NTELOS 10-Q 2015 Q3 Quarterly report

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 30, 2015

or

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

For the transition period from to

Commission File Number: 000-51798

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 22,254,675 shares of the registrant’s common stock outstanding as of the close of business on October 23, 2015.

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 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	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	34
SIGNATURES	35

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NTELOS Holdings Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

(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.

2

NTELOS Holdings Corp.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share amounts)	2015			2014			2015			2014
Operating Revenues
Retail revenue	$	50,221		$	72,034		$	174,978		$	218,845
Wholesale and other revenue	35,567			37,802			109,497			116,817
Equipment sales	11,752			9,802			41,595			23,853
Operating Revenues	97,540			119,638			326,070			359,515
Operating Expenses
Cost of services	30,087			30,591			91,762			87,676
Cost of equipment sold	21,495			26,290			65,168			72,287
Customer operations	19,201			25,381			64,049			78,383
Corporate operations	11,830			8,580			31,217			31,610
Restructuring	4,627			—			8,237			—
Depreciation and amortization	15,157			18,473			43,516			57,469
Gain on sale of assets	—			—			(16,749		)	—
	102,397			109,315			287,200			327,425
Operating Income (Loss)	(4,857		)	10,323			38,870			32,090
Other Expense
Interest expense, net	(7,422		)	(8,371		)	(22,913		)	(24,644		)
Other income (expense), net	30			(29		)	61			(1,194		)
	(7,392		)	(8,400		)	(22,852		)	(25,838		)
Income (Loss) before Income Taxes	(12,249		)	1,923			16,018			6,252
Income Tax Expense (Benefit)	(3,523		)	767			7,576			2,517
Net Income (Loss)	(8,726		)	1,156			8,442			3,735
Net Income Attributable to Noncontrolling Interests	(237		)	(352		)	(999		)	(1,161		)
Net Income (Loss) Attributable to NTELOS Holdings Corp.	$	(8,963	)	$	804		$	7,443		$	2,574
Earnings (Loss) per Share Attributable to NTELOS Holdings Corp.
Basic	$	(0.42	)	$	0.04		$	0.34		$	0.12
Weighted average shares outstanding - basic	21,284			21,119			21,241			21,100
Diluted	$	(0.42	)	$	0.04		$	0.32		$	0.12
Weighted average shares outstanding - diluted	21,284			21,894			22,569			21,706
Cash Dividends Declared per Share - Common Stock	$	—		$	—		$	—		$	0.84

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

3

NTELOS Holdings Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2015			2014			2015		2014
Net Income (Loss) Attributable to NTELOS Holdings Corp.	$	(8,963	)	$	804		$	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		)
Unrecognized loss from defined benefit plans, net of $243 of deferred income taxes in 2014	—			—			—		(382		)
Comprehensive Income (Loss) Attributable to NTELOS Holdings Corp.	(8,846		)	534			7,795		1,380
Comprehensive Income Attributable to Noncontrolling Interests	237			352			999		1,161
Comprehensive Income (Loss)	$	(8,609	)	$	886		$	8,794	$	2,541

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

NTELOS Holdings Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
(In thousands)	2015			2014
Cash flows from operating activities
Net income	$	8,442		$	3,735
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	43,516			57,469
Gain on sale of assets	(16,749		)	—
Deferred income taxes	(15,916		)	(2,696		)
Bad debt expense	16,298			10,676
Equity-based compensation	2,652			2,244
Amortization of loan origination costs	1,254			2,033
Write off of unamortized debt issuance costs	537			895
Loss on interest rate cap	—			219
Retirement benefits and other	2,062			1,806
Changes in operating assets and liabilities
Accounts receivable	(23,752		)	(11,672		)
Inventories and supplies	5,833			4,307
Income taxes	2,376			5,730
Prepaid expenses and other assets	4,749			1,472
Accounts payable	(11,473		)	1,496
Accrued expenses and other liabilities	(1,469		)	822
Retirement benefit distributions	243			599
Net cash provided by operating activities	18,603			79,135
Cash flows from investing activities
Purchases of property, plant and equipment	(75,218		)	(67,711		)
Proceeds from sale of assets	96,910			—
Other, net	—			2,337
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
Debt issuance and refinancing costs	—			(3,551		)
Repayments on senior secured term loans	(4,054		)	(152,127		)
Cash dividends paid on common stock	—			(27,235		)
Capital distributions to noncontrolling interests	(626		)	(731		)
Other, net	(319		)	(425		)
Net cash provided by (used in) financing activities	(4,999		)	3,586
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.

5

NTELOS Holdings Corp.

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

(Unaudited)

(In thousands)	Common Shares	Treasury Shares	Common Stock		Additional Paid In Capital		Treasury Stock			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total NTELOS Holdings Corp. Stockholders’ Equity (Deficit)			Noncontrolling Interests			Total Equity (Deficit)
Balance, December 31, 2014	21,616	18	$	214	$	28,663	$	(285	)	$	(53,634	)	$	(9,090	)	$	(34,132	)	$	1,180		$	(32,952	)
Equity-based compensation *	642	9			2,735		(40		)							2,695						2,695
Capital distribution to noncontrolling interests																—			(626		)	(626		)
Net income attributable to NTELOS Holdings Corp.										7,443						7,443						7,443
Amortization of unrealized loss from defined benefit plans, net of $224 of deferred income taxes													352			352						352
Comprehensive income attributable to noncontrolling interests																—			999			999
Balance, September 30, 2015	22,258	27	$	214	$	31,398	$	(325	)	$	(46,191	)	$	(8,738	)	$	(23,642	)	$	1,553		$	(22,089	)

* 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.

6

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 13 for additional information regarding this arrangement. The Company does not have any independent 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”) valued at approximately $56.0 million. The transaction closed on April 15, 2015. Pursuant to the terms of the spectrum sale, the Company entered into a lease agreement with T-Mobile which allows it to continue using the Eastern Market spectrum licenses for varying terms ranging from the closing date through November 15, 2015 in order to facilitate the wind down of our operations. In conjunction with the agreement to sell, the Company has taken an impairment charge for wireless spectrum and fixed assets, and has incurred restructuring charges. See Note 8 for additional information regarding these charges.

On August 10, 2015,the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Shenandoah Telecommunications Company, a Virginia corporation (“Shentel”), and Gridiron Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Shentel (“Merger Sub”), pursuant to which, at the effective time of the merger (“Effective Time”), Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Shentel (“Merger”).

Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, each share of common stock, par value $0.01 per share, of the Company (“Common Stock”) issued and outstanding immediately prior to the Effective Time (excluding (i) any shares of Common Stock that are owned by the Company, Shentel or any of their respective subsidiaries and (ii) any shares of Common Stock that are owned by any Company stockholders who are entitled to exercise, and properly exercise, appraisal rights with respect to such shares of Common Stock pursuant to the General Corporation Law of the State of Delaware) will be cancelled and converted automatically into the right to receive $9.25 in cash, without interest.

The completion of the Merger, which is expected to close in the first quarter of 2016, is subject to the satisfaction or waiver of certain conditions, including (i) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, (ii) the approval of the transaction by the Federal Communications Commission (the “FCC”) and applicable state public utility commissions, (iii) the provision of all required notices to applicable state public utility commissions, (iv) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), as amended, (v) the absence of any proceeding, order or law enjoining or prohibiting the Merger or the other transactions contemplated by the Merger Agreement, (vi) each party’s material performance of its obligations and compliance with its covenants, (vii) the accuracy of each party’s representations and warranties, subject to customary materiality qualifiers, (viii) the absence of a material adverse effect on the Company and (ix) the consummation of the transactions contemplated by the Master Agreement, dated as of August 10, 2015, between SprintCom, Inc., an affiliate of Sprint Corporation, and Shenandoah Personal Communications, LLC, a wholly-owned subsidiary of Shentel (“Sprint Transactions”). The HSR Act waiting period was terminated early by the Federal Trade Commission on September 25, 2015.

The Merger Agreement contains certain termination rights for Shentel and the Company, including termination by either party if the Merger is not consummated by February 29, 2016 (subject to a one-time 120-day extension exercisable by either party). The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, including in connection with a change of recommendation of the Company board of directors (the “Board”) or the acceptance of a superior proposal by the Board, the Company will pay Shentel a termination fee equal to $8.8 million plus reimbursement of up to $2.5 million in fees, costs and expenses incurred by Shentel in connection with the Merger. The Merger Agreement also provides that, upon termination of the Merger Agreement under specified circumstances, Shentel will pay the Company a termination fee of $25 million or $8.8 million, depending on the specific circumstances, plus reimbursement of up to $2.5 million in fees, costs and expenses incurred by the Company in connection with the Merger.

7

The completion of the Merger is not subject to a financing condition. However, in connection with the Merger Agreement, Shentel has entered into a commitment letter with CoBank, ACB, Royal Bank of Canada and Fifth Third Bank (collectively, the “Lenders”), dated as of August 10, 2015, pursuant to which the Lenders have committed (the “Debt Commitment”) to make available to Shentel senior secured credit facilities, including a revolving credit facility and two term loan facilities. The Debt Commitment is subject to various conditions, including the consummation of the Sprint Transactions and the consummation of the Merger in accordance with the terms and conditions set forth in the Merger Agreement. Under certain conditions, if the Merger Agreement is terminated because of the failure of Shentel to obtain financing, Shentel will pay the Company the termination fee of $25 million plus reimbursement of up to $2.5 million in fees, costs and expenses referenced above.

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. The accompanying condensed consolidated balance sheet as of December 31, 2014 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”). These financial statements should be read in conjunction with the Company’s 2014 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 30, 2015 and December 31, 2014 was $79.6 million and $28.5 million, respectively. The remaining $29.2 million and $45.0 million of cash at September 30, 2015 and December 31, 2014, 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.

8

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 30, 2015		December 31, 2014
Accrued payroll	$	4,862	$	6,545
Accrued taxes	6,927		5,383
Accrued restructuring	4,545		3,400
Other	13,380		11,825
Total	$	29,714	$	27,153

Other Long-Term Liabilities

(In thousands)	September 30, 2015		December 31, 2014
Asset retirement obligation	$	27,631	$	27,560
Deferred gain on sale leaseback	17,067		2,617
Deferred SNA revenue	16,868		8,173
Other	6,256		6,666
Total	$	67,822	$	45,016

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 30, 2015 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) million for the three months ended September 30, 2015 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 for the respective periods.

Defined benefit pension plan assets were valued at $22.0 million at September 30, 2015.

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.

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.

9

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 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances.  The guidance is effective for annual reporting periods ending after December 15, 2016, with early adoption permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s financial position or results of operations.

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in the financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The guidance is effective for annual reporting periods beginning after December 15, 2015, 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 2015, FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides additional guidance regarding cloud computing arrangements. The guidance requires registrants to account for a cloud computing arrangement that includes a software license element consistent with the acquisition of other software licenses. Cloud computing arrangement without software licenses are to be accounted for as a service contract. This guidance is effective for fiscal years and interim periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s financial position or results of operations.

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 value. 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.

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Note 3. Supplemental Cash Flow Information

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:

	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

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.

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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Note 5. Property, Plant and Equipment

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

(In thousands)	Estimated Useful Life	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.

At September 30, 2015 and December 31, 2014, goodwill and radio spectrum licenses were comprised of the following:

	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 Assets Subject to Amortization

Customer relationships and trademarks are considered amortizable intangible assets. At September 30, 2015 and December 31, 2014, customer relationships and trademarks were comprised of the following:

		September 30, 2015							December 31, 2014
(In thousands)	Estimated Useful Life	Gross Amount		Accumulated Amortization			Net		Gross Amount		Accumulated Amortization			Net
Customer relationships	17.5 years	$	36,900	$	(34,549	)	$	2,351	$	36,900	$	(34,305	)	$	2,595
Trademarks	15 years	7,000		(4,861		)	2,139		7,000		(4,511		)	2,489
Total		$	43,900	$	(39,410	)	$	4,490	$	43,900	$	(38,816	)	$	5,084

The Company amortizes its amortizable intangible assets using the straight-line method. Amortization expense for the three months ended September 30, 2015 and 2014 was $0.2 million, respectively. Amortization expense for the nine months ended September 30, 2015 and 2014 was $0.6 million and $1.7 million, respectively.

Note 7. Long-Term Debt

At September 30, 2015 and December 31, 2014, the Company’s outstanding long-term debt consisted of the following:

(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

Long-Term Debt, Excluding Capital Lease Obligations

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”).

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 30, 2015, excluding capital lease obligations, based on the contractual terms of the instruments were as follows:

(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 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.

The Amended and Restated Credit Agreement has a Restricted Payments basket, which can be used to make Restricted Payments (as defined in the Amended and Restated Credit Agreement), including the ability to pay dividends, repurchase stock or advance funds to the Company. 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 Cash Flow (as defined in the Amended and Restated Credit Agreement). 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 Lease Obligations

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 30, 2015, the carrying value and accumulated depreciation of these assets were $2.1 million 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.

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Note 8. Restructuring Charges

In December 2014, the Company announced its intention to sell its wireless spectrum and wind down its operations in the Eastern Markets, 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 consolidated balance sheets. A summary of the restructuring liabilities is presented below:

(In thousands)	Employee Separation			Contract Terminations			Other			Total
Expected period of recognition	2014-2015			2014-2015			2014-2015
Projected range at completion	$4,000 - $5,000			$40,000 - $45,000			$1,500 - $2,000			$45,500 - $52,000
Cumulative charges incurred as of September 30, 2015	$	4,052		$	6,736		$	1,111		$	11,899
Balance as of December 31, 2014	$	1,496		$	917		$	987		$	3,400
Charges	1,654			338			17			2,009
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 separation costs consist 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.

Note 9. 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. 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. The following is a summary by balance sheet category:

Long-Term Investments

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.

Interest Rate Derivatives

In February 2013, the Company purchased an interest rate cap for $0.9 million with a notional amount of $350.0 million, which capped the three month Eurodollar rate at 1.0%. The Company did not designate the interest rate cap agreement as a cash flow hedge for accounting purposes. Therefore, the change in market value of the agreement was recorded as a gain or loss in other expense. The Company recorded an immaterial loss for the three and nine months ended September 30, 2015, and losses of less

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than $0.1 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.

The following table indicates the difference between face amount, carrying amount and fair value of the Company’s financial instruments at September 30, 2015 and December 31, 2014.

	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

*Notional amount

The fair value of the Term Loans under the Amended and Restated Credit Agreement were derived based on bid prices at September 30, 2015 and December 31, 2014, respectively. The fair value of the derivative instrument was based on a quoted market price at September 30, 2015 and December 31, 2014, respectively. These instruments are classified within Level 2 of the fair value hierarchy described in FASB ASC 820, Fair Value Measurements and Disclosures.

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Note 10. Equity and Earnings Per Share

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

	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

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

During the nine months ended September 30, 2015, the Company granted 28,031 PSUs under the Employee Equity Incentive Plans to certain key employees. These PSUs vest on December 31, 2016 and are subject 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.

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:

(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, 2015	1,583		$	19.09
Granted during the period	261		6.00
Exercised during the period	(1	)	0.58
Forfeited during the period	(283	)	21.05
Stock options outstanding at September 30, 2015	1,560		$	16.55	5.7 years	$	—
Exercisable at September 30, 2015	943		$	20.22	5.7 years	$	—
Total expected to vest after September 30, 2015	556		$	12.20

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  Grant Date Fair Value per Share
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 summary of the activity and status of the Company’s performance stock unit awards for the nine months ended September 30, 2015 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, 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

At September 30, 2015, there was $0.4 million 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.

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 nine months ended September 30, 2015 and 2014, 6,635 shares and 4,669 shares, respectively, were issued under the employee stock purchase plan. Compensation expense associated with the employee stock purchase plan for the nine months ended September 30, 2015 and 2014 was immaterial.

Note 12. Income Taxes

Income tax expense (benefit) for the three and nine months ended September 30, 2015 was $(3.5) million and $7.6 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. 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 13. 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 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 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. Tower Sale and Leaseback

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."

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 Company cannot presently determine the ultimate resolution of this matter nor can it reasonably estimate the range of possible losses.

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 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

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with whom it does business, or on its operating results and business generally, (6) the outcome of any legal proceedings related to the merger; (7) the Company may be adversely affected by other economic, business, and/or competitive factors; (8) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (9) changes in the legal or regulatory environment; and (10) other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all. If the 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, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky. 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 being discontinued after closing and NTELOS’s approximately 300,200 wireless retail customers 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 by Shentel is expected to close in early 2016, subject to customary conditions, including necessary approvals from federal and state regulators and NTELOS stockholders as well as the completion of Shentel’s re-affiliation transaction with Sprint. Quadrangle Capital Partners, which owns over 18% of NTELOS’s outstanding common stock, has entered into an agreement to vote its shares in favor of the merger.

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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 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 network via our wholesale contracts provide us with a differentiated competitive position relative to our primary wireless competitors, most of whom are national providers. 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

In January 2015, we entered into a definitive agreement to sell up to 103 towers for approximately $43.0 million. The agreement provides for long term lease agreements on the sold towers that are located in our Western Markets. During the nine months ended September 30, 2015, we closed on the sale of 96 towers with net proceeds to us of approximately $40.4 million. We intend to sell and leaseback the remaining towers during 2015. For additional information, see Note 14 of the Notes to the Unaudited Condensed Consolidated Financial Statements.

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RESULTS OF OPERATIONS – OVERVIEW

Three-Month Results

Operating revenues decreased $22.1 million, or 18.5%, to $97.5 million for the three months ended September 30, 2015 compared to $119.6 million for the three months ended September 30, 2014 driven by a $22.3 million decrease in the Eastern Markets due to the wind down of those operations.Operating income decreased $15.2 million, or 147.1%, to a loss of $(4.9) million for the three months ended September 30, 2015 compared to $10.3 million for the three months ended September 30, 2014 reflecting the reduction in operating revenues offset by a reduction in operating expenses related to the wind down of our Eastern Markets. Depreciation and Amortization decreased $3.3 million due to the write down and abandonment of property plant and equipment in our Eastern Markets recorded in the fourth quarter of 2014. Income before income taxes decreased $14.1 million to a loss of $(12.2) million for the three months ended September 30, 2015 compared to $1.9 million for the three months ended September 30, 2014 for the reasons discussed above and a reduction in other expenses.

Nine-Month Results

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 per Account ("ARPA") 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

ARPA in our Western Markets decreased for the three and nine months ended September 30, 2015 as compared to the same period in 2014 as a result of pricing declines driven by the competitive environment and service plan discounts offered with EIP. We expect ARPA to continue to be under pressure as our competition stays focused on price incentives and due to increased acceptance of EIP with its associated service plan discounts.

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 30, 2015 and 2014.

Total ABPU	Three Months Ended September 30,						Nine months ended September 30,
(Dollars in thousands, except ABPU)	2015			2014			2015			2014
Retail revenue	$	50,221		$	72,034		$	174,978		$	218,845
Add: EIP billings	4,835			18			11,084			18
Less: prepay service revenues and other	(9,031		)	(14,950		)	(32,591		)	(47,019		)
Total postpay billings	$	46,025		$	57,102		$	153,471		$	171,844
Average number of postpay subscribers	265,400			310,000			284,800			307,700
Postpay ABPU	$	57.80		$	61.41		$	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 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 equipment 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 of our Eastern Markets;

• Depreciation and amortization – includes depreciable 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.

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 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 30, 2015 and 2014. The VA Alliance made $0.6 million and $0.7 million of capital distributions to the minority owners during the nine months ended September 30, 2015 and 2014, respectively.

RESULTS OF OPERATIONS – COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

OPERATING REVENUES

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

	Three Months Ended September 30,
(In thousands)	2015		2014		$ Variance			% Variance
Retail revenue	$	50,221	$	72,034	$	(21,813	)	(30.3	)%
Wholesale and other revenue	35,567		37,802		(2,235		)	(5.9	)%
Equipment sales	11,752		9,802		1,950			19.9	%
Total operating revenues	$	97,540	$	119,638	$	(22,098	)	(18.5	)%

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Retail Revenue

Retail revenue in our Western Markets declined $2.1 million, or 4.8%, to $42.1 million as compared to the three months ended September 30, 2014. 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, as compared to the same period in 2014, as a result of an increase in subscribers, offset by by a decline in revenue per unit driven by the competitive landscape. 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 $2.6 million, or 6.9%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014, primarily reflecting a $2.2 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 in our Western Markets increased $4.9 million, or 73.4%, for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014, reflecting an increase in 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 $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 30, 2015 and 2014:

	Three Months Ended September 30,
(In thousands)	2015		2014		$ Variance			% Variance
Cost of services	$	30,087	$	30,591	$	(504	)	(1.6	)%
Cost of equipment sold	21,495		26,290		(4,795		)	(18.2	)%
Customer operations	19,201		25,381		(6,180		)	(24.3	)%
Corporate operations	11,830		8,580		3,250			37.9	%
Restructuring	4,627		—		4,627			—
Depreciation and amortization	15,157		18,473		(3,316		)	(18.0	)%
Total operating expenses	$	102,397	$	109,315	$	(6,918	)	(6.3	)%

Cost of Services – Cost of services in our Western Markets increased $2.0 million, or 9.7%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to a $1.5 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.

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 – Restructuring expense was $4.6 million for the three 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 $3.3 million, or 18.0%, for the three months ended September 30, 2015 compared to the three 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 in connection with the spectrum sale.

OTHER EXPENSE

Interest expense, net decreased $0.9 million, or 11.3%, for the three months ended September 30, 2015 compared to the three 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.

INCOME TAXES

Income tax expense (benefit) for the three months ended September 30, 2015 and 2014 was $(3.5) million and $0.8 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.

RESULTS OF OPERATIONS – COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

OPERATING REVENUES

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 30, 2015, we had $108.8 million of cash, compared to $73.5 million as of December 31, 2014, of which $79.6 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 $29.2 million was held in non-interest bearing accounts. The commercial bank that held substantially all of our cash at September 30, 2015 has a rating of Aa1 on long term deposits by Moody’s. Our working capital (current assets minus current liabilities) was $150.8 million as of September 30, 2015 compared to $108.6 million as of December 31, 2014.

As of September 30, 2015, we had $629.9 million in aggregate long-term liabilities, compared to $629.4 million as of December 31, 2014, consisting of $515.9 million in long-term debt, including capital lease obligations, and approximately $114.0 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 30, 2015 is provided in Note 7 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.

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 months ended September 30, 2015 and 2013, respectively:

	Nine Months Ended September 30,
(In thousands)	2015			2014
Net cash provided by operating activities	$	18,603		$	79,135
Net cash provided by/(used in) investing activities	21,692			(65,374		)
Net cash provided by/(used in) financing activities	(4,999		)	3,586

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Operating Activities

Our cash flows from operating activities for the nine months ended September 30, 2015 of $18.6 million decreased $60.5 million, or 76.5%, compared to the cash flows from operating activities of $79.1 million for the nine months ended September 30, 2014. 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 changes in working capital further decreased cash provided by operating activities. The decrease is primarily due to an increase in accounts receivable resulting from the timing of cash collections for EIP sales as compared 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 $75.2 million in capital expenditures for the nine months ended September 30, 2015. This was an increase of $7.5 million compared to the $67.7 million of capital expenditures for the same period last year. Included in the capital spending for the nine months ended September 30, 2015 was $64.3 million of expenditures for additional capacity to support our projected growth and incremental 4G/LTE expansion, and $10.9 million to maintain our existing networks and other business needs. These capital expenditures were offset by net proceeds of $96.9 million primarily from the sale of our tower assets and spectrum.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2015 was $5.0 million compared to net cash provided by financing activities of $3.6 million for the nine months ended September 30, 2014, which reflected $4.1 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 $108.8 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.

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 30, 2015, 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	$	520,986	$	522,980	$	534,291	$	511,945
Capital lease obligations	585		$	585	643		526

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 30, 2015, 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 September 30, 2015 we had approximately $79.6 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 30, 2015 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 Company cannot presently determine the ultimate resolution of this matter nor can it reasonably estimate the range of possible losses.

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, 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 30, 2015 under the authorization. The approximate dollar value of shares that may yet be purchased under the plan was $23.1 million at September 30, 2015. 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.

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.

Exhibit No.	Description
31.1*	Certification of Rodney D. Dir, President and Chief Executive Officer, Pursuant to Rule 13a-14(a).
31.2*	Certification of Stebbins B. Chandor Jr., Executive Vice President and Chief Financial Officer, Treasurer and Asst. Secretary, Pursuant to Rule 13a-14(a).
32.1*	Certification of Rodney D. Dir, 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 B. Chandor Jr., Executive Vice President and Chief Financial 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
		Rodney D. Dir
		President and Chief Executive Officer
		(Principal Executive Officer)
Dated: October 28, 2015	By:	/s/ Stebbins B. Chandor Jr.
		Stebbins B. Chandor Jr.
		Executive Vice President and Chief Financial Officer, Treasurer and Asst. Secretary
		(Principal Financial Officer)
Dated: October 28, 2015	By:	/s/ John Turtora
		John Turtora
		Vice President and Controller
		(Principal Accounting Officer)

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