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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September~~March 3031, ~~2015~~2016



¨	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: 000-51798

NTELOS Holdings Corp.

(Exact name of registrant as specified in its charter)



Delaware		36-4573125
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1154 Shenandoah Village Drive, Waynesboro, Virginia 22980

(Address of principal executive offices) (Zip Code)

(540) 946-3500

(Registrant’s telephone number, including area code)

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. ý 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). ý 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.



Large accelerated filer	¨		Accelerated filer	ý
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý No

There were 22,~~254~~260,~~675~~023 shares of the registrant’s common stock outstanding as of the close of business on ~~October~~May 232, ~~2015~~2016.

Table of Contents

NTELOS HOLDINGS CORP.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	Page Number
Item 1. Financial Statements	2
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Operations	3
Condensed Consolidated Statements of Comprehensive Income (Loss)	4
Condensed Consolidated Statements of Comprehensive Income	4
Condensed Consolidated Statements of Cash Flows	5
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)	6
Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3027
Item 4. Controls and Procedures	3128
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	3229
Item 1A. Risk Factors	3229
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3329
Item 3. Defaults Upon Senior Securities	3329
Item 4. Mine Safety Disclosures	3329
Item 5. Other Information	3329
Item 6. Exhibits	3430
SIGNATURES	3531

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NTELOS Holdings Corp.

Condensed Consolidated Balance Sheets

(Unaudited)



(In thousands, except per share amounts)	March 31, 2016			December 31, 2015
ASSETS
Current Assets
Cash	$	74,287		$	72,687
Accounts receivable, net	53,154			53,021
Inventories and supplies, net	8,259			13,345
Prepaid expenses	11,409			9,350
Tax refund receivable	2,637			24,986
Other current assets	284			1,132
Other current assets from discontinued operations	937			2,121
	150,967			176,642
Assets Held for Sale	62			62
Restricted Cash	2,167			2,167
Securities and Investments	1,522			1,522
Property, Plant and Equipment, net	327,975			326,260
Intangible Assets
Goodwill	63,700			63,700
Radio spectrum licenses	44,933			44,933
Customer relationships and trademarks, net	4,095			4,292
Deferred Charges and Other Assets	11,857			11,639
Deferred Income Taxes	2,841			2,737
Other Noncurrent Assets from Discontinued Operations	985			1,733
TOTAL ASSETS	$	611,104		$	635,687
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Current portion of long-term debt	$	5,586		$	5,605
Accounts payable	4,666			20,532
Advance billings and customer deposits	13,522			12,772
Accrued expenses and other current liabilities	17,133			18,003
Other current liabilities from discontinued operations	5,184			13,054
	46,091			69,966
Long-Term Debt	506,560			507,332
Retirement Benefits	22,784			22,448
Deferred Income Taxes	10,364			12,272
Other Long-Term Liabilities	62,974			61,860
Other Noncurrent Liabilities from Discontinued Operations	2,273			835
	651,046			674,713
Commitments and Contingencies
Equity (Deficit)
Preferred stock, par value $.01 per share, authorized 100 shares, none issued	—			—
Common stock, par value $.01 per share, authorized 55,000 shares; 22,304 shares issued and 22,262 shares outstanding (22,290 shares issued and 22,264 shares outstanding at December 31, 2015)	214			214
Additional paid in capital	33,012			32,500
Treasury stock, at cost, 43 shares (27 shares at December 31, 2015)	(475		)	(330		)
Accumulated deficit	(67,141		)	(65,840		)
Accumulated other comprehensive loss	(7,287		)	(7,142		)
Total NTELOS Holdings Corp. Stockholders’ Equity (Deficit)	(41,677		)	(40,598		)
Noncontrolling interests	1,735			1,572
	(39,942		)	(39,026		)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	611,104		$	635,687

(In thousands, except per share amounts)	September 30, 2015			December 31, 2014
ASSETS
Current Assets
Cash	$	108,842		$	73,546
Restricted cash	2,167			2,167
Accounts receivable, net	52,508			45,054
Inventories and supplies, net	12,464			18,297
Deferred income taxes	22,144			24,770
Prepaid expenses	12,732			13,543
Other current assets	536			4,626
	211,393			182,003
Assets Held for Sale	1,454			64,271
Securities and Investments	1,522			1,522
Property, Plant and Equipment, net	321,673			289,947
Intangible Assets
Goodwill	63,700			63,700
Radio spectrum licenses	44,933			44,933
Customer relationships and trademarks, net	4,490			5,084
Deferred charges and other assets	19,260			18,474
TOTAL ASSETS	$	668,425		$	669,934
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Current portion of long-term debt	$	5,696		$	5,816
Accounts payable	11,847			24,541
Advance billings and customer deposits	13,370			15,939
Accrued expenses and other current liabilities	29,714			27,153
	60,627			73,449
Long-Term Debt	515,875			519,592
Retirement Benefits	24,888			25,209
Deferred Income Taxes	21,302			39,620
Other Long-Term Liabilities	67,822			45,016
	629,887			629,437
Commitments and Contingencies
Equity (Deficit)
Preferred stock, par value $.01 per share, authorized 100 shares, none issued	—			—
Common stock, par value $.01 per share, authorized 55,000 shares; 22,284 shares issued and 22,258 shares outstanding (21,634 shares issued and 21,616 shares outstanding at December 31, 2014)	214			214
Additional paid in capital	31,398			28,663
Treasury stock, at cost, 27 shares (18 shares at December 31, 2014)	(325		)	(285		)
Accumulated deficit	(46,191		)	(53,634		)
Accumulated other comprehensive loss	(8,738		)	(9,090		)
Total NTELOS Holdings Corp. Stockholders’ Equity (Deficit)	(23,642		)	(34,132		)
Noncontrolling interests	1,553			1,180
	(22,089		)	(32,952		)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	668,425		$	669,934

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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NTELOS Holdings Corp.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(In thousands, except per share amounts)	~~2015~~2016			~~2014~~2015			~~2015~~			~~2014~~
Operating Revenues
Retail revenue	$	5039,~~221~~647		$	7243,~~034~~011		$	~~174,978~~		$	~~218,845~~
Wholesale and other revenue	3532,~~567~~418			3735,~~802~~597			~~109,497~~			~~116,817~~
Equipment sales	1113,~~752~~142			916,~~802~~703			~~41,595~~			~~23,853~~
Operating Revenues	9785,~~540~~207			~~119~~95,~~638~~311			~~326,070~~			~~359,515~~
Operating Expenses
Cost of services	3023,~~087~~221			3020,~~591~~821			~~91,762~~			~~87,676~~
Cost of equipment sold	2117,~~495~~299			2622,~~290~~998			~~65,168~~			~~72,287~~
Customer operations	1915,~~201~~303			2519,~~381~~553			~~64,049~~			~~78,383~~
Corporate operations	119,~~830~~482			8,~~580~~624			~~31,217~~			~~31,610~~
Restructuring	~~4,627~~82			—1,605			~~8,237~~			—
Depreciation and amortization	1513,~~157~~486			1812,~~473~~917			~~43,516~~			~~57,469~~
Gain on sale of assets	—			—(11,009		)	~~(16,749~~		)	—
	102,397			109,315			287,200			327,425
	78,873			75,509
Operating Income (Loss)	(4,857		)	10,323			38,870			32,090
Operating Income	6,334			19,802
Other Expense
Interest expense, net	(7,~~422~~210		)	(87,~~371~~947		)	~~(22,913~~		)	~~(24,644~~		)
Other income (expense), net	30			(29		)	61			(1,194		)
Other expense, net	(6		)	(3		)
	(7,392		)	(8,400		)	(22,852		)	(25,838		)
	(7,216		)	(7,950		)
Income (Loss) before Income Taxes	(~~12,249~~882		)	111,~~923~~852			~~16,018~~			~~6,252~~
Income Tax Expense (Benefit)	(~~3,523~~211		)	~~767~~4,814			~~7,576~~			~~2,517~~
Net Income (Loss)	(8,726		)	1,156			8,442			3,735
Income (Loss) from Continuing Operations	(671		)	7,038
Net Income Attributable to Noncontrolling Interests	(237		)	(352		)	(999		)	(1,161		)
Income (Loss) from Discontinued Operations, Net of Tax	(390		)	8,249
Net Income (Loss) Attributable to NTELOS Holdings Corp.	$	(8,963	)	$	804		$	7,443		$	2,574
Net Income (Loss)	(1,061		)	15,287
Earnings (Loss) per Share Attributable to NTELOS Holdings Corp.
Net Income Attributable to Noncontrolling Interests	(240		)	(491		)
Basic	$	(0.42	)	$	0.04		$	0.34		$	0.12
Net Income (Loss) Attributable to NTELOS Holdings Corp.	$	(1,301	)	$	14,796
Weighted average shares outstanding - basic	21,284			21,119			21,241			21,100
Earnings (Loss) per Share Attributable to NTELOS Holdings Corp.
Diluted	$	(0.42	)	$	0.04		$	0.32		$	0.12
Basic earnings (loss) per common share from continuing operations	$	(0.04	)	$	0.29
Weighted average shares outstanding - diluted	21,284			21,894			22,569			21,706
Basic earnings (loss) per common share from discontinued operations	(0.02		)	0.39
Cash Dividends Declared per Share - Common Stock	$	—		$	—		$	—		$	0.84
Basic earnings (loss) per common share	$	(0.06	)	$	0.68
Weighted average shares outstanding - basic	21,311			21,193
Diluted earnings (loss) per common share from continuing operations	$	(0.04	)	$	0.28
Diluted earnings (loss) per common share from discontinued operations	(0.02		)	0.37
Diluted earnings (loss) per common share	$	(0.06	)	$	0.65
Weighted average shares outstanding - diluted	21,311			22,161
Cash Dividends Declared per Share - Common Stock	$	—		$	—

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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NTELOS Holdings Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2015~~2016			~~2014~~2015			~~2015~~		~~2014~~
Net Income (Loss) Attributable to NTELOS Holdings Corp.	$	(81,~~963~~301	)	$	~~804~~14,796		$	~~7,443~~	$	~~2,574~~
Other Comprehensive Income:
Amortization of unrealized (gain) loss from defined benefit plans, net of $75 and $224 of deferred income taxes in 2015, respectively ($172 and $516 in 2014, respectively)	117			(270		)	352		(812		)
Amortization of unrealized (gain) loss from defined benefit plans, net of $93 and $75 of deferred income taxes in 2016 and 2015, respectively	(145		)	117
Unrecognized loss from defined benefit plans, net of $243 of deferred income taxes in 2014	—			—			—		(382		)
Comprehensive Income (Loss) Attributable to NTELOS Holdings Corp.	(1,446		)	14,913
Comprehensive Income (Loss) Attributable to NTELOS Holdings Corp.	(8,846		)	534			7,795		1,380
Comprehensive Income Attributable to Noncontrolling Interests	240			491
Comprehensive Income Attributable to Noncontrolling Interests	237			352			999		1,161
Comprehensive Income (Loss)	$	(1,206	)	$	15,404
Comprehensive Income (Loss)	$	(8,609	)	$	886		$	8,794	$	2,541

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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NTELOS Holdings Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2015~~2016			~~2014~~2015
Cash flows from operating activities
Net income	$	8,442		$	3,735
Net income (loss)	$	(1,061	)	$	15,287
Adjustments to reconcile net income to net cash provided by operating activities
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	4314,~~516~~238			5713,~~469~~874
Gain on sale of assets	(~~16,749~~418		)	—(15,947		)
Deferred income taxes	(~~15,916~~462		)	(27,~~696~~348		)
Bad debt expense	163,~~298~~911			105,~~676~~536
Equity-based compensation	~~2,652~~786			~~2,244~~859
Amortization of loan origination costs	~~1,254~~619			~~2,033~~590
Write off of unamortized debt issuance costs	537			895
Retirement benefits and other	219			784
Loss on interest rate cap	—			219
Retirement benefits and other	2,062			1,806
Changes in operating assets and liabilities
Accounts receivable	(233,~~752~~726		)	(1112,~~672~~115		)
Inventories and supplies	5,~~833~~086			4(2,~~307~~080		)
Income taxes	222,~~376~~350			52,~~730~~661
Prepaid expenses and other assets	~~4,749~~(586		)	12,~~472~~733
Accounts payable	(1116,~~473~~513		)	1(2,~~496~~874		)
Accrued expenses and other liabilities	(1,~~469~~464		)	~~822~~(1,422		)
Retirement benefit distributions	243			599
Other	(55		)	204
Net cash provided by operating activities	1822,~~603~~924			7915,~~135~~438
Cash flows from investing activities
Purchases of property, plant and equipment	(7520,~~218~~963		)	(6722,~~711~~941		)
Proceeds from sale of assets	961,~~910~~145			—38,796
Other, net	—			2,337
Net cash provided by (used in) investing activities	(19,818		)	15,855
Net cash provided by (used in) investing activities	21,692			(65,374		)
Cash flows from financing activities
Proceeds from issuance of long-term debt, net of original issue discount	—			187,655
Repayments on senior secured term loans	(1,351		)	(1,351		)
Debt issuance and refinancing costs	—			(3,551		)
Cash distributions to noncontrolling interests	(77		)	—
Repayments on senior secured term loans	(4,054		)	(152,127		)
Other, net	(78		)	(70		)
Cash dividends paid on common stock	—			(27,235		)
Net cash used in financing activities	(1,506		)	(1,421		)
Capital distributions to noncontrolling interests	(626		)	(731		)
Increase in cash	1,600			29,872
Other, net	(319		)	(425		)
Cash, beginning of period	72,687			73,546
Net cash provided by (used in) financing activities	(4,999		)	3,586
Cash, end of period	$	74,287		$	103,418
Increase in cash	35,296			17,347
Cash, beginning of period	73,546			88,441
Cash, end of period	$	108,842		$	105,788

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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NTELOS Holdings Corp.

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

(In thousands)	CommonShares		TreasuryShares	CommonStock		AdditionalPaid InCapital		TreasuryStock			Accumulated Deficit			AccumulatedOtherComprehensiveLoss			TotalNTELOSHoldingsCorp.Stockholders’Equity (Deficit)			NoncontrollingInterests			TotalEquity (Deficit)
Balance, December 31, 2014	21,616		18	$	214	$	28,663	$	(285	)	$	(53,634	)	$	(9,090	)	$	(34,132	)	$	1,180		$	(32,952	)
Balance, December 31, 2015	22,264		27	$	214	$	32,500	$	(330	)	$	(65,840	)	$	(7,142	)	$	(40,598	)	$	1,572		$	(39,026	)
Equity-based compensation *	~~642~~(2	)	916			~~2,735~~512		(40145		)							~~2,695~~367						~~2,695~~367
Capital distribution to noncontrolling interests																	—			(~~626~~77		)	(~~626~~77		)
Net income attributable to NTELOS Holdings Corp.											7,443						7,443						7,443
Net loss attributable to NTELOS Holdings Corp.											(1,301		)				(1,301		)				(1,301		)
Amortization of unrealized loss from defined benefit plans, net of $224 of deferred income taxes														352			352						352
Amortization of unrealized gain from defined benefit plans, net of $93 of deferred income taxes														(145		)	(145		)				(145		)
Comprehensive income attributable to noncontrolling interests																	—			~~999~~240			~~999~~240
Balance, September 30, 2015	22,258		27	$	214	$	31,398	$	(325	)	$	(46,191	)	$	(8,738	)	$	(23,642	)	$	1,553		$	(22,089	)
Balance, March 31, 2016	22,262		43	$	214	$	33,012	$	(475	)	$	(67,141	)	$	(7,287	)	$	(41,677	)	$	1,735		$	(39,942	)



*	Includes restricted shares issued, employee stock purchase plan issuances, shares issued through 401(k) matching contributions, stock options exercised and other activity.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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NTELOS Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Organization

NTELOS Holdings Corp. (hereafter referred to as “Holdings Corp.” or the “Company”), through NTELOS Inc., its wholly-owned subsidiary (“NTELOS Inc.”) and its subsidiaries, is a regional provider of digital wireless communications services to consumers and businesses primarily in Virginia, West Virginia and certain portions of surrounding states. The Company’s primary services are wireless voice and data digital personal communications services (“PCS”) provided through NTELOS-branded retail operations and on a wholesale basis to other PCS providers, most notably through an arrangement with Sprint Spectrum L.P. (“Sprint Spectrum”), and Sprint Spectrum on behalf of and as an agent for SprintCom, Inc. (“SprintCom”) (Sprint Spectrum and SprintCom collectively, “Sprint”), which arrangement is referred to herein as the “Strategic Network Alliance” or "SNA." See Note 1314 for additional information regarding this arrangement. The Company does not have any independent operations.

On ~~December~~August 110, ~~2014~~2015, the Company entered into an ~~agreement~~Agreement ~~to sell its wireless spectrum licenses in its eastern Virginia~~ and ~~Outer~~Plan ~~Banks~~ of ~~North~~Merger ~~Carolina markets~~ (“~~Eastern~~Merger ~~Markets~~Agreement”) ~~valued~~with atShenandoah ~~approximately~~Telecommunications ~~$56.0~~Company, ~~million. The~~a ~~transaction~~Virginia ~~closed~~corporation ~~on April 15~~(“Shentel”), ~~2015.~~and ~~Pursuant~~Gridiron toMerger ~~the~~Sub, ~~terms of the spectrum sale~~Inc., ~~the Company entered into~~ a ~~lease~~Delaware ~~agreement~~corporation ~~with~~and Twholly-~~Mobile~~owned ~~which~~subsidiary ~~allows~~of itShentel to(“Merger ~~continue using the Eastern Market spectrum licenses for varying terms ranging from the closing date through November 15~~Sub”), ~~2015~~pursuant ~~in order~~ to ~~facilitate~~which, at the ~~wind~~effective ~~down~~time of ~~our operations. In conjunction with~~ the ~~agreement~~merger to(“Effective ~~sell~~Time”), ~~the~~Merger ~~Company~~Sub ~~has~~will ~~taken~~merge anwith ~~impairment charge for wireless spectrum~~ and ~~fixed~~into ~~assets~~the Company, ~~and~~with ~~has~~the ~~incurred~~Company ~~restructuring~~surviving ~~charges.~~the ~~See~~merger ~~Note~~as 8a ~~for~~wholly-owned ~~additional~~subsidiary ~~information~~of ~~regarding~~Shentel ~~these charges~~(“Merger”).

OnSubject ~~August~~to ~~10, 2015,~~the ~~Company~~terms ~~entered~~and ~~into~~conditions anset forth in the Merger Agreement, ~~and~~at ~~Plan~~the Effective Time, each share of ~~Merger~~common ~~(“Merger~~stock, ~~Agreement”)~~par ~~with~~value ~~Shenandoah~~$0.01 ~~Telecommunications~~per ~~Company~~share, aof ~~Virginia~~the ~~corporation~~Company (“~~Shentel~~Common Stock”), issued and ~~Gridiron~~outstanding ~~Merger~~immediately ~~Sub,~~prior ~~Inc.,~~to athe ~~Delaware~~Effective ~~corporation~~Time ~~and~~(excluding ~~wholly-owned~~(i) ~~subsidiary~~any shares of ~~Shentel~~Common ~~(“Merger~~Stock ~~Sub”),~~that ~~pursuant~~are toowned ~~which,~~by at the ~~effective~~Company, ~~time~~Shentel or any of ~~the~~their ~~merger~~respective ~~(“Effective~~subsidiaries ~~Time”~~and (ii), ~~Merger~~any ~~Sub~~shares ~~will~~of ~~merge~~Common ~~with~~Stock ~~and~~that ~~into~~are ~~the~~owned by any Company stockholders who are entitled to exercise, and properly exercise, appraisal rights with ~~the~~respect ~~Company~~to ~~surviving~~such ~~the~~shares ~~merger~~of asCommon aStock ~~wholly-owned~~pursuant ~~subsidiary~~to the General Corporation Law of ~~Shentel~~the ~~(“Merger”~~State of Delaware) will be canceled and converted automatically into the right to receive $9.25 in cash, without interest.

~~Subject~~The toMerger ~~the~~Agreement ~~terms~~contains ~~and~~certain ~~conditions~~termination ~~set~~rights ~~forth~~for inShentel and the ~~Merger Agreement~~Company, atincluding termination by either party if the ~~Effective~~Merger ~~Time,~~is ~~each~~not ~~share~~consummated ofby ~~common~~June ~~stock~~28, ~~par~~2016 ~~value~~(as $0mutually extended).01 ~~per~~The ~~share~~Merger Agreement further provides that, upon termination of the ~~Company~~Merger ~~(“Common~~Agreement ~~Stock”)~~under ~~issued~~specified ~~and~~circumstances, ~~outstanding~~including ~~immediately~~in ~~prior~~connection towith a change of recommendation of the ~~Effective~~Company ~~Time~~board ~~(excluding~~of directors (ithe “Board”) ~~any~~or ~~shares~~the acceptance of ~~Common~~a ~~Stock~~superior ~~that~~proposal ~~are~~by ~~owned~~the byBoard, the Company, ~~Shentel~~will orpay ~~any~~Shentel ofa ~~their~~termination ~~respective~~fee ~~subsidiaries~~equal ~~and~~to ~~(ii)~~$8.8 ~~any~~million ~~shares~~plus reimbursement of ~~Common~~up ~~Stock~~to ~~that~~$2.5 ~~are~~million ~~owned~~in fees, costs and expenses incurred by ~~any~~Shentel ~~Company~~in ~~stockholders~~connection ~~who~~with ~~are~~the ~~entitled~~Merger. toThe ~~exercise,~~Merger ~~and~~Agreement ~~properly~~also ~~exercise~~provides that, ~~appraisal~~upon ~~rights~~termination ~~with~~of ~~respect~~the toMerger ~~such~~Agreement ~~shares~~under ofspecified ~~Common~~circumstances, ~~Stock~~Shentel ~~pursuant~~will topay the ~~General~~Company ~~Corporation~~a ~~Law~~termination fee of ~~the~~$25 ~~State~~million ofor ~~Delaware)~~$8.8 ~~will~~million, bedepending ~~cancelled~~on ~~and~~the ~~converted~~specific ~~automatically~~circumstances, ~~into~~plus ~~the~~reimbursement ~~right~~of up to ~~receive~~ $92.255 million in ~~cash~~fees, ~~without~~costs ~~interest~~and expenses incurred by the Company in connection with the Merger.

The completion of the Merger, ~~which~~ is ~~expected~~not ~~to close in the first quarter of 2016, is~~ subject to ~~the~~a ~~satisfaction~~financing orcondition. ~~waiver~~On ofDecember ~~certain~~18, ~~conditions~~2015, ~~including~~Shentel ~~(i) the~~entered ~~adoption~~into ~~of the Merger Agreement by the affirmative vote of the holders of~~ a ~~majority~~credit ofagreement ~~the~~with ~~outstanding~~various ~~shares~~lenders ofand ~~Common~~CoBank, ~~Stock~~ACB, ~~(ii)~~as ~~the~~administrative ~~approval~~agent of(collectively, the ~~transaction by the Federal Communications Commission (the~~ “~~FCC~~Lenders”), ~~and~~that ~~applicable~~provides ~~state~~Shentel ~~public~~with ~~utility~~senior ~~commissions,~~secured ~~(iii)~~credit ~~the~~facilities, ~~provision~~including ofa ~~all~~revolving ~~required~~credit ~~notices~~facility toand ~~applicable~~two ~~state~~term ~~public~~loan ~~utility~~facilities. The ~~commissions,~~availability ~~(iv) the expiration~~ of the ~~applicable~~credit ~~waiting~~facilities ~~period~~ under the ~~Hart-Scott-Rodino~~credit ~~Antitrust~~agreement ~~Improvements~~is ~~Act~~subject ofto ~~1976~~various ~~(“HSR Act”)~~conditions, asincluding ~~amended, (v)~~ the ~~absence~~consummation of ~~any~~the ~~proceeding,~~Sprint ~~order~~Transactions orand ~~law~~the ~~enjoining~~consummation orof ~~prohibiting~~ the Merger orin accordance with the ~~other~~terms ~~transactions~~and ~~contemplated~~conditions byset forth in the Merger Agreement. In addition, ~~(vi)~~the ~~each~~commitments ~~party’s material performance~~ of ~~its~~the ~~obligations~~Lenders ~~and~~will ~~compliance~~terminate ~~with~~if ~~its~~the ~~covenants,~~consummation ~~(vii)~~of the ~~accuracy~~Merger ofdoes ~~each~~not ~~party’s~~occur ~~representations~~on ~~and~~or ~~warranties,~~prior ~~subject~~ to ~~customary~~June ~~materiality qualifiers~~28, ~~(viii) the~~2016. ~~absence~~Under ofcertain aconditions, ~~material~~if ~~adverse effect on~~ the ~~Company~~Merger ~~and~~Agreement ~~(ix)~~is ~~the~~terminated ~~consummation~~because of the ~~transactions~~failure ~~contemplated~~of byShentel ~~the~~to ~~Master~~obtain ~~Agreement~~financing, ~~dated~~Shentel aswill ofpay ~~August~~the ~~10,~~Company ~~2015,~~the ~~between~~termination ~~SprintCom,~~fee ~~Inc., an affiliate~~ of ~~Sprint~~$25 ~~Corporation,~~million ~~and~~plus ~~Shenandoah~~reimbursement ~~Personal Communications, LLC, a wholly-owned subsidiary~~ of ~~Shentel~~up ~~(“Sprint~~to ~~Transactions”)~~$2. ~~The~~5 ~~HSR~~million ~~Act~~in ~~waiting~~fees, ~~period~~costs ~~was~~and ~~terminated~~expenses ~~early~~referenced ~~by the Federal Trade Commission on September 25, 2015~~above.

The completion of the Merger ~~Agreement~~is ~~contains~~subject ~~certain~~to ~~termination~~the ~~rights~~satisfaction ~~for~~or ~~Shentel~~waiver ~~and~~of ~~the~~certain ~~Company~~conditions, including ~~termination~~(i) the byapproval ~~either~~of ~~party~~the iftransaction by the ~~Merger~~Federal isCommunications ~~not~~Commission ~~consummated~~(the by“FCC”) ~~February~~and ~~29,~~applicable ~~2016~~state ~~(subject~~public toutility acommissions, ~~one-time~~(ii) ~~120-day~~the ~~extension~~provision ~~exercisable~~of byall ~~either~~required ~~party).~~notices ~~The~~to ~~Merger~~applicable ~~Agreement~~state ~~further~~public ~~provides~~utility ~~that~~commissions, ~~upon~~(iii) ~~termination~~the expiration of the ~~Merger~~applicable ~~Agreement~~waiting period under ~~specified~~the ~~circumstances,~~Hart-Scott-Rodino ~~including~~Antitrust inImprovements ~~connection~~Act ~~with~~of a1976 ~~change~~(“HSR ofAct”), ~~recommendation~~as ofamended, (iv) the ~~Company~~absence ~~board~~ of ~~directors~~any ~~(the~~proceeding, ~~“Board”)~~order or law enjoining or prohibiting the ~~acceptance~~Merger ofor athe ~~superior~~other ~~proposal~~transactions contemplated by the ~~Board~~Merger Agreement, ~~the~~(v) ~~Company~~each ~~will~~party’s ~~pay~~material ~~Shentel~~performance aof ~~termination~~its ~~fee~~obligations ~~equal~~and tocompliance ~~$8.8~~with ~~million~~its ~~plus~~covenants, ~~reimbursement~~(vi) ofthe upaccuracy toof ~~$2.5~~each ~~million~~party’s inrepresentations ~~fees~~and warranties, ~~costs~~subject ~~and~~to ~~expenses~~customary ~~incurred~~materiality byqualifiers, ~~Shentel~~(vii) the inabsence ~~connection~~of ~~with~~a ~~the~~material ~~Merger.~~adverse ~~The~~effect ~~Merger~~on ~~Agreement~~the ~~also~~Company ~~provides~~and ~~that,~~(xiii) ~~upon~~the ~~termination~~consummation of the ~~Merger~~transactions ~~Agreement~~contemplated ~~under~~by ~~specified~~the ~~circumstances~~Master Agreement, ~~Shentel~~dated ~~will~~as ~~pay~~of ~~the~~August ~~Company~~10, a2015, ~~termination~~between ~~fee~~SprintCom, ofInc., ~~$25~~an ~~million~~affiliate orof ~~$8.8~~Sprint ~~million~~Corporation, ~~depending~~and onShenandoah ~~the~~Personal ~~specific~~Communications, ~~circumstances~~LLC, ~~plus~~a ~~reimbursement~~wholly-owned subsidiary of upShentel to(“Sprint $2Transactions”).5 All ~~million~~conditions inwere satisfied ~~fees, costs~~ and ~~expenses incurred by~~ the ~~Company~~merger inclosed ~~connection~~on ~~with~~May ~~the~~6, ~~Merger~~2016.

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~~The~~On ~~completion~~December of1, ~~the Merger is not subject to a financing condition. However~~2014, ~~in connection with~~ the ~~Merger~~Company ~~Agreement, Shentel has~~ entered into aan ~~commitment~~agreement ~~letter~~to ~~with~~sell ~~CoBank,~~its ~~ACB,~~wireless ~~Royal~~spectrum ~~Bank~~licenses ofin ~~Canada~~its eastern Virginia and ~~Fifth~~Outer ~~Third~~Banks ~~Bank~~of ~~(collectively,~~North ~~the~~Carolina markets (“~~Lenders~~Eastern Markets”), ~~dated~~valued asat ofapproximately ~~August~~$56.0 ~~10,~~million. The ~~2015,~~transaction ~~pursuant~~closed toon ~~which~~April ~~the~~15, ~~Lenders~~2015. ~~have~~The ~~committed~~Company ~~(the~~entered ~~“Debt~~into ~~Commitment”)~~lease toagreements ~~make available~~ to ~~Shentel~~continue ~~senior~~using ~~secured~~the ~~credit~~Eastern ~~facilities,~~Markets ~~including~~spectrum alicenses ~~revolving~~for ~~credit~~varying ~~facility~~terms ~~and~~ranging ~~two~~from ~~term~~the ~~loan~~closing ~~facilities.~~date ~~The~~through ~~Debt~~November ~~Commitment~~15, is2015. ~~subject~~Effective toNovember ~~various~~15, ~~conditions~~2015, ~~including~~ the ~~consummation~~Company ofceased ~~the~~commercial ~~Sprint~~operations ~~Transactions~~ and ~~the~~all ~~consummation~~subscribers ofhad ~~the~~been ~~Merger~~migrated inoff ~~accordance~~our ~~with~~network. As ~~the~~a ~~terms~~result ~~and~~of ~~conditions~~no ~~set~~longer ~~forth~~providing service in the ~~Merger~~Eastern ~~Agreement.~~Markets, ~~Under~~ certain ~~conditions~~assets, ifliabilities ~~the~~and ~~Merger~~results ~~Agreement~~of isoperations ~~terminated~~associated ~~because~~with ofthis ~~the~~market ~~failure~~are ofnow ~~Shentel~~being toreported ~~obtain~~as ~~financing~~discontinued operations. Accordingly, ~~Shentel~~we ~~will~~have ~~pay~~recast the ~~Company~~prior ~~the~~period ~~termination~~results ~~fee~~to ofbe ~~$25~~comparable ~~million~~with ~~plus~~the ~~reimbursement~~current ofdiscontinued upoperations ~~to $2~~presentation.5 See ~~million~~Note in3 ~~fees,~~for ~~costs~~additional ~~and~~information ~~expenses~~regarding ~~referenced~~these ~~above~~charges.

On August 24, 2015, Mr. Marvin Westen and Mr. Paul Sekerak, each filed a purported class action complaint relating to the merger in the Court of Chancery of the State of Delaware. The Plaintiffs have sued all members of the Board, alleging that the members of the Board breached their fiduciary obligations to the purported class by agreeing to sell the Company for consideration deemed “inadequate” and by agreeing to deal protection terms that allegedly foreclose competing offers. Plaintiffs further allege that Shentel and Merger Sub (or, in the case of Mr. Sekerak, Shentel and the Company) for purportedly aiding and abetting the foregoing breaches. Plaintiffs seek, among other things, injunctive relief preventing consummation of the merger (and/or directing rescission of the transaction, to the extent already implemented), unspecified damages and an award of plaintiff’s expenses and attorneys’ fees. The Company and the members of the Board believe these claims are without merit and intend to defend themselves vigorously.

Note 2. Basis of Presentation and Other Information

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position have been included.

The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015~~2016. The accompanying condensed consolidated balance sheet as of December 31, ~~2014~~2015 has been derived from the audited financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014 (the “2014 Form 10-K”)~~2015. These financial statements should be read in conjunction with the Company’s ~~2014~~2015 Form 10-K.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the current period presentation. ~~Effective~~ September 30, 2015, the Company changed the classification of the fair value of the trade-in right related to Equipment Installment Plan (“EIP”) to better align its presentation with other wireless carriers. As of December 31, 2014, the reclassification resulted in an increase in accounts receivable of $1.4 million and a corresponding increase in advance billings and customer deposits of $1.4 million. Net income has not been affected by these reclassifications.

Cash

The Company’s cash was held in market rate savings accounts and non-interest bearing deposit accounts. The total held in market rate savings accounts at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 was $7919.67 million and $2839.57 million, respectively. The remaining $2954.26 million and $4533.0 million of cash at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, was held in non-interest bearing deposit accounts.

Restricted Cash

The Company is eligible to receive up to $5.0 million in connection with its winning bid in the Connect America Fund's Mobility Fund Phase I Auction ("Auction 901"). Pursuant to the terms of Auction 901, the Company was required to obtain a Letter of Credit (“LOC”) for the benefit of the Universal Service Administrative Company (“USAC”) to cover each disbursement plus the amount of the performance default penalty (10% of the total eligible award). USAC may draw upon the LOC in the event the Company fails to demonstrate the required coverage by the applicable deadline in 2016. The Company obtained the LOC in the amount of $2.2 million, representing the first disbursement of $1.7 million received in September 2013, plus the performance default penalty of $0.5 million. In accordance with the terms of the LOC, the Company deposited $2.2 million into a separate account at the issuing bank to serve as cash collateral. Such funds will be released when the LOC is terminated without being drawn upon by USAC.

Allowance for Doubtful Accounts

The Company includes bad debt expense in customer operations expense in the unaudited condensed consolidated statements of operations. Bad debt expense for the three months ended March 31, 2016 and 2015 was $3.9 million and $2.8 million, respectively. The Company’s allowance for doubtful accounts was $7.3 million and $6.8 million at March 31, 2016 and December 31, 2015, respectively. In addition to these amounts, the Company has recognized $2.7 million in bad debt expense for the three months ended March 31, 2015, and allowance for doubtful accounts of $0.7 million and $1.5 million recorded as part of discontinued operations at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016 and December 31, 2015, the allowance for doubtful accounts included $2.5 million and $2.3 million, respectively, related to unbilled equipment receivables. See Note 5 for additional information related to EIP.

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Allowance for Doubtful Accounts

The Company includes bad debt expense in customer operations expense in the unaudited condensed consolidated statements of operations. Bad debt expense for the three months ended September 30, 2015 and 2014 was $5.2 million and $3.4 million, respectively. Bad debt expense for the nine months ended September 30, 2015 and 2014 was $16.3 million and $10.7 million, respectively. The Company’s allowance for doubtful accounts was $10.3 million and $7.3 million at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the allowance for doubtful accounts included $3.1 million and $1.1 million, respectively, related to unbilled equipment receivables. See Note 4 for additional information related to EIP.

Accrued Expenses and Other Current Liabilities

(In thousands)	~~September~~March 3031, ~~2015~~2016		December 31, ~~2014~~2015
Accrued payroll	$	42,~~862~~797	$	65,~~545~~010
Accrued taxes	64,~~927~~006		54,~~383~~321
Accrued restructuring	4,545		3,400
Other	10,330		8,672
Other	13,380		11,825
Total	$	17,133	$	18,003
Total	$	29,714	$	27,153

Other Long-Term Liabilities

(In thousands)	~~September~~March 3031, ~~2015~~2016		December 31, ~~2014~~2015
Asset retirement obligation	$	2721,~~631~~140	$	2720,~~560~~785
Deferred gain on sale leaseback	1715,~~067~~956		216,~~617~~511
Deferred SNA revenue	1620,~~868~~748		819,~~173~~183
Other	65,~~256~~130		65,~~666~~381
Total	$	6762,~~822~~974	$	4561,~~016~~860

Pension Benefits and Retirement Benefits Other Than Pensions

The total expense recognized for the Company’s defined benefit and nonqualified pension plans was $0.1 million for both the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, respectively, and $0.3 million and $0.1 million, for the nine months ended September 30,~~ 2015 ~~and 2014, respectively, a portion of which related to the amortization of unrealized loss~~.

The total amount reclassified out of accumulated other comprehensive loss related to actuarial (gains)/losses from the defined benefit plans was $(0.1) million and $(0.3)1 million for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, respectively, and $0.4 million and $(0.8) million for the nine months ended September 30,~~ 2015 ~~and 2014~~, respectively, all of which has been reclassified to cost of services, customer operations, and corporate operations on the unaudited condensed consolidated statements of ~~income~~operations for the respective periods.

Defined benefit pension plan assets were valued at $22.09 million at ~~September~~March 3031, ~~2015~~2016.

The Company also sponsors a contributory defined contribution plan under Internal Revenue Code (“IRC”) Section 401(k) for substantially all employees. The Company’s current policy is to make matching contributions in ~~shares of the Company’s common stock~~cash.

Equity-Based Compensation

The Company accounts for equity-based compensation plans under FASB Accounting Standards Codification (“ASC”) 718, Stock Compensation. Equity-based compensation expense from stock-based awards is recorded with an offsetting increase to additional paid in capital on the unaudited condensed consolidated balance sheet. The Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award and credits compensation for any forfeitures in the reporting period in which the forfeiture occurs.

Total equity-based compensation expense related to all of the Company’s stock-based equity awards for the three months ended March 31, 2016 and 2015 and the Company’s 401(k) matching contributions was allocated as follows:



	Three Months Ended March 31,
(In thousands)	2016		2015
Cost of services	$	182	$	161
Customer operations	133		178
Corporate operations	471		520
Equity-based compensation expense	$	786	$	859

Future charges for equity-based compensation related to securities outstanding at March 31, 2016 for the remainder of 2016 and for the years 2017 through 2019 are estimated to be $1.9 million, $1.7 million, $1.0 million and $0.1 million, respectively.

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Total equity-based compensation expense related to all of the Company’s stock-based equity awards for the three and nine months ended September 30, 2015 and 2014 and the Company’s 401(k) matching contributions was allocated as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2015		2014			2015		2014
Cost of services	$	156	$	152		$	494	$	446
Customer operations	158		258			493		746
Corporate operations	569		(760		)	1,665		1,052
Equity-based compensation expense	$	883	$	(350	)	$	2,652	$	2,244

Future charges for equity-based compensation related to securities outstanding at September 30, 2015 for the remainder of 2015 and for the years 2016 through 2019 are estimated to be $0.7 million, $1.6 million, $1.0 million, $0.2 million and less than $0.1 million, respectively.

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The guidance is effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2014, with early adoption permitted for transactions that have not been reported in financial statements previously issued or available for issuance. The standard was effective for the Company's fiscal year beginning January 1, 2015 and has been applied to relevant transactions.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU provides a framework that replaces the existing revenue recognition guidance and is intended to improve the financial reporting requirements. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption being prohibited. The Company is currently in the process of evaluating the impact of adoption of the ASU on its financial statements.

In ~~August~~April ~~2014~~2015, FASB issued ASU ~~2014~~2015-1503, ~~Disclosure~~Simplifying the Presentation of ~~Uncertainties~~Debt ~~about~~Issuance anCosts, ~~Entity’s~~which ~~Ability~~changes tothe ~~Continue~~presentation asof adebt ~~Going~~issuance ~~Concern,~~costs ~~which~~in ~~requires~~the ~~management~~financial tostatements. ASU ~~assess~~2015-03 requires an entity’s ~~ability~~ to ~~continue~~present such costs in the balance sheet as a ~~going~~direct ~~concern~~deduction ~~and~~from tothe ~~provide~~ related ~~footnote~~debt ~~disclosures~~liability inrather ~~certain~~than ~~circumstances~~as an asset. Amortization of the costs will continue to be reported as interest expense. The guidance iswas effective for annual reporting periods ~~ending~~beginning after December 15, ~~2016~~2015. The Company has adopted the guidance effective March 31, ~~with~~2016 ~~early~~and ~~adoption~~it ~~permitted~~was applied retrospectively to each period presented. The ~~adoption~~Condensed ofConsolidated ~~this~~Balance ~~guidance~~Sheet isfor ~~not~~the ~~expected~~year ended December 31, 2015 has been restated to ~~have~~reflect athis ~~material~~change ~~effect~~in onaccounting ~~the~~principle ~~Company’s~~and ~~financial~~a ~~position~~reclass orof ~~results~~$7.3 million of ~~operations~~"Debt Issuance Costs" from Deferred Charges and Other Assets to Long-Term Debt.

In ~~April~~February ~~2015~~2016, the FASB issued ASU ~~2015~~No. 2016-0302, ~~Simplifying the Presentation of Debt Issuance Costs~~Leases, which ~~changes the presentation of debt issuance costs in the financial statements. ASU 2015-03~~ requires anlessees ~~entity~~ to ~~present~~recognize ~~such~~assets ~~costs~~and inliabilities ~~the~~for ~~balance~~most ~~sheet~~leases asand awould ~~direct~~change ~~deduction~~certain ~~from~~aspects ~~the related debt liability rather than as an asset. Amortization~~ of ~~the~~current ~~costs~~lease ~~will~~accounting, ~~continue~~among toother ~~be reported as interest expense~~things. The guidance is effective for annual ~~reporting~~and interim periods beginning after December 15, ~~2015~~2018, with early adoption permitted. ~~The~~ ~~guidance will be applied retrospectively to each period presented.~~ The Company is currently in the process of evaluating the impact of adoption of the ASU on its financial statements.

In ~~April~~March ~~2015~~2016, the FASB issued ASU ~~2015~~2016-0509, ~~Customer’s~~Compensation ~~Accounting~~- ~~for~~Stock ~~Fees~~Compensation ~~Paid~~(Topic in718): Improvements ato ~~Cloud~~Employee ~~Computing~~Share-Based ~~Arrangement~~Payment Accounting, which ~~provides~~simplifies ~~additional~~the ~~guidance~~accounting ~~regarding~~for ~~cloud~~the ~~computing~~taxes ~~arrangements.~~related ~~The~~to ~~guidance~~stock ~~requires~~based ~~registrants~~compensation, toincluding ~~account~~adjustments ~~for~~to ahow ~~cloud~~excess ~~computing~~tax ~~arrangement~~benefits ~~that~~and ~~includes~~ a ~~software~~company's ~~license~~payments ~~element~~for ~~consistent~~tax ~~with~~withholdings ~~the~~should ~~acquisition of other software licenses. Cloud computing arrangement without software licenses are to~~ be ~~accounted for as a service contract~~classified. The ~~This~~ guidance is effective for fiscal years ~~and interim periods~~ beginning after December 15, ~~2015~~2016. The ~~adoption~~Company ofis ~~this~~currently ~~guidance~~in isthe ~~not~~process ~~expected~~of toevaluating ~~have~~the aimpact ~~material~~of ~~effect~~adoption onof the ~~Company’s~~ASU ~~financial~~on ~~position~~its orfinancial ~~results of operations~~statements.

In July 2015, FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable valueNote 3. Discontinued The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. This guidance is effective for fiscal years and interim periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact of adoption of the ASU on its financial statements.Operations

On December 1, 2014, the Company entered into an agreement to sell its wireless spectrum licenses in its eastern Virginia and Outer Banks of North Carolina markets (“Eastern Markets”) for approximately $56.0 million. The transaction closed on April 15, 2015. The Company entered into lease agreements to continue using the Eastern Markets spectrum licenses for varying terms ranging from the closing date through November 15, 2015. Effective November 16, 2015, we ceased commercial operations and all subscribers had been migrated off our network. As a result of no longer providing service in the Eastern Markets, certain assets, liabilities and results of operations associated with this market are now being reported as discontinued operations. Accordingly, we have recast the prior period results to be comparable with the current discontinued operations presentation.

In 2015, restructuring liabilities were established for employee separations, lease abandonments, operating lease terminations, and other related costs. During the three months ended March 31, 2016, the Company recorded $0.3 million in additional restructuring costs and made payments for restructuring costs of $1.2 million. At March 31, 2016, there was a restructuring accrual of $1.7 million, which is expected to be paid through 2019 absent settlements with vendors.

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~~Note 3.~~Financial ~~Supplemental~~results ~~Cash~~for ~~Flow~~the ~~Information~~three-month periods ended March 31, 2016 and 2015 reported as Income (loss) from discontinued operations, net of tax on the Condensed Consolidated Statements of Operations are as follows:

The following information is presented as supplementary disclosures for the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014:



	Three Months Ended March 31,
(In thousands)	2016			2015
Operating Revenues
Retail revenue	$	—		$	23,523
Wholesale and other revenue	100			686
Equipment sales	—			686
Operating Revenues	100			24,895
Operating Expenses
Cost of services	289			8,836
Cost of equipment sold	—			637
Customer operations	36			4,797
Corporate operations	(225		)	788
Restructuring	302			403
Depreciation and amortization	752			957
Gain on sale of assets	(418		)	(4,938		)
	736			11,480
Operating Income (Loss)	(636		)	13,415
Other Income (Expense), net	(1		)	30
Income (loss) before Income Taxes	(637		)	13,445
Income Tax Expense (Benefit)	(247		)	5,196
Income (Loss) from Discontinued Operations	$	(390	)	$	8,249

	Nine Months Ended September 30,
(In thousands)	2015		2014
Cash payments for:
Interest (net of amounts capitalized)	$	21,989	$	27,186
Income taxes	21,207		912
Cash received from income tax refunds	3,974		1,434
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable	7,288		12,564
Borrowings under capital leases	35		152

Assets and liabilities presented as discontinued operations as of March 31, 2016 and December 31, 2015 are as follows:

The amount of interest capitalized was $1.0 million and $0.2 million for each of the nine months ended September 30, 2015 and 2014, respectively.



(In thousands)	March 31, 2016		December 31, 2015
Current Assets
Accounts receivable, net	$	783	$	1,101
Prepaid expenses	154		1,002
Other current assets	—		18
Total current assets from discontinued operations	937		2,121
Assets held for sale	985		1,733
Total assets from discontinued operations	$	1,922	$	3,854
Current Liabilities
Current portion of long-term debt	$	46	$	55
Accounts payable	6		6,003
Advance billings and customer deposits	92		115
Accrued expenses and other current liabilities	5,040		6,881
Total current liabilities from discontinued operations	5,184		13,054
Long-Term Debt	36		46
Other Long-Term Liabilities	2,237		789
Total liabilities from discontinued operations	$	7,457	$	13,889

Note 4. Equipment Installment Plan Receivables

EIP subscribers pay for their devices in installments over a 24-month period. At the time of an installment sale, the Company imputes interest on the installment receivable using current market interest rate estimates along with other inputs such as historical and expected credit losses and credit quality of its EIP base. The imputed interest is recorded as a reduction to equipment revenue and as a reduction to the face amount of the related receivable. Interest income is recognized over the term of the installment contract as interest income presented net of interest expense. The Company's imputed interest rate has ranged from approximately 5% to 10%. Additionally, the customer has the right to trade in their original device after a specified period of time for a new device and have the remaining unpaid balance satisfied. This trade-in right is measured at the estimated fair value of the device being traded in based on current trade-in values and the timing of the trade-in. The trade-in right is recorded as a reduction to the equipment revenue at the time of sale with a corresponding increase in liabilities. As of September 30, 2015 and December 31, 2014, the liability associated with this trade-in right was $3.6 million and $1.4 million, respectively, and is reflected in Advanced billings and customer deposits and Other Long-Term Liabilities on the unaudited condensed consolidated balance sheets.

There was $4.5 million and $0.6 million of billed EIP receivables included in the Company's subscriber accounts receivable as of September 30, 2015 and December 31, 2014, respectively. The following table summarizes the remaining unbilled EIP receivables at September 30, 2015 and December 31, 2014 :

(In thousands)	September 30, 2015			December 31, 2014
EIP receivables, gross	$	33,818		$	16,109
Deferred interest	(2,048		)	—
EIP receivables, net of deferred interest	31,770			16,109
Allowance for credit losses	(3,061		)	(1,064		)
EIP receivables, net	$	28,709		$	15,045

Classified on the unaudited Condensed Consolidated Balance Sheets as:
Accounts receivable, net	$	18,515	$	6,937
Deferred charges and other assets	10,194		8,108
EIP receivables, net	$	28,709	$	15,045

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Following is selected operating and investing cash flow activity from discontinued operations included in Condensed Consolidated Statements of Cash Flows:

Note 5. Property, Plant and Equipment



	Three Months Ended March 31,
(In thousands)	2016		2015
Depreciation and amortization	$	752	$	957
Purchases of property, plant, and equipment	—		335

The components of property, plant and equipment, and the related accumulated depreciation, were as follows:

(In thousands)	Estimated UsefulLife	September 30, 2015		December 31, 2014
Land and buildings *	39 to 50 years	$	29,980	$	30,772
Network plant and equipment	5 to 17 years	484,816		445,940
Furniture, fixtures and other equipment	2 to 18 years	96,132		91,512
		610,928		568,224
Under construction		43,332		18,213
		654,260		586,437
Less: accumulated depreciation		332,587		296,490
Property, plant and equipment, net		$	321,673	$	289,947

* Leasehold improvements, which are categorized in land and buildings, are depreciated over the shorter of the estimated useful lives or the remaining lease terms.

Depreciation expense for the three months ended September 30, 2015 and 2014 was $15.0 million and $18.3 million, respectively. Depreciation expense for the nine months ended September 30, 2015 and 2014 was $42.9 million and $55.8 million, respectively.

During the nine months ended September 30, 2015, the Company began negotiating to sell certain facilities in the Eastern Markets. Based on bids received for these facilities, the Company recorded an impairment charge of approximately $0.2 million during the nine months ended September 30, 2015.

Note 6. Intangible Assets

Indefinite-Lived Intangible Assets

Goodwill and radio spectrum licenses are considered indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but instead are tested for impairment annually, on October 1, or more frequently if an event indicates that the asset might be impaired. The Company believes that no impairment indicators existed as of September 30, 2015 that would require it to perform impairment testing.

In conjunction with the agreement to sell the Company's wireless spectrum licenses in the Eastern Markets, the Company calculated the fair value to be $57.9 million, which includes the sales price plus the implied value of the non-cash spectrum leaseback. Accordingly, an impairment charge of $29.0 million was recorded during the fourth quarter of 2014. In addition, the Company transferred these intangible assets to assets held for sale in the Company’s unaudited condensed consolidated balance sheets. The transaction closed in April 2015 and the assets are no longer reflected in the Company’s unaudited condensed consolidated balance sheets at September 30, 2015.

	September 30, 2015				December 31, 2014
(In thousands)	Goodwill		Radio Spectrum Licenses		Goodwill		Radio Spectrum Licenses
Balance at beginning of the period	$	63,700	$	44,933	$	63,700	$	131,834
Impairment loss in the period	—		—		—		(28,990		)
Transferred to assets held for sale	—		—		—		(57,911		)
Total	$	63,700	$	44,933	$	63,700	$	44,933

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~~Intangible~~Note 4. ~~Assets~~Supplemental ~~Subject~~Cash toFlow ~~Amortization~~Information

~~Customer~~The ~~relationships~~following ~~and~~information ~~trademarks~~is ~~are~~presented ~~considered~~as ~~amortizable~~supplementary ~~intangible~~disclosures ~~assets.~~for Atthe ~~September 30,~~unaudited ~~2015~~condensed ~~and~~consolidated ~~December 31,~~statements ~~2014,~~of ~~customer~~cash ~~relationships~~flows ~~and~~for ~~trademarks~~the ~~were~~three ~~comprised~~months ofended ~~the~~March ~~following~~31, 2016 and 2015:

			September 30, 2015									December 31, 2014
	Three Months Ended March 31,
(In thousands)	~~EstimatedUseful Life~~2016		~~Gross Amount~~		2015		~~AccumulatedAmortization~~			~~Net~~		~~Gross Amount~~		~~AccumulatedAmortization~~			~~Net~~
Customer relationships	17.5 years		$	36,900			$	(34,549	)	$	2,351	$	36,900	$	(34,305	)	$	2,595
Cash payments for:
Trademarks	15 years		7,000				(4,861		)	2,139		7,000		(4,511		)	2,489
Interest (net of amounts capitalized)	$	7,271			$	7,494
Total			$	43,900			$	(39,410	)	$	4,490	$	43,900	$	(38,816	)	$	5,084
Cash received from income tax refunds	22,339				3,883
Supplemental investing and financing activities:
Additions to property, plant and equipment included in accounts payable	2,858				7,979
Borrowings under capital leases	—				35

The ~~Company~~amount ~~amortizes~~of ~~its~~interest ~~amortizable~~capitalized ~~intangible~~was ~~assets using the straight-line method~~$0. ~~Amortization~~3 ~~expense~~million ~~for the three months ended September 30, 2015~~ and ~~2014 was~~ $0.21 million, ~~respectively. Amortization expense~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014 was $0.6 million and $1.7 million~~2015, respectively.

Note 75. Equipment ~~Long-Term~~Installment ~~Debt~~Plan Receivables

EIP subscribers pay for their devices in installments over a 24-month period. At ~~September 30~~the time of an installment sale, ~~2015~~the Company imputes interest on the installment receivable using current market interest rate estimates along with other inputs such as historical and expected credit losses and credit quality of its EIP base. The imputed interest is recorded as a reduction to equipment revenue and as a reduction to the face amount of the related receivable. Interest income is recognized over the term of the installment contract and presented net of interest expense. The Company's imputed interest rate has ranged from approximately 5% to 10%. Additionally, the customer has the right to trade in their original device after a specified period of time for a new device and have the remaining unpaid balance satisfied. This trade-in right is measured at the estimated fair value of the device being traded in based on current trade-in values and the timing of the trade-in. The trade-in right is recorded as a reduction to the equipment revenue at the time of sale with a corresponding increase in liabilities. As of March 31, 2016 and December 31, ~~2014~~2015, the ~~Company’s~~liability ~~outstanding~~associated ~~long~~with this trade-~~term~~in ~~debt~~right ~~consisted~~was of$5.2 million and $4.7 million, respectively, and is reflected in Advanced billings and customer deposits and Other Long-Term Liabilities on the ~~following:~~unaudited condensed consolidated balance sheets.

(In thousands)	September 30, 2015		December 31, 2014
Senior secured term loans, net of unamortized debt discount	$	520,986	$	524,504
Capital lease obligations	585		904
	521,571		525,408
Less: current portion of long-term debt	5,696		5,816
Long-term debt	$	515,875	$	519,592

There was $5.2 million and $4.4 million of billed EIP receivables included in the Company's subscriber accounts receivable as of March 31, 2016 and December 31, 2015, respectively. The following table summarizes the remaining unbilled EIP receivables at March 31, 2016 and December 31, 2015:

Long-Term Debt, Excluding Capital Lease Obligations



(In thousands)	March 31, 2016			December 31, 2015
EIP receivables, gross	$	39,898		$	37,898
Deferred interest	(3,266		)	(2,764		)
EIP receivables, net of deferred interest	36,632			35,134
Allowance for credit losses	(2,485		)	(2,324		)
EIP receivables, net	$	34,147		$	32,810

On November 9, 2012, NTELOS Inc. entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amended and restated, in its entirety, that certain Credit Agreement dated August 7, 2009 (the “Original Credit Agreement”). The Amended and Restated Credit Agreement provided for (1) a term loan A in the aggregate amount of $150.0 million (the “Term Loan A”); and (2) a term loan B in the aggregate amount of $350.0 million (the “Term Loan B” and, together with the Term Loan A, the “Term Loans”).



Classified on the unaudited Condensed Consolidated Balance Sheets as:
Accounts receivable, net	$	23,549	$	22,291
Deferred charges and other assets	10,598		10,519
EIP receivables, net	$	34,147	$	32,810

On January 31, 2014, the Company completed the refinancing of Term Loan A, which converted the outstanding principal balance of $148.1 million of Term Loan A into Term Loan B, and borrowed an additional $40.0 million under Term Loan B. The additional Term Loan B borrowings bear the same interest rate, maturity and other terms as the Company’s existing Term Loan B borrowings. In connection with the refinancing, the Company incurred approximately $3.8 million in creditor and third party fees, of which $3.7 million was deferred and is being amortized to interest expense over the life of the debt using the effective interest method. The Company also deferred $0.5 million in debt discounts related to the new Term Loan B borrowings, which are being accreted to the Term Loan B using the effective interest method over the life of the debt and are reflected in interest expense. Additionally, the Company wrote off a proportionate amount of the unamortized deferred fees and debt discount from the Amended and Restated Credit Agreement totaling $0.5 million and $0.2 million, respectively, which are reflected in other expenses in the unaudited condensed consolidated statements of income.

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~~The aggregate maturities of long-term debt outstanding at September~~Note ~~30,~~6. ~~2015~~Property, ~~excluding~~Plant ~~capital~~and ~~lease obligations, based on the contractual terms of the instruments were as follows:~~Equipment

(In thousands)	Term Loan
Remainder of 2015	$	1,351
2016	5,405
2017	5,405
2018	5,405
2019	506,725
Total	$	524,291

The components of property, plant and equipment, and the related accumulated depreciation, were as follows:

The Company’s blended average effective interest rate on its long-term debt was approximately 6.4% for the three and nine months ended September 30, 2015 and 2014, respectively.



(In thousands)	Estimated Useful Life	March 31, 2016		December 31, 2015
Land and buildings *	39 to 50 years	$	27,420	$	27,406
Network plant and equipment	5 to 17 years	465,094		451,996
Furniture, fixtures and other equipment	2 to 18 years	96,229		95,095
		588,743		574,497
Under construction		29,181		27,577
		617,924		602,074
Less: accumulated depreciation		289,949		275,814
Property, plant and equipment, net		$	327,975	$	326,260

~~The~~* ~~Amended~~Leasehold ~~and Restated Credit Agreement has a Restricted Payments basket~~improvements, which ~~can~~are becategorized ~~used to make Restricted Payments (as defined~~ in ~~the~~land ~~Amended~~ and ~~Restated Credit Agreement)~~buildings, ~~including~~are ~~the~~depreciated ~~ability~~over ~~to pay dividends, repurchase stock or advance funds to~~ the ~~Company.~~shorter NTELOS Inc. may not make Restricted Payments if its Leverage Ratio (calculated on a pro forma basis) is greater than 4.25:1.00. This Restricted Payments basket increases by $6.5 million per quarter and decreases by any actual Restricted Payments and by certain investments and any mandatory prepayments on the Term Loans, to the extent the lenders decline to receive such prepayment. In addition, on a quarterly basis the Restricted Payments basket increases by the positive amount, if any, of the ~~Excess~~estimated ~~Cash~~useful ~~Flow~~lives ~~(as~~or ~~defined in~~ the ~~Amended~~remaining ~~and~~lease ~~Restated Credit Agreement)~~terms. For the three months ended September 30, 2015 there was no Excess Cash Flow. The balance of the Restricted Payments basket as of September 30, 2015 was $79.6 million and the Leverage Ratio for the Company was 5.19:1.00.

~~Capital~~Depreciation ~~Lease~~expense ~~Obligations~~from continuing operations for the three months ended March 31, 2016 and 2015 was $13.3 million and $12.7 million, respectively.

~~In addition to the long-term debt discussed above, the Company has entered into capital leases on vehicles with original lease terms of four to five years. At September~~Note ~~30, 2015, the carrying value and accumulated depreciation of these assets were $2~~7.1 ~~million~~Intangible and $1.3 million, respectively. The total net present value of the Company’s future minimum lease payments is $0.6 million. At September 30, 2015, the principal portion of these capital lease obligations was payable as follows: $0.1 million for the remainder of 2015, $0.3 million in 2016, $0.1 million in 2017, $0.1 million in 2018 and less than $0.1 million in 2019 and 2020.Assets

Indefinite-Lived Intangible Assets

Goodwill and radio spectrum licenses are considered indefinite-lived intangible assets. Indefinite-lived intangible assets are not subject to amortization but instead are tested for impairment annually, on October 1, or more frequently if an event indicates that the asset might be impaired. The Company believes that no impairment indicators existed as of March 31, 2016 that would require it to perform impairment testing.

Intangible Assets Subject to Amortization

Customer relationships and trademarks are considered amortizable intangible assets. At March 31, 2016 and December 31, 2015, customer relationships and trademarks were comprised of the following:



		March 31, 2016							December 31, 2015
(In thousands)	Estimated Useful Life	Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net
Customer relationships	17.5 years	$	36,900	$	(34,711	)	$	2,189	$	36,900	$	(34,630	)	$	2,270
Trademarks	15 years	7,000		(5,094		)	1,906		7,000		(4,978		)	2,022
Total		$	43,900	$	(39,805	)	$	4,095	$	43,900	$	(39,608	)	$	4,292

The Company amortizes its amortizable intangible assets using the straight-line method. Amortization expense was $0.2 million for both the three months ended March 31, 2016 and 2015.

Future Amortization expense is expected to be as follows:



(In thousands)	Customer Relationships		Trademarks		Total
Remainder of 2016	$	243	$	351	$	594
2017	324		467		791
2018	324		467		791
2019	324		467		791
2020	324		154		478
2021	324		—		324
Thereafter	326		—		326
	$	2,189	$	1,906	$	4,095

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Note 8. ~~Restructuring~~ ~~Charges~~Long-Term Debt

InAt ~~December 2014~~March 31, ~~the~~2016 ~~Company announced its intention to sell its wireless spectrum~~ and ~~wind down its operations in the Eastern Markets~~December 31, ~~and to reduce related corporate operating expenses during fiscal year~~ 2015~~. In conjunction~~, ~~restructuring liabilities have been established for employee separations, contract terminations, and other related costs, which are recorded in accrued expenses and other current liabilities in~~ the ~~unaudited~~Company’s ~~consolidated~~outstanding ~~balance~~long-term ~~sheets. A~~debt ~~summary~~consisted of the ~~restructuring liabilities is presented below~~following:

(In thousands)	~~Employee~~March ~~Separation~~31, 2016			December 31, 2015	~~Contract Terminations~~			~~Other~~			~~Total~~
Expected period of recognition	2014-2015				2014-2015			2014-2015
Senior secured term loans, net of unamortized debt discount and issuance costs	$	511,785		$	512,518
Projected range at completion	$4,000 - $5,000				$40,000 - $45,000			$1,500 - $2,000			$45,500 - $52,000
Capital lease obligations	361			419
Cumulative charges incurred as of September 30, 2015	$	4,052			$	6,736		$	1,111		$	11,899
	512,146			512,937
Balance as of December 31, 2014	$	1,496			$	917		$	987		$	3,400
Less: current portion of long-term debt	5,586			5,605
Charges	1,654				338			17			2,009
Long-term debt	$	506,560		$	507,332
Utilization	(1,480		)		(688		)	(30		)	(2,198		)
Balance as of March 31, 2015	$	1,670			$	567		$	974		$	3,211
Charges	479				1,113			10			1,602
Utilization	(789		)		(493		)	(10		)	(1,292		)
Balance as of June 30, 2015	$	1,360			$	1,187		$	974		$	3,521
Charges	369				4,228			30			4,627
Utilization	(796		)		(1,823		)	(984		)	(3,603		)
Balance as of September 30, 2015	$	933			$	3,592		$	20		$	4,545

~~Employee~~Long-Term ~~separation~~Debt, ~~costs~~Excluding ~~consist~~Capital of severance for certain Eastern Markets and corporate employees to be paid in accordance with the Company’s written severance plan and certain management contracts. Severance payments are expected to be paid through 2015. Contract termination costs represent lease abandonment costs for retail stores and other termination costs for contractual network services obligations. Lease abandonment costs represent future minimum lease obligations, net of estimated sublease income. We anticipate recognizing additional contract termination costs in the fourth quarter of 2015 as we cease commercial operations. However, these costs are expected to be paid through 2019 absent any settlements with vendors. Other costs include legal and advisory fees expected to be paid during 2015.Obligations

~~Note~~On November 9, 2012, NTELOS Inc. ~~Financial~~entered ~~Instruments~~into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amended and restated, in its entirety, that certain Credit Agreement dated August 7, 2009 (the “Original Credit Agreement”). The Amended and Restated Credit Agreement provided for (1) a term loan A in the aggregate amount of $150.0 million (the “Term Loan A”); and (2) a term loan B in the aggregate amount of $350.0 million (the “Term Loan B” and, together with the Term Loan A, the “Term Loans”).

~~The~~On ~~Company~~January ~~is exposed to market risks with respect to certain of the financial instruments that it holds. Cash~~31, ~~accounts receivable~~2014, ~~accounts~~the ~~payable~~Company ~~and~~completed ~~accrued liabilities are reflected in~~ the ~~unaudited~~refinancing ~~condensed~~of ~~consolidated~~Term ~~financial~~Loan ~~statements at cost~~A, which ~~approximates~~converted ~~fair value because of~~ the ~~short-term~~outstanding ~~nature~~principal balance of ~~these instruments~~$148.1 ~~The~~million ~~fair values~~ of ~~other~~Term ~~financial~~Loan ~~instruments~~A ~~are~~into ~~determined~~Term ~~using~~Loan ~~observable~~B, ~~market~~and ~~prices~~borrowed oran ~~using~~additional a$40.0 ~~valuation~~million ~~model,~~under ~~which~~Term isLoan ~~based~~B. onThe aadditional ~~conventional~~Term ~~discounted~~Loan ~~cash~~B ~~flow~~borrowings ~~methodology~~bear ~~and~~the ~~utilizes~~same ~~assumptions~~interest ofrate, ~~current~~maturity ~~market~~and ~~conditions.~~other ~~The~~terms ~~following~~as isthe aCompany’s ~~summary~~existing byTerm ~~balance~~Loan ~~sheet~~B ~~category:~~borrowings.

~~Long~~The aggregate maturities of long-~~Term~~term ~~Investments~~debt outstanding at March 31, 2016, excluding capital lease obligations, based on the contractual terms of the instruments were as follows:

At September 30, 2015 and December 31, 2014, the Company had an investment in CoBank, ACB (“CoBank”) of $1.5 million. This investment is primarily related to a required investment under the Original Credit Agreement and declared and unpaid patronage distributions of restricted equity related to the portion of the term loans previously held by CoBank. This investment is carried under the cost method as it is not practicable to estimate fair value. This investment is subject to redemption in accordance with CoBank’s capital recovery plans.



(In thousands)	Term Loan
Remainder of 2016	$	4,054
2017	5,405
2018	5,405
2019	506,725
Total	$	521,589

~~Interest~~The ~~Rate~~Company’s ~~Derivatives~~blended average effective interest rate on its long-term debt was approximately 6.3% for the three months ended March 31, 2016 and 2015.

InThe ~~February~~Amended ~~2013~~and Restated Credit Agreement has a Restricted Payments basket, which can be used to make Restricted Payments (as defined in the ~~Company~~Amended ~~purchased~~and anRestated ~~interest~~Credit ~~rate~~Agreement), ~~cap~~including ~~for~~the $0ability to pay dividends, repurchase stock or advance funds to the Company.9 ~~million~~NTELOS ~~with~~Inc. may not make Restricted Payments if its Leverage Ratio (calculated on a ~~notional~~pro ~~amount~~forma ofbasis) is greater than 4.25:1.00. This Restricted Payments basket increases by $~~350~~6.05 million, ~~which~~per ~~capped~~quarter ~~the~~and ~~three~~decreases ~~month~~by ~~Eurodollar~~any ~~rate~~actual atRestricted ~~1.0%. The~~Payments ~~Company~~and ~~did~~by ~~not~~certain ~~designate~~investments and any mandatory prepayments on the ~~interest~~Term ~~rate~~Loans, ~~cap~~to ~~agreement~~the asextent athe ~~cash~~lenders ~~flow~~decline ~~hedge~~to ~~for~~receive ~~accounting~~such ~~purposes~~prepayment. In ~~Therefore~~addition, on a quarterly basis the ~~change~~Restricted inPayments ~~market~~basket ~~value~~increases ofby the ~~agreement~~positive ~~was~~amount, ~~recorded~~if asany, aof ~~gain~~the orExcess ~~loss~~Cash inFlow ~~other~~(as ~~expense.~~defined ~~The~~in ~~Company~~the ~~recorded~~Amended anand ~~immaterial~~Restated ~~loss~~Credit ~~for~~Agreement). For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 there was no Excess Cash Flow. The balance of the Restricted Payments basket as of March 31, 2016 was $92.6 million and ~~losses~~the ofLeverage ~~less~~Ratio for the Company was 9.33:1.00.

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~~than~~Capital ~~$0.1~~Lease ~~million and $0.2 million for the three and nine months ended September 30, 2014, respectively. The interest rate cap agreement expired in August 2015.~~ Obligations

~~The~~In ~~following~~addition ~~table~~to ~~indicates~~the long-term debt discussed above, the ~~difference~~Company ~~between~~has ~~face~~entered ~~amount~~into capital leases on vehicles with original lease terms of four to five years. At March 31, 2016, the carrying ~~amount~~value and ~~fair~~accumulated depreciation of these assets were $1.9 million and $1.4 million, respectively. The total net present value of the Company’s ~~financial~~future ~~instruments~~minimum atlease ~~September 30,~~payments ~~2015~~is ~~and~~$0.4 ~~December~~million. At March 31, ~~2014~~2016, the principal portion of these capital lease obligations was payable as follows: $0.1 million for the remainder of 2016, $0.1 million in 2017, and less than $0.1 million in 2018 and 2019.

	Face			Carrying		Fair
(In thousands)	Amount			Amount		Value
September 30, 2015
Nonderivatives:
Financial assets:
Long-term investments for which it is not practicable to estimate fair value	N/A			$	1,522	N/A
Financial liabilities:
Term loans	$	524,291		$	520,986	$	522,980
Capital lease obligations	$	585		$	585	$	585
December 31, 2014
Nonderivatives:
Financial assets:
Long-term investments for which it is not practicable to estimate fair value	N/A			$	1,522	N/A
Financial liabilities:
Term loans	$	528,345		$	525,504	$	459,660
Capital lease obligations	$	904		$	904	$	904
Derivative related to debt:
Interest rate cap asset	$	350,000	*	0		0

Note 9. Restructuring Charges

~~The~~In ~~fair~~2014, ~~value of~~ the ~~Term~~Company ~~Loans~~initiated ~~under~~a ~~the~~plan ~~Amended~~to ~~and~~reduce ~~Restated~~operating ~~Credit~~expenses. ~~Agreement~~In ~~were~~conjunction, ~~derived~~the ~~based~~Company onestablished ~~bid~~restructuring ~~prices~~liabilities atfor ~~September 30~~employee separations, ~~2015~~operating ~~and~~lease ~~December 31~~terminations, ~~2014,~~and ~~respectively.~~other ~~The~~related ~~fair~~costs, ~~value~~which ofare ~~the~~recorded ~~derivative~~in ~~instrument~~accrued ~~was~~expenses ~~based~~and onother acurrent ~~quoted~~liabilities ~~market~~in ~~price~~the atunaudited ~~September 30,~~consolidated ~~2015~~balance ~~and December 31, 2014, respectively~~sheets. A ~~These~~summary ~~instruments are classified within Level 2~~ of the ~~fair~~restructuring ~~value~~liabilities ~~hierarchy~~is ~~described~~presented ~~in FASB ASC 820, Fair Value Measurements and Disclosures.~~below:



(In thousands)	Employee Separation			Contract Terminations			Other		Total
Cumulative charges incurred as of March 31, 2016	$	3,126		$	346		$	79	$	3,551

Balance as of December 31, 2015	$	360		$	251		$	—	$	611
Charges	63			19			—		82
Utilization	(307		)	(218		)	—		(525		)
Balance as of March 31, 2016	$	116		$	52		$	—	$	168

Employee separation costs for certain corporate employees consist of severance to be paid in accordance with the Company’s written severance plan and certain management contracts. Severance payments are expected to be paid through 2016. Contract termination costs include lease abandonment costs and other termination costs for contractual obligations. Lease abandonment costs represent future minimum lease obligations, net of estimated sublease income. Other costs include legal and advisory fees paid during 2015. The Company does not anticipate any additional significant costs to be incurred as part of this restructuring plan.

Note 10. Financial Instruments

The Company is exposed to market risks with respect to certain of the financial instruments that it holds. Cash, accounts receivable, accounts payable and accrued liabilities are reflected in the unaudited condensed consolidated financial statements at cost, which approximates fair value because of the short-term nature of these instruments. At March 31, 2016 and December 31, 2015, the Company had an investment in CoBank, ACB (“CoBank”) of $1.5 million. This investment is primarily related to a required investment under the Original Credit Agreement and declared and unpaid patronage distributions of restricted equity related to the portion of the term loans previously held by CoBank. This investment is carried under the cost method as it is not practicable to estimate fair value. This investment is subject to redemption in accordance with CoBank’s capital recovery plans. The fair values of other financial instruments are determined using observable market prices or using a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current market conditions.

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~~Note 10.~~The ~~Equity~~following table indicates the difference between face amount, carrying amount and ~~Earnings~~fair ~~Per~~value ~~Share~~of the Company’s financial instruments at March 31, 2016 and December 31, 2015.

The computations of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 were as follows:



	Face		Carrying		Fair
(In thousands)	Amount		Amount		Value
March 31, 2016
Nonderivatives:
Financial assets:
Long-term investments for which it is not practicable to estimate fair value	N/A		$	1,522	N/A
Financial liabilities:
Term loans	$	521,589	$	511,785	$	517,677
Capital lease obligations	$	361	$	361	$	361
December 31, 2015
Nonderivatives:
Financial assets:
Long-term investments for which it is not practicable to estimate fair value	N/A		$	1,522	N/A
Financial liabilities:
Term loans	$	522,940	$	512,518	$	517,710
Capital lease obligations	$	419	$	419	$	419

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2015			2014			2015			2014
Numerator:
Net income (loss) attributable to NTELOS Holdings Corp.	$	(8,963	)	$	804		$	7,443		$	2,574
Net income (loss) applicable to participating securities	—			—			292			—
Net income (loss) applicable to common shares	$	(8,963	)	$	804		$	7,151		$	2,574
Denominator:
Total shares outstanding	22,258			21,595			22,258			21,595
Less: unvested shares	(957		)	(459		)	(957		)	(459		)
Less: effect of calculating weighted average shares	(17		)	(17		)	(60		)	(36		)
Denominator for basic earnings per common share - weighted average shares outstanding	21,284			21,119			21,241			21,100
Plus: weighted average unvested shares	—			506			868			287
Plus: common stock equivalents of stock options	—			269			460			319
Denominator for diluted earnings per common share - weighted average shares outstanding	21,284			21,894			22,569			21,706

The fair value of the Term Loans under the Amended and Restated Credit Agreement were derived based on bid prices at March 31, 2016 and December 31, 2015, respectively. These instruments are classified within Level 2 of the fair value hierarchy described in FASB ASC 820, Fair Value Measurements and Disclosures.

In accordance with FASB ASC 260, Earnings Per Share, unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents, whether paid or unpaid, are considered a “participating security” for purposes of computing earnings or loss per common share pursuant to the two-class method. The Company's unvested restricted stock awards have rights to receive non-forfeitable dividends. For the three and nine months ended September 30, 2014, the Company has calculated basic earnings per share using weighted average shares outstanding and the two-class method and determined there was no significant difference in the per share amounts calculated under the two methods.

For the three months ended September 30, 2015 and 2014, the denominator for diluted earnings per common share excludes approximately 1.3 million and 2.0 million shares, respectively, and for the nine months ended September 30, 2015 and 2014 the denominator for diluted earnings per common share excludes approximately 1.6 million and 1.5 million shares, respectively, which were related to stock options that were antidilutive for the respective periods presented. In addition, the performance-based portion of the performance stock units ("PSUs") is excluded from diluted earnings per share until the performance criteria are satisfied.

Note 11. Stock Plans

The Company has employee equity incentive plans (referred to as the “Employee Equity Incentive Plans”) administered by the Compensation Committee of the Company’s board of directors (the “Committee”), which permits the grant of long-term incentives to employees, including stock options, stock appreciation rights, restricted stock awards, restricted stock units, incentive awards, other stock-based awards and dividend equivalents. The Company also has a non-employee director equity plan (the “Non-Employee Director Equity Plan”). The Non-Employee Director Equity Plan together with the Employee Equity Incentive Plans are referred to as the “Equity Incentive Plans.” Awards under these plans are issuable to employees or non-employee directors as applicable.

During the nine months ended September 30, 2015, the Company issued 261,503 stock options under the Employee Equity Incentive Plans. The options issued under the Employee Equity Incentive Plans vest one-fourth annually beginning one year after the grant date.

During the nine months ended September 30, 2015, the Company issued 415,401 shares of restricted stock under the Employee Equity Incentive Plans and 87,525 shares of restricted stock under the Non-Employee Director Equity Plan. The restricted shares granted under the Employee Equity Incentive Plans cliff vest on the third anniversary of the grant date. The restricted

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~~shares~~Note 11. ~~granted under the Non-Employee Director~~ Equity ~~Plan cliff vest on the first anniversary of the grant date. Dividend~~ and ~~voting~~Earnings ~~rights~~Per ~~applicable to restricted stock are equivalent to the Company’s common stock.~~Share

~~During~~The ~~the~~computations ~~nine~~of ~~months~~basic ~~ended~~and ~~September~~diluted ~~30,~~earnings ~~2015,~~per ~~the~~share ~~Company~~for ~~granted 28,031 PSUs under~~ the ~~Employee~~three ~~Equity~~months ~~Incentive~~ended ~~Plans~~March ~~to certain key employees. These PSUs vest on December~~ 31, 2016 and ~~are~~2015 ~~subject~~were to certain performance and market conditions. Each PSU represents the contingent right to receive one share (or more based on maximum achievement) of the Company’s common stock if vesting is satisfied. The PSUs have no voting rights. Dividends, if any, that would have been paid on the underlying shares will be paid as ~~dividend equivalent units on PSUs that vest, on or after the vesting date. At September 30, 2015, the Company had accrued approximately $0.2 million in dividend equivalent units.~~ follows:

The summary of the activity and status of the Company’s stock option awards for the nine months ended September 30, 2015 is as follows:



	Three Months Ended March 31, 2016
(In thousands)	Continuing Operations			Discontinued Operations			Total
Numerator:
Net loss	$	(911	)	$	(390	)	$	(1,301	)
Net loss applicable to participating securities	—			—			—
Net loss applicable to common shares	$	(911	)	$	(390	)	$	(1,301	)
Denominator:
Total shares outstanding	22,262			22,262			22,262
Less: unvested shares	(946		)	(946		)	(946		)
Less: effect of calculating weighted average shares	(5		)	(5		)	(5		)
Denominator for basic earnings per common share – weighted average shares outstanding	21,311			21,311			21,311
Plus: weighted average unvested shares	—			—			—
Plus: common stock equivalents of stock options	—			—			—
Plus: performance stock units	—			—			—
Denominator for diluted earnings per common share – weighted average shares outstanding	21,311			21,311			21,311
Basic earnings (loss) per common share	$	(0.04	)	$	(0.02	)	$	(0.06	)
Diluted earnings (loss) per common share	$	(0.04	)	$	(0.02	)	$	(0.06	)

(In thousands, except per share amounts)	Options			WeightedAverageExercisePrice perShare				WeightedAverageRemainingContractualTerm		AggregateIntrinsicValue
	Three Months Ended March 31, 2015
Stock options outstanding at January 1, 2015	1,583			$	19.09
(In thousands)	Continuing Operations				Discontinued Operations				Total
Granted during the period	261			6.00
Numerator:
Exercised during the period	(1	)		0.58
Net income	$	6,547			$	8,249			$	14,796
Forfeited during the period	(283	)		21.05
Net income applicable to participating securities	459				—				459
Stock options outstanding at September 30, 2015	1,560			$	16.55			5.7 years		$	—
Net income applicable to common shares	$	6,088			$	8,249			$	14,337
Exercisable at September 30, 2015	943			$	20.22			5.7 years		$	—
Denominator:
Total expected to vest after September 30, 2015	556			$	12.20
Total shares outstanding	22,196				22,196				22,196
Less: unvested shares	(965		)		(965		)		(965		)
Less: effect of calculating weighted average shares	(38		)		(38		)		(38		)
Denominator for basic earnings per common share – weighted average shares outstanding	21,193				21,193				21,193
Plus: weighted average unvested shares	781				781				781
Plus: common stock equivalents of stock options	187				187				187
Plus: performance stock units	—				—				—
Denominator for diluted earnings per common share – weighted average shares outstanding	22,161				22,161				22,161
Basic earnings (loss) per common share	$	0.29			$	0.39			$	0.68
Diluted earnings (loss) per common share	$	0.28			$	0.37			$	0.65

The fair value of each common stock option award granted during the nine months ended September 30, 2015 was estimated on the respective grant date using a generally accepted valuation model with assumptions related to risk-free interest rate, expected volatility, expected dividend yield and expected terms. The weighted average grant date fair value per share of stock options granted during the nine months ended September 30, 2015 and 2014 was $1.72 and $1.02, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was less than $0.1 million. The total fair value of options that vested during the nine months ended September 30, 2015 and 2014 was $0.6 million and $1.5 million, respectively. As of September 30, 2015, there was $0.6 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 2.7 years.

The summary of the activity and status of the Company’s restricted stock awards for the nine months ended September 30, 2015 is as follows:

(In thousands, except per share amounts)	Shares		Weighted Average GrantDate Fair Value perShare
Restricted stock awards outstanding at January 1, 2015	245		$	14.93
Granted during the period	503		5.37
Vested during the period	(82	)	18.80
Forfeited during the period	(13	)	12.34
Restricted stock awards outstanding at September 30, 2015	653		$	7.13

At September 30, 2015, there was $2.5 million of total unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 2.0 years. The fair value of the restricted stock award is equal to the market value of common stock on the date of grant.

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~~The~~In ~~summary~~accordance ofwith ~~the~~FASB ~~activity~~ASC ~~and~~260, ~~status~~Earnings ofPer ~~the~~Share, ~~Company’s~~unvested ~~performance~~share-based ~~stock~~payment ~~unit~~ awards that contain rights to receive non-forfeitable dividends or dividend equivalents, whether paid or unpaid, are considered a “participating security” for purposes of computing earnings or loss per common share pursuant to the ~~nine~~two-class ~~months~~method. The ~~ended~~Company's ~~September~~unvested ~~30,~~restricted ~~2015~~stock isawards ashave ~~follows:~~rights to receive non-forfeitable dividends.

(In thousands, except per share amounts)	Units		Weighted Average GrantDate Fair Value perPSU
Performance stock units outstanding at January 1, 2015	99		$	11.24
Granted during the period	28		7.33
Vested during the period	(1	)	12.47
Forfeited during the period	(10	)	11.22
Performance stock units outstanding at September 30, 2015	116		$	10.29

For the three months ended March 31, 2016 and 2015, the denominator for diluted earnings per common share excludes approximately 1.3 million and 1.6 million shares, respectively, which were related to stock options that were antidilutive for the respective periods presented. In addition, the performance-based portion of the performance stock units ("PSUs") is excluded from diluted earnings per share until the performance criteria are satisfied.

~~At September~~Note ~~30, 2015, there was $0~~12.4 ~~million~~Stock of total unrecognized compensation cost related to unvested PSUs, which is expected to be recognized over a weighted average period of 1.5 years. The fair value of the PSU is estimated at the grant date using a Monte Carlo simulation model.Plans

InThe ~~addition~~Company has employee equity incentive plans (referred to as the “Employee Equity Incentive Plans”) ~~discussed~~administered ~~above,~~by the ~~Company~~Compensation ~~has~~Committee anof ~~employee~~the ~~stock~~Company’s ~~purchase~~board ~~plan,~~of ~~which~~directors ~~commenced~~(the in“Committee”), ~~July~~which ~~2006~~permits ~~with~~the ~~100,000~~grant ~~shares~~of ~~available.~~long-term ~~Shares~~incentives ~~are~~to ~~priced~~employees, atincluding ~~85%~~stock ofoptions, ~~the~~stock ~~closing~~appreciation ~~price~~rights, onrestricted ~~the~~stock ~~last~~awards, ~~trading~~restricted ~~day~~stock ofunits, ~~the~~incentive ~~month~~awards, ~~before~~other ~~settlement~~stock-based awards and ~~settlement~~dividend isequivalents. ~~done~~The ~~semi-annually.~~Company ~~During~~also ~~the~~has ~~nine~~a ~~months~~non-employee ~~ended~~director ~~September~~equity ~~30,~~plan ~~2015~~(the ~~and~~“Non-Employee ~~2014,~~Director ~~6,635~~Equity ~~shares~~Plan”). ~~and~~The ~~4,669~~Non-Employee ~~shares,~~Director ~~respectively,~~Equity ~~were~~Plan ~~issued~~together ~~under~~with the ~~employee~~Employee ~~stock~~Equity ~~purchase~~Incentive ~~plan.~~Plans ~~Compensation~~are ~~expense~~referred ~~associated~~to ~~with~~as the ~~employee~~“Equity ~~stock~~Incentive ~~purchase~~Plans.” ~~plan~~Awards ~~for~~under ~~the~~these ~~nine~~plans ~~months~~are ~~ended~~issuable ~~September~~to ~~30,~~employees ~~2015~~or ~~and~~non-employee ~~2014~~directors ~~was~~as ~~immaterial~~applicable.

~~Note 12~~During the three months ended March 31, 2016, the Committee approved phantom stock award grants under the Equity Incentive Plans, which vest ratably over a three-year period for employees or a one-year period for non-employee directors through the closing of the Merger, or, in the event of a termination of the proposed Merger, in three years or one year from the grant date, subject to certain accelerated vesting provisions, payable, at the Company's option, in either shares of the Company's common stock or cash equal to the then market value of such shares. ~~Income~~During ~~Taxes~~the three months ended March 31, 2016, the Company issued 294,601 phantom stock award grants. At March 31, 2016, there was $2.5 million of total unrecognized compensation cost related to these award grants which is expected to be recognized over a weighted average period of 2.6 years, however, the compensation expense could fluctuate with the change in market value of common stock. These qualify as liability awards under FASB ASC 718, Stock Compensation, and the fair value of the phantom stock award grants is equal to the market value of common stock at March 31, 2016.

~~Income~~The ~~tax~~summary ~~expense~~of ~~(benefit) for~~ the ~~three~~activity and ~~nine~~status ~~months~~of ~~ended September 30, 2015 was $(3.5) million and $7.6 million, respectively, representing~~ the ~~statutory~~Company’s ~~tax~~stock ~~rate~~option ~~applied~~awards tofor ~~pre-tax income and~~ the ~~effects~~three ofmonths ~~certain~~ended ~~non-deductible~~March ~~acquisition related expenses~~31, ~~compensation,~~2016 ~~non-controlling~~is interest, and state minimum taxes. The Company expects its recurring non-deductible expenses to relate primarily to certain non-cash equity-based compensation and other non-deductible compensation. The Company has provided for income taxes using a year to date calculation as ~~it is unable to reliably estimate the annual effective income tax rate.~~follows:

Note 13. Strategic Network Alliance



(In thousands, except per share amounts)	Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at January 1, 2016	1,547		$	16.50
Granted during the period	—		—
Exercised during the period	—		—
Forfeited during the period	(25	)	17.79
Stock options outstanding at March 31, 2016	1,522		$	16.48	6.3 years	$	—
Exercisable at March 31, 2016	1,153		$	18.77	5.7 years	$	—
Total expected to vest after March 31, 2016	332		$	10.35

~~The~~No ~~Company~~options ~~provides~~were ~~PCS~~granted ~~services~~or ~~and~~exercised ~~has~~during ~~contracted~~the tothree ~~provide~~months ~~LTE~~ended ~~Services~~March ~~on a wholesale basis to other wireless communication providers~~31, ~~most~~2016. The ~~notably~~fair ~~through~~value ~~the~~of ~~Strategic~~each ~~Network~~common ~~Alliance~~stock ~~("SNA")~~option ~~with~~award ~~Sprint~~granted inis ~~which~~estimated ~~the~~on ~~Company is~~ the ~~exclusive~~respective ~~PCS/LTE~~grant ~~service~~date ~~provider~~using ina ~~the~~generally ~~Company’s~~accepted ~~western~~valuation ~~Virginia~~model ~~and~~with ~~West~~assumptions ~~Virginia~~related ~~service~~to ~~area~~risk-free ~~(“SNA~~interest ~~service~~rate, ~~area”)~~expected ~~for~~volatility, ~~all~~expected ~~Sprint~~dividend ~~Code~~yield ~~Division Multiple Access (“CDMA”)~~ and ~~LTE~~expected ~~wireless customers~~terms. InThe ~~May~~total ~~2014~~intrinsic ~~the~~value ~~parties entered into an amended agreement to extend the SNA. Pursuant to the terms~~ of ~~the~~options ~~SNA,~~exercised ~~the~~during ~~Company is required to upgrade its network in~~ the ~~SNA~~three ~~service~~months ~~area~~ended toMarch ~~provide LTE Services. As part of the amendment~~31, ~~the~~2015 ~~Company~~was ~~leases~~less ~~spectrum,~~than ~~on a non-cash basis, from Sprint in order to enhance the PCS/LTE services. The non-cash consideration attributable to the leased spectrum is approximately~~ $40.91 million ~~per year~~. The ~~lease~~total ~~expense~~fair isvalue ~~recognized~~of ~~over~~options ~~the~~that ~~term~~vested ofduring the ~~lease~~three ~~and~~months ~~recorded~~ended ~~within~~March ~~cost of sales and services~~31, ~~with~~2016 ~~the offsetting consideration recorded within wholesale~~ and ~~other~~2015 ~~revenue~~was $0. ~~Additionally,~~4 ~~the~~million ~~amended SNA provides the Company access to Sprint’s nationwide 3G~~ and ~~4G LTE network at rates that are reciprocal to rates paid by Sprint under the amended SNA~~$0. ~~The~~5 ~~amended~~million, ~~SNA provides that a portion of the amount paid by Sprint thereunder is fixed~~respectively. ~~The~~As ~~fixed fee element~~ of ~~the amended SNA is subject to contractual reductions on August~~March 131, ~~2015 and annually thereafter starting on January 1~~2016, ~~2016~~there ~~that~~was ~~will result in a decrease of payments for the fixed fee element~~$0.4 ~~The~~million ~~Company accounts for this fixed fee portion~~ of ~~the~~total ~~revenue~~unrecognized ~~earned~~compensation ~~from~~cost ~~the~~related ~~SNA~~to ~~revenue~~unvested onstock ~~a straight-line basis over the term of the agreement. In addition~~options, ~~these~~which ~~reductions~~is ~~are~~expected ~~subject~~ to ~~further upward or downward resets in the fixed fee element. These resets, if any, will~~ be recognized inover ~~the~~a ~~period~~weighted inaverage ~~which~~period itof ~~occurs~~2.6 years.

The Company generated 34.9% and 30.4% of its revenue from the SNA for the three months ended September 30, 2015 and 2014, respectively. The Company generated 32.2% and 31.3% of its revenue from the SNA for the nine months ended September 30, 2015 and 2014, respectively.

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~~Note 14.~~The ~~Tower~~summary ~~Sale~~of the activity and ~~Leaseback~~status of the Company’s restricted stock awards for the three months ended March 31, 2016 is as follows:

During the nine months ended September 30, 2015, the Company completed its sale leaseback transaction for 96 of 103 towers committed to be sold. The Company intends to sell and leaseback the remaining towers during 2015. For the towers sold during the nine months ended September 30, 2015, the Company received net proceeds of $40.4 million. The Company applied the guidance under FASB ASC 840, Leases, to the sale and leaseback and recorded a gain on the sale of assets of $16.7 million for the nine months ended September 30, 2015, which is included in the unaudited condensed consolidated statements of income as "Gain on sale of assets." The leasebacks are generally for a term of 10 years with options to renew and are accounted for as operating leases. The deferred gain is amortized on a straight-line basis over the remaining life of the lease of approximately 10 years at September 30, 2015 and will be included as a reduction in the "Cost of services" in the unaudited condensed consolidated statements of income. At September 30, 2015, the Company recorded on the unaudited condensed consolidated balance sheets $1.8 million of deferred gain under "Accrued expenses and other current liabilities" and $15.4 million in "Other Long-Term Liabilities."



(In thousands, except per share amounts)	Shares		Weighted Average Grant Date Fair Value per Share
Restricted stock awards outstanding at January 1, 2016	591		$	7.30
Granted during the period	—		—
Vested during the period	(164	)	7.97
Forfeited during the period	(2	)	8.26
Restricted stock awards outstanding at March 31, 2016	425		$	7.03

At March 31, 2016, there was $1.6 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. The fair value of the restricted stock award is equal to the market value of common stock on the date of grant.

The summary of the activity and status of the Company’s performance stock unit awards for the three months ended March 31, 2016 is as follows:



(In thousands, except per share amounts)	Units		Weighted Average Grant Date Fair Value per PSU
Performance stock units outstanding at January 1, 2016	70		$	8.62
Granted during the period	—		—
Vested during the period	—		—
Forfeited during the period	(8	)	8.62
Performance stock units outstanding at March 31, 2016	62		$	8.62

At March 31, 2016, there was $0.2 million of total unrecognized compensation cost related to unvested PSUs, which is expected to be recognized over a weighted average period of 1.3 years. The fair value of the PSU is estimated at the grant date using a Monte Carlo simulation model.

In addition to the Equity Incentive Plans discussed above, the Company has an employee stock purchase plan, which commenced in July 2006 with 100,000 shares available. Shares are priced at 85% of the closing price on the last trading day of the month before settlement and settlement is done semi-annually. During the three months ended March 31, 2015, 3,785 shares were issued under the employee stock purchase plan. Compensation expense associated with the employee stock purchase plan for the three months ended March 31, 2015 was immaterial.

Note 13. Income Taxes

Income tax expense (benefit) for the three months ended March 31, 2016 was $(0.2) million, representing the statutory tax rate applied to pre-tax income and the effects of certain non-deductible acquisition related expenses, compensation, and non-controlling interest. The Company expects its recurring non-deductible expenses to relate primarily to certain non-cash equity-based compensation and other non-deductible compensation. The Company has provided for income taxes using a year to date calculation as it is unable to reliably estimate the annual effective income tax rate.

Note 14. Strategic Network Alliance

The Company provides PCS services and has contracted to provide LTE Services on a wholesale basis to other wireless communication providers, most notably through the Strategic Network Alliance ("SNA") with Sprint in which the Company is the exclusive PCS/LTE service provider in the Company’s western Virginia and West Virginia service area (“SNA service area”) for all Sprint Code Division Multiple Access (“CDMA”) and LTE wireless customers. In May 2014, the parties entered into an amended agreement to extend the SNA. Pursuant to the terms of the SNA, the Company is required to upgrade its network in the SNA service area to provide LTE Services. As part of the amendment, the Company leases spectrum, on a non-cash basis, from Sprint in order to enhance the PCS/LTE services. The non-cash consideration attributable to the leased spectrum is approximately $4.9 million per year. The lease expense is recognized over the term of the lease and recorded

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within cost of sales and services, with the offsetting consideration recorded within wholesale and other revenue. Additionally, the amended SNA provides the Company access to Sprint’s nationwide 3G and 4G LTE network at rates that are reciprocal to rates paid by Sprint under the amended SNA. The amended SNA provides that a portion of the amount paid by Sprint thereunder is fixed. The fixed fee element of the amended SNA is subject to contractual reductions on August 1, 2015 and annually thereafter starting on January 1, 2016 that will result in a decrease of payments for the fixed fee element. The Company accounts for this fixed fee portion of the revenue earned from the SNA revenue on a straight-line basis over the term of the agreement. In addition, these reductions are subject to further upward or downward resets in the fixed fee element. These resets, if any, will be recognized in the period in which it occurs.

The Company generated 37.4% and 36.5% of its revenue from the SNA for the three months ended March 31, 2016 and 2015, respectively.

Note 15. Commitments and Contingencies

On occasion, the Company makes claims or receives disputes related to its billings to other carriers, including billings under the SNA agreement, for access to the Company’s network. These disputes may involve amounts which, if resolved unfavorably to the Company, could have a material effect on the Company’s financial statements. The Company does not recognize revenue related to such matters until the period that it is reasonably assured of the collection of these claims. In the event that a claim is made related to revenues previously recognized, the Company assesses the validity of the claim and adjusts the amount of revenue recognized to the extent that the claim adjustment is considered probable and reasonably estimable.

In accordance with the tower sale and leaseback transaction discussed in Note 14, the Company entered into operating leases, generally for a term of 10 years, with future minimum lease payments totaling approximately $20.2 million.

The Company is involved in disputes, claims, either asserted or unasserted, and legal and tax proceedings and filings arising from normal business activities. While the outcome of such matters is currently not determinable, management believes that adequate provision for any probable and reasonably estimable losses has been made in the Company’s unaudited condensed consolidated financial statements.

In addition, on August 24, 2015, Mr. Marvin Westen and Mr. Paul Sekerak, each filed a purported class action complaint relating to the Merger in the Court of Chancery of the State of Delaware. ~~The~~These ~~Company~~complaints ~~cannot~~were ~~presently determine the ultimate resolution of this matter nor can it reasonably estimate the range of possible losses~~dismissed.

Note 16. Subsequent Event

Pursuant to the Merger Agreement, dated as of August 10, 2015, with Shentel, Merger Sub and the Company, Merger Sub merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Shentel. The Merger became effective on May 6, 2016. See Note 1 for additional information related to the Merger.

In connection with the consummation of the Merger, on May 6, 2016, the Company terminated the Amended and Restated Credit Agreement and repaid all of the outstanding obligations in respect of principal, interest and fees under the Amended and Restated Credit Agreement. See Note 8 for additional information related to the Amended and Restated Credit Agreement.

Upon completion of the Merger, the Company notified the Nasdaq Global Select Market (“NASDAQ”) that each issued and outstanding share of Company Common Stock (excluding (i) any shares of Company Common Stock owned by the Company, Parent or any of their respective subsidiaries and (ii) any shares of Company Common Stock owned by any Company stockholders who were entitled to exercise, and properly exercised, appraisal rights with respect to such shares of Company Common Stock pursuant to the General Corporation Law of the State of Delaware) automatically converted into the right to receive $9.25 in cash and requested that trading in Company Common Stock be suspended following the close of trading on May 6, 2016. Also on May 6, 2016, the Company requested that NASDAQ file with the SEC a notification on Form 25 to effect the delisting of Company Common Stock on NASDAQ and the deregistration of Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends to file with the SEC a certification on Form 15 under the Exchange Act requesting the suspension of the Company’s reporting obligations under Sections 13 and 15(d) of the Exchange Act.

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

Cautionary Note Regarding Forward-Looking Statements

This document may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “project,” “will,” “may” “should,” and similar expressions identify forward-looking statements, which generally are not historical in nature.

Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. The forward-looking statements are or may be based on a series of projections and estimates and involve risks and uncertainties. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A, Risk Factors" and elsewhere in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015 and those described from time to time in our future reports filed with the Securities and Exchange Commission ("SEC").

Additionally, there are risks and uncertainties associated with the proposed acquisition by Shentel such as: (1) the Company may be unable to obtain stockholder approval as required for the proposed merger with Shenandoah Telecommunications Company ("Shentel"); (2) conditions to the closing of the merger, including, without limitation, the consummation of certain transactions between Shentel and Sprint, may not be satisfied and required regulatory approvals may not be obtained; (3) the merger may involve unexpected costs, liabilities or delays; (4) the risks related to disruption of management’s attention from the Company’s ongoing business operations due to the transaction, (5) the effect of the announcement of the merger on the ability of the Company to retain and hire key personnel and maintain relationships with its customers, suppliers and others 21

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Additionally, there are risks and uncertainties associated with the proposed acquisition by Shentel such as: (1) conditions to the closing of the Merger, including, without limitation, the consummation of certain transactions between Shentel and Sprint, may not be satisfied and required regulatory approvals may not be obtained; (2) the Merger may involve unexpected costs, liabilities or delays; (3) the risks related to disruption of management’s attention from the Company’s ongoing business operations due to the Merger, (4) the effect of pendency of the Merger on the ability of the Company to retain and hire key personnel and maintain relationships with its customers, suppliers and others with whom it does business, or on its operating results and business generally, (65) the outcome of any legal proceedings related to the ~~merger~~Merger; (76) the Company may be adversely affected by other economic, business, and/or competitive factors; (87) the occurrence of any event, change or other circumstances that could give rise to the termination of the ~~merger~~Merger ~~agreement~~Agreement; (98) changes in the legal or regulatory environment; and (109) other risks to consummation of the ~~merger~~Merger, including the risk that the ~~merger~~Merger will not be consummated within the expected time period or at all. If the ~~merger~~Merger is consummated, the Company stockholders will cease to have any equity interest in the Company and will have no right to participate in its earnings and future growth.

OVERVIEW

Our summary operating results presented below are before the impact of income taxes and amounts attributable to noncontrolling interests.

General

We are a ~~leading~~ regional provider of digital wireless communications services to consumers and businesses primarily in Virginia, ~~and~~ West Virginia, asand ~~well~~certain asportions ~~parts~~ of ~~Maryland,~~surrounding ~~North Carolina, Pennsylvania, Ohio and Kentucky~~states. We offer wireless voice and digital data PCS products and services to retail and business customers under the “NTELOS Wireless” and “FRAWG Wireless” brand names. We conduct our business through NTELOS-branded retail operations, which sell our products and services via direct and indirect distribution channels, and provide network access to other telecommunications carriers, most notably through an arrangement with Sprint Spectrum L.P. (“Sprint Spectrum”), and Sprint Spectrum on behalf of and as an agent for SprintCom, Inc. (“SprintCom”) (Sprint Spectrum and SprintCom collectively, “Sprint”), which arrangement is referred to herein as the “Strategic Network Alliance” or the “SNA”.

Sale of Virginia East Spectrum and Wind Down of Eastern Markets

On December 2, 2014, we announced that we would focus our business operations exclusively in our Western Markets, as defined by our territories primarily in western Virginia and West Virginia, where we have experienced strong operating performance, have a favorable competitive position for our branded retail offering and where we benefit operationally and financially from our SNA with Sprint. In connection with this refocus, we entered into an agreement, on December 1, 2014, to sell our 1900 MHz PCS wireless spectrum licenses in our eastern Virginia and Outer Banks of North Carolina markets (“Eastern Markets”) to T-Mobile for $56.0 million. The transaction closed on April 15, 2015.

Pursuant to the terms of the spectrum sale, we entered into a lease agreement with T-Mobile which allows us to continue using the Eastern Market licenses for varying terms ranging from the closing date through November 15, 2015 in order to facilitate the wind down of our operations.

Due to the sale of our spectrum and the wind down of our Eastern Markets operations, we have experienced declines in our revenue and cost of equipment sold. These declines are directly related to the accelerated decrease of our subscriber base and elimination of new subscriber additions. In addition, customer operations expenses are down as we aggressively focus on cost containment associated with the wind down of the Eastern Markets operations. Accordingly, current year results are not comparable to prior periods.

Agreement and Plan of Merger with Shenandoah Telecommunications Company ("Shentel")

On August 10, 2015, we announced that we entered into a definitive agreement to be acquired by Shentel in an all-cash transaction valued at approximately $640 million, including net debt. Our stockholders will receive approximately $208 million in cash, or $9.25 per share and Shentel will assume our debt at closing.

Concurrent with the signing of the merger agreement, Shentel entered into a series of agreements with Sprint, including the expansion of Shentel’s “affiliate” relationship with Sprint. This will result in the “nTelos” brand eventually being discontinued after closing and NTELOS’s approximately ~~300~~293,~~200~~800 wireless retail customers eventually becoming Sprint-branded customers. Additionally, NTELOS’s retail stores will convert into Sprint-branded stores ~~that will be managed by Shentel~~. ~~Our SNA with Sprint will be terminated.~~

The ~~acquisition~~Company byhas ~~Shentel~~received isall ~~expected~~necessary ~~to close in early 2016~~approvals, ~~subject to customary conditions,~~ including ~~necessary~~approval ~~approvals~~ from ~~federal and state regulators and NTELOS stockholders as well as~~ the ~~completion of Shentel’s re-affiliation transaction with Sprint~~FCC. The ~~Quadrangle~~Merger ~~Capital~~closed ~~Partners,~~on ~~which~~May ~~owns over 18% of NTELOS’s outstanding common stock~~6, ~~has entered into an agreement to vote its shares in favor of the merger~~2016.

21For additional information, see Notes 1 and 16 of the Notes to the Unaudited Condensed Consolidated Financial Statements.

~~Table~~Sale of ~~Contents~~ Virginia East Spectrum and Wind Down of Eastern Markets

~~Our~~On ~~Business~~December 1, 2014, the Company entered into an agreement to sell its wireless spectrum licenses in its eastern Virginia and Outer Banks of North Carolina markets (“Eastern Markets”) for approximately $56.0 million. The transaction closed on April 15, 2015. The Company entered into lease agreements to continue using the Eastern Markets spectrum licenses for varying terms ranging from the closing date through November 15, 2015. Effective November 15, 2015, we ceased commercial operations. As a result of no longer providing service in the Eastern Markets, certain assets, liabilities and results of operations associated with this market are now being reported as discontinued operations.

WeFor ~~operate~~additional ~~a 100% CDMA digital PCS network and are actively deploying fourth generation mobile communications standards / Long Term Evolution wireless technology (“4G LTE”) across our footprint in Virginia~~information, ~~West~~see ~~Virginia,~~Note ~~and portions of Pennsylvania, Kentucky, Maryland, Ohio and North Carolina with covered POPs of approximately 6.0 million,~~ 3.1 ~~million in our Western Markets. We believe our strategic focus in our Western Markets, commitment to personalized local service, contiguous service area and leveraged use~~ of ~~our~~the ~~network~~Notes ~~via our wholesale contracts provide us with a differentiated competitive position relative~~ to ~~our~~the ~~primary~~Unaudited ~~wireless~~Condensed ~~competitors,~~Consolidated ~~most~~Financial ~~of whom are national providers~~Statements. Our strategic marketing differentiator is based upon an approach of offering each customer The Best Value in Wireless, which we define as a robust nationwide coverage area, simple, flexible wireless rate plans, and popular wireless devices.

At September 30, 2015, our wireless retail business, including both our Western and Eastern Markets, had approximately 343,700 subscribers, representing a penetration of approximately 5.8% of our total covered population. Of the 343,700 total retail subscribers, total postpay subscribers were 255,500 at September 30, 2015 compared to 310,200 at September 30, 2014 and total prepay subscribers were 88,200 at September 30, 2015 compared to 147,000 at September 30, 2014.

At September 30, 2015, our wireless retail business in our Western Markets had approximately 300,200 subscribers, representing a penetration of approximately 9.7% of our total covered population. Our postpay subscriber base of 231,300 has increased by 7.3% from September 30, 2014 to September 30, 2015 and our prepay subscriber base of 68,900 has increased by 11.9% during the same time period. The retail market for wireless broadband mobile services continues to be highly competitive. Our competitors are generally nationwide in scope and have significantly greater resources than us and can be extremely aggressive in product and service pricing as well as promotional initiatives to existing and potential customers.

On August 15, 2014 we launched our Equipment Installment Plan (“EIP”) which offers customers the option to pay for their devices over 24 months and features service plan discounts and no service contracts. This offering allows the customer to purchase a device with zero down, provides discounts on service plans and provides the ability to upgrade more frequently, with a new agreement, than traditional plans. We have seen significant adoption rates by new and existing customers under the EIP program.

We are continuing to make network improvements, particularly within our existing service coverage areas, which includes upgrading our network to 4G LTE. At September 30, 2015, we had approximately 2.0 million LTE Covered POPs, or 65%, of our total 3.1 million covered POPs in our Western Markets.

Strategic Network Alliance

We are the exclusive PCS service provider and have contracted to exclusively provide LTE Services in our western Virginia and West Virginia service area (“SNA service area”), which is wholly within our Western Markets, for all Sprint Code Division Multiple Access (“CDMA”) and LTE wireless customers. In May 2014 we entered into an amended agreement to extend the SNA. Pursuant to the terms of the SNA, we are required to upgrade our network in the SNA service area to provide LTE Services. As part of the amendment we lease spectrum, on a non-cash basis, from Sprint in order to enhance the PCS/LTE services. The non-cash consideration attributable to the leased spectrum is approximately $4.9 million per year. The lease expense is recognized over the term of the lease and recorded within cost of services, with the offsetting consideration recorded within wholesale and other revenue. Additionally, the amended SNA provides us access to Sprint’s nationwide 3G and 4G LTE network at rates that are reciprocal to rates paid by Sprint under the amended SNA. The amended SNA provides that a portion of the amount paid by Sprint thereunder is fixed. The fixed fee element of the amended SNA is subject to contractual reductions on August 1, 2015 and annually thereafter starting on January 1, 2016 that will result in a decrease in the fixed fee element. We account for this fixed fee portion of SNA revenue on a straight line basis over the term of the agreement. In addition, these reductions are subject to further upward or downward resets in the fixed fee element. These resets, if any, will be recognized in the period in which it occurs.

For the three months ended September 30, 2015 and 2014, we realized wholesale revenues of $34.6 million and $37.3 million, respectively, of which $34.1 million and $36.3 million, respectively, related to the SNA.

Towers Sale

InAs ~~January~~part ~~2015,~~of ~~we entered into~~ a definitive agreement announced in January 2015 to sell up to 103 towers, ~~for~~we ~~approximately~~closed ~~$43.0 million. The agreement provides for long term lease agreements~~ on ~~the~~96 ~~sold~~ towers ~~that~~for ~~are~~approximately ~~located in our Western Markets~~$41.0 ~~During~~million ~~the~~in ~~nine months ended September 30,~~ 2015,. We we closed on ~~the~~one ~~sale~~tower ofin 96early ~~towers~~2016 with ~~net~~an ~~proceeds~~additional totower usexpected ofto ~~approximately~~close ~~$40.4~~this ~~million~~year. WeThe ~~intend~~agreement toprovides ~~sell~~that ~~and~~we ~~leaseback~~enter ~~the~~into ~~remaining~~long-term ~~towers~~lease ~~during~~agreements ~~2015. For~~on ~~additional information, see Note 14 of~~ the ~~Notes~~towers toin ~~the~~our ~~Unaudited~~operating ~~Condensed Consolidated Financial Statements~~footprint.

Our Business

We operate a 100% CDMA digital PCS network and are actively deploying fourth generation mobile communications standards / Long Term Evolution wireless technology (“4G LTE”) across our footprint in Virginia, West Virginia, and certain

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portions of surrounding states with covered POPs of approximately 3.1 million. We believe our strategic focus in the markets we serve, our commitment to personalized local service, contiguous service area and leveraged use of our network via our wholesale contracts provide us with a differentiated competitive position relative to our primary wireless competitors, most of whom are national providers.

At March 31, 2016, our wireless retail business had approximately 293,800 subscribers, representing a penetration of approximately 9.4% of our total covered population. Our postpay subscriber base of 227,800 has increased by 5.7% from March 31, 2015 to March 31, 2016 and our prepay subscriber base of 66,000 has increased by 7.0% during the same time period. The retail market for wireless broadband mobile services continues to be highly competitive. Our competitors are generally nationwide in scope and have significantly greater resources than us and can be extremely aggressive in product and service pricing as well as promotional initiatives to existing and potential customers.

Equipment Installment Plan (“EIP”) allow subscribers to pay for their devices over 24 months and features service plan discounts and no service contracts. This offering allows the customer to purchase a device with zero down, provides discounts on service plans and provides the ability to upgrade more frequently, with a new agreement, than traditional plans. We have seen significant adoption rates by new and existing customers under the EIP program.

We continue the deployment of our 4G LTE network. At March 31, 2016, we had approximately 2.3 million LTE Covered POPs, or 74%, of our total 3.1 million covered POPs in our Western Markets.

Strategic Network Alliance

We provide PCS services and have contracted to provide LTE Services on a wholesale basis to other wireless communication providers, most notably through the Strategic Network Alliance ("SNA") with Sprint in which the Company is the exclusive PCS/LTE service provider in the Company’s western Virginia and West Virginia service area (“SNA service area”) for all Sprint Code Division Multiple Access (“CDMA”) and LTE wireless customers. In May 2014 the parties entered into an amended agreement to extend the SNA. Pursuant to the terms of the SNA, the Company is required to upgrade its network in the SNA service area to provide LTE Services. As part of the amendment, the Company leases spectrum, on a non-cash basis, from Sprint in order to enhance the PCS/LTE services. The non-cash consideration attributable to the leased spectrum is approximately $4.9 million per year. The lease expense is recognized over the term of the lease and recorded within cost of services, with the offsetting consideration recorded within wholesale and other revenue. Additionally, the amended SNA provides the Company access to Sprint’s nationwide 3G and 4G LTE network at rates that are reciprocal to rates paid by Sprint under the amended SNA. The amended SNA provides that a portion of the amount paid by Sprint thereunder is fixed. The billable fixed fee element of the agreement was reduced pursuant to the amended SNA on August 1, 2015 and again on January 1, 2016. Additional annual reductions will occur on January 1 of each year. The Company accounts for this fixed fee portion of the revenue earned from the SNA revenue on a straight-line basis over the term of the agreement. In addition, these reductions are subject to further upward or downward resets in the fixed fee element.

For the three months ended March 31, 2016 and 2015, we realized wholesale revenues of $32.2 million and $35.2 million, respectively, of which $31.9 million and $34.8 million, respectively, related to the SNA.

RESULTS OF OPERATIONS – OVERVIEW

Three-Month Results

Operating revenues decreased $2210.1 million, or 1810.56%, to $9785.52 million for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to $~~119~~95.63 million for the three ~~months~~month period ended ~~September 30~~March 31, ~~2014 driven by a $22~~2015.3 ~~million decrease in the Eastern Markets due to the wind down of those operations.~~ Operating income decreased $1513.25 million, or ~~147~~68.12%, to ~~a loss of~~ $(46.9)3 million for the three ~~months~~month period ended ~~September~~March 3031, ~~2015~~2016 compared to $1019.38 million for the three ~~months~~month period ended ~~September~~March 3031, ~~2014~~2015. ~~reflecting~~Other ~~the~~expense ~~reduction~~decreased in$0.8 ~~operating~~million, ~~revenues~~or ~~offset~~10.0%, byto a$7.2 ~~reduction~~million infor ~~operating expenses related to~~ the ~~wind~~three ~~down~~months ofended ~~our~~March ~~Eastern~~31, ~~Markets.~~2016 ~~Depreciation~~compared ~~and~~to ~~Amortization decreased~~ $38.30 million ~~due~~for to the ~~write~~three ~~down~~months ~~and~~ended ~~abandonment~~March of31, ~~property~~2015. Income ~~plant~~from ~~and~~continuing ~~equipment~~operations ~~in our Eastern Markets recorded in the fourth quarter of 2014. Income~~ before income taxes decreased $1412.18 million to a loss of $~~(12~~0.2)9 million for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to income of $111.9 million for the three months ended ~~September~~March 3031, ~~2014 for the reasons discussed above and a reduction in other expenses~~2015.

~~Nine-Month~~For further detail regarding our operating results, see the Other Overview Discussion and discussions of Results of Operations – Comparison of Three months ended March 31, 2016 and 2015 below.

Operating revenues decreased $33.4 million, or 9.3%, to $326.1 million for the nine months ended September 30, 2015 compared to $359.5 million for the nine months ended September 30, 2014 consisting of an $11.6 million increase in the Western Markets, offset by decrease in Eastern Markets operating revenues of $45.0 million due to the wind down of those operations. Operating income increased $6.8 million, or 21.2%, to $38.9 million for the nine months ended September 30, 2015 compared to $32.1 million for the nine months ended September 30, 2014 reflecting the reduction in operating revenues and operating expenses and depreciation and amortization related to the wind down of our Eastern Markets and the gain on sale of tower assets. Income before income taxes increased 9.7 million to $16.0 million for the nine months ended September 30, 2015 compared to $6.3 million for the nine months ended September 30, 2014 for the reasons discussed above and a reduction in other expenses.

For further detail regarding our operating results, see the Other Overview Discussion and discussions of Results of Operations – Comparison of Three and Nine months ended September 30, 2015 and 2014 below.

Other Overview Discussion

To supplement our financial statements presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we reference the non-GAAP measure Average ~~Revenue~~Billings per ~~Account~~User ("~~ARPA~~ABPU") to measure our postpay wireless performance. We use this measure, along with other performance metrics such as subscribers and churn, to gauge operating performance for which our operating managers are responsible and upon which we evaluate their performance. Further, with the launch of EIP, we measure and monitor Average Billings per User ("ABPU") as a key performance indicator.

We believe ARPA and ABPU provide management useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high-value customers. ARPA and ABPU as calculated below may not be similar to ARPA and ABPU measures of other wireless companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in our unaudited condensed consolidated statements of income.

The tables below provide a reconciliation of retail revenues to postpay subscriber revenues used to calculate Total ARPA and Western Markets ARPA for the three and nine months ended September 30, 2015 and 2014.

Total ARPA	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands, except ARPA)	2015			2014			2015			2014
Retail revenue	$	50,221		$	72,034		$	174,978		$	218,845
Less: prepay service revenues and other	(9,031		)	(14,950		)	(32,591		)	(47,019		)
Postpay service revenues	$	41,190		$	57,084		$	142,387		$	171,826
Average number of postpay accounts	125,400			141,800			133,900			140,100
Postpay ARPA	$	109.47		$	134.18		$	118.12		$	136.27

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Western Markets ARPA	Three Months Ended September 30,						Nine months ended September 30,
(Dollars in thousands, except ARPA)	2015			2014			2015			2014
Retail revenue	$	42,110		$	44,224		$	127,668		$	132,867
Less: prepay service revenues and other	(6,405		)	(6,118		)	(18,975		)	(19,126		)
Postpay service revenues	$	35,705		$	38,106		$	108,693		$	113,741
Average number of postpay accounts	105,500			94,900			103,000			93,200
Postpay ARPA	$	112.81		$	133.83		$	117.27		$	135.66

postpay wireless performance. We use this measure, along with other performance metrics such as subscribers and churn, to gauge operating performance for which our operating managers are responsible and upon which we evaluate their performance.

~~ARPA~~We inbelieve ~~our~~ABPU ~~Western~~provides ~~Markets~~management ~~decreased~~useful ~~for~~information concerning the ~~three~~appeal ~~and~~of ~~nine~~our ~~months~~rate ~~ended~~plans ~~September~~and ~~30,~~service ~~2015~~offerings asand ~~compared~~our toperformance ~~the~~in ~~same~~attracting ~~period~~and inretaining ~~2014~~high-value customers. ABPU as acalculated ~~result~~below ofmay ~~pricing~~not ~~declines~~be ~~driven~~similar byto ~~the~~ABPU ~~competitive~~measures ~~environment~~of ~~and~~other ~~service~~wireless ~~plan~~companies, ~~discounts~~is ~~offered~~not ~~with~~a ~~EIP.~~measurement Weunder ~~expect~~GAAP ~~ARPA~~and toshould ~~continue to~~ be ~~under~~considered ~~pressure~~in asaddition ~~our~~to, ~~competition~~but ~~stays~~not ~~focused~~as ona ~~price~~substitute ~~incentives~~for, ~~and~~the ~~due~~information tocontained ~~increased~~in ~~acceptance~~our ofunaudited ~~EIP~~condensed ~~with~~consolidated ~~its~~statements ~~associated~~of ~~service plan discounts~~income.

The tables below provide a reconciliation of retail revenues to postpay subscriber revenues used to calculate Total ABPU ~~and Western Markets ABPU~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014.~~2015:

Total ABPU

Three Months Ended ~~September~~March 3031,

~~Nine months ended September 30,~~

(Dollars in thousands, except ABPU)

~~2015~~2016

~~2014~~2015

~~2015~~

~~2014~~

Retail revenue

5039,~~221~~647

7243,~~034~~011

~~174,978~~

~~218,845~~

Add: EIP billings

46,~~835~~377

181,996

~~11,084~~

Less: prepay service revenues and other

(95,~~031~~861

)

(146,~~950~~250

)

~~(32,591~~

)

~~(47,019~~

)

Total postpay billings

4640,~~025~~163

5738,~~102~~757

~~153,471~~

~~171,844~~

Average number of postpay subscribers

~~265~~229,~~400~~800

~~310~~222,~~000~~600

~~284,800~~

~~307,700~~

Postpay ABPU

5758.8026

6158.4104

~~59.87~~

~~62.05~~

Western Markets ABPU	Three Months Ended September 30,						Nine months ended September 30,
(Dollars in thousands, except ABPU)	2015			2014			2015			2014
Retail revenue	$	42,110		$	44,224		$	127,668		$	132,867
Add: EIP billings	4,631			13			10,267			13
Less: prepay service revenues and other	(6,405		)	(6,118		)	(18,975		)	(19,126		)
Total postpay billings	$	40,336		$	38,119		$	118,960		$	113,754
Average number of postpay subscribers	230,700			214,400			226,600			211,600
Postpay ABPU	$	58.29		$	59.27		$	58.32		$	59.75

ABPU in our Western Markets decreased for the three and nine months ended September 30, 2015 as compared to the same periods in 2014 as a result of pricing declines driven by the competitive environment and service plan discounts offered with EIP. We expect this year over year trend to continue.

Operating Revenues

Our revenues are generated from the following sources:


•	Retail – subscriber revenues from network access, data services, and feature services;


•	Wholesale and other – primarily wholesale revenue from the SNA and roaming revenue from other telecommunications carriers. Other revenues relate to rent from leasing excess tower and building space; and

• Equipment sales – sales from ~~handsets~~devices and accessories to new and existing customers.

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Operating Expenses

Our operating expenses are categorized as follows:

•

Cost of services – includes usage-based access charges, including long distance, roaming charges, and other direct costs incurred in accessing other telecommunications providers’ networks in order to provide telecommunication services to our end-user customers; leased facility expenses for connection to other carriers, leased spectrum, cell sites and switch locations; and engineering and repairs and maintenance expenses related to property, plant and equipment;

• Cost of equipment sold – includes ~~handset~~device ~~equipment~~and accessory costs to new and existing customers,


•	Customer operations – includes marketing, product management, product advertising, selling, billing, customer care, customer retention and bad debt expenses;


•	Corporate operations – includes taxes other than income, executive, accounting, legal, purchasing, information technology, human resources and other general and administrative expenses, including bonuses and equity-based compensation expense related to stock and option instruments held by certain members of corporate management, and accretion of asset retirement obligations;

• Restructuring – includes employee separations, contract terminations, and other costs related to the ~~exit~~reduction of ~~our~~corporate ~~Eastern~~and ~~Markets~~other operating expenses;

• Depreciation and amortization – includes ~~depreciable~~depreciation of long-lived property, plant and equipment and amortization of intangible assets where applicable; and


•	Gain on sale of assets - includes the gain from the sale of towers.

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Other Expense

Other expense includes interest expense on debt instruments, ~~net of capitalized interest and interest income recognized on EIP receivables,~~ corporate financing costs and debt discounts associated with the repricing and refinancing of our debt instruments and, as appropriate, related charges or amortization of such costs and discounts, changes in the fair value of our interest rate cap and other items such as interest income, interest income from EIP receivables, and fees.

Income Taxes

Income tax expense and effective tax rate increase or decrease based upon changes in a number of factors, including our pre-tax income or loss, non-controlling interest, ~~state minimum tax assessments,~~ and non-deductible expenses.

Noncontrolling Interests in Earnings of Subsidiaries

We own 97% of Virginia PCS Alliance, L.C. (the “VA Alliance”), which provides PCS services to an estimated two million populated area in central and western Virginia. In accordance with the noncontrolling interest requirements in FASB ASC 810, Consolidations, we attribute approximately 3% of VA Alliance net income to these noncontrolling interests. No capital contributions from the minority owners were made during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015. The VA Alliance made $0.61 million ~~and~~in ~~$0.7 million of capital~~ distributions to the minority owners during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~no distributions during the three months ended March 31, ~~respectively~~2015.

~~RESULTS~~Loss OFfrom ~~OPERATIONS~~Discontinued ~~– COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014~~Operations

Loss from Discontinued Operations includes the financial results, net of taxes, for the Eastern Markets.

RESULTS OF OPERATIONS – COMPARISON OF THREE MONTHS ENDED MARCH 31, 2016 AND 2015

OPERATING REVENUES

The following table identifies our operating revenues for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015:

	Three Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2015~~2016		~~2014~~2015		$ Variance			% Variance
Retail revenue	$	5039,~~221~~647	$	7243,~~034~~011	$	(213,~~813~~364	)	(307.38	)%
Wholesale and other revenue	3532,~~567~~418		3735,~~802~~597		(23,~~235~~179		)	(58.9	)%
Equipment sales	1113,~~752~~142		916,~~802~~703		1(3,~~950~~561		)	19(21.93	)%
Total operating revenues	$	9785,~~540~~207	$	~~119~~95,~~638~~311	$	(2210,~~098~~104	)	(1810.56	)%

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Retail Revenue

Retail revenue ~~in our Western Markets~~ declined $23.14 million, or 47.8%, to $4239.16 million for the three months ended March 31, 2016 as compared to the three months ended ~~September~~March 3031, ~~2014~~2015. Postpay service revenue decreased as a result of higher adoption rates of lower rate plans as a result of competitive pricing pressures and service plan discounts offered with EIP~~. Prepay service revenues were flat for the three months ended September 30~~, ~~2015,~~partially ~~as compared to the same period in 2014, as a result of an increase in subscribers,~~ offset by by a ~~decline~~higher inaverage ~~revenue~~subscriber ~~per unit driven by the competitive landscape~~base. ~~In addition, retail revenue in our Eastern Markets declined $19.7 million, or 70.8%, as compared to the three months ended September 30, 2014 as we wind down those operations.~~

Wholesale and Other Revenue

Wholesale and roaming revenues ~~in our Western Markets~~ decreased $23.62 million, or 68.9%, for the three months ended ~~September~~March 3031, ~~2015~~2016 as compared to the three months ended ~~September~~March 3031, ~~2014~~2015, primarily reflecting a $2.29 million decrease in revenue from the SNA. This decrease is ~~primarily~~ the result of the amended terms of the SNA that took effect in May 2014~~, which included a rate reset on August 1, 2015~~. ~~We expect this year over year trend to continue.~~

Equipment Sales

Equipment revenues indecreased ~~our Western Markets increased~~ $43.96 million, or 7321.43%, for the three months ended ~~September~~March 3031, ~~2015~~2016 as compared to the three months ended ~~September~~March 3031, ~~2014~~2015, reflecting ana ~~increase~~decrease in ~~EIP~~equipment sales, ~~which~~to ~~began~~new inand ~~August~~existing ~~2014~~customers. ~~The improvement in equipment revenue in our Western Markets was partially offset by the decline in equipment revenue of $2.9 million, or 91.4%, in our Eastern Markets as we wind down those operations.~~

OPERATING EXPENSES

The following table identifies our operating expenses for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015:

	Three Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2015~~2016		~~2014~~2015			$ Variance			% Variance
Cost of services	$	3023,~~087~~221	$	3020,~~591~~821		$	~~(504~~2,400	)	(111.65	)%
Cost of equipment sold	2117,~~495~~299		2622,~~290~~998			(45,~~795~~699		)	(1824.28	)%
Customer operations	1915,~~201~~303		2519,~~381~~553			(64,~~180~~250		)	(2421.37	)%
Corporate operations	119,~~830~~482		8,~~580~~624			~~3,250~~858			379.9	%
Restructuring	~~4,627~~82		—1,605			4(1,~~627~~523		)	—(94.9	)%
Depreciation and amortization	1513,~~157~~486		1812,~~473~~917			~~(3,316~~569		)	~~(18~~4.04	)%
Total operating expenses	$	102,397	$	109,315		$	(6,918	)	(6.3	)%
Gain on sale of assets	—		(11,009		)	11,009			(100.0	)%
Total operating expenses	$	78,873	$	75,509		$	3,364		4.5	%

Cost of Services – Cost of services ~~in our Western Markets~~ increased $2.04 million, or 911.75%, for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to the three months ended ~~September~~March 3031, ~~2014~~2015 primarily due to a $12.52 million increase in cell site expense to support additional capacity for our 4G/ LTE expansion ~~and a $0~~.9 million increase in cost of roaming due to increased data usage. These increases were offset by a decrease in cost of services of $2.5 million, or 25.7%, in our Eastern Markets due to the wind down of those operations.

Cost of Equipment Sold – Cost of equipment sold in our Western Markets increased $3.3 million, or 18.8%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to an increase in equipment costs driven by continued smartphone sales and an increase in subscriber activity. These increases were offset by a decrease in cost of equipment sold of $8.1 million, or 96.0%, in our Eastern Markets due to the wind down of those operations.25

Customer Operations – Customer operations expense in our Western Markets increased $1.1 million, or 7.4%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 primarily driven by an increase in bad debt expense of $1.1 million, or 51.4%. Bad debt expense increased as a result of increased accounts receivable partially related to EIP. This increase was offset by a decrease in customer operations expense of $7.3 million, or 71.5%, in our Eastern Markets due to the wind down of those operations.

Corporate Operations – Corporate operations expense related to our Western Markets increased $5.9 million, or 105.2%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 primarily due to $3.3 million of costs incurred related to the pending acquisition by Shentel. There was a decrease in corporate operations of $2.7 million, or 90.5%, in our Eastern Markets due to the wind down of those operations.

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~~Restructuring~~Cost of Equipment Sold – ~~Restructuring~~Cost ~~expense~~of ~~was~~equipment sold decreased $45.67 million, or 24.8%, for the three months ended ~~September~~March 3031, ~~2015~~2016 ~~due~~compared ~~primarily~~ to ~~severance~~the ~~charges~~three ~~and~~months ~~contract~~ended ~~termination~~March ~~fees~~31, ~~associated~~2015 ~~with~~due ~~the~~to ~~wind~~a ~~down~~decrease ~~of the business~~ in ~~the~~equipment ~~Eastern~~sales ~~Markets. We will continue~~ to ~~incur~~new ~~restructuring~~and ~~charges~~existing ~~throughout 2015 as we continue the wind down~~customers.

~~Depreciation~~Customer ~~and~~Operations ~~Amortization~~ – ~~Depreciation~~Customer ~~and~~operations ~~amortization~~expense ~~expenses~~ decreased $34.3 million, or 1821.07%, for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to the three months ended ~~September~~March 3031, ~~2014~~2015 due primarily to ~~the~~cost ~~write~~reductions ~~down~~in advertising and ~~abandonment of property~~salaries, ~~plant,~~offset ~~and~~by ~~equipment~~increased ~~recorded~~bad indebt ~~the~~expense ~~fourth~~primarily ~~quarter~~associated ofwith ~~2014~~the inincrease ~~our Eastern Markets~~ in ~~connection~~EIP ~~with the spectrum sale~~receivables.

Corporate Operations – Corporate operations expense increased $0.9 million, or 9.9%, for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 driven by costs related to the Merger.

Restructuring – Restructuring expense decreased $1.5 million for the three months ended March 31, 2016 due primarily to a decrease in severance charges, contract termination fees and professional fees associated with the reduction of corporate expenses.

Depreciation and Amortization – Depreciation and amortization expenses increased $0.6 million, or 4.4%, for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Gain on Sale of Assets - Gain on sale of assets was $11.0 million for the three months ended March 31, 2015 related to the sale of tower assets.

OTHER EXPENSE

Interest expense, net decreased $0.97 million, or 118.39%, for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to the three months ended ~~September~~March 3031, ~~2014~~2015. The decrease was attributable to an increase in interest costs capitalized that were associated with our 4G/ LTE expansion and an increase in interest income recognized on our EIP receivables.

INCOME TAXES

Income tax expense (benefit) for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015 was $(30.52) million and $04.8 million, respectively, representing the statutory tax rate applied to pre-tax income and the effects of certain non-deductible acquisition related expenses, compensation, and non-controlling interest~~, and state minimum taxes~~. We have provided for income taxes using a year to date calculation as we are unable to reliably estimate the annual effective income tax rate.

~~RESULTS~~LOSS OFFROM ~~OPERATIONS~~DISCONTINUED ~~– COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014~~OPERATIONS

~~OPERATING~~Loss ~~REVENUES~~from Discontinued Operations includes the financial results, net of taxes, for the Eastern Markets.

The following table identifies our operating revenues for the nine months ended September 30, 2015 and 2014:

	Nine Months Ended September 30,
(In thousands)	2015		2014		$ Variance			% Variance
Retail revenue	$	174,978	$	218,845	$	(43,867	)	(20.0	)%
Wholesale and other revenue	109,497		116,817		(7,320		)	(6.3	)%
Equipment sales	41,595		23,853		17,742			74.4	%
Total operating revenues	$	326,070	$	359,515	$	(33,445	)	(9.3	)%

Retail Revenue

Retail revenue in our Western Markets declined $5.2 million, or 3.9%, to $127.7 million compared to the nine months ended September 30, 2014. Postpay service revenue decreased as a result of higher adoption rates of promotional pricing plans as a result of competitive pricing pressures and service plan discounts offered with EIP. Prepay service revenues decreased for the nine months ended September 30, 2015, as compared to the same period in 2014, as a result of a decline in revenue per unit driven by the competitive landscape, offset by an increase in subscribers. In addition, retail revenue in our Eastern Markets declined $38.7 million, or 45.0%, compared to the nine months ended September 30, 2014 as we wind down those operations.

Wholesale and Other Revenue

Wholesale and roaming revenues in our Western Markets decreased $8.3 million, or 7.2%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, primarily reflecting a $7.5 million decrease in revenue from the SNA. This decrease is primarily the result of the amended terms of the SNA that took effect in May 2014, which included a rate reset on August 1, 2015. We expect this year over year trend to continue.

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Equipment Sales

Equipment revenues increased $25.1 million, or 164.8%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, reflecting an increase in retail pricing driven by continued smartphone adoption and EIP sales, which began in August 2014. The improvement in equipment revenue in our Western Markets was partially offset by the decline in equipment revenue of $7.4 million, or 85.2%, in our Eastern Markets as we wind down those operations.

OPERATING EXPENSES

The following table identifies our operating expenses for the nine months ended September 30, 2015 and 2014:

	Nine Months Ended September 30,
(In thousands)	2015			2014		$ Variance			% Variance
Cost of services	$	91,762		$	87,676	$	4,086		4.7	%
Cost of equipment sold	65,168			72,287		(7,119		)	(9.8	)%
Customer operations	64,049			78,383		(14,334		)	(18.3	)%
Corporate operations	31,217			31,610		(393		)	(1.2	)%
Restructuring	8,237			—		8,237			—
Depreciation and amortization	43,516			57,469		(13,953		)	(24.3	)%
Gain on sale of assets	(16,749		)	—		(16,749		)	—
Total operating expenses	$	287,200		$	327,425	$	(40,225	)	(12.3	)%

Cost of Services – Cost of services in our Western Markets increased $7.0 million, or 11.7%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, due to a $3.4 million increase in cell site expense to support additional capacity for our 4G/LTE expansion, a $2.0 million increase in cost of roaming due to increased data usage and a $1.6 million increase in non-cash spectrum lease expenses related to the SNA agreement. These increases were offset by a decrease in cost of services of $2.9 million, or 10.2%, in our Eastern Markets as we wind down those operations.

Cost of Equipment Sold – Cost of equipment sold in our Western Markets increased $15.7 million, or 32.5%, for the nine months ended September 30, 2015 compared to the three months ended September 30, 2014 due to an increase in equipment costs driven by continued smartphone sales and an increase in subscriber activity. These increases were offset by a decrease in cost of equipment sold of $22.8 million, or 95.3%, in our Eastern Markets due to the wind down of those operations.

Customer Operations – Customer operations expense in our Western Markets increased $5.8 million, or 12.5%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to an increase in other general selling expenses. These increases were offset by a decrease in customer operations of $20.1 million, or 62.5%, in our Eastern Markets due to the wind down of those operations.

Corporate Operations – Corporate operations expense in our Western Markets increased $8.9 million, or 43.2%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily due to $3.7 million of costs incurred related to the pending acquisition by Shentel. There was a decrease in corporate operations of $9.3 million, or 84.4%, in our Eastern Markets due to the wind down of those operations.

Restructuring – Restructuring expense was $8.2 million for the nine months ended September 30, 2015 due primarily to severance charges and contract termination fees associated with the wind down of the business in the Eastern Markets. We will continue to incur restructuring charges throughout 2015 as we continue the wind down.

Depreciation and Amortization – Depreciation and amortization expenses decreased $14.0 million, or 24.3%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to the write down and abandonment of property, plant, and equipment recorded in the fourth quarter of 2014 in our Eastern Markets due to the spectrum sale.

Gain on Sale of Assets – Gain on sale of assets was $16.7 million for the nine months ended September 30, 2015 due to the sale of tower assets.

OTHER EXPENSE

Interest expense, net decreased $1.7 million, or 7.0%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The decrease was attributable to an increase in interest costs capitalized that were associated with our 4G/LTE expansion and an increase in interest income recognized on our EIP receivables. Other expenses

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decreased $1.3 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily as a result of a $0.9 million charge related to the write off of a proportionate amount of the unamortized deferred debt issuance costs associated with the refinancing in January 2014.

INCOME TAXES

Income tax expense for the nine months ended September 30, 2015 and 2014 was $7.6 million and $2.5 million, respectively, representing the statutory tax rate applied to pre-tax income and the effects of certain non-deductible acquisition related expenses, compensation, non-controlling interest, and state minimum taxes. We have provided for income taxes using a year to date calculation as we are unable to reliably estimate the annual effective income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We historically have funded our working capital requirements, capital expenditures and other payments from cash on -hand and net cash provided from operating activities.

As of ~~September~~March 3031, ~~2015~~2016, we had $~~108~~74.83 million of cash, compared to $7372.57 million as of December 31, ~~2014~~2015, of which $7919.67 million was held in market rate savings accounts (including $9.6 million held by the Company which is not restricted for certain payments by the Amended and Restated Credit Agreement). The remaining balance of $2954.26 million was held in non-interest bearing accounts. The commercial bank that held substantially all of our cash at ~~September~~March 3031, ~~2015~~2016 has a rating of Aa1 on long -term deposits by Moody’s. Our working capital (current assets minus current liabilities) was $~~150~~104.89 million as of ~~September~~March 3031, ~~2015~~2016 compared to $~~108~~106.67 million as of December 31, ~~2014~~2015.

As of ~~September~~March 3031, ~~2015~~2016, we had $~~629~~605.90 million in aggregate long-term liabilities, compared to $~~629~~604.47 million as of December 31, ~~2014~~2015, consisting of $~~515~~506.96 million in long-term debt, including capital lease obligations, and approximately $~~114~~96.01 million in other long-term liabilities consisting primarily of retirement benefits, deferred income taxes, asset retirement obligations and deferred gains on tower sales. Further information regarding long-term debt obligations at ~~September~~March 3031, ~~2015~~2016 is provided in Note 78 of the Notes to Unaudited Condensed Consolidated Financial Statements.

We have a Restricted Payments basket under the terms of the Amended and Restated Credit Agreement, which can be used to make Restricted Payments, including dividends and stock repurchases. The Restricted Payments basket increases by $6.5 million per quarter plus an additional quarterly amount for Excess Cash Flow, if any (as defined in the Amended and Restated Credit Agreement) and decreases by any actual Restricted Payments and by certain investments and debt prepayments made after the date of the Amended and Restated Credit Agreement. For the quarter ended September 30, 2015 there was no excess cash flow. The balance of the Restricted Payments basket as of September 30, 2015 was $79.6 million.

The Amended and Restated Credit Agreement also permits incremental commitments of up to $125.0 million (the “Incremental Commitments”) of which up to $35.0 million can be in the form of a revolving credit facility. The ability to incur the Incremental Commitments is subject to various restrictions and conditions, including having a Leverage Ratio (as defined in the Amended and Restated Credit Agreement) not in excess of 4.50:1.00 at the time of incurrence (calculated on a pro forma basis). As of September 30, 2015, there were no commitments associated with the Incremental Commitments and the leverage ratio for the Company was 5.19:1.00.26

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Credit Agreement) and decreases by any actual Restricted Payments and by certain investments and debt prepayments made after the date of the Amended and Restated Credit Agreement. For the quarter ended March 31, 2016 there was no excess cash flow. The balance of the Restricted Payments basket as of March 31, 2016 was $92.6 million.

The Amended and Restated Credit Agreement also permits incremental commitments of up to $125.0 million (the “Incremental Commitments”) of which up to $35.0 million can be in the form of a revolving credit facility. The ability to incur the Incremental Commitments is subject to various restrictions and conditions, including having a Leverage Ratio (as defined in the Amended and Restated Credit Agreement) not in excess of 4.50:1.00 at the time of incurrence (calculated on a pro forma basis). As of March 31, 2016, there were no commitments associated with the Incremental Commitments and the leverage ratio for the Company was 9.33:1.00.

We are a holding company that does not operate any business of our own. As a result, we are dependent on cash dividends and distributions and other transfers from our subsidiaries in order to make dividend payments or to make other distributions to our stockholders, including by means of a stock repurchase. Amounts that can be made available to us to pay cash dividends or repurchase stock are restricted by the Amended and Restated Credit Agreement.

Cash Flows from Operations

The following table summarizes our cash flows from operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2013~~2015, respectively:

	Nine Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2015~~2016			~~2014~~2015
Net cash provided by operating activities	$	1822,~~603~~924		$	7915,~~135~~438
Net cash provided by/(used in) investing activities	21(19,~~692~~818		)	~~(65~~15,~~374~~855		)
Net cash provided by/(used in) financing activities	(4,999		)	3,586
Net cash used in financing activities	(1,506		)	(1,421		)

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Operating Activities

Our cash flows from operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 of $1822.69 million ~~decreased~~increased $607.5 million, or 7648.5%, compared to the cash flows from operating activities of $7915.14 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015. Our operating income, exclusive of non-cash items such as depreciation and amortization and gain on sale of assets, decreased compared to the prior year. ~~Net~~This decrease was offset by net changes in working capital ~~further~~which ~~decreased~~increased cash provided by operating activities. ~~The~~This ~~decrease~~increase is primarily due to ancash ~~increase~~received ~~in accounts receivable resulting~~ from ~~the~~income ~~timing~~tax ofrefund ~~cash~~and ~~collections~~a ~~for~~decrease ~~EIP~~in ~~sales~~inventory, asoffset ~~compared~~by ~~to traditional sales and~~ a decrease in accounts payable due to the timing of cash paid to vendors.

Investing Activities

As we continue to upgrade our network, we invested $7521.20 million in capital expenditures for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. This was ana ~~increase~~decrease of $71.59 million compared to the $6722.79 million of capital expenditures for the same period last year. Included in the capital spending for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 was $6414.39 million of expenditures for additional capacity to support ~~our~~ projected growth and incremental 4G/ LTE expansion, and $106.90 million to maintain our existing networks and other business needs. These capital expenditures were partially offset by net proceeds of $961.91 million primarily from the sale of ~~our~~assets ~~tower~~related ~~assets~~to ~~and~~our ~~spectrum~~discontinued operations.

Financing Activities

Net cash used in financing activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 was $51.05 million compared to net cash ~~provided~~used byin financing activities of $31.64 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, which reflected $4.1.4 million of principal payments on the long term debt. Included in the financing activity for the nine months ended September 30, 2014 was $39.5 million net proceeds from the January 2014 debt refinancing, offset by $27.2 million in cash dividends, $3.5 million in debt issuance costs and $4.0 million of principal payments on long-term debt.

We believe that our current cash balances of $~~108~~74.83 million, our cash flows from operations and other capital resources will be sufficient to satisfy our working capital requirements, capital expenditures, interest costs, required debt principal payments prior to maturity, and stock repurchases, if any, through our stock repurchase plan, for the foreseeable future.

OFF BALANCE SHEET ARRANGEMENTS

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

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk.~~27

We are exposed to market risks primarily related to interest rates. Aggregate maturities of long-term debt outstanding under the Amended and Restated Credit Agreement, based on the contractual terms of the instruments, were $524.3 million at September 30, 2015. Under this facility the Term Loan bears interest at a rate equal to either 4.75% above the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) or 3.75% above the Base Rate (as defined in the Amended and Restated Credit Agreement). The Amended and Restated Credit Agreement provides that the Eurodollar Rate shall never be less than 1.00% per annum and the Base Rate shall never be less than 2.00% per annum. We also have other fixed rate, long-term debt in the form of capital leases totaling $0.6 million as of September 30, 2015.

In February 2013, we purchased an interest rate cap for $0.9 million with a notional amount of $350.0 million. The interest rate cap reduced our exposure to changes in the three-month Eurodollar rate by capping the rate at 1.0%. The interest rate cap agreement expired in August 2015.

At September 30, 2015, our financial assets included cash of $108.8 million and restricted cash of $2.2 million. Securities and investments totaled $1.5 million at September 30, 2015.

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~~The following sensitivity analysis estimates the impact on the fair value of certain financial instruments, which are potentially subject to material market risks, at September~~Item ~~30,~~3. ~~2015,~~Quantitative ~~assuming a ten percent increase~~ and aQualitative ~~ten~~Disclosures ~~percent~~About ~~decrease~~Market ~~in the levels of our interest rates:~~Risk.

(In thousands)	Book Value		Fair Value		Estimated fairvalue assumingnoted decreasein marketpricing		Estimated fairvalue assumingnoted increasein marketpricing
Senior secured term loan, net of unamortized debt discount	$	520,986	$	522,980	$	534,291	$	511,945
Capital lease obligations	585		$	585	643		526

We are exposed to market risks primarily related to interest rates. Aggregate maturities of long-term debt outstanding under the Amended and Restated Credit Agreement, based on the contractual terms of the instruments, were $521.6 million at March 31, 2016. Under this facility the Term Loan bears interest at a rate equal to either 4.75% above the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) or 3.75% above the Base Rate (as defined in the Amended and Restated Credit Agreement). The Amended and Restated Credit Agreement provides that the Eurodollar Rate shall never be less than 1.00% per annum and the Base Rate shall never be less than 2.00% per annum. We also have other fixed rate, long-term debt in the form of capital leases totaling $0.4 million as of March 31, 2016.

Our Amended and Restated Credit Agreement accrues interest based on the Eurodollar Rate plus an applicable margin (currently 475 bps). LIBOR for purposes of this facility floats when it exceeds the floor of 1.00%. At ~~September~~March 3031, ~~2015~~2016, ~~an immediate 10% increase or decrease to LIBOR would not have an effect on~~ our ~~interest~~financial ~~expense~~assets asincluded ~~the~~cash ~~variable~~of ~~LIBOR component would remain below the floor~~$74.3 Inmillion ~~addition,~~and atrestricted ~~September 30,~~cash ~~2015~~of ~~we had approximately~~ $792.62 million. ofSecurities ~~cash~~and ~~held~~investments intotaled ~~a market rate savings account~~$1.5 Anmillion ~~immediate~~at ~~10%~~March 31, ~~increase or decrease to the market interest rate would not have a material effect on our cash flows~~2016.

The following sensitivity analysis estimates the impact on the fair value of certain financial instruments, which are potentially subject to material market risks, at March 31, 2016, assuming a ten percent increase and a ten percent decrease in the levels of our interest rates:



(In thousands)	Book Value		Fair Value		Estimated fair value assuming noted decrease in market pricing		Estimated fair value assuming noted increase in market pricing
Senior secured term loan, net of unamortized debt discount and issuance cost	$	511,785	$	517,677	$	527,974	$	507,610
Capital lease obligations	443		443		488		399

Our Amended and Restated Credit Agreement accrues interest based on the Eurodollar Rate plus an applicable margin (currently 475 bps). LIBOR for purposes of this facility floats when it exceeds the floor of 1.00%. At March 31, 2016, an immediate 10% increase or decrease to LIBOR would not have an effect on our interest expense as the variable LIBOR component would remain below the floor. In addition, at March 31, 2016 we had approximately $19.7 million of cash held in a market rate savings account. An immediate 10% increase or decrease to the market interest rate would not have a material effect on our cash flows.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of the end of the period covered by this quarterly report of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934). Based on this evaluation, our principal executive officer and our principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the three months ended ~~September~~March 3031, ~~2015~~2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are involved in routine litigation in the ordinary course of our business. We do not believe that any pending or threatened litigation of which we are aware would have a material adverse effect on our financial condition, results of operations or cash flows. In addition, on August 24, 2015, Mr. Marvin Westen and Mr. Paul Sekerak, each filed a purported class action complaint relating to the Merger in the Court of Chancery of the State of Delaware. ~~The~~These ~~Company~~complaints ~~cannot~~were ~~presently determine the ultimate resolution of this matter nor can it reasonably estimate the range of possible losses~~dismissed.

Item 1A. Risk Factors.

In addition to the other information set forth in this quarterly report, including the updated risk factors below, as well as other information in our subsequent filings with the SEC, you should carefully consider the risks discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, which could materially affect our business, financial condition or future results. The risks described in this quarterly report and in our 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 material adverse affect on our business, financial condition and/or future results.

Risk Factors Related with the Proposed Acquisition by Shentel:

There are risks related to the proposed acquisition of the Company that could have a material adverse impact on our business, financial condition, financial results and stock price.

Completion of the proposed acquisition by Shentel is subject to the satisfaction of various conditions, including stockholder approval and various government and regulatory approvals. There is no assurance that these conditions will be satisfied, or that the proposed merger will be consummated within the expected time frame or at all. If the proposed acquisition is not completed, the price of our common stock may decline to the extent that such market price reflects a market assumption that the proposed acquisition will be completed. In addition, under certain circumstances, if the merger agreement is terminated, we may be required to pay Shentel a termination fee of $8.8 million, plus the reimbursement of up to $2.5 million of fees, costs and expenses incurred by or on behalf of Shentel in connection with the merger.

The merger agreement also restricts us from engaging in certain activities and taking certain actions without Shentel’s approval, which could prevent us from pursuing opportunities that may arise prior to the closing of the acquisition.

The pendency of the proposed acquisition, and potential failure to complete the merger, could materially and adversely impact our business.

The proposed acquisition by Shentel could cause disruptions in our business, which could have an adverse effect on our results of operations and financial condition. For example:

• our employees may experience uncertainty about the Company and their future roles at the Company, which might adversely affect our ability to retain and hire key managers and other employees; • customers and suppliers may experience uncertainty about the Company’s future and may seek alternative business relationships with third parties or seek to alter their business relationships with the Company; • the attention of our management may be directed to transaction-related considerations and may be diverted from the day-to-day operations of our business; and • we have incurred, and will continue to incur, significant fees for professional services and other transaction costs in connection with the proposed acquisition by Shentel, and many of these fees and costs are payable by us regardless of whether we consummate the transaction.

In addition, if the proposed acquisition is not completed, our Board of Directors may consider various alternatives available to us, including, among others, continuing as a public company with no material changes to our business or capital structure, seeking to raise capital through the sale of equity or debt securities, seeking additional debt financing, or attempting to sell our company to another potential acquirer. These alternatives may involve additional risks to our business, including, among others, risks related to the diversion of management’s attention and additional expenses, our ability to consummate any such alternative transaction, our ability to obtain capital sufficient to operate our business, the valuation assigned to our business in any such alternative transaction, our ability or a potential buyer’s ability to access capital on acceptable terms or at all and other matters that may materially and adversely affect our business, results of operations and financial condition.

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Revised Risk Factors Related to the Contract with Apple, Inc.:

If suppliers or vendors, including Apple, experience problems or favor our competitors, we could fail to obtain sufficient quantities of devices and accessories, or the products and services we require to operate our network successfully.

We depend on a limited number of key suppliers and vendors, including Apple, Samsung and others, for devices and accessories. Due to the scale of our operations, we may have difficulty obtaining specific types of devices, applications and content in a timely manner, or at all. The lack of availability to us of some of the latest and most popular devices, applications, and content, whether as a result of exclusive dealings, volume discounting, or otherwise, could put us at a significant competitive disadvantage and could make it more difficult for us to attract and retain our customers, especially as our competitors continue to aggressively offer device promotions with increased features, functionality and applications.

Apple devices represent a significant percentage of all devices sold by us. We are currently operating under an extension of our original contract with Apple, Inc. If we are unable to further extend our existing contract with Apple or to renew our contract upon reasonable terms on a longer-term basis or at all, our ability to attract and retain subscribers would be materially impacted.

We also rely on a limited number of network equipment manufacturers, including Alcatel-Lucent, Cisco Systems, Inc. and others, related to our network infrastructure. If these suppliers experience manufacturing delays, interruptions or other problems delivering equipment and network components on a timely basis, our revenue and operating results could suffer significantly. Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of the network, cause us effectively to be locked into one or a few suppliers for key network components. If these companies experience financial or other problems, alternative suppliers and vendors may become necessary and we may not be able to obtain satisfactory and timely replacement supplies on economically attractive terms, or at all.

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

In August 2009, the Company’s board of directors authorized management to repurchase up to $40.0 million of the Company’s common stock. The Company did not purchase any shares of its common stock during the three months ended ~~September~~March 3031, ~~2015~~2016 under the authorization. The approximate dollar value of shares that may yet be purchased under the plan was $23.1 million at ~~September~~March 3031, ~~2015~~2016. Amounts available to the Company to repurchase stock are restricted by the Amended and Restated Credit Agreement. The authorization does not have an expiration date. A summary of our repurchases of common stock during the first quarter of 2016 is as follows:



Period	Total Number of Shares Purchased ¹	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May be Purchased Under the Plans or Programs
February 1 - 29, 2016	13,638	9.19	—	—
March 1 - 31, 2016	2,109	9.19	—	—
Total	15,747	9.19	—	—



1			During the three months ended March 31, 2016, the Company repurchased restricted common stock in order to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6.	Exhibits.

ExhibitNo.		Description
31.1*		Certification of ~~Rodney~~Christopher DE. ~~Dir~~French, President and Chief Executive Officer, Pursuant to Rule 13a-14(a).
31.2*		Certification of ~~Stebbins~~John ~~B. Chandor Jr.~~Turtora, ~~Executive~~ Vice President and Chief ~~Financial~~Accounting Officer, ~~Treasurer and Asst. Secretary,~~ Pursuant to Rule 13a-14(a).
32.1*		Certification of ~~Rodney~~Christopher DE. ~~Dir~~French, 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*		Certification of ~~Stebbins~~John ~~B. Chandor Jr.~~Turtora, ~~Executive~~ Vice President and Chief ~~Financial~~Accounting Officer, ~~Treasurer and Asst. Secretary,~~ 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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NTELOS HOLDINGS CORP.
Dated: October 28, 2015	By:	/s/ Rodney D. Dir
Dated: May 16, 2016	By:	/s/ Christopher E. French
		Rodney D. Dir
		Christopher E. French
		President and Chief Executive Officer
		(Principal Executive Officer)
Dated: May 16, 2016	By:	/s/ Adele M. Skolits
Dated: October 28, 2015	By:	/s/ Stebbins B. Chandor Jr.
		Adele M. Skolits
		Stebbins B. Chandor Jr.
		Vice President - Finance and Chief Financial Officer
		Executive Vice President and Chief Financial Officer, Treasurer and Asst. Secretary
Dated: May 16, 2016	By:	/s/ John Turtora
		(Principal Financial Officer)
Dated: October 28, 2015	By:	/s/ John Turtora
		John Turtora
		Vice President and Controller
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

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Filing Compare · NTELOS HOLDINGS CORP.