SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SHENANDOAH TELECOMMUNICATIONS COMPANY ■ 44
The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered or
products have been delivered, the price to the buyer is fixed and determinable, and collectibility is reasonably assured.
The Company's revenue recognition polices are consistent with the guidance in Staff Accounting Bulletin ("SAB") No.
101, Revenue Recognition in Financial Statements promulgated by the Securities and Exchange Commission, and the
Emerging Issues Task Force (“EITF”) 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”).
Effective July 1, 2003 the Company adopted EITF 00-21. The EITF guidance addresses how to account for
arrangements that may involve multiple revenue-generating activities, i.e., the delivery or performance of multiple
products, services, and/or rights to use assets.  In applying this guidance, separate contracts with the same party,
entered into at or near the same time, will be presumed to be a bundled transaction, and the consideration will be
measured and allocated to the separate units based on their relative fair values.  The consensus guidance was applicable
to new PCS service agreements entered into for quarters beginning July 1, 2003.  The adoption of EITF 00-21 required
evaluation of each arrangement entered into by the Company for each sales channel.  The Company will continue to
monitor arrangements with its sales channels to determine if any changes in revenue recognition will need to be made
in the future.  The adoption of EITF 00-21 has resulted in substantially all of the PCS activation fee revenue generated
through Company-owned retail stores and associated direct costs being recognized at the time the related wireless
handset is sold and it is classified as equipment revenue and cost of equipment, respectively.  Upon adoption of EITF
00-21, previously deferred PCS revenue and costs will continue to be amortized over the remaining estimated life of a
subscriber, not to exceed 30 months.  PCS revenue and costs for activations at other retail locations and through other
sales channels will continue to be deferred and amortized over their estimated lives as prescribed by SAB 101.  The
adoption of EITF 00-21 had the effect of increasing equipment revenue by $68 thousand and increasing costs of
equipment by $23 thousand, which otherwise would have been deferred and amortized.
The Company records equipment revenue from the sale of handsets and accessories to subscribers in its retail stores
and to local distributors in its territories upon delivery.  The Company does not record equipment revenue on handsets
and accessories purchased from national third-party retailers, those purchased though the Company’s business-to-
business sales force, or directly from Sprint by subscribers in its territories.  The Company believes the equipment
revenue and related cost of equipment associated with the sale of wireless handsets and accessories is a separate
earnings process from the sale of wireless services to subscribers.  For competitive marketing reasons, the Company
sells wireless handsets at prices lower than the cost.  In certain instances the Company may offer larger handset
discounts as an incentive for the customer to agree to a multi-year service contract.  The Company also sells wireless
handsets to existing customers at a loss in handset sales and the corresponding cost in cost of goods, and accounts for
these transactions separately from agreements to provide customers wireless service.  These transactions are viewed as
a cost to retain the existing customers and deter churn.
For the Company’s wireless customers that purchase and activate their service through a channel not covered by EITF