SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.  Summary of Significant Accounting Policies (Continued)
2003 2002 2001
Net Income (in thousands, except per share amounts)
As reported $ 32,074 $ 4,519 $16,372
Pro forma $ 31,899 $ 4,307 $16,115
Earnings per share, basic and diluted
As reported, basic $ 4.23 $ 0.60 $ 2.18
As reported, diluted $ 4.22 $ 0.60 $ 2.17
Pro forma, basic $ 4.21 $ 0.57 $ 2.14
Pro forma, diluted $ 4.19 $ 0.57 $ 2.13
101, (SAB No.101).  Effective July 1, 2003, the Company adopted Emerging Issues Task Force ("EITF") No. 00-21,
"Accounting for Revenue Arrangements with Multiple Element Deliverables." 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 adoption of EITF 00-21 has
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 would
need to be made in the future.  The adoption of EITF 00-21 has resulted in substantially all of the activation fee
revenue generated from Company-owned retail stores and associated direct costs being recognized at the time the
related wireless handset is sold and is classified as equipment revenue and cost of equipment, respectively.  Upon
adoption of EITF 00-21, previously deferred revenues and costs will continue to be amortized over the remaining
estimated life of a subscriber, not to exceed 30 months.  Revenue and costs for activations at other retail locations 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 activation by $23 thousand
in 2003, which otherwise would have been deferred and amortized. The amounts of deferred revenue under SAB 101 at
December 31, 2003, 2002 and 2001 were $1.2 million, $1.5 million and $1.2 million, respectively.  The deferred costs
at December 31, 2003, 2002 and 2001 were $0.4 million, $0.7 million and $0.7 million, respectively.  
The Company records its PCS service revenue net of the 8% of collected revenue that is paid to Sprint. Under the
management agreement with Sprint, through December 31, 2003 Sprint is entitled to retain 8% of all collected service
revenue from subscribers whose service home is in the Company's territory, and 8% of the collected roaming revenue
generated by non-Sprint wireless subscribers who use the Company's network.  With the adoption of the new Amended
Agreement, the Company will record its service revenue and receive payment from Sprint based on billed revenue, net
of 8% of billed revenue retained by Sprint, customer credits, and allocated write-offs.
Stock Option Plan: To account for its fixed plan stock options, the Company applies the intrinsic value-based method
of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations including Financial Accounting Standards Board (FASB) Interpretation No.
44, "Accounting for Certain Transactions involving Stock Compensation," an interpretation of APB Opinion No. 25
issued in March 2000.  Under this method, compensation expense is recorded on the date of the grant only if the
current market price of the underlying stock exceeded the exercise price.  SFAS No. 123, "Accounting for Stock-Based