627)	$ 7,352
Less: net income attributable to Lumos Networks Corp. allocable to participating securities	(36)	(44)		(241)
Numerator for basic and diluted earnings (loss) per common share	$ 987	$ 1,235	$ (627)	$ 7,111
Weighted average basic shares outstanding	23,463	22,872	23,300	22,775
Less: weighted average participating securities and nonvested performance-based restricted shares	(846)	(806)	(804)	(767)
Denominator for basic earnings (loss) per common share	22,617	22,066	22,496	22,008
Plus: potentially dilutive restricted shares and stock options	237	202		319
Denominator for diluted earnings (loss) per common share	22,854	22,268	22,496	22,327
Basic and diluted earnings (loss) per share	$ 0.04	$ 0.06	$ (0.03)	$ 0.32

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Stock Options, Restricted Stock and Stock Warrants (Narrative) (Details) - USD ($) $ in Millions		3 Months Ended	9 Months Ended
	Aug. 06, 2015	Sep. 30, 2016	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Securities remained available for issuance		920,672	920,672
Number of stock options issued			0
Stock plan vesting description			Restricted shares generally cliff vest on the third anniversary of the grant date for employees and generally cliff vest on the first anniversary of the grant date for non-employee directors. Some of the outstanding restricted stock awards vest on a graded vesting schedule over a five year period.
Vesting schedule		5 years
Total fair value of options vested			$ 0.6
Warrants issued, shares	5,500,000
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost		$ 1.0	$ 1.0
Unrecognized compensation cost recognition period, in years			1 year 9 months 18 days
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issued during the period			292,804
Unrecognized compensation cost		$ 5.3	$ 5.3
Unrecognized compensation cost recognition period, in years			1 year 9 months 18 days
Stock Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants issued, shares
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	5,500,000
Unsecured Debt [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Debt instrument, interest rate, stated percentage		8.00%	8.00%

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Stock Options, Restricted Stock and Stock Warrants (Summary Of Stock Options Activity) (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Stock Plans [Abstract]
Stock options outstanding at December 31, 2015, Shares	2,182,000
Stock options outstanding at December 31, 2015, Weighted-Average Exercise Price per Share | $ / shares	$ 12.57
Granted during the period, Shares	0
Exercised during the period, Shares	(102,000)
Exercised during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 12.73
Forfeited during the period, Shares	(33,000)
Forfeited during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 14.04
Expired during the period, Shares	(269,000)
Expired during the period, Weighted-Average Exercise Price per Share | $ / shares	$ 13.71
Stock options outstanding at September 30, 2016, Shares	1,778,000
Stock options outstanding at September 30, 2016, Weighted-Average Exercise Price per Share | $ / shares	$ 12.36
Stock options outstanding at September 30, 2016, Weighted-Average Remaining Contractual Term, in years	5 years 6 months
Stock options outstanding a September 30, 2016, Aggregate Intrinsic Value | $	$ 4,249
Stock options exercisable at September 30, 2016, Shares	1,317,000
Stock options exercisable at September 30, 2016, Weighted-Average Exercise Price per Share | $ / shares	$ 12.12
Stock options exercisable at September 30, 2016, Weighted-Average Remaining Contractual Term, in years	5 years
Stock options exercisable at September 30, 2016, Aggregate Intrinsic Value | $	$ 3,364
Total stock options outstanding, vested and expected to vest at September 30, 2016, Shares	1,751,000
Total stock options outstanding, vested and expected to vest at September 30, 2016, Weighted-Average Exercise Price per Share | $ / shares	$ 12.37
Total stock options outstanding, vested and expected to vest at September 30, 2016, Aggregate Intrinsic Value | $	$ 4,167

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Stock Options, Restricted Stock and Stock Warrants (Summary Of Restricted Stock Awards Activity) (Details) - Restricted Stock [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock outstanding at December 31, 2015, Shares | shares	861,000
Stock outstanding at December 31, 2015, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 14.37
Granted during the period, Shares | shares	292,804
Granted during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 11.97
Vested during the period, Shares | shares	(229,000)
Vested during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 12.20
Forfeited during the period, Shares | shares	(93,000)
Forfeited during the period, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 16.04
Restricted stock outstanding at September 30, 2016, Shares | shares	832,000
Stock outstanding at September 30, 2016, Weighted Average Grant Date Fair Value per Share | $ / shares	$ 13.89

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Stock Options, Restricted Stock and Stock Warrants (Summary of Stock Warrant Activity) (Details) - $ / shares		9 Months Ended
	Aug. 06, 2015	Sep. 30, 2016
Granted during the period, shares	5,500,000
Stock Warrants [Member]
Stock warrants oustanding at December 31, 2015, Shares		5,500,000
Stock warrants outstanding at December 31, 2015, weighted average exercise price per share		$ 13.99
Granted during the period, shares
Exercised during the period, shares
Expired during the period, shares
Granted during the period, weighted average exercise price
Exercised during the period, Weighted Average Exercise Price Per Share
Expired during the period, weighted average exercise price per share
Stock warrants outstanding at September 30, 2016, Shares		5,500,000
Stock warrants outstanding at September 30, 2016, weighted average exercise price		$ 13.99

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Taxes [Abstract]
Income Tax Expense	$ 1,046	$ 1,774	$ 1,712	$ 6,221

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Related Party Transactions (Narrative) (Details) - Equity Method Investee [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 300	$ 400	$ 900	$ 900
Related Party Transaction, Other Revenues from Transactions with Related Party	1,300	$ 1,200	3,700	$ 3,500
Due from Related Party	$ 400		$ 400		$ 400

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Restructuring Charges (Schedule Of Restructuring Costs By Business Segments) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Restructuring Cost and Reserve [Line Items]
Employee severance and termination benefits		$ 1,823
Total Restructuring charges	$ (384)	1,823	$ 637
Data [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and termination benefits		1,382
Total Restructuring charges		1,382
R&SB [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and termination benefits		376
Total Restructuring charges		376
RLEC Access [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and termination benefits		65
Total Restructuring charges		$ 65

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Restructuring Charges (Summary Of Restructuring Liability Balance) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Additions	$ 1,823
Payments	(1,445)
Ending balance at September 30, 2016	378
Employee Severance And Termination Benefits [Member]
Restructuring Cost and Reserve [Line Items]
Additions	1,823
Payments	(1,445)
Ending balance at September 30, 2016	$ 378

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Commitments And Contingencies (Details) $ in Millions	Sep. 30, 2016 USD ($)
Commitments And Contingencies [Abstract]
Purchase commitments relating to capital expenditures	$ 2.9

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Subsequent Event (Details) - USD ($) $ in Millions		9 Months Ended
	Nov. 01, 2016	Sep. 30, 2016
Business Acquisition, Date of Acquisition Agreement		Nov. 02, 2016
Business Acquisition, Name of Acquired Entity	Clarity Communications, LLC
Subsequent Event [Member]
Total Purchase Price	$ 15
Payments to Acquire Businesses, Gross	10
Earnout Provision Amount in Purchase Price	$ 5