Lumos Networks Corp. Reports Fourth Quarter 2012 Financial Results

  Lumos Networks Corp. Reports Fourth Quarter 2012 Financial Results

          Year over Year Growth in 4Q12 Revenue and Adjusted EBITDA

Strategic Data Revenue was 52% of Total 4Q12 Revenue and Grew 5% Sequentially

    Adjusted EBITDA Margins Expand for Second Consecutive Quarter to 44.1%

                  Cash Dividend of $0.14 per Share Declared

Business Wire

WAYNESBORO, Va. -- February 28, 2013

Lumos Networks Corp. (“Lumos Networks” or “the Company”) (Nasdaq: LMOS), a
fiber-based service provider of data, voice and IP-based telecommunication
services in the Mid-Atlantic region, today announced financial results for its
fourth quarter of 2012.

Total revenue for the fourth quarter of 2012 was $52.7 million, compared to
$51.1 million for the fourth quarter of 2011 and $52.0 million in the third
quarter of 2012. Total adjusted EBITDA was $23.2 million for the fourth
quarter of 2012, compared to $23.0 million in the fourth quarter of 2011 and
to $22.3 million in the third quarter of 2012.

“Our strong execution continued in the fourth quarter as our Strategic Data
revenue grew 5% sequentially and represented 52% of total sales, up from 50%
in the prior quarter,” said Tim Biltz, CEO and President of Lumos Networks.
“Our Strategic Data revenue grew 17% from the same quarter in the prior year,
which is the third straight quarter of accelerating revenue growth for this
product segment.”

“Our adjusted EBITDA margins reached 44.1%, marking the second straight
quarter of sequential margin improvements, and we are making clear progress
towards our longer term margin target of 47%,” Mr. Biltz continued. “I view
this quarter’s results as a true inflection point in our operating results and
I am confident that our current momentum will carry through 2013.”

Highlights

  *During the fourth quarter of 2012, the Company exceeded its targeted
    installation goals and more than doubled the number of fiber to the cell
    (“FTTC”) installations from 148 as of December 31, 2011 to 370 as of
    December 31, 2012.
  *In 2012, the Company achieved its goal of ensuring that 75% of total
    capital expenditures were for success-based strategic data projects in its
    Enterprise and Carrier Data customer segments as compared to less than 50%
    in 2011.
  *Adjusted EBITDA margins were 44.1% in the fourth quarter, up sequentially
    for the second consecutive quarter, from 41.5% in second quarter and 42.9%
    in the third quarter of 2012.
  *On February 27, 2013, the Board of Directors of Lumos Networks Corporation
    declared a dividend on its common stock in the amount of $0.14 per share
    to be paid on April 11, 2013 to stockholders of record on March 13, 2013.

Business Outlook

The Company introduced financial guidance for the first quarter and full year
of 2013. In the first quarter of 2013, the Company expects revenue to be
approximately $52 million and adjusted EBITDA approximately $23 million. For
the full year 2013, the Company expects revenue to be in the range of $208 to
$212 million and adjusted EBITDA in the range of $94 to $97 million. During
the first half of 2013, the Company plans to explore bank financing options to
adequately fund our success-based Strategic Data growth plans over the next
several years.

Please see the schedules accompanying this release for additional financial
guidance, including projected 2013 cash flows and non-GAAP reconciliations.

Statements made are based on management’s current expectations. These
statements are forward-looking and actual results may differ materially.
Please see “Special Note from the Company Regarding Forward-Looking
Statements.”

Conference Call

A conference call and simultaneous webcast, hosted by Timothy G. Biltz, CEO,
Harold L. Covert, CFO, and Will Davis, Director of Investor Relations, to
review these financial and operational results and financial guidance will be
held at 8:30 A.M. (ET) on February 28, 2013.

The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/
and the live call (“Lumos Networks Fourth Quarter 2012 Earnings Conference
Call”) may be accessed with the following numbers:

Domestic: 1-888-317-6016
International: 1-412-317-6016
Canada: 1-855-669-9657

The conference call will be archived and available for replay through March
13, 2013 before 9:00 A.M. (ET) and may be accessed with the following numbers:

Domestic: 1-877-344-7529
International: 1-412-317-0088
Replay pass codes: Conference ID: 10024524

The webcast will also be archived and the replay may be accessed at
http://ir.lumosnetworks.com/.

About Lumos Networks

Lumos Networks is a fiber-based service provider in the Mid-Atlantic region
serving carrier, business and residential customers over a dense fiber network
offering data, voice and IP services. With headquarters in Waynesboro, VA,
Lumos Networks serves Virginia, West Virginia and portions of Pennsylvania,
Kentucky, Ohio, and Maryland over a fiber network of 5,800 long haul miles.
Detailed information about Lumos Networks is available at
www.lumosnetworks.com.

Non-GAAP Measures

Adjusted EBITDA is defined as net income attributable to Lumos Networks before
interest, income taxes, depreciation and amortization, accretion of asset
retirement obligations, net income attributable to noncontrolling interests,
other expenses/income, equity based compensation charges, acquisition related
charges, amortization of actuarial losses on retirement plans, employee
separation charges, restructuring related charges, gain or loss on settlements
and gain or loss on interest rate derivatives.

Adjusted EBITDA is a non-GAAP financial performance measure. It should not be
considered in isolation or as an alternative to measures determined in
accordance with GAAP. Please refer to the exhibits and materials posted on the
Lumos Networks website for a reconciliation of these non-GAAP financial
performance measures to the most comparable measures reported in accordance
with GAAP and for a discussion of the presentation, comparability and use of
such financial performance measures.

SPECIAL NOTE FROM THE COMPANY REGARDING FORWARD-LOOKING STATEMENTS

Any statements contained in this presentation that are not statements of
historical fact, including statements about our beliefs and expectations, are
forward-looking statements and should be evaluated as such. The words
“anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates,”
“targets,” “projects,” “should,” “may,” “will” and similar words and
expressions are intended to identify forward-looking statements. Such
forward-looking statements reflect, among other things, our current
expectations, plans and strategies, and anticipated financial results, all of
which are subject to known and unknown risks, uncertainties and factors that
may cause our actual results to differ materially from those expressed or
implied by these forward-looking statements. Many of these risks are beyond
our ability to control or predict. Because of these risks, uncertainties and
assumptions, you should not place undue reliance on these forward-looking
statements. Furthermore, forward-looking statements speak only as of the date
they are made. We do not undertake any obligation to update or review any
forward-looking information, whether as a result of new information, future
events or otherwise. Important factors with respect to any such
forward-looking statements, including certain risks and uncertainties that
could cause actual results to differ from those contained in the
forward-looking statements, include, but are not limited to: rapid development
and intense competition in the telecommunications industry; our ability to
achieve benefits from our separation from NTELOS Holdings Corp; our ability to
offset expected revenue declines in our Competitive business from legacy voice
products and in our RLEC business related to the recent regulatory
developments and carriers grooming their networks; adverse economic
conditions; operating and financial restrictions imposed by our senior credit
facility; our cash and capital requirements; declining prices for our
services; the potential to experience a high rate of customer turnover;
federal and state regulatory fees, requirements and developments; our reliance
on certain suppliers and vendors; and other unforeseen difficulties that may
occur. These risks and uncertainties are not intended to represent a complete
list of all risks and uncertainties inherent in our business, and should be
read in conjunction with the more detailed cautionary statements and risk
factors included in our SEC filings, including our Annual Reports filed on
Forms 10-K.

Exhibits:

  *Condensed Consolidated Balance Sheets
  *Condensed Consolidated Statements of Operations
  *Condensed Consolidated Statements of Cash Flows
  *Summary of Operating Results, Customer and Network Statistics
  *Reconciliation of Net Income Attributable to Lumos Networks Corp. to
    Operating Income
  *Reconciliation of Operating Income to Adjusted EBITDA
  *Business Outlook

                                                          
Lumos Networks Corp.                                      
Condensed Consolidated Balance Sheets
                                       December 31, 2012  December 31, 2011
(In thousands)
                                                             
ASSETS
Current Assets
Cash                                     $     2             $     10,547
Restricted cash ^1                             5,303               7,554
Accounts receivable, net                       22,676              23,555
Other receivables                              2,400               2,390
Income tax receivable                          954                 -
Prepaid expenses and other                   5,136             2,278
Total Current Assets                         36,471            46,324
                                                             
Securities and investments                     462                 128
                                                             
Property, plant and equipment, net             336,589             299,958
                                                             
Other Assets
Goodwill                                       100,297             100,297
Other intangibles, net                         34,895              45,696
Deferred charges and other assets            4,448             6,197
Total Other Assets                           139,640           152,190
                                                             
Total Assets                            $     513,162      $     498,600
                                                             
                                                             
LIABILITIES AND EQUITY
Current Liabilities
Current portion of long-term debt        $     7,900         $     2,679
Accounts payable                               17,453              12,432
Dividends payable                              3,013               2,980
Advance billings and customer deposits         13,527              12,623
Accrued compensation                           1,742               2,832
Accrued operating taxes                        3,838               2,624
Other accrued liabilities                    6,284             3,262
Total Current Liabilities                    53,757            39,432
                                                             
Long-Term Liabilities
Long-term debt                                 304,325             323,897
Retirement benefits                            30,413              35,728
Deferred income taxes                          55,956              41,204
Other long-term liabilities                    3,500               5,028
Income tax payable                           609               484
Total Long-term Liabilities                  394,803           406,341
                                                             
Stockholders' Equity                         64,050            52,383
Noncontrolling Interests                     552               444
Total Equity                                 64,602            52,827
                                                             
Total Liabilities and Equity            $     513,162      $     498,600

     During 2010, the Company received a Federal stimulus award providing 50%
     funding to bring broadband services and infrastructure to Alleghany
^1  County, Virginia. The Company was required to deposit 100% of its grant
     ($8.1 million) into pledged accounts in advance of any reimbursements, to
     be drawn down ratably following reimbursement approvals.
     

                                                              
Lumos Networks                                              
Corp.
Condensed
Consolidated     Three months ended:             Year ended:
Statements of
Operations
                                                                   
(In thousands,    December 31,    December 31,     December 31,    December
except per       2012           2011            2012           31, 2011
share amounts)
                                                                   
Operating         $  52,679       $  51,107        $  206,871      $ 207,414
Revenues
                                                                   
Operating
Expenses ^1
Cost of sales
and services
(exclusive of        20,601          19,584           80,520         78,484
items shown
separately
below)
Customer             5,440           4,773            21,886         19,551
operations
Corporate            5,168           5,341            23,615         16,251
operations ^2,3
Depreciation
and                  11,211          10,187           38,884         43,090
amortization
Asset
impairment           -               86,295           -              86,295
charge
Accretion of
asset                31              31               124            116
retirement
obligations
Restructuring        2,981           -                2,981          -
charges ^4
Gain on
settlements,       -            -             (2,335   )   -       
net ^5
Total Operating    45,432       126,211       165,675     243,787 
Expenses, net
Operating            7,247           (75,104  )       41,196         (36,373 )
Income (Loss)
                                                                   
Other Income
(Expenses)
Interest             (2,941  )       (3,153   )       (11,921  )     (11,993 )
expense
Loss on
interest rate        (1,343  )       -                (1,898   )     -
derivatives
Other income,      26           32            81          105     
net
                                                                   
Income (Loss)
Before Income        2,989           (78,225  )       27,458         (48,261 )
Tax Expense
                                                                   
Income Tax
Expense            1,025        (16,527  )     11,010      (4,383  )
(Benefit)
Net Income           1,964           (61,698  )       16,448         (43,878 )
(Loss)
                                                                   
Net (Income)
Loss
Attributable to      (28     )       35               (108     )     (52     )
Noncontrolling
Interests
                                                           
Net Income
(Loss)
Attributable to  $  1,936      $  (61,663  )   $  16,340     $ (43,930 )
Lumos Networks
Corp.
                                                                   
                                                                   
Basic and Diluted Earnings (Loss) per Common Share Attributable to Lumos
Networks Corp. Stockholders:
                                                                   
Earnings (loss)
per share -       $  0.09         $  (2.96    )    $  0.78         $ (2.11   )
basic ^6
Earnings (loss)
per share -       $  0.09         $  (2.96    )    $  0.76         $ (2.11   )
diluted ^6
                                                                   
Weighted
average shares       21,047          20,815           20,958         20,815
outstanding -
basic
Weighted
average shares       21,517          20,815           21,407         20,815
outstanding -
diluted
                                                                   
Cash Dividends
Declared per      $  0.14         $  0.14          $  0.56         $ 0.14
Share - Common
Stock

     Includes equity-based compensation charges related to all of the
     Company’s share-based awards and the Company’s 401(k) matching
^1  contributions of $1.0 million and $0.2 million for the three months ended
     December 31, 2012 and 2011, respectively, and $3.9 million and $2.4
     million for the years ended December 31, 2012 and 2011, respectively.
     Includes amortization of actuarial losses related to certain retirement
     benefit plans of $0.4 million and $1.8 million for the three and
^2   twelve-month periods ended December 31, 2012, respectively. The amounts
     allocated to us from our former parent for amortization of actuarial
     losses for periods prior to the Business Separation on October 31, 2011
     were not material.
     In 2012, the Company recorded charges of $2.3 million related to the
^3   recognition of employee separation benefits which were provided for in
     the employment agreements of two executive officers who left the Company
     in April and December 2012.
     In December 2012, the Company completed a cost reduction plan involving
     an employee reduction-in-force, consolidation of certain facilities and
     freezing the accumulation of benefits under certain postretirement plans.
^4   Restructuring charges of $3.0 million were recognized in the fourth
     quarter of 2012 in connection with this plan, $2.4 million of which
     related to employee severance and termination benefits and $0.6 million
     of which related to lease termination costs.
     The Company recognized a net pre-tax gain of approximately $2.3 million
^5   in the third quarter of 2012 in connection with the settlement of
     outstanding matters related to a prior acquisition and the settlement of
     an outstanding lawsuit.
     Basic and diluted earnings (loss) per share for the three and twelve
     months ended December 31, 2011 is computed by dividing net loss for the
^6   period by the weighted average number of common shares outstanding during
     the two month period beginning November 1, 2011 (the date upon which we
     became an independent publicly traded company) and ending December 31,
     2011.
     

                                                          
Lumos Networks Corp.                                      
Condensed Consolidated Statements of    Year ended:
Cash Flows
                                                             
(In thousands)                          December 31, 2012  December 31, 2011
                                                             
Cash flows from operating activities
Net income (loss)                        $   16,448          $   (43,878    )
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation                                 27,750              27,703
Amortization                                 11,134              15,387
Accretion of asset retirement                124                 116
obligations
Asset impairment charge                      -                   86,295
Deferred income taxes                        10,514              (8,110     )
Loss on interest rate swap derivatives       1,898               -
Equity-based compensation expense            3,912               2,383
Amortization of loan origination costs       812                 132
Gain on settlement                           (3,035    )         -
Retirement benefits, net of                  665                 (4,059     )
contributions and distributions
Excess tax benefits from share-based         (428      )         -
compensation
Changes in operating assets and            2,421            6,939      
liabilities, net
Net cash provided by operating             72,215           82,908     
activities
                                                             
Cash flows from investing activities
Purchases of property, plant and             (59,881   )         (61,536    )
equipment
Broadband network expansion funded by        (1,351    )         (2,248     )
stimulus grant
Proceeds from disposal of managed            750                 -
services business
Change in restricted cash                    2,251               508
Cash reimbursement received from             2,251               508
broadband stimulus grant
Purchase of tradename asset                  (333      )         -
Other                                      (26       )       -          
Net cash used in investing activities      (56,339   )       (62,768    )
                                                             
Cash flows from financing activities
Proceeds from issuance of long-term          -                   310,000
debt
Proceeds from issuance of revolving          -                   30,000
credit facility
Payment of debt issuance costs               -                   (4,854     )
Cash paid to NTELOS Inc. associated          -                   (315,000   )
with the Business Separation
Payments on senior secured term loans        (2,000    )         (500       )
Payments on revolving credit facility,       (11,478   )         (15,000    )
net
Cash dividends paid on common stock          (11,951   )         -
Payments to NTELOS Inc., net                 -                   (14,357    )
Payments under capital lease                 (1,542    )         (317       )
obligations
Proceeds from employee stock purchase        122                 -
plan
Excess tax benefits from share-based         428                 -
compensation
Other                                      -                (54        )
Net cash used in financing activities      (26,421   )       (10,082    )
(Decrease) increase in cash                  (10,545   )         10,058
Cash:
Beginning of period                        10,547           489        
                                                             
End of period                           $   2             $   10,547     
                                                             

                                                                               
Lumos
Networks                                                                  
Corp.
Operating
Results,
Customer and                                                              
Network
Statistics
(Dollars in    Three months ended:                                        Year ended:
thousands)
               December    September   June 30,    March 31,   December    December    December
               31,         30,                                 31,         31,         31,
             2012       2012       2012       2012       2011       2012       2011
Competitive
Revenue and
Adjusted
EBITDA
Revenue
Enterprise     9,628       9,448       9,039       8,667       8,437       36,782      33,131
Data
Carrier Data   13,025      11,955      11,196      10,937      10,506      47,113      37,649
IP Services    4,754      4,718      4,684      4,587      4,515      18,743     17,401  
Total
Strategic      27,407      26,121      24,919      24,191      23,458      102,638     88,181
Data
Legacy Voice   10,703      11,244      11,509      12,010      12,825      45,466      54,414
Access         1,948     2,413     2,540     2,715     2,758      9,616     11,802  
Total          40,058    39,778    38,969    38,915    39,042     157,720   154,397 
Revenue
                                                                            
Adjusted       14,652      14,440      14,078      14,548      15,034      57,718      62,098
EBITDA^1
Adjusted       36.6    %  36.3    %  36.1    %  37.4    %  38.5    %   36.6    %  40.2    %
EBITDA %

RLEC Revenue
and Adjusted
EBITDA
Revenue
Legacy Voice   4,883       4,874       4,710       4,756       4,937       19,223      20,039
Access         7,738     7,325     7,125     7,740     7,129      29,928    32,978  
Total          12,621    12,199    11,835    12,496    12,066     49,151    53,017  
Revenue
                                                                            
Adjusted       8,559       7,841       7,028       7,743       7,970       31,171      34,842
EBITDA^1
Adjusted       67.8    %  64.3    %  59.4    %  62.0    %  66.1    %   63.4    %  65.7    %
EBITDA %

Consolidated
Revenue
Strategic      27,407      26,121      24,919      24,191      23,458      102,638     88,181
Data
Legacy Voice   15,586      16,118      16,219      16,766      17,762      64,689      74,453
Access         9,686      9,738      9,665      10,455     9,887      39,544     44,780  
Total          52,679      51,977      50,803      51,412      51,107      206,871     207,414
Revenue
Adjusted       23,211      22,281      21,106      22,291      23,004      88,889      96,940
EBITDA^1
Adjusted       44.1    %   42.9    %   41.5    %   43.4    %   45.0    %   43.0    %   46.7    %
EBITDA %
Capital        15,956      14,937      11,619      17,369      12,722      59,881      61,536
Expenditures
Adjusted
EBITDA less   7,255       7,344       9,487       4,922       10,282      29,008      35,404
Capital
Expenditures

Customer and
Network
Statistics
Customer
Statistics
Competitive
voice          110,261     112,709     114,930     117,965     122,046     110,261     122,046
connections
^2
RLEC
Broadband      15,181      15,199      15,258      15,100      14,916      15,181      14,916
Customers ^3
Total
Broadband      39,950      40,401      37,361      35,974      35,707      39,950      35,707
Connections
^3
Video          4,549       4,390       4,192       4,019       3,734       4,549       3,734
Subscribers
                                                                                       
Network
Statistics
On-Network     1,196       1,150       1,091       1,066       1,051       1,196       1,051
Buildings ^4
Fiber to the
Cell Sites     370         261         178         155         148         370         148
^4
                                                                                       
RLEC Total     31,203      31,708      32,272      32,676      33,193      31,203      33,193
Access Lines

^1  Adjusted EBITDA is a non-GAAP measure. See definition on page 2 of this
     earnings release.
     
^2   Includes customer Primary Rate Interface (PRI) line equivalents at 23
     lines per PRI. Excludes intercompany PRI lines.
     
     Includes customers or customer equivalents for DSL, dedicated Internet
^3   access, wireless portable broadband, broadband over fiber and metro
     Ethernet. All revenues from broadband products, including RLEC broadband,
     are recorded in the operating revenues of the Competitive segment.
     
^4   Includes statistics for legacy markets only, excluding FiberNet, through
     December 31, 2012.
     
Note: Certain amounts have been reclassified to agree with current year
presentation.


                                                               
Lumos Networks                                              
Corp.
Reconciliation of Net Income Attributable to Lumos
Networks Corp. to Operating Income
(In thousands)                                              
                   Three months ended:            Year ended:
                 December 31,  December 31,    December 31,   December
                   2012           2011             2012            31, 2011
Net income
(loss)
attributable to    $  1,936       $  (61,663  )    $  16,340       $ (43,930 )
Lumos Networks
Corp.
Net income
(loss)
attributable to     28          (35      )     108         52      
noncontrolling
interests
Net income            1,964          (61,698  )       16,448         (43,878 )
(loss)
                                                                   
Interest expense      2,941          3,153            11,921         11,993
Loss on interest      1,343          -                1,898          -
rate derivatives
Income tax
expense               1,025          (16,527  )       11,010         (4,383  )
(benefit)
Other income,       (26    )     (32      )     (81     )    (105    )
net
Operating income  $  7,247     $  (75,104  )   $  41,196     $ (36,373 )
(loss)
                                                                   
Competitive           4,428          6,678            25,257         29,955
RLEC                2,819       (81,782  )     15,939      (66,328 )
Operating income  $  7,247     $  (75,104  )   $  41,196     $ (36,373 )
(loss)
                                                                   

                                                                              
Lumos Networks                                                            
Corp.
Reconciliation
of Operating
Income to
Adjusted
EBITDA
(Dollars in      2012                                    2011
thousands)
                Competitive  RLEC        Total        Competitive  RLEC         Total
                                                                                     
For The Three
Months Ended
December 31
Operating        $  4,428      $ 2,819      $ 7,247      $  6,678      $ (81,782 )   $ (75,104 )
Income (Loss)
Depreciation
and
amortization
and accretion      7,146     4,096     11,242      7,196     3,021      10,217  
of asset
retirement
obligations
Sub-total:         11,574    6,915     18,489      13,874    (78,761 )   (64,887 )
Asset
impairment          -            -            -             -            86,295        86,295
charge
Amortization
of actuarial        334          111          445           -            -             -
losses
Equity based        757          268          1,025         140          97            237
compensation
Acquisition
related             -            -            -             1            -             1
charges
Business
separation          -            -            -             1,019        339           1,358
charges
Employee
separation          203          68           271           -            -             -
charges ^1
Restructuring      1,784     1,197     2,981       -         -          -       
charges ^2
Adjusted         $  14,652   $ 8,559    $ 23,211    $  15,034   $ 7,970     $ 23,004  
EBITDA
Adjusted            36.6   %     67.8   %     44.1   %      38.5   %     66.1    %     45.0    %
EBITDA Margin
                                                                                     
For The Year
Ended December
31
Operating        $  25,257     $ 15,939     $ 41,196     $  29,955     $ (66,328 )   $ (36,373 )
Income (Loss)
Depreciation
and
amortization
and accretion      26,439    12,569    39,008      29,579    13,627     43,206  
of asset
retirement
obligations
Sub-total:         51,696    28,508    80,204      59,534    (52,701 )   6,833   
Asset
impairment          -            -            -             -            86,295        86,295
charge
Amortization
of actuarial        1,336        445          1,781         -            -             -
losses
Equity based        2,895        1,017        3,912         1,474        909           2,383
compensation
Acquisition
related             -            -            -             71           -             71
charges
Business
separation          -            -            -             1,019        339           1,358
charges
Employee
separation          1,759        587          2,346         -            -             -
charges ^1
Restructuring       1,784        1,197        2,981         -            -             -
charges ^2
Gain on
settlements,       (1,752 )   (583   )   (2,335 )     -         -          -       
net ^3
Adjusted         $  57,718   $ 31,171   $ 88,889    $  62,098   $ 34,842    $ 96,940  
EBITDA
Adjusted            36.6   %     63.4   %     43.0   %      40.2   %     65.7    %     46.7    %
EBITDA Margin

     In 2012, the Company recorded charges of $2.3 million related to the
^1  recognition of employee separation benefits which were provided for in
     the employment agreements of two executive officers who left the Company
     in April and December 2012.
     
     In the fourth quarter of 2012, the Company completed a cost reduction
     plan involving an employee reduction-in-force, consolidation of certain
     facilities and freezing the accumulation of benefits under certain
^2   postretirement plans. Restructuring charges of $3.0 million were
     recognized in the fourth quarter in connection with this, of which $2.4
     million was related to employee severance and termination benefits and
     $0.6 million was related to lease termination costs.
     
     The Company recognized a net pre-tax gain of approximately $2.3 million
^3   in the third quarter of 2012 in connection with the settlement of
     outstanding matters related to a prior acquisition and the settlement of
     an outstanding lawsuit.
     

                                                                  
Lumos Networks Corp.                                            
Business Outlook ^1  (as of February                            
28, 2013)
(In millions)                          2013 Guidance ^1
                                       First Quarter 2013   2013 Annual
Operating Revenues                     approximately $52    $ 208   to   $ 212
                                                                         
Adjusted EBITDA                        approximately $23    $ 94    to   $ 97
                                                                         
Capital Expenditures                   approximately $16    $ 65    to   $ 70
                                                                         
                                                                         
Reconciliation of Operating Income
to Adjusted EBITDA
Operating Income                       approximately $11    $ 44    to   $ 46
Depreciation and amortization          approximately $10      40    to     41
Equity based compensation charges      approximately $2             8
Amortization of actuarial losses                               2   
Adjusted EBITDA                        approximately $23    $ 94   to  $ 97
                                                                         

                                                    
Lumos Networks Corp.                                 
Projected Cash Flows for the Year 2013 ^1            
(Dollars in millions)
                                                      
Adjusted EBITDA ^2                                    $ 96
Less: Capital expenditures                             (65 )
                                                        31
Less:
Cash interest, net of interest income                   (14 )
Cash taxes                                             (6  )
Cash flows, net, before dividends and debt payments     11
Less:
Cash dividends: $0.14 per share per quarter ^3          (12 )
Scheduled 2013 debt payments                            (3  )
Plus:
Other, net                                             (7  )
Projected Cash Flows, net ^4                          $ (11 )

     These estimates are based on management’s current expectations. These
     estimates are forward-looking and actual results may differ materially.
^1  Please see “Special Note from the Company Regarding Forward-Looking
     Statements" in the Lumos Networks Corp. fourth quarter 2012 earnings
     release dated February 28, 2013.
     
^2   Based on the mid-point of the above guidance range.
     
     Represents the most recent cash dividend paid, annualized. Dividend
^3   payments are reviewed quarterly by the board of directors and are subject
     to change.
     
^4   Before discretionary payments to the credit facility Revolver loan and
     changes to working capital.
     

Contact:

Lumos Networks Corp.
Will Davis
Director of Investor Relations
(o) 540-946-6930
(c) 917-519-6994
davisw@lumosnet.com