SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2003 2002 2001 Available-for-sale securities: (in thousands) Beginning Balance $ (7) $ 68 $ 9,153 Unrealized holding gains (losses) during the year, net 48 (75) 5,615 Reclassification of recognized (gains) during the year, net - - (14,700) 41 (7) 68 Deferred tax effect related to net unrealized gains 15 (3) 26 Ending Balance $ 26 $ (4) $ 42 As of December 31, other investments, comprised of equity securities, which do not have readily determinable fair values, consist of the following: 2003 2002 2001 Cost method: (in thousands) Rural Telephone Bank $ 796 $ 796 $  796 NECA Services, Inc. 500 500 500 CoBank 1,321 1,126 768 NTC Communications (equity method in 2003 and 2002) - - 500 Other 182 241 254 $ 2,799 $ 2,663 $ 2,818 Equity method: South Atlantic Venture Fund III L.P. $8 9 $ 263 $ 393 South Atlantic Private Equity Fund IV L.P. 541 707 891 Dolphin Communications Parallel Fund, L.P. 184 273 441 Dolphin Communications Fund II, L.P. 1,290 1,024 518 Burton Partnership 1,149 988 970 NTC Communications (cost method in 2001) 971 1,089 - Virginia Independent Telephone Alliance 228 248 400 ValleyNet 17 17 7 $ 4,469 $ 4,609 $ 3,620 Total investments $ 7,268 $ 7,272 $ 6,438 $ $ $ 2 ) - - $ $ - 7 $ $ securities, which do not have readily det erminable fair values, consist of the following: comprised of equity  Note 3. Securities and Investments (Continued) The Company’s investment in CoBank increased $195 thousand in 2003 and $358 thousand in 2002, due to the ongoing patronage earned from the outstanding investment and loan balances the Company has with CoBank. For 2003 and 2002, the Company’s allocated portions of losses, recorded on the investment in NTC were $118 thousand and $171 thousand, respectfully. In 2003, the Company received distributions from its equity investments totaling $0.5 million in cash and invested $0.7 million in two equity investments, Dolphin Communications Parallel Fund, LP and Dolphin Communications Fund II, LP. These two investments recorded losses of approximately $0.4 million for the 2003 year. The Company recorded a loss from the Virginia Independent Telephone Alliance investment of $19 thousand, for 2003. The Company recorded a gain from the ValleyNet partnership of $84 thousand and received distributions of $84 thousand. Other equity investments lost an additional $0.4 million for 2003. The Company was committed to invest an additional $1.8 million at December 31, 2003 in various equity method investees pursuant to capital calls from the fund managers. It is not practical to estimate the fair value of the other investments due to their limited market and restrictive nature of their transferability. The Company’s ownership interests in Virginia Independent Telephone Alliance and ValleyNet are approximately 22% and 20%, respectively. The Company purchases services from Virginia Independent Telephone Alliance and ValleyNet at rates comparable with other customers. The Company’s ownership in NTC Communications is approximately 18%. Other equity method investees are investment limited partnerships which are approximately 2% owned each. 25 ■  2003 ANNUAL REPORT