SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Significant Contractual Relationship (Continued) As part of the Amended Agreement signed January 30, 2004, the Company and Sprint resolved several outstanding issues. The result of the resolution of these disputes was a favorable adjustment to operating income of $0.7 million for the settlement of a dispute related to inter-market travel revenue generated by certain other Affiliate subscribers traveling in the Company’s market, and a reduction to previously billed disputed software maintenance fees from a re- allocation of the fees from Sprint on a per subscriber basis versus the prior allocation which was on a per switch basis. The Sprint Agreements require the Company to maintain certain minimum network performance standards and to meet other performance requirements. The Company was in compliance in all-material respects with these requirements as of December 31, 2003. Going forward, the adoption of the Amended Agreement will allow the Company to better project the fees it will pay to Sprint for its cash cost per user (CCPU) per month related to certain billing, customer services and other service costs, and certain defined costs per gross add (CPGA). The CCPU charge from Sprint is fixed at $7.70 per subscriber through the end of 2006, and certain defined CPGA are the lower of $25.00 or 6.3% of Sprint’s published CPGA figure. ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement. Facility lease revenue from ValleyNet was approximately $3.1 million, $3.5 million and $4.1 million in 2003, 2002 and 2001, respectively. At December 31, 2003, 2002 and 2001, the Company had accounts receivable from ValleyNet of approximately $0.4 million, $0.4 million and $0.4 million, respectively. The Company’s PCS operating subsidiary leases capacity through ValleyNet fiber facilities. Payment for usage of these facilities was $0.8 million in 2003, and $1.2 million in 2002 and 2001. Virginia Independent Telephone Alliance, (VITAL), another equity method investee of the Company, provides SS7 signaling services to the Company. These transactions are recorded as expense on the Company’s books and were less than $30 thousand in each of the 2003, 2002 and 2001. The Company maintains a noncontributory defined benefit pension plan and a separate defined contribution plan. The following table presents the defined benefit plan’s funded status and amounts recognized in the Company’s consolidated balance sheets. Note 8. Related Party Transactions Note 9. Retirement Plans SHENANDOAH TELECOMMUNICATIONS COMPANY ■  30 2003 2002 2001 Change in benefit obligation: (in thousands) Benefit obligation, beginning $ 9,585 $ 8,538 $ 6,847 Service cost 486 420 313 Interest cost 615 591 507 Actuarial (gain) loss 1,211 252 1,054 Benefits paid (247) (216) (183) Benefit obligation, ending $11,650 $ 9,585 $ 8,538 Change in plan assets: Fair value of plan assets, beginning $ 6,705 $ 7,375 $ 8,081 Actual return on plan assets 948 (794) (523) Benefits paid (247) (216) (183) Contributions made 447 340 - Fair value of plan assets, ending $ 7,853 $ 6,705 $ 7,375