SHENANDOAH TELECOMMUNICATIONS COMPANY ■ 28
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31,
2003 2002 2001
(in thousands)
Computed “expected” tax expense $ 5,122  $ (1,701)  $ 5,271
State income taxes, net of federal tax effect 298 (460) 575
Other, net (116) 52 (35)
Income tax provision (benefit) $ 5,304 $ (2,109) $ 5,811
Net deferred tax assets and liabilities consist of the following at December 31:
2003 2002 2001
Deferred tax assets: (in thousands)
Allowance for doubtful accounts $ 192 $ 370 $ 247
Accrued compensation costs - 181 149
State net operating loss carryforwards, net of federal tax 1,569 1,425 -
Recognized investment losses including impairments - 593 -
Deferred revenues304 338 179
AMT credits - 285 -
Accrued pension costs 476 395 397
Other, net 81 23 -
     Total gross deferred tax assets $ 2,622 $ 3,610 $ 972
Less valuation allowance (864) (704) -
     Net deferred tax assets $ 1,758 $ 2,906 $ 972
Deferred tax liabilities:
Plant-in-service $ 20,058 $ 17,568 $ 11,313
Escrowed gain on sale of discontinued operations 1,859 --
Unrealized gain on investments 15 -2 6
Gain on investments, net 123 - 4,035
     Total gross deferred tax liabilities $ 22,055 $ 17,568 $ 15,374
Net deferred tax liabilities $ 20,297  $ 14,662 $ 14,402
In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent
upon generating future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax
planning strategies in making this assessment.  Based upon the level of historical taxable income and projections for
future taxable income over the periods which the deferred tax assets are deductible, management believes it more likely
than not that the Company will realize the benefits of the deductible differences that are not reserved by the valuation
allowance, which increased by $160 thousand, to $864 thousand in 2003, from $704 thousand in 2002.  The Company
has generated net operating loss (NOL) carry forwards of approximately $25.9 million from its PCS operations in
several states.  The carry forwards expire at varying dates beginning in 2005.
Note 7.  Significant Contractual Relationship
In 1999, the Company executed a Management Agreement (the Agreement) with Sprint whereby the Company
committed to construct and operate a PCS network using CDMA air interface technology, replacing an earlier PCS
network based on GSM technology.  Under the Agreement, the Company is the exclusive PCS Affiliate of Sprint
providing wireless mobility communications network products and services in its territory which extends from
Altoona, York and Harrisburg, Pennsylvania, and south along the Interstate 81 corridor through Western Maryland, the
panhandle of West Virginia, to Harrisonburg, Virginia.  The Company is authorized to use the Sprint brand name in its
territory, and operate its network under the Sprint radio spectrum license.
Note 6.  Income Taxes (Continued)