The Company experienced significant bad debt losses in its PCS operations related to the Sprint Clear PaySM program.
The program was initially targeted at customers in sub-prime credit classes and did not require a deposit upon
activation of service. As a result of default rates that exceeded projections, the Company experienced a substantial
increase in bad debt expense, which rose from $1.2 million in 2001 to $4.4 million in 2002. The reinstatement of
deposit requirements in April 2002 caused some moderation in bad debt expense by the end of the year. Total PCS
bade debt expense for 2002 was $3.7 million of this expense is associated with several large telecommunications
customers who filed bankruptcies in 2002.
Selling, general and administrative expenses were $26.1 million, an increase of $9.3 million or 55.0%.  Customer
support costs were $7.8 million, an increase of $2.8 million or 55.3%.  The growth in Sprint wireless subscribers was
the primary driver for this increase.  Advertising expense was $4.3 million, an increase of $1.5 million or 55.8%.  This
change was primarily due to the stepped-up and ongoing marketing efforts to support the PCS operations in the Quad
State market and particularly the Central Penn market.  PCS sales staff expenses were $2.7 million, an increase of $0.7
million or 32.7%.  The increase was principally due to the full year operations of the three retail locations and adding
additional sales staff.
Depreciation and amortization expense was $14.5 million, an increase of $3.2 million or 28.6%.  The PCS operation had
depreciation expense of $8.6 million, an increase of $3.6 million or 72.7%.  The PCS operation added 53 additional base
stations during 2002.
Network operating costs were $32.5 million, an increase of $5.8 million or 21.5%.  Line and switching costs were $9.7
million, an increase of $2.6 million or 37.4%, due principally to the impact of the expanded PCS network.  Travel
expense, generated by the Company’s PCS subscribers’ use of minutes on other providers’ portions of the Sprint
wireless network, was $10.7 million, an increase of $0.9 million or 8.4%. The increase in customer travel usage more
than offset the travel rate explained above in travel revenue.  Plant specific costs were $9.6 million, which include the
operation, and maintenance of the networks increased $2.3 million or 30.7%.  Tower, building, and land rentals, as well
as PCS equipment maintenance, were major contributors to the increase in plant specific expenses.  Other network
costs such as power, network administration, and engineering, were $2.7 million, the same as in 2001.
Cost of goods and services was $10.5 million, an increase of $3.1 million or 41.8%.  The PCS cost of goods sold was
$8.3 million, an increase of $2.8 million or 50.2%.  This change is due primarily to higher volumes of handsets sold
through Company owned stores and PCS handset subsidies paid to third-party retailers.  The cable television
programming (cost of service) expense was $1.4 million, an increase of $0.1 million or 4.6%.  The other cost of goods
sold increased $0.3 million, compared to the same period in 2001.
Total operating expenses were $83.6 million, an increase of $21.3 million or 34.3%.  The continued growth in the PCS
operation was principally responsible for the change.
Within other revenues, Internet and 511Virginia contract revenues from the Virginia Department of Transportation,
were $5.1 million in 2002, an increase of $1.2 million or 30.4%.  The Company had 18,050 dial-up Internet subscribers
at December 31, 2002, compared to 17,423 subscribers at the end of 2001.  Total Internet service revenue was $4.2
million, an increase of $0.6 million or 15.7%.  Services provided under the 511Virginia contract contributed $0.9
million to other revenues, an increase of $0.6 million.  Telecommunications equipment sales, services and lease
revenues were $1.2 million, a nominal increase over 2001 results.