12
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

      [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number 0-556

                             SUREWEST COMMUNICATIONS
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                              California 68-0365195
                  (State or other jurisdiction (I.R.S. Employer
              of incorporation or organization) Identification No.)

                 200 Vernon Street, Roseville, California 95678
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (916) 786-6141

               Securities registered pursuant to Section 12(g) of
                                    the Act:

                        Common Stock - Without Par Value
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes X            No _____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

The aggregate  market value of voting stock held by  non-affiliates  (and on the
assumption  that  all  shares  held  by  registrant's  employee  benefit  plans,
directors and officers may be deemed shares held by affiliates), was as of March
1,2002. As of March 1, 2002,  15,008,630 shares of the registrant's Common Stock
were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Incorporated by reference into Part III hereof are portions of the registrant's
definitive proxy statement issued in connection with the annual meeting of
registrant's shareholders to be held May 17, 2002.


<PAGE>



                                TABLE OF CONTENTS


ITEM NO.                                                                  PAGE

PART I

          1.    Business..................................................... 3
          2.    Properties................................................... 6
          3.    Legal Proceedings............................................ 6
          4.    Submission of Matters to a Vote of Security Holders......... .9


PART II

          5.    Market for Registrant's Common Equity and Related
                 Stockholder Matters.....................................    12
          6.    Selected Financial Data..................................    12
          7.    Management's Discussion and Analysis of Financial
                 Condition and Results of Operations.....................    15
         7A.    Quantitative and Qualitative Disclosures About Market
                 Risk....................................................    29
          8.    Financial Statements and Supplementary Data..............    30
          9.    Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure................................    65


PART III

         10.    Directors and Executive Officers of the Registrant.......    65
         11.    Executive Compensation...................................    65
         12.    Security Ownership of Certain Beneficial Owners and
                 Management..............................................    65
         13.    Certain Relationships and Related Transactions...........    65


PART IV

         14.    Exhibits, Financial Statement Schedules, and Reports on
                 Form 8-K................................................    65

SIGNATURES      .........................................................    90



<PAGE>



                                     PART I

Item 1. Business

SureWest   Communications,   formerly  Roseville  Communications  Company,  (the
"Company") was incorporated in 1995 under the laws of the State of California as
a holding company.  The Company's  wholly-owned  subsidiaries  include Roseville
Telephone Company ("Roseville Telephone"), SureWest Directories,  Roseville Long
Distance Company ("Roseville Long Distance"),  SureWest Internet,  QuikNet, Inc.
("QuikNet"),  SureWest Wireless and Roseville  Alternative  Company  ("Roseville
Alternative").

Substantially all of the Company's revenues are in the  communications  services
industry.  Approximately  3%,  11%  and  11% of the  Company's  total  operating
revenues in 2001, 2000 and 1999, respectively,  were derived from access charges
and charges for other  services to Pacific Bell, a wholly-  owned  subsidiary of
SBC  Communications  Inc.  ("Pacific Bell"),  pursuant to certain  agreements as
described  below. No other customer  accounted for more than 10% of consolidated
operating revenues during these years.

The Company currently generates a majority of its revenues from services subject
to regulation by the California Public Utilities  Commission  ("P.U.C.") and the
Federal Communications Commission ("F.C.C."), but expects that its proportionate
share of revenues from  nonregulated  businesses will be greater in future years
as a result of its entry into new  businesses  and the impact of  competition on
its  regulated  operations.  The table that follows  reflects the  percentage of
total operating revenues of the Company contributed by various sources.
<TABLE>
<CAPTION>

                                 % of Total Operating Revenues

Revenues                         2001              2000              1999
------------------------         ----              ----              ----
<S>                               <C>               <C>              <C>
Revenues subject to regulation    69%               75%               80%
Other revenues                    31%               25%               20%
                                 ----              ----             ----
Total operating revenues         100%              100%              100%
</TABLE>

Telecom Operations

The Company's principal regulated operating subsidiary,  Roseville Telephone, is
engaged in the business of furnishing  communications services, mainly local and
toll telephone  service and network  access  services,  in a territory  covering
approximately  83 square miles in Placer and  Sacramento  Counties,  California.
Toll service to points outside Roseville  Telephone's  service area is furnished
through  connection in Roseville with facilities of Pacific Bell, AT&T and other
interexchange  carriers.  The City of Roseville,  which is centrally  located in
Roseville Telephone's service area, is 18 miles northeast of Sacramento.  During
2000 and  2001,  Roseville  Telephone  experienced  a  significant  increase  in
competition.

For many years,  including the year ended  December 31, 2001, the area served by
Roseville  Telephone has  experienced  significant  residential,  commercial and
industrial  development.  Roseville  Telephone  continues  to be  engaged in the
expansion of its  facilities  and  operations  to meet  current and  anticipated
service demand increases and to maintain modern and efficient service. Roseville
Telephone  uses public streets and highways in the conduct of its public utility
telephone business under a non-exclusive  perpetual franchise granted by Section
7901 of the California Public Utilities Code.

Revenues  subject to  regulation,  which include local  service,  network access
service  and  toll  service  revenues,  constituted  approximately  69%  of  the
Company's total operating  revenues in 2001. Other Roseville  Telephone revenues
consist  primarily of directory  advertising  services,  billing and  collection
services,  nonregulated  sales and  services and other  miscellaneous  revenues.
Nonregulated  revenues  are  derived  from the sale,  lease and  maintenance  of
telecommunications  equipment,  payphone services, alarm monitoring services and
network access services.  In addition,  SureWest Broadband,  a Competitive Local
Exchange  Carrier  ("CLEC")  operating as a non-regulated  division of Roseville
Telephone,  offers local  service,  network  access  service and toll service to
customers in the greater  Sacramento  region,  excluding  Roseville  Telephone's
service area. In December  2001,  the Company  entered into an agreement to sell
its alarm monitoring business, which consisted principally of customer contracts
and equipment  which had no book value as of December 31, 2001. The  transaction
was  consummated  in January  2002. As a result,  Roseville  Telephone no longer
provides alarm monitoring services.

Total  revenues  from  telephone  services are affected by rates  authorized  by
various regulatory agencies.  Intrastate service rates are subject to regulation
by the P.U.C. With respect to intrastate toll calls,  interexchange carriers are
assessed  access  charges  based  on  tariffs  filed  by  Roseville   Telephone.
Additionally, Roseville Telephone bills Pacific Bell various charges for certain
local service and network access service  revenues.  Interstate access rates and
resulting  earnings  are subject to  regulation  by the  Federal  Communications
Commission ("F.C.C."). With respect to interstate services,  Roseville Telephone
has filed its own tariff with the F.C.C.  for all  elements  of access  services
except carrier common line charges,  for which Roseville  Telephone concurs with
tariffs filed by the National  Exchange Carrier  Association.  Interstate access
charges and carrier  common line  revenues  are based on  extensive  annual cost
separation studies which utilize estimated cost information and projected demand
usage. Additionally,  as discussed in "Item 3 - Legal Proceedings",  in December
1996, the P.U.C.  issued a decision regarding Roseville  Telephone's  authorized
revenue levels and regulatory framework. Roseville Telephone's future operations
may be impacted by several  proceedings pending before the F.C.C. and the P.U.C.
addressing interconnection,  access charges and universal service. See "Item 3 -
Legal  Proceedings"  and  "Item 7 -  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations" for further discussion  regarding
Roseville  Telephone's  revenues  subject  to  regulation  and  the  competitive
environment in which Roseville Telephone operates.

In addition to its regulatory  authority  with respect to Roseville  Telephone's
rates, the P.U.C. also has the power, among other things, to establish the terms
and conditions of service,  to prescribe  uniform systems of accounts to be kept
by public  utilities  and to regulate the  mortgaging or  disposition  of public
utility properties.

In February 1996, Congress passed the Telecommunications Act of 1996 (the "Act")
which significantly  changed the regulatory  environment for  telecommunications
companies.  See  "Item  3 -  Legal  Proceedings"  and  "Item  7  -  Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  for
further discussion regarding the impact of the Act.

PCS Operations

SureWest  Wireless  is the manager of and owns 100% of West Coast PCS LLC ("West
Coast"), which does business using the SureWest Wireless name and was formed for
the purpose of providing  wireless  personal  communications  services  ("PCS").
During 1997, West Coast purchased from the F.C.C. licenses to offer PCS services
in four Basic Trading Areas located in central  California  including the cities
of  Sacramento,  Stockton,  Modesto and Yuba City.  Each license  represents  10
megahertz  of spectrum  which  offers  digital  wireless  technology  capable of
providing  both  voice  and  data  transmission.   SureWest  Wireless  commenced
deployment  of  the  network  infrastructure  in  1998  and  initiated  wireless
telecommunications services with telephone, paging and voicemail capabilities in
June 1999.

Other Operations

SureWest Directories  publishes and distributes  Roseville Telephone's directory
including  the  sale of  yellow  pages  advertising  previously  provided  by an
unaffiliated  company.  SureWest  Directories is also engaged in the business of
producing,  publishing and distributing directories in other Northern California
communities.

Roseville  Long Distance  provides long  distance  services  using a fiber-optic
network  owned  by  Global   Crossing  Ltd.   ("Global   Crossing"),   providing
international, interstate and intrastate long distance service, calling card and
800 services.  On January 28, 2002,  Global Crossing filed for protection  under
Chapter 11 of the U.S.  Bankruptcy  Code.  The  Company is  presently  unable to
determine the impact, if any, that Global Crossing's bankruptcy filing will have
on the Company's long distance operations. However, the Company believes that it
could   procure   long   distance   network   transport   services   from  other
telecommunications  providers.  In the event the Company  must  procure  network
transport  services  from another  telecommunications  provider,  rates for such
service  may be higher  than those  offered by Global  Crossings.  However,  the
Company believes that the impact on its results of operations resulting from any
potential change in transport rates will not be material.

SureWest Internet provides high speed Internet service to Roseville  Telephone's
digital subscriber line ("DSL") and other high band-width customers.

In July 2001,  the Company  purchased  QuikNet,  which also  provides high speed
Internet services in addition to custom data solutions.

Sale of Cellular Partnership Interest in Sacramento-Valley Limited Partnership

On November 3, 2000, two of the Company's subsidiaries sold their collective 24%
cellular partnership interest in Sacramento-Valley  Limited Partnership ("SVLP")
to Verizon Wireless for  approximately  $236.2 million so that the Company could
concentrate on its wireless  services  provided by SureWest  Wireless.  The sale
resulted in a pre-tax gain of $201.3 million, which was recognized in the fourth
quarter of 2000.

The Company's  equity in the earnings of SVLP  constituted  approximately 4% and
19% of the Company's income before income taxes in 2000 and 1999, respectively.

Employees

At December 31, 2001, the Company had 817 employees, none of whom are
represented by a union.

Item 2. Properties

The Company owns central  office  buildings and related  equipment in Roseville,
Citrus  Heights,  Granite Bay,  and other  locations  in  Sacramento  and Placer
Counties.  The  Company's  68,000  square  foot  principal  business  office and
executive  headquarters  and 214,000 square foot  operations and  administrative
facility are located in Roseville. The Company has appropriate easements, rights
of  way  and  other  arrangements  for  the  accommodation  of its  pole  lines,
underground conduits, aerial and underground cables and wires, and PCS antennas.

In addition to land and structures, the Company's property consists of equipment
required in providing  communication  services.  This  includes  central  office
equipment, customer premises equipment and connections,  radio and PCS antennas,
towers, pole lines, aerial and underground cable and wire facilities,  vehicles,
furniture and fixtures and other equipment.  The Company also owns certain other
communications equipment held as inventory for sale or lease.

In addition to plant and equipment  that it  wholly-owns,  the Company  utilizes
poles,  towers and cable and conduit systems  wholly-owned  by, or jointly-owned
with,  other entities and leases space on facilities  wholly or jointly-owned by
the Company to other entities. These arrangements are in accordance with written
agreements customary in the industry.

Item 3. Legal Proceedings

Except for the  proceedings  described  below,  the  Company is not aware of any
material  pending  legal  proceedings,  other than ordinary  routine  litigation
incidental  to its  business,  to which  it is a party  or to  which  any of its
property is subject.

As appears in Item 1, above, Roseville Telephone is subject to regulation by the
F.C.C. and P.U.C. In the past, there have been various  proceedings before these
agencies to which  Roseville  Telephone  has been a party.  Reference is made to
Item 1 for further  information  regarding the nature of the jurisdiction of the
F.C.C. and P.U.C. over the business and operations of Roseville Telephone.

In 1996, the P.U.C.  issued a decision in connection with Roseville  Telephone's
general rate proceeding, which authorized Roseville Telephone to implement a New
Regulatory Framework ("NRF") for services furnished within Roseville Telephone's
service  area in order to  accommodate  market and  regulatory  movement  toward
competition and greater pricing flexibility. In accordance with the requirements
of its general rate case order,  Roseville  Telephone  filed an application  for
review of its NRF in 1999. This proceeding  considered  modifications to the NRF
structure,  including  potential changes to the current monitoring and reporting
requirements, the earnings sharing mechanism, and related matters. In accordance
with NRF,  Roseville  Telephone  is subject to,  among other  things,  a sharing
mechanism  whereby  Roseville  Telephone  is  required  to share  earnings  with
customers  through a reduction  to revenues if its earned  annual rate of return
exceeds  that  authorized  by the  P.U.C.  In  addition,  the  P.U.C.  Office of
Ratepayer   Advocates  ("ORA")  undertook  a  verification  audit  of  Roseville
Telephone's  non-regulated and affiliated  transactions  pursuant to the general
rate case and other P.U.C. orders. In June 2001, the P.U.C. adopted its decision
in this matter (the "Decision").  The P.U.C. ruled that Roseville Telephone must
change the method  used to allocate  costs for  services  provided by  Roseville
Telephone to its affiliates, the treatment of certain directory revenues and the
treatment  of  internal-use  software  costs.  The  Decision did not suspend the
sharing  mechanism  and  required  Roseville  Telephone  to  further  amend  its
intrastate  shareable earnings filing for 1998 and 1999 and recognize additional
shareable earnings obligations in its consolidated  financial statements,  which
were  recorded  through a reduction of revenues.  In December  2001,  the P.U.C.
denied Roseville Telephone's application for rehearing of the Decision.

In 1999,  Pacific Bell  expressed  interest in  withdrawing  from the designated
carrier plan ("DCP") for Roseville  Telephone's toll traffic and to enter into a
new, permanent  compensation  arrangement for extended area service ("EAS"). The
DCP is a compensation  arrangement  between Roseville Telephone and Pacific Bell
for certain intralata toll services.  Pacific Bell also paid Roseville Telephone
$11.5 million per year for EAS pursuant to a Settlement Transition Agreement. In
November  2000, the P.U.C.  authorized  Pacific Bell to terminate its annual EAS
payments  to  Roseville  Telephone  effective  November  30,  2000.  The  P.U.C.
authorized  replacement funding on an interim basis using the current reserve in
the California High Cost Fund-B and denied permanent  replacement  funding.  The
P.U.C.  also  opened an Order  Instituting  Investigation  for the  purposes  of
determining  whether  recovery of all,  none,  or a portion of the $11.5 million
annual  payments  should come from  Roseville  Telephone's  ratepayers  or other
regulatory  recovery  mechanisms.  These  proceedings  began in 2001 and will be
conducted  through 2003.  The P.U.C.  has made no indication as to what, if any,
changes will be forthcoming relating to EAS replacement revenues. The results of
these proceedings and their potential effects on Roseville Telephone can not yet
be determined.  In addition, since the DCP arrangement with Pacific Bell expired
in December  2001, Roseville  Telephone now bills and keeps its customers  toll
traffic.  The impact of ending the DCP arrangement and moving to a bill and keep
basis on Roseville Telephone's results of operations is not material.

There are a number of regulatory  proceedings occurring at the federal and court
level that may have a material impact on Roseville  Telephone.  These regulatory
proceedings  include,  but are not limited to,  consideration  of changes to the
jurisdictional  separations  process,  the  interstate  universal  service fund,
access charge reform and the regulation of local exchange carriers. The outcomes
and impact on Roseville Telephone's  operations of these proceedings and related
court matters involving local service competition,  access reform, and universal
service, cannot be determined at this time.

Roseville Telephone's  operations may also be impacted by the Telecommunications
Act  of  1996  (the  "Act").  Beginning  in  1996,  the  F.C.C.  adopted  orders
implementing  the Act's  provisions to open local  exchange  service  markets to
competition.  The F.C.C.  rules outline pricing  methodologies for the states to
follow when setting  rates for resale,  interconnection  and  unbundled  network
elements.  In 1997,  the United  States Court of Appeals for the Eighth  Circuit
found that the F.C.C.  exceeded its  jurisdiction in connection with some of its
orders  implementing  the Act. In early 1999,  the United  States  Supreme Court
reversed the Eighth Circuit's determinations that the F.C.C. lacked authority to
implement the Act by adopting local pricing  standards or to bar incumbent local
exchange  carriers from separating  already-combined  unbundled network elements
("UNEs") before offering them to competitors.  The Supreme Court also reinstated
the agency's "pick-and-choose" rules. However, the Supreme Court invalidated the
F.C.C.'s  original list of UNEs,  saying the F.C.C. had failed to determine that
those elements were necessary for competitors to offer service.  The F.C.C.  has
opened a proceeding to review this issue in light of the Supreme  Court's order,
and in 1999, adopted an order identifying UNEs that ILECs must make available to
competitors.

In 2000, the United States Court of Appeals for the Eighth  Circuit  vacated the
FCC's Total Element Long Run Incremental  Cost ("TELRIC")  pricing  standard for
determining  the price that ILECs can charge to CLECs  seeking use of  unbundled
network elements. The Supreme Court decision also remanded the reasonableness of
TELRIC pricing back to the Eighth Circuit for  determination.  In addition,  the
Circuit's  decision  also  vacated,  among other  things,  the FCC's rules which
define "avoided retail costs" for purposes of determining  wholesale  rates, the
FCC's proxy  prices,  the FCC's  rules which  addressed  the  identification  of
additional network elements to be unbundled,  and the FCC's superior quality and
additional combinations rules.

In January 2001,  the United States Supreme Court granted a petition for writ of
certiorari  to review the Eighth  Circuit's  opinion with respect to (1) whether
the appeals court erred in holding that the Act "forecloses the cost methodology
adopted by the FCC, which is based on the efficient replacement cost of existing
technology"   for   determining   what  new   entrants   must  pay   ILECs   for
interconnection; (2) whether the appeals court erred in holding that neither the
constitution nor the Act requires an ILEC's  "historical costs" to be taken into
account in setting the rates it can charge for access to network  elements;  and
(3) whether the Act prohibits regulators from requiring that incumbents "combine
certain  previously  uncombined  network elements" when the new entrant requests
the combination and offers to pay for the extra work.

In 1997,  the F.C.C.  adopted orders on access charge reform and a new universal
service program.  The F.C.C.'s order on access charge reform  generally  removed
from   minute-of-use   access   charges   costs  that  are  not  incurred  on  a
per-minute-of-use  basis. The F.C.C. also adopted changes to its interstate rate
structure  for  transport  services  which are  designed to move the charges for
these  services to more  cost-based  levels.  The  F.C.C.'s  order on  universal
service reformed the existing system of universal  service in a manner that will
permit local  telephone  markets to move to a competitive  arena.  In 1999,  the
United  States  Court  of  Appeals  for the  Fifth  Circuit  issued  an  opinion
addressing  challenges  to the  F.C.C.'s  universal  service  order.  The  Court
rejected  challenges  on technical  issues such as the F.C.C.'s use of models in
determining  universal service. The Court ruled,  however, that the F.C.C. can't
use   intrastate   revenues  in  determining  a  carriers'   universal   service
contribution and rejected the so-called flowback method of collecting  universal
service  contributions  through access charges. To implement the Fifth Circuit's
decision,  the F.C.C.  adopted an order in 1999 making  revisions  to its rules,
requiring,  among other  things,  that ILECs  recover  their  universal  service
contributions  either through  interstate access charges or interstate  end-user
charges  based  on  interstate  and  international  end-user  telecommunications
revenues only. In October, 1999, the Commission adopted two orders in connection
with  universal  service  reform.  In the  first  order,  the  F.C.C.  completed
development  of the  cost  model  to be used as a basis  for  federal  universal
service support. In the second order, the F.C.C.  adopted a methodology based on
the results of the cost model to  calculate  the level of support for  non-rural
carriers serving  high-cost areas and that federal  universal service support is
portable  among  all  eligible  telecommunications  carriers.  If  a  competitor
acquires a subscriber line from an incumbent  receiving support,  the competitor
receives the  incumbent's  federal  universal  service support for that line. In
November  2001,  the F.C.C.  released its Order on the  Multi-Association  Group
("MAG")  Plan.  The F.C.C.  order  reformed  the  interstate  access  charge and
universal service support system for incumbent local exchange carriers ("ILECs")
subject to rate-of-return  regulation making  modifications to ILECs access rate
structures,  end user charges and support  mechanisms.  In addition,  the F.C.C.
terminated its open proceeding on the  represcription  of the authorized rate of
return which results in the  authorized  rate of return of 11.25% for interstate
access services.

Given  the  Act's  relatively  recent  enactment  and  the  on-going  regulatory
proceedings and legal changes to the F.C.C.'s orders,  it is not yet possible to
determine  fully  the  impact  of the  Act and  related  F.C.C.  regulations  on
Roseville Telephone's operations.

The regulatory  proceedings  occurring at the state and federal levels described
above may  broaden  the  scope of  competition  in the  provision  of  regulated
services  and  change  the  rates  and rate  structure  for  regulated  services
furnished by Roseville  Telephone,  the effects of which on Roseville  Telephone
cannot yet be determined.

Item 4.  Submission of Matters to a Vote of Security Holders

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of 2001.



<PAGE>



                      EXECUTIVE OFFICERS of the registrant

The names,  ages and positions of the executive  officers of the Company and its
subsidiaries as of March 1, 2002 are as follows:

<TABLE>
<CAPTION>


Name               Age Principal occupation and business experience for past
                       five years

<S>                <C> <C>

Thomas E. Doyle     73  Chairman of the Board of Directors (since August 2000);
                        Vice Chairman (1998 to 2000); Vice President (1972 -
                        2000) and Secretary-Treasurer (1965 - 2000) of the
                        Company

Brian H. Strom      59  President and Chief Executive Officer of the Company
                        (since 1993)

Michael D. Campbell 53  Executive Vice President and Chief Financial Officer of
                        the Company (since 1996) and Treasurer (since 2000);
                        Vice President and Chief Financial Officer of the
                        Company (1994 to 1996)

Jay B. Kinder       57  Executive Vice President and Chief Operating Officer -
                        Roseville Telephone Company (since December 2000); Vice
                        President, Customer Services (1996 to 2000) and
                        Director of Marketing and Planning (1993 to 1996) of
                        Roseville  Telephone Company

Bill M. DeMuth     52   Vice President and Chief Technology Officer of the
                        Company (since October 2000); Executive Director,
                        Network Services - Roseville Telephone Company
                        (1998 to October 2000); Director, Network Services
                        (1997 to 1998) and Manager, Network Maintenance and
                        Planning (1994 to 1997) of Roseville Telephone Company

David Marsh        53   Vice President and Chief Information Officer of the
                        Company (since December 2000); President and Chief
                        Executive Officer RnetEC, Inc (1999 to 2000); Chief
                        Information Officer - Pierce Leahy (1994 to 1999)

Robert M. Burger   45   Vice President and Chief Operating Officer - SureWest
                        Wireless (since June 2000); General Manager of SureWest
                        Wireless (1998 to 2000); Chief Financial Officer,
                        Fourth Communications Network, Inc. (1997 to 1998);
                        Vice President Finance and Business Communications,
                        Fourth  Communications  Network, Inc. (1996 to 1997);
                        General Manager - Central California/Northern Nevada,
                        Nextel Communications (1995 to 1996);
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

Name              Age  Principal occupation and business experience for past
                       five years

<S>               <C>   <C>

Philip D. Germond 52   Vice President, Customer Operations - Roseville
                       Telephone Company (since January 2002); Vice President,
                       Customer Services and Marketing - Roseville Telephone
                       Company (2000 - January 2002); Vice President, Marketing
                       (1997 to December, 2000); Director of Marketing and
                       Sales of Roseville Telephone Company  (1996 to 1997)

Fred  A. Arcuri   49   Vice President and Chief Operating Officer - SureWest
                       Broadband (since June 2001); Vice President and Chief
                       Operating Officer - SureWest Internet (since June 2000);
                       Executive Director of  Emerging Businesses (1999 to
                       2000); Director of Marketing and Product Development
                       (1998 to 1999), and Product and Service Manager (1995 to
                       1998) of Roseville Telephone Company

Neil J. Doerhoff  49   Secretary of the Company (since August 2000); Financial
                       Consultant (since 2001); Corporate Secretary, Raley's
                       (1987 - 2001)

Darla J. Yetter   41   Assistant Secretary of the Company (since August 2000);
                       Assistant to the President and Chief Executive Officer
                       (since 1994)

</TABLE>

<PAGE>



                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's  common stock was traded on the  over-the-counter  market prior to
September 6, 2001. As a result of the minimal number of stock transactions,  the
Company's  information  with respect to price per share was derived from reports
provided by the Company's  Retirement  Supplement Plan, Employee Stock Ownership
Plan and disclosure, in limited circumstances,  of third party transactions. The
following  table sets forth the  quarterly  price per share from January 1, 2000
through June 30, 2001:
<TABLE>

                                Per Share Amount
<CAPTION>
<S>                                     <C>                     <C>
Quarter ended                            2001                    2000
March 31                                 $40                     $34
June 30                                  $40                     $37
September 30                             N/A                     $38
December 31                              N/A                     $38

</TABLE>

On September  6, 2001 the  Company's  common  stock began  trading on the Nasdaq
National  Market  ("NASDAQ"),  under the  symbol  "SURW".  The  following  table
represents  the  high  and low  sales  price of the  Company's  common  stock as
reported on the NASDAQ for the third and fourth quarters of 2001:
<TABLE>

                                             NASDAQ National Market
                                        High                      Low
<CAPTION>
<S>                                     <C>                     <C>
September 30, 2001                     $45.48                   $40.35
December 31, 2001                      $58.90                   $45.48
</TABLE>

As of March 1, 2002 the Company's approximate number of shareholders was 7,948.

The Company paid cash dividends on its common stock of $.25 per share for each
quarter of 2001 and 2000.

Item 6. Selected Financial Data
<TABLE>
                                  2001            2000              1999           1998           1997
                                  (amounts in thousands, except per share amounts)
<CAPTION>
<S>                                 <C>             <C>                  <C>        <C>           <C>

Total operating revenues          $166,965        $143,316          $140,801       $126,682       $114,888
Gain on sale of investment in
 cellular partnership             $      -        $201,294                 -              -              -
Net income                        $ 10,317        $125,793          $ 31,750       $ 25,049       $ 22,971

Basic earnings per share(1)       $   0.67        $   8.06          $   2.01       $   1.58       $   1.45
Diluted earnings per share(1)     $   0.67        $   8.05          $   2.01       $   1.58       $   1.45

Extraordinary loss, net of tax    $      -        $(10,932)         $      -       $      -       $      -

Cumulative effect of change
 in accounting principle,
 net of tax                       $      -        $ (3,273)         $      -       $      -       $      -

</TABLE>


<PAGE>

<TABLE>
                                  2001            2000              1999           1998           1997
                                  (amounts in thousands, except per share amounts)
<CAPTION>
<S>                                  <C>              <C>               <C>           <C>         <C>
Extraordinary loss, net of
 tax, per share (basic and
 diluted)                         $      -        $  (0.70)         $      -       $      -       $      -

Cumulative effect of change
 in accounting principle,
 net of tax, per share,
 (basic and diluted)              $      -        $  (0.21)         $      -       $      -       $      -

Pro forma amounts assuming the
 accounting change is applied
 retroactively:

Income before extraordinary
 loss and cumulative effect
 of change in accounting
 principle                        $  10,317       $ 139,998         $ 31,926       $ 24,749       $ 22,373

Net income                        $  10,317       $ 129,066         $ 31,926       $ 24,749       $ 22,373

Basic per share amounts:

Income before extraordinary
 loss and cumulative effect
 of change in accounting
 principle                        $    0.67       $    8.97         $   2.02       $   1.56       $   1.41

Net income                        $    0.67       $    8.27         $   2.02       $   1.56       $   1.41

Diluted per share amounts:

Income before extraordinary
 loss and cumulative effect
 of change in accounting
 principle                        $    0.67       $    8.96         $   2.02       $   1.56       $   1.41

Net income                        $    0.67       $    8.26         $   2.02       $   1.56       $   1.41

Cash dividends per share(2)       $    1.00       $    1.00         $   1.00       $   0.85       $   0.63
Property, plant and
 equipment, at cost               $ 524,505       $ 469,389         $383,896       $328,437       $297,057
Total assets                      $ 412,343       $ 528,942         $333,187       $315,877       $276,297
Long-term debt                    $  42,142       $  44,285         $ 46,428       $ 48,571       $ 22,322

Shares of common stock used
 to calculate:
  Basic earnings per share(1)        15,326          15,610           15,815         15,815         15,815
  Diluted earnings per
   share(1)                          15,387          15,630           15,822         15,815         15,815
</TABLE>




<PAGE>



(1)  Shares used in the computation of basic earnings per share are based on the
     weighted average number of common shares  outstanding,  excluding  unvested
     restricted  common  shares.  Shares  used  in the  computation  of  diluted
     earnings per share are based on the weighted  average  number of common and
     other potentially dilutive securities outstanding in each period.

(2)  Cash  dividends per share are based on the actual  dividends per share,  as
     declared by the Company's Board of Directors.


<PAGE>



Item 7.  Management's     Discussion     and     Analysis    of    Financial
         Condition     and    Results    of Operations

Results of Operations

Company Overview

SureWest   Communications,   formerly  Roseville  Communications  Company,  (the
"Company")   is  a  holding   company   with   subsidiaries   operating  in  the
Telecommunications  ("Telecom")  and Personal  Communications  Services  ("PCS")
segments.

The  Telecom  segment is aligned  with  specific  subsidiaries  of the  Company.
Roseville Telephone Company ("Roseville  Telephone"),  a wholly-owned subsidiary
of the Company,  provides  local and toll  telephone  services,  network  access
services,  billing and collection services,  directory  advertising services and
certain nonregulated services.  SureWest Directories,  a wholly-owned subsidiary
of the Company,  publishes  and  distributes  Roseville  Telephone's  directory,
including the sale of yellow pages  advertising.  SureWest  Directories  is also
engaged in the business of producing, publishing and distributing directories in
other Northern California  communities.  The Company's wholly-owned  subsidiary,
Roseville Long Distance Company  ("Roseville Long Distance"),  is engaged in the
provision of long distance services.  The Company's  wholly-owned  subsidiaries,
SureWest Internet and QuikNet, Inc. ("QuikNet"), are engaged in the provision of
high speed Internet services.

The PCS segment  consists of the  Company's  wholly-owned  subsidiary,  SureWest
Wireless.  SureWest  Wireless  is the owner of West  Coast PCS LLC,  which  does
business using the SureWest Wireless name and provides wireless PCS.

The Company expects that the sources of its revenues and its cost structure will
be different in future periods as a result of its entry into new communications
markets.

Revenue Recognition

The Company  recognizes  revenue when (i) persuasive  evidence of an arrangement
between the Company and the customer exists, (ii) delivery of the product to the
customer has occurred or service has been  provided to the  customer,  (iii) the
price to the customer is fixed and determinable and (iv)  collectibility  of the
sales price is reasonably  assured.  Certain revenues  derived  principally from
local telephone,  dedicated  network access,  data  communications  and wireless
services are billed in advance and  recognized  in  subsequent  periods when the
services are provided. Revenues derived from other telecommunications  services,
principally  network  access,  long distance,  billing and collection  services,
Internet access service, digital subscriber line ("DSL"), wireless PCS and alarm
monitoring   services,   are  recognized   monthly  as  services  are  provided.
Incremental direct costs of telecommunications service activation are charged to
expense in the period in which they are incurred. Directory publication revenues
and costs related to publishing  and  distributing  directories  are  recognized
using the  "circulation  period" method,  under which revenues and related costs
are recognized ratably over the expected useful life of the directory, generally
one year from the date of  publication.  For all other  operations,  revenue  is
recognized when products are delivered or services are rendered to customers.

Telecom Revenue Overview

The Telecom  segment  derives its revenue from services  subject to  regulation,
long distance services,  directory advertising  services,  Internet services and
the sale of non-regulated products and services.

Revenues from services subject to regulation constituted  approximately 69%, 75%
and 80% of the  Company's  total  operating  revenues  in 2001,  2000 and  1999,
respectively.  Revenues  subject to  regulation,  which include  local  service,
network  access  service,  and toll  service  revenues  generated  by  Roseville
Telephone, are derived from various sources,  including billings to business and
residential  subscribers  for basic  exchange  services,  extended  area service
charges,  surcharges  mandated by the  California  Public  Utilities  Commission
("P.U.C."),   billings  to  Pacific  Bell,  a  wholly-owned  subsidiary  of  SBC
Communications  Inc., long distance  carriers,  competitive access providers and
subscribers for network access services, interstate settlement revenues from the
National Exchange Carrier  Association,  and support payments from the Universal
Service Fund and a California High Cost Fund.

Total  revenues  from  telephone  services are affected by rates  authorized  by
various regulatory agencies.  Intrastate service rates are subject to regulation
by the P.U.C. With respect to toll calls initiated by customers of interexchange
carriers,  interexchange  carriers are assessed  access charges based on tariffs
filed by Roseville Telephone. Interstate access rates and resulting earnings are
subject to regulation by the Federal Communications Commission ("F.C.C.").  With
respect to  interstate  services,  Roseville  Telephone has filed its own tariff
with the F.C.C.  for all elements of access  services except carrier common line
charges,  for  which  Roseville  Telephone  concurs  with  tariffs  filed by the
National Exchange Carrier Association.

The FCC monitors Roseville  Telephone's  interstate  earnings through the use of
annual cost separation  studies  prepared by Roseville  Telephone which utilizes
estimated cost information and projected demand usage. The FCC establishes rules
that carriers must follow in the preparation of the annual  studies.  On January
23,  2001,  the FCC issued a Memorandum  Opinion and Order to another  telephone
company in which it clarified how Internet  traffic,  which the FCC had prior to
that date characterized as largely  interstate in nature,  should be treated for
rate making  purposes.  Additionally,  under  current FCC rules  governing  rate
making,  Roseville Telephone is required to establish  interstate rates based on
projected  demand usage for its various  services at the  beginning of each year
and determine  the actual  earnings from these rates at the end of the year once
actual volumes and costs are known.

When Roseville  Telephone completed its first analysis of 2000 actual interstate
earnings and the true-up  analysis of 1999 interstate  earnings in January 2001,
those studies reflected the FCC's January 2001  clarification  order on Internet
traffic and actual  traffic and cost levels.  During the latter half of the 1999
through 2000 monitoring period and the year ended 2001, Internet traffic and DSL
service grew substantially,  far exceeding Roseville Telephone's estimates.  The
combination of the increase in actual volumes  relating to Internet  traffic and
DSL services over the original estimates and the FCC's alternative  treatment of
Internet traffic resulted in actual earnings exceeding the levels allowed by the
FCC. Based on the preliminary  cost studies for the 1999 through 2000 monitoring
period and the year ended December 31, 2001, the Company recognized  liabilities
relating  to  Roseville  Telephone's  estimated  interstate  shareable  earnings
obligations  of $8.1 million and $3.2 million  during the fourth quarter of 2000
and the year ended  December  31,  2001,  respectively,  through  reductions  to
revenues.  During the year ended  December 31, 2001,  Roseville  Telephone  made
payments  to  certain  telecommunications  companies  aggregating  $6.8  million
relating  to a portion  of these  obligations.  In  addition,  during the fourth
quarter of 2001,  the  Company  changed  its  estimate  relating to a portion of
Roseville Telephone's interstate shareable earnings obligations, principally due
to the  closing of the 1997  through  1998  monitoring  period.  This  change in
accounting  estimate increased the Company's  consolidated 2001 revenues and net
income by $2.2 million and $1.3 million ($0.08 per share), respectively.

Roseville Telephone bills Pacific Bell various charges for certain local service
and network access service  revenues as described  below. Of the Company's total
revenues in 2001,  2000 and 1999, 3%, 11% and 11%,  respectively,  were recorded
under these agreements.  In 1999, Pacific Bell expressed interest in withdrawing
from the designated carrier plan ("DCP") for Roseville  Telephone's toll traffic
and to enter into a new,  permanent  compensation  arrangement for extended area
service  ("EAS").  The  DCP  is a  compensation  arrangement  between  Roseville
Telephone and Pacific Bell for certain  intralata  toll  services.  Pacific Bell
also paid  Roseville  Telephone  $11.5  million  per year for EAS  pursuant to a
Settlement Transition Agreement. In November 2000, the P.U.C. authorized Pacific
Bell to  terminate  its annual EAS  payments to  Roseville  Telephone  effective
November 30, 2000. The P.U.C. authorized replacement funding on an interim basis
using the current reserve in the California High Cost Fund, and denied permanent
replacement funding.  The P.U.C. also opened an Order Instituting  Investigation
for the purpose of  determining  whether  recovery of all, none, or a portion of
the  $11.5  million  annual  payments  should  come from  Roseville  Telephone's
ratepayers or other regulatory recovery  mechanisms.  These proceedings began in
2001 and will be conducted through 2003. The P.U.C. has made no indication as to
what, if any, changes will be forthcoming relating to EAS revenues.  The results
of these proceedings and their potential effects on Roseville  Telephone can not
yet be  determined.  In addition,  since the DCP  arrangement  with Pacific Bell
expired in December 2001,  Roseville Telephone now bills and keeps its customers
toll traffic.  The impact of ending the DCP arrangement and moving to a bill and
keep basis on Roseville Telephone's results of operations is not material.

In 1996, the P.U.C.  issued a decision in connection with Roseville  Telephone's
general rate proceeding, which authorized Roseville Telephone to implement a New
Regulatory Framework ("NRF") for services furnished within Roseville Telephone's
service  area in order to  accommodate  market and  regulatory  movement  toward
competition and greater pricing flexibility.  Under the NRF, Roseville Telephone
is subject to ongoing monitoring and reporting requirements, including a sharing
mechanism  whereby  Roseville  Telephone may be required to share  earnings with
customers based on its earned annual rate-of-return.

In accordance with the  requirements  of its general rate case order,  Roseville
Telephone  filed an application  for review of its NRF in 1999.  This proceeding
considered  modifications to the NRF structure,  including  potential changes to
the  current  monitoring  and  reporting  requirements,   the  earnings  sharing
mechanism and related matters.  In accordance with NRF,  Roseville  Telephone is
subject to, among other things, a sharing mechanism whereby Roseville  Telephone
may be required to share earnings with customers through a reduction to revenues
if its earned annual  rate-of-return  exceeds that  authorized by the P.U.C.  In
addition,   the  P.U.C.  Office  of  Ratepayer  Advocates  ("ORA")  undertook  a
verification  audit  of  Roseville  Telephone's   non-regulated  and  affiliated
transactions  pursuant to the general rate case and other P.U.C. orders. In June
2001,  the P.U.C.  adopted its  decision in this  matter (the  "Decision").  The
P.U.C. ruled that Roseville  Telephone must change the allocation method used to
allocate costs for services  provided by Roseville  Telephone to its affiliates,
the treatment of certain  directory  revenues and the treatment of  internal-use
software costs. The Decision did not suspend the sharing  mechanism and required
Roseville  Telephone to further amend its intrastate  shareable  earnings filing
for 1998 and 1999 to provide an additional  $1.0 million in shareable  earnings,
which was recorded during the three months ended June 30, 2001 as a reduction of
revenues.  Additionally,  in accordance with the provisions of the Decision, the
Company  recorded  additional  liabilities  and  reductions  of revenues of $5.0
million relating to estimated shareable earnings during 2001. In December, 2001,
the  P.U.C.  denied the  application  for  rehearing  of the  Decision  filed by
Roseville Telephone.

As of December 31, 2001,  the Company's  consolidated  balance  sheet  reflected
aggregate  liabilities  of  $16.6  million  relating  to  Roseville  Telephone's
estimated  interstate  and  intrastate  shareable  earnings   obligations.   The
calculations supporting these liabilities are very complex and involve a variety
of estimates prior to the ultimate settlement of such obligations.  In addition,
Roseville Telephone's  interstate shareable earnings obligations lapse over time
if Roseville Telephone's  interexchange carrier and other customers do not claim
the amounts  ascribed  to them.  Accordingly,  it is  reasonably  possible  that
management's   estimates  of  the  Company's   liabilities  for  interstate  and
intrastate  shareable earning obligations could change in the near term, and the
amounts involved could be material.

PCS Revenue Overview

The PCS segment  derives  its revenue  from the  provision  of wireless  digital
personnel   communication   services  and  the  sale  of  handsets  and  related
communications  equipment.  Revenues include  wireless voice services,  sales of
handsets and related accessories,  long distance, telephone insurance and custom
calling features.  Wireless services are provided on a month-to-month  basis and
are generally billed in advance.

Acquisition of QuikNet

Effective  July 31, 2001,  the Company  acquired all of the  outstanding  common
stock of QuikNet for $2.1 million in cash. The  acquisition was accounted for as
a purchase in  accordance  with  Statement  of  Financial  Accounting  Standards
("SFAS")  No. 141.  The  tangible  assets of QuikNet  acquired  by the  Company,
aggregating $498 thousand,  consisted  principally of cash,  accounts receivable
and property,  plant and equipment.  The  liabilities of QuikNet  assumed by the
Company,  aggregating $534 thousand,  consisted  principally of accounts payable
and long-term  debt. As a result of the  preliminary  purchase price  allocation
associated with the acquisition, the Company recorded $2.2 million of goodwill.

Purchase of Wireless PCS Minority Interest

During  the  second  quarter  of 2001,  the  Company  acquired  from  Foresthill
Telephone Co. ("FHT") its 1.8% interest in West Coast PCS LLC,  ("West  Coast"),
for  $2.5  million  in cash.  The  acquisition  of this  minority  interest  was
accounted  for as a purchase.  As a result of the  acquisition,  the Company now
owns 100% of West Coast.  A former  member of the  Company's  Board of Directors
was, at the time of the acquisition, the President and sole shareholder of FHT.

Other Related Party Transactions

An officer of the Company is also a member of the Board of  Directors of a local
banking  institution.  As of December  31,  2000,  the Company had a $15 million
certificate  of  deposit  with  a  term  of  greater  than  one  year  with  the
aforementioned  banking institution.  In the fourth quarter of 2001, the Company
redeemed  this  certificate  of deposit  for an amount  equal to its  historical
carrying value, including accrued interest.

A member of the  Company's  Board of Directors is also an executive  officer and
director of a certain entity from which the Company purchased approximately $545
thousand and $1.0 million in telecommunications  equipment during 2001 and 2000,
respectively.

Sale of Cellular Partnership Interest

On November 3, 2000, two of the Company's subsidiaries sold their collective 24%
cellular  partnership  interest  in  Sacramento-Valley  Limited  Partnership  to
Verizon Wireless for approximately  $236.2 million,  resulting in a pre-tax gain
of $201.3  million,  which was  recognized in the fourth  quarter of 2000. As of
December  31,  2000 the  Company  had a $5.5  million  receivable  from  Verizon
Wireless,  which originated prior to the sale. The Company collected the balance
of this receivable during 2001.

The Company believes that the sale of the limited partnership interest furthered
its  strategy to focus  resources on  expansion  of the  Company's  own wireless
operation,  SureWest  Wireless,  and other of the  Company's  emerging  business
operations.

Extraordinary Loss

As described in Note 2 to the Consolidated  Financial Statements of the Company,
Roseville  Telephone  discontinued  applying  SFAS No. 71,  "Accounting  for the
Effects of Certain Types of Regulation," in December 2000. Management determined
that,  primarily as a result of a  significant  increase in  competition  within
Roseville Telephone's service area, the application of SFAS No. 71 was no longer
appropriate for Roseville Telephone.  As a result of the discontinuation of SFAS
No. 71 accounting by Roseville Telephone,  the Company recorded an extraordinary
non-cash  charge of $10.9 million,  which is net of related tax benefits of $7.6
million, in December 2000.

Cumulative Effect of a Change in Accounting Principle

During the fourth quarter of 2000, the Company changed its method of accounting,
retroactive   to  January  1,  2000,   for   up-front   fees   associated   with
telecommunications  service activation in accordance with the guidance contained
in the Securities Exchange Commission ("SEC") Staff Accounting Bulletin No. 101,
"Revenue  Recognition in Financial  Statements" ("SAB 101"), which was issued by
the SEC in December 1999.  Previously,  the Company had recognized such up-front
fees as revenues upon  activation of service.  Under the new accounting  method,
the Company now recognizes up-front fees associated with service activation over
the expected  duration of the customer  relationships.  The cumulative effect of
the change on prior years  resulted  in a charge to 2000 income of $3.3  million
(net of income  taxes of $2.3  million).  The  effect of the  change on the year
ended December 31, 2000 was to decrease income before extraordinary loss and the
cumulative  effect of the accounting  change by $508 thousand ($0.03 per share).
For the years ended  December  31, 2001 and 2000,  the Company  recognized  $1.7
million  and $2.4  million,  respectively,  of revenues  previously  deferred in
connection  with the  cumulative  effect  adjustment as of January 1, 2000.  The
effect of that  revenue was to increase  income by $1.0  million  (net of income
taxes of $683  thousand) and $1.4 million (net of income taxes of $963 thousand)
for the years ended December 31, 2001 and 2000, respectively.

2001 versus 2000

Net income for 2001 was $10.3  million,  or $0.67 per share,  compared  with net
income of $125.8  million,  or $8.06 per share,  for 2000.  The  decrease in net
income and  earnings  per share for 2001 is due  principally  to the sale of the
Company's  limited  partnership  interest in SVLP in 2000,  which  resulted in a
$201.3 million pre-tax gain. The gain was offset in part by a one-time, non-cash
extraordinary  loss relating to the  discontinuance of SFAS No. 71 accounting of
$10.9 million, net of taxes, and the cumulative effect of a change in accounting
principle of $3.3 million, net of taxes. There was also an increase in operating
revenues of $23.6  million in 2001,  offset by an  increase of $34.6  million in
operating  expenses due principally to the Company's  aggressive  expansion into
new telecommunications markets including, wireless, Internet, broadband and data
services.

Operating Revenues:

Revenues subject to regulation, which include local and network access services,
increased  in the  aggregate  by $7.6  million,  or 7%,  compared to 2000.  This
increase was due to the combined effects of 1) increased network access revenues
due to expanded  demand for DSL  services  and  dedicated  access and  increased
minutes of use  volumes 2)  increases  in custom  calling,  voice mail and other
enhanced network  services,  and 3) access line growth of 1%. In addition,  this
increase was due to i) reduced  interstate  and  intrastate  shareable  earnings
obligations  in 2001 that the Company was  required to record as a reduction  of
operating  revenues in 2001, and ii) an increase in operating  revenues relating
to a  reduction  in  the  Company's  estimate  pertaining  to a  portion  of the
Company's  interstate  shareable  earnings  obligations,  principally due to the
closing of the 1997 through 1998 monitoring period and therefore resulting in an
increase in revenues.  The change in accounting estimate increased the Company's
consolidated  2001  revenues  and net income by $2.2  million  and $1.3  million
($0.08 per share), respectively.

Wireless service  revenues  increased $11.4 million compared to 2000 as a result
of  continued  additions to the customer  base.  Wireless  revenues in 2001 were
negatively  impacted by billings to certain  customers  of $2.2 million that did
not meet all of the criteria for revenue recognition due to collection concerns.

Directory  advertising  revenues increased $1.2 million, or 9%, compared to 2000
due to  increased  advertising  sales  and  the  introduction  of an  additional
directory  in  March  2001.  Revenues  from  non-regulated  sales  and  services
decreased by $601 thousand, or 8%, compared to 2000 due primarily to the effects
of lower sales of telecommunications equipment.

Other operating revenues  primarily consist of Internet services,  long distance
services,  billing and  collection  services and other  miscellaneous  services.
Other operating  revenues  increased $4.1 million,  or 40%, compared to 2000 due
primarily to an increase in the market  penetration  of long distance  services,
continued  additions to the Internet  customer base, the  acquisition of QuikNet
and increased dedicated access provided by SureWest Broadband.

Operating Expenses:

Total operating expenses increased $34.6 million, or 29%, compared to 2000. Cost
of  services  and  products  increased  $9.7  million,  or 21%,  during 2001 due
primarily  to an  increase in tower  rents,  handset  costs and roaming  charges
related to the  continuing  expansion of the coverage area and increased  demand
for SureWest  Wireless service.  In addition,  there were increases in transport
costs  associated  with long distance  services,  and modem and transport  costs
related to Internet services.

Customer  operations and selling expense increased $7.6 million,  or 31%, during
2001 due primarily to $1.2 million of bad debt expense  associated with wireless
services, increased dealer commissions and subscriber billing associated with an
increase in wireless customers.

General and administrative expenses increased $6.3 million, or 32%, during 2001.
These  increases are due primarily to increased  labor costs  resulting  from an
increase  in the  size  of the  company's  workforce  as a  result  of  expanded
operations,   an  acquired  business,  and  normal  compensation  increases.  In
addition,  there  were  increases  to  fulfill  strategic  planning  and  growth
objectives.

Depreciation and amortization  increased $10.9 million, or 38%, during 2001 as a
result  of  increases  in  Telecom  and  PCS  property,   plant  and  equipment,
amortization of network software and PCS licenses,  and a reduction in estimated
useful lives of certain  elements of property and equipment in  connection  with
the discontinuance of applying regulatory accounting in December 2000.

Other Income, Net:

Other income, net, decreased $207.0 million, compared to 2000 due principally to
the $201.3  million gain on the sale of the Company's  interest in SVLP in 2000.
Excluding  the  gain on the  sale of the  Company's  investment  in SVLP and the
Company's equity in earnings in SVLP in 2000, other income,  net, increased $4.4
million,  compared to 2000.  Interest  income  increased  $2.0 million,  or 71%,
during 2001 as a result of larger average  invested  balances.  Interest expense
decreased  $2.9  million,  or 69%,  compared  to 2000 due to a  decrease  in the
Company's average outstanding balances on its long-term debt and a change in the
presentation  of  capitalized  interest  from the prior  year as a result of the
Company's discontinuance of SFAS No. 71 accounting in 2000.

Income Taxes:

Income taxes  decreased  $88.3  million,  as compared to 2000,  due primarily to
taxes  recognized  from the  Company's  $201.3  million  gain on the sale of its
interest in SVLP in 2000.  The  effective  federal and state income tax rate was
40% in 2001, compared to 40.5% in 2000.

Extraordinary Loss:

Roseville  Telephone  discontinued  applying  SFAS No. 71,  "Accounting  for the
Effects of Certain Types of  Regulation,"  in December 2000 as described  above,
which resulted in the  recognition of $10.9 million  extraordinary  loss, net of
tax.

Cumulative Effect of a Change in Accounting Principle:

During the fourth quarter of 2000, the Company changed its method of accounting,
retroactive   to   January   1,  2000  for   up-front   fees   associated   with
telecommunications  service activation in accordance with the guidance contained
in SAB 101, which was issued by the SEC in December 1999, as described above.

2000 versus 1999

Net income for 2000 was $125.8  million,  or $8.06 per share,  compared with net
income of $31.7  million,  or $2.01 per share,  for 1999.  The  increase  in net
income and earnings per share for 2000 was due  principally  to the pre-tax gain
of $201.3 million from the sale of the Company's limited partnership interest in
SVLP. This gain was offset by a one-time non-cash extraordinary loss relating to
the  discontinuance  of SFAS No.  71 of $10.9  million,  net of  taxes,  and the
cumulative  effect of a change in accounting  principle of $3.3 million,  net of
taxes.  There was also a modest increase in operating  revenues of $2.5 million,
offset by an increase of $21.7 million in operating  expenses due principally to
the Company's aggressive expansion into new telecommunications markets including
wireless, Internet, broadband and data services.

Operating Revenues:

Revenues subject to regulation, which include local and network access services,
decreased  in the  aggregate  by $5.1  million,  or 5%,  compared to 2000.  This
decrease was due to reductions to operating  revenues of $11.3 million  relating
to the Company's  estimated  interstate and intrastate sharing obligations noted
above,  and  one-time  positive  adjustments  of $1.4  million  recorded in 1999
relating to interstate  access  settlements  and a modification by the P.U.C. to
Roseville  Telephone's  rate case decision.  Revenue subject to regulation also
decreased  due to the  implementation  of SAB 101, as  discussed  both above and
below.  These  decreases  in local and  network  access  service  revenues  were
partially  offset by the  combined  effects of 1) access  lines growth of 2%, 2)
increases in custom calling,  voice mail and other enhanced network services, 3)
increased  network access  revenues due to expanded demand for data services and
larger minutes-of-use  volumes and 4) the introduction of DSL services in August
1999.

Wireless  services  revenues  increased $4.3 million compared to 1999 due to the
introduction of wireless service in June of 1999.

Directory advertising revenues increased $55 thousand, or less than 1%, compared
to 1999 due to a modest  increase in  advertising  sales relating to independent
directories  published outside of Roseville  Telephone's  service area. Revenues
from  non-regulated  sales  and  services  increased  by $1.6  million,  or 26%,
compared to 1999 due primarily to the effects of several large equipment  sales.

Other operating revenues  primarily consist of Internet services,  long distance
services,  billing and  collection  services and other  miscellaneous  services.
Other operating  revenues  increased $1.6 million,  or 18%, compared to 1999 due
primarily to an increase in the market penetration of long distance services and
the introduction of Internet services in August of 1999.

Operating Expenses:

Total operating expenses increased $21.7 million, or 22%, compared to 1999. Cost
of  services  and  products  increased  $9.1  million,  or 24%,  during 2001 due
primarily to an increase in tower rents related to the  continuing  expansion of
the coverage area of SureWest  Wireless,  transport  costs  associated with long
distance services, and modem and transport costs related to Internet services.

Customer  operations  expense  increased $7.2 million,  or 42%,  during 2000 due
primarily to marketing and advertising  costs associated with wireless  services
and increased  labor costs relating to customer  support  activities  associated
with Internet services.

General and administrative  expenses decreased $1.1 million, or 5%, during 2000.
Increases in various  general and  administrative  costs during 2000 compared to
1999 were  offset by costs  related to  computer  upgrades in 1999 which did not
occur in 2000.

Depreciation and amortization  increased $6.5 million,  or 29%, during 2001 as a
result of an increase in telephone and wireless  plant and the  amortization  of
network software and PCS licenses.

Other Income, Net:

Other income, net, increased $201.4 million, compared to 1999 due principally to
the $201.3 million  pre-tax gain on the sale of the Company's  interest in SVLP.
Excluding  the  gain on the sale of the  Company's  investment  in  SVLP,  other
income, net, increased $60 thousand, or less than 1%, compared to 1999. Interest
income increased $1.1 million, or 63%, during 2000 as a result of larger average
invested balances. Interest expense increased $758 thousand, or 22%, compared to
1999 due to an increase in the  Company's  average  outstanding  balances on its
credit facility during 2000.

Income Taxes:

Income  taxes  increased  $73.9  million  compared to 1999 due  primarily to the
Company's  $201.3 million  pre-tax gain on the sale of its interest in SVLP. The
effective  federal and state income tax rate was 40.5% in 2000 compared to 40.1%
in 1999.

Extraordinary Loss:

Roseville  Telephone  discontinued  applying  SFAS No. 71,  "Accounting  for the
Effects of Certain Types of  Regulation,"  in December 2000 as described  above,
which resulted in the  recognition of $10.9 million  extraordinary  loss, net of
tax.

Cumulative Effect of a Change in Accounting Principle:

During the fourth quarter of 2000, the Company changed its method of accounting,
retroactive   to   January   1,  2000  for   up-front   fees   associated   with
telecommunications  service activation in accordance with the guidance contained
in SAB 101 which was issued by the SEC in December 1999, as described above.

Liquidity and Capital Resources

As  reflected in the  consolidated  statements  of cash flows,  net cash used in
operating  activities  was $32.9 million in 2001. Net cash provided by operating
activities  was $53.1 million and $42.7 million in 2000 and 1999,  respectively.
The decrease in cash from operating activities in 2001, compared to 2000 was due
primarily  to an  approximate  $90 million  payment of income tax related to the
sale of the Company's  cellular  partnership  interest in 2000. The Company used
cash flows from  operations  and existing cash and cash  equivalents  to fund 1)
capital  expenditures of $69.6 million  pertaining to ongoing plant construction
projects,  2) common stock  repurchases  of $18.5  million 3) dividends of $15.3
million,  4) principal payments of $2.1 million to retire long-term debt, 5) the
purchase from Foresthill  Telephone Co. of its interest in SureWest Wireless for
$2.5 million and 6) the purchase of QuikNet for $2.1 million.

In February 2000, the Board of Directors  authorized the repurchase of up to one
million  shares  of  the  Company's  common  stock.  Additionally,  the  Company
implemented an odd lot repurchase  program during 2001. The shares are purchased
from  time  to  time  in  the  open  market  or  through  privately   negotiated
transactions  subject  to  overall  financial  and  market  conditions.  Through
December 31, 2001,  approximately  742 thousand shares of common stock have been
repurchased  through both programs.  As a result,  the Company has authorization
from the Board of Directors to repurchase an additional 275 thousand outstanding
shares.

In March 2000,  the Company  entered into a business loan  agreement with a bank
for a $30 million line of credit with a term of three years.  In September 2000,
the bank  temporarily  amended  the credit  facility  increasing  the  borrowing
capacity  from $30 million to $50  million  through  December  30,  2001.  As of
December  31,  2001,  the amount  available  under the credit  facility  was $30
million and there were no amounts  outstanding  under this line at December  31,
2001 or 2000.

The  Company's  most  significant  use of funds in 2002 is expected to be for 1)
budgeted capital  expenditures of approximately  $54.2 million, 2) net operating
expenditures of up to $6.1 million relating to SureWest  Wireless,  3) scheduled
payments of long-term  debt of $2.1 million,  and 4) the purchase by the Company
of shares of its outstanding common stock pursuant to the repurchase program.

In 2000, the Company entered into a 3-year  non-exclusive  agreement with Global
Crossing Ltd. ("Global  Crossing"),  a long distance service  provider,  for the
right to provide  long  distance  service to the  Company's  customers  at fixed
prices during the term of the  agreement.  As of December 31, 2001,  the Company
had a minimum  aggregate long distance service usage commitment of approximately
$1.6 million.  On January 28, 2002,  Global Crossing filed for protection  under
Chapter 11 of the U.S.  Bankruptcy  Code.  The  Company is  presently  unable to
determine the impact, if any, that Global Crossing's bankruptcy filing will have
on the Company's long distance operations. However, the Company believes that it
could   procure   long   distance   network   transport   services   from  other
telecommunications  providers.  In the event the Company  must  procure  network
transport  services  from another  telecommunications  provider,  rates for such
service  may be higher  than those  offered by Global  Crossings.  However,  the
Company believes that the impact on its results of operations resulting from any
potential change in transport rates will not be material.

On December 6, 2001, the Company entered into an agreement with a third party to
sell  substantially  all of the assets (which consisted  principally of customer
contracts and equipment, which had no net book value as of December 31, 2001) of
the  Company's  alarm  monitoring  division,  which is an element of the Telecom
segment.  The total sales price for the Company's  alarm  monitoring  assets was
approximately  $5.3  million,  subject  to  certain  future  adjustments.  As of
December  31,  2001,  the Company  had  received a deposit in the amount of $500
thousand from the purchaser of the Company's alarm monitoring  assets.  The sale
of the Company's alarm monitoring assets was consummated on January 25, 2002.

Total operating revenues attributable to the Company's alarm monitoring division
during 2001,  2000 and 1999 were $2.5  million,  $2.2 million and $2.0  million,
respectively.

The Company had cash, cash  equivalents  and short-term  investments at December
31, 2001,  in excess of $56.2  million.  In addition,  the Company has borrowing
capacity under the aforementioned business loan agreement,  and believes,  given
its  financial  position  and  debt-to-equity   position,   it  has  substantial
additional  short and long-term  borrowing  capacity.  Accordingly,  the Company
believes that its working capital  position,  operating cash flows and borrowing
capacity are more than sufficient to satisfy its liquidity requirements in 2002.
The Company may consider other sources of external financing for the purposes of
funding future capital expenditures and potential investments.

Critical Accounting Policies and Estimates

Below is a summary of the Company's critical  accounting policies and estimates,
which  are  more  fully  described  in the  referenced  notes  to the  Company's
consolidated financial statements:

o    As discussed more fully in Note 1, total  revenues from telephone  services
     are affected by rates authorized by various  regulatory  agencies.  The FCC
     monitors  Roseville  Telephone's  interstate  earnings  through  the use of
     annual cost  separation  studies  prepared by  Roseville  Telephone,  which
     utilize  estimated cost  information  and projected  demand usage.  The FCC
     establishes  rules that  carriers  must  follow in the  preparation  of the
     annual studies.  In addition,  under NRF, Roseville Telephone is subject to
     ongoing  monitoring  and  reporting  requirements  by the PUC,  including a
     sharing  mechanism  whereby  Roseville  Telephone  may be required to share
     earnings with  customers  based on its earned annual  rate-of  return.  The
     calculations  supporting  the  liabilities  associated  with the  Company's
     estimated  shareable  earnings  obligations  are very complex and involve a
     variety of estimates prior to the ultimate  settlement of such obligations.
     Accordingly,  it is  reasonably  possible  that  management's  estimates of
     Roseville  Telephone's  shareable earnings  obligations could change in the
     near term, and the amounts involved could be material.

o    As discussed more fully in Note 3, the Company  recognizes revenue when (i)
     persuasive  evidence of an arrangement between the Company and the customer
     exists,  (ii)  delivery  of the  product to the  customer  has  occurred or
     service has been provided to the customer,  (iii) the price to the customer
     is fixed and  determinable  and (iv)  collectibility  of the sales price is
     reasonably assured.

o    As  discussed  more  fully in Note 1,  property,  plant and  equipment  and
     intangible   assets  are  recorded  at  cost.   Additions  and  substantial
     improvements are capitalized. Retirements and other reductions of regulated
     telephone plant and equipment are charged against accumulated  depreciation
     with no gain or loss  recognized  in accordance  with the  composite  group
     remaining  life  methodology  utilized for  telephone  plant  assets.  When
     property  applicable to  non-telephone  operations is sold or retired,  the
     asset and related  accumulated  depreciation  are removed from the accounts
     and  the  associated  gain  or  loss is  recognized.  Property,  plant  and
     equipment and  intangible  assets are  depreciated  or amortized  using the
     straight-line  method over their estimated economic lives, certain of which
     were  significantly  revised in the fourth  quarter of 2000,  as more fully
     described  in Note 2. In  assessing  the  recoverability  of the  Company's
     intangible  assets,  which consist of wireless  licenses and goodwill,  the
     Company must make  assumptions  regarding  estimated  future cash flows and
     other  factors to determine  the fair value of the  respective  assets.  If
     these  estimates and assumptions  change in the future,  the Company may be
     required to record  impairment  charges relating to its intangible  assets.
     See further  discussion  below concerning the pending adoption of SFAS Nos.
     142 and 144 and the Company's  framework for  evaluating  the impairment of
     long-lived assets in periods ending after December 31, 2001.

o    As  discussed  more fully in Note 1, the Company  accounts for income taxes
     using the  liability  method.  Under this  method,  deferred tax assets and
     liabilities  are  determined  based on  differences  between the  financial
     reporting and tax basis of assets and  liabilities  and are measured  using
     the enacted  tax rates and laws that are  expected to be in effect when the
     differences are expected to reverse.  The Company does not have a valuation
     allowance  on its  deferred  tax asset as of December  31, 2001  because it
     believes it is more likely  than not that such  deferred  tax asset will be
     realized. Should the Company determine that it would not be able to realize
     all or part of its deferred tax asset in the future,  an  adjustment to the
     deferred  tax asset  would be  charged to income in the period in which the
     determination was made.

o    The Company maintains allowances for doubtful accounts for estimated losses
     resulting  from the  potential  inability of its customers to make required
     payments.  If the financial  condition of the Company's  customers  were to
     deteriorate,  resulting in an impairment of their ability to make payments,
     additional allowances may be required.

o    As   discussed   more  fully  in  Note  8,  the  Company  has  pension  and
     postretirement  benefit costs and  obligations.  The Company's  pension and
     postretirement  benefit  obligations  are actuarially  determined  based on
     estimates of discount  rates,  long-term rates of return on plan assets and
     increases in future  compensation  levels.  Changes in these  estimates and
     other  factors  could  significantly   impact  the  Company's  pension  and
     postretirement benefit costs and obligations.

Recent accounting pronouncements

On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging  Activities," as amended.  SFAS No. 133 standardizes the
accounting  for  derivatives  and  hedging  activities  and  requires  that  all
derivatives  be  recognized  in the  statement of  financial  position as either
assets or  liabilities  at fair value.  Changes in the fair value of derivatives
that do not meet the hedge  accounting  criteria  are required to be reported in
operations.  The  adoption  of SFAS  No.  133  had no  effect  on the  Company's
consolidated financial statements.

In July 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141, "Business  Combinations," and SFAS No. 142, "Goodwill and Other Intangibles
Assets." SFAS No. 141 eliminates the  pooling-of-interests  method of accounting
for business combinations, except for qualifying business combinations that were
initiated  prior to July 1, 2001. The Company has applied the provisions of SFAS
No.  141 to its  acquisition  of  QuikNet,  which  occurred  on July  31,  2001.
Consequently,  the goodwill  recognized  by the Company in  connection  with its
acquisition of QuikNet is not being amortized,  but rather is reviewed  annually
for impairment, or more frequently, if impairment indicators arise, based on the
guidance  in SFAS No.  142.  The  Company  will adopt SFAS No. 142 on January 1,
2002.  The Company  believes its wireless PCS and LMDS licenses have  indefinite
lives  because  such  licenses  can be  renewed  indefinitely  at  little  cost.
Accordingly, the application of the nonamortization provision of SFAS No. 142 to
the Company's  wireless PCS licenses (the Company's  wireless LMDS licenses were
not in service or being amortized as of December 31, 2001) is expected to result
in an increase in the Company's  consolidated net income of $290 thousand ($0.02
per  share)in  2002.  Beginning  in the first  quarter  of 2002,  the  Company's
wireless  PCS and LMDS  licenses  will be  carried  at the lower of cost or fair
value.  The Company will test goodwill for impairment using the two-step process
described in SFAS No. 142. The first step is to screen for potential impairment,
while the second step measures the amount of the impairment, if any. The Company
expects to perform the first of the  required  impairment  tests of goodwill and
indefinite-lived intangible assets as of January 1, 2002 in the first quarter of
2002.  The Company  does not  presently  believe  that any  material  impairment
charges will result from these transitional impairment tests.

In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations."  SFAS No. 143 requires  that the fair value of a liability  for an
asset retirement  obligation be recognized in the period in which it is incurred
if a  reasonable  estimate  of fair  value  can be made.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  The  Company is required to adopt SFAS No. 143 on January 1,
2003,  and it does not believe the adoption of SFAS No. 143 will have a material
effect on its consolidated financial statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived  Assets," which supersedes SFAS No. 121,  "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed
Of," and provides a single accounting model for long-lived assets to be disposed
of. The  Company is  required  to adopt SFAS No. 144 on January 1, 2002,  and it
does not believe the adoption of SFAS No. 144 will have a material effect on its
consolidated financial statements.

In April  2001,  the  FASB's  Emerging  Issues  Task  Force  ("EITF")  reached a
consensus regarding the provision in EITF Issue 00-25,  "Vendor Income Statement
Characterization  of  Consideration  from a Vendor to a Retailer,"  dealing with
consideration  from a vendor to a reseller  under  cooperative  advertising  and
other arrangements. This provision of EITF Issue 00-25 states that consideration
from a vendor to a resel1er of the vendor's  products or services is presumed to
be a reduction of the selling price of the vendor's products or services, unless
the vendor (i) receives an identifiable  benefit in return for the consideration
and (ii) can reasonably estimate the fair value of the benefit received.  If the
amount of  consideration  paid by the vendor exceeds the estimated fair value of
the  benefit  received,  the excess  amount is to be recorded by the vendor as a
reduction of revenues.  The Company is required to adopt this  provision of EITF
Issue 00-25 on January 1, 2002, and it does not believe the adoption of this new
guidance will have a material effect on its consolidated financial statements.

Regulatory and Legal Matters

In 1996,  Congress passed the  Telecommunications  Act of 1996 (the "Act") which
significantly   changed  the  regulatory   environment  for   telecommunications
companies.  Beginning  in 1996,  the F.C.C.  conducted  proceedings  and adopted
orders implementing the Act's provisions to open local exchange service markets,
such as the market of Roseville Telephone, to competition. These proceedings and
orders  address  interconnection,  access  charges and universal  service.  With
respect to local competition the F.C.C. rules outline pricing  methodologies for
the  states  to  follow  when  setting  rates for  incumbent  carriers  (such as
Roseville  Telephone)  to charge  competitors  for resale,  interconnection  and
unbundled network elements.

In January 2001,  the United States Supreme Court granted a petition for writ of
certiorari  to review  certain  aspects  of the  implementation  of the Act.  In
particular, the United States Supreme Court will consider whether the Act:

1)   precludes the F.C.C. from requiring incumbent local exchange carriers, such
     as Roseville  Telephone,  from using a pricing  methodology  in determining
     what  new  entrants  must  pay  that is  based  upon a  hypothetical,  most
     efficient  network  configuration,  rather  than  the  incumbent  carrier's
     historical cost;

2)   requires the "historical costs" of the incumbent carrier (such as Roseville
     Telephone) to be taken into account in setting the rates that the incumbent
     can charge the new entrants for access to network elements; and

3)   prohibits  regulators  from  requiring that  incumbents  (such as Roseville
     Telephone)  combine  previously  uncombined  network  elements when the new
     entrant requests the combination and offers to pay for the extra work.

Given the Act's relatively  recent  enactment,  the ongoing actions taken by the
F.C.C. to promulgate rules and regulations on interconnection access charges and
universal service reform, and the various on-going legal challenges  considering
the validity of these F.C.C.  orders,  it is not yet possible to determine fully
the impact of the Act and related F.C.C.  regulations  on Roseville  Telephone's
operations.

The Company's  financial  condition and results of operations have been and will
be  affected  by recent and  future  proceedings  before  the P.U.C.  and F.C.C.
Pending before the F.C.C. and P.U.C. are proceedings which are considering:

     o    Additional rules governing the opening of markets to competition

     o    The goals and definition of universal  telephone service in a changing
          environment,  including  examination of subsidy support mechanisms for
          subscribers of different carriers  (including the incumbent  carriers)
          and in various geographic areas.

     o    Rules that will provide non-discriminatory access by competing service
          providers to the network capabilities of local exchange carriers

The  eventual  impact  on the  Company  of the  effect  of all  the  proceedings
described above cannot presently be determined.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is subject to market risk  associated  with interest rate movements.
However,  the  Company's  market  risk  disclosure  pursuant  to  Item 7A is not
material and therefore not required.


<PAGE>



Item 8.  Financial Statements and Supplementary Data
                                                                        Page

Report of Independent Auditors ....................................       31

Consolidated Balance Sheets as of December 31, 2001 and 2000 ......       32

Consolidated Statements of Income for each of the three years
in the period ended December 31, 2001 .............................       34

Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended December 31, 2001 .............       37

Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 2001 .................       38

Notes to Consolidated Financial Statements ........................       40


<PAGE>



                         REPORT OF INDEPENDENT AUDITORS



The Board of Directors and Shareholders
SureWest Communications


We have  audited  the  accompanying  consolidated  balance  sheets  of  SureWest
Communications  as of December 31, 2001 and 2000,  and the related  consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 2001. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits. The 1999 consolidated
financial statements of Sacramento-Valley  Limited Partnership (a partnership in
which the Company had an  approximate  24% interest  through  November 3, 2000 -
Note 5) have been audited by other  auditors  whose report has been furnished to
us; insofar as our opinion on the 1999 consolidated financial statements relates
to data included for Sacramento-Valley  Limited Partnership,  it is based solely
on their report.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We  believe  that our  audits  and the  report of other  auditors
provide a reasonable basis for our opinion.

In our  opinion,  based on our  audits  and the  report of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the consolidated  financial position of SureWest  Communications at December 31,
2001 and 2000, and the consolidated results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.

As discussed in Note 2 to the  consolidated  financial  statements,  in 2000 the
Company   discontinued    accounting   for   the   operations   of   its   local
telecommunications   subsidiary  in  accordance   with  Statement  of  Financial
Accounting  Standards  No. 71,  Accounting  for the Effects of Certain  Types of
Regulation.  As discussed in Note 3 to the consolidated financial statements, in
2000 the Company  changed its method of accounting  for revenue  recognition  in
accordance  with guidance  contained in SEC Staff  Accounting  Bulletin No. 101,
Revenue Recognition in Financial Statements.


                                                            /s/Ernst & Young LLP

Sacramento, California
February 8, 2002


<PAGE>



                             SUREWEST COMMUNICATIONS
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000
                             (amounts in thousands)
<TABLE>
<CAPTION>
                       ASSETS                        2001                  2000
                       ------                        ----                  ----
<S>                                                 <C>                    <C>
Current assets:
   Cash and cash equivalents                     $ 54,520              $169,955
   Short-term investments                           1,723                 7,435
   Accounts receivable (less allowances of
     $1,068 and $142 at December 31, 2001 and
     2000, respectively)                           20,282                24,515
   Receivable relating to cellular partnership          -                 5,513
   Refundable income tax                            2,619                     -
   Inventories                                      3,324                 3,696
   Deferred income tax asset                          640                 6,613
   Deferred directory costs                         3,260                 4,133
   Prepaid expenses and other current assets        1,726                   547
                                                 --------              --------
     Total current assets                          88,094               222,407

Property, plant and equipment:
   In service                                     492,323               445,057
   Under construction                              32,182                24,332
                                                 --------              --------
                                                  524,505               469,389
Less accumulated depreciation                     216,432               191,408
                                                 --------              --------
                                                  308,073               277,981

Investments and other assets:
   Long-term certificate of
     deposit with related party                         -                15,155
   Wireless licenses, net                          13,566                12,929
   Goodwill                                         2,171                     -
   Deferred charges and other assets                  439                   470
                                                 --------              --------
                                                   16,176                28,554
                                                 --------              --------
                                                 $412,343              $528,942
                                                 ========              ========

</TABLE>











                             See accompanying notes.



<PAGE>
                             SUREWEST COMMUNICATIONS
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                           December 31, 2001 and 2000
                             (amounts in thousands)
<TABLE>


LIABILITIES AND SHAREHOLDERS' EQUITY                  2001           2000
------------------------------------                  ----           ----
<CAPTION>
<S>                                                     <C>           <C>
Current liabilities:
Current portion of long-term debt                  $  2,143       $  2,143
Accounts payable and other accrued
 liabilities                                         11,093         14,784
Estimated shareable earnings obligations             16,597         16,316
Advance billings and deferred revenues                8,144          7,445
Accrued income taxes                                      -         92,050
Accrued pension cost                                  6,551          7,061
Accrued compensation                                  4,218          3,742
                                                   --------       --------
Total current liabilities                            48,746        143,541

Long-term debt                                       42,142         44,285

Deferred income taxes                                11,206          6,626

Other liabilities and deferred revenues               8,456          7,918

Minority interest in subsidiary                           -          1,570

Shareholders' equity:
 Common stock, without par value; 100,000
    shares authorized, 15,110 and 15,510 shares
    issued and outstanding at December 31, 2001
    and 2000, respectively                          172,083        181,547
   Deferred stock-based compensation                   (303)             -
   Retained earnings                                130,013        143,455
                                                   --------       --------
     Total shareholders' equity                     301,793        325,002
                                                   --------       --------
                                                   $412,343       $528,942
                                                   ========       ========


</TABLE>











                             See accompanying notes.


<PAGE>
                             SUREWEST COMMUNICATIONS
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                (amounts in thousands, except per share amounts)
<TABLE>

                                         2001         2000          1999
<CAPTION>
<S>                                     <C>           <C>          <C>
                                        ----         ----          ----
Operating revenues:
   Local service                      $ 65,524     $ 65,708      $ 68,605
   Network access service               49,120       41,357        43,531
   Wireless Service                     16,301        4,922           610
   Directory advertising                14,237       13,044        12,989
   Nonregulated sales and
    services                             7,330        7,931         6,284
   Other                                14,453       10,354         8,782
                                      --------     --------      --------
     Total operating revenues          166,965      143,316       140,801

Operating expenses:
   Cost of services and products        56,352       46,662        37,558
   Customer operations and selling      31,991       24,350        17,108
   General and administrative           26,018       19,686        20,805
   Depreciation and amortization        39,841       28,891        22,378
                                      --------     --------      --------
     Total operating expenses          154,202      119,589        97,849
                                      --------     --------      --------
Income from operations                  12,763       23,727        42,952

Other income (expense):
   Interest income                       4,803        2,814         1,725
   Interest expense                     (1,314)      (4,223)       (3,465)
   Equity in earnings of cellular
    partnership                              -       10,089        10,129
   Gain on sale of investment in
    cellular partnership                     -      201,294             -
   Allowance for funds used during
    construction                             -        1,219         1,530
   Other, net                              934          234           154
                                      --------     --------      --------
   Total other income, net               4,423      211,427        10,073
                                      --------     --------      --------
Income before income taxes,
  extraordinary loss and cumulative
  effect of change in accounting
  principle                             17,186      235,154        53,025

Income taxes                             6,869       95,156        21,275
                                      --------     --------      --------
Income before extraordinary loss
  and cumulative effect of
  change in accounting principle        10,317      139,998        31,750

Extraordinary loss, net of $7,631
  tax benefit                                -      (10,932)            -
</TABLE>


<PAGE>

                             SUREWEST COMMUNICATIONS
                  CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                (amounts in thousands, except per share amounts)
<TABLE>

                                          2001         2000          1999
                                          ----         ----          ----
<CAPTION>
<S>                                     <C>             <C>           <C>
Cumulative effect of change in
  accounting principle, net of
  $2,250 tax benefit                          -       (3,273)            -
                                       --------     --------      --------
Net income                             $ 10,317     $125,793      $ 31,750
                                       ========     ========      ========
Basic per share amounts:
  Income before extraordinary loss
     and cumulative effect of change
     in accounting principle           $    0.67    $   8.97      $   2.01
    Extraordinary loss,
     net of tax benefit                        -       (0.70)            -
    Cumulative effect of change in
     accounting principle, net of tax
      benefit                                  -       (0.21)            -
                                       ---------    ---------     ---------
Net income                             $    0.67    $   8.06      $   2.01
                                       =========    =========     =========
Shares of common stock used to
    calculate basic per share
    amounts                               15,326      15,610        15,815
                                       =========    =========     =========

Diluted per share amounts:
    Income before extraordinary loss
     and cumulative effect of change
     in accounting principle           $    0.67    $   8.96      $   2.01
    Extraordinary loss, net of tax
     benefit                                   -       (0.70)            -
    Cumulative effect of change in
     accounting principle, net of
     tax benefit                               -       (0.21)            -
                                       ---------    ---------     ---------
Net income                             $    0.67    $   8.05      $   2.01
                                       =========    =========     =========
Shares of common stock used to
    calculate diluted per share
    amounts                               15,387      15,630        15,822
                                       =========    =========     =========

Dividends per share                    $    1.00    $   1.00      $   1.00
                                       =========    =========     =========
Pro forma amounts assuming the
 accounting change is applied
 retroactively:

   Income before extraordinary loss
     and cumulative effect of change
     in accounting principle           $  10,317    $139,998      $ 31,926

</TABLE>

<PAGE>

                             SUREWEST COMMUNICATIONS
                  CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                (amounts in thousands, except per share amounts)
<TABLE>

                                          2001          2000         1999
                                          ----          ----         ----
<CAPTION>
<S>                                       <C>            <C>         <C>
Net income                             $  10,317     $129,066     $ 31,926

Basic per share amounts:
   Income before extraordinary loss
     and cumulative effect of change
     in accounting principle           $    0.67     $   8.97     $   2.02

Net income                             $    0.67     $   8.27     $   2.02

Diluted per share amounts:
   Income before extraordinary loss
     and cumulative effect of change
     in accounting principle           $    0.67     $   8.96     $   2.02

Net income                             $    0.67     $   8.26     $   2.02

</TABLE>


































                             See accompanying notes


<PAGE>
                             SUREWEST COMMUNICATIONS
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 2001, 2000 and 1999
                             (amounts in thousands)



<TABLE>
                                  Common Stock
                               -------------------
                                                                  Deferred
                                    Number of                  Stock-Based      Retained
                                     Shares       Amount       Compensation     Earnings       Total
                                     ------      --------      ------------     --------       -------
<CAPTION>
<S>                                      <C>         <C>             <C>          <C>           <C>

Balance at December 31, 1998         15,815        $189,171       $    -       $ 22,118      $211,289

 Issuance of restricted common
    stock                                13            383             -              -           383
   Cash dividends                         -              -             -        (15,822)      (15,822)
   Net income                             -              -             -         31,750        31,750
                                     ------       --------        ------       --------      --------
Balance at December 31, 1999         15,828        189,554             -         38,046       227,600

  Issuance of restricted common
   stock                                 11            373             -              -           373
  Repurchase of common
   stock                               (329)        (8,380)            -         (4,744)      (13,124)
  Cash dividends                          -              -             -        (15,640)      (15,640)
  Net income                              -              -             -        125,793       125,793
                                   ---------      --------        ------      ---------      --------
Balance at December 31, 2000         15,510        181,547             -        143,455       325,002

   Issuance of common stock upon
    exercise of options                   7            288             -              -           288
  Issuance of restricted common
   stock                                  8            363          (363)             -             -
  Repurchase of common
   stock                               (415)       (10,115)            -         (8,417)      (18,532)
   Amortization of deferred
    stock-based compensation              -              -            60              -            60
  Cash dividends                          -              -             -        (15,342)      (15,342)
  Net income                              -              -             -         10,317        10,317
                                   --------       --------        -------      ---------     --------
Balance at December 31, 2001         15,110       $172,083        $ (303)      $130,013      $301,793
                                   ========       ========        =======      =========     ========

</TABLE>







                             See accompanying notes.


<PAGE>
                             SUREWEST COMMUNICATIONS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2001, 2000 and 1999
                Increase (Decrease) in Cash and Cash Equivalents
                             (amounts in thousands)
<TABLE>

                                                      2001               2000               1999
<CAPTION>
<S>                                                   <C>                 <C>               <C>
                                                      ----               ----               ----
  Cash flows from operating activities:
     Net income                                    $ 10,317           $ 125,793          $ 31,750
     Adjustments to reconcile net
      income to net cash provided by (used
      in) operating activities:
        Extraordinary loss, net of
          tax benefit                                     -              10,932                 -
        Cumulative effect of a change
          in accounting principle, net
          of tax benefit                                  -               3,273                 -
        Depreciation and amortization                39,841              28,891            22,378
         Equity component of allowance
           for funds used during construction            -                 (653)             (643)
         Provision for deferred income taxes         10,381             (14,260)            1,495
         Equity in earnings of cellular
           partnership                                   -              (10,089)          (10,129)
         Gain on sale of cellular partnership            -             (201,294)                -
         Provision for doubtful accounts              2,896                 836               638
         Amortization of deferred stock-based
           compensation                                  60                   -                 -
         Other, net                                     838                (439)               69
         Net changes in:
           Receivables                                1,374              (4,953)           (4,186)
           Refundable and accrued income
             taxes, net                             (94,669)             92,380               639
           Inventories, prepaid expenses
             and other current assets                  (774)             (1,482)             (826)
           Payables, accrued liabilities
             and other deferred credits              (3,160)             24,165             1,523
                                                    --------           --------           -------
         Net cash provided by (used in)
           operating activities                     (32,896)             53,100            42,708

  Cash flows from investing activities:
     Purchase of business, net of
       cash acquired                                 (2,091)                  -                 -
     Purchase of minority interest in
       subsidiary                                    (2,500)                  -                 -
     Capital expenditures for property,
       plant and equipment                          (69,556)            (87,234)          (58,402)
     Deposit                                            500                            -        -
    Purchase of wireless licenses                         -              (4,642)                -
    Purchases of held-to-maturity
      investments                                    (8,843)             (7,625)           (8,022)
</TABLE>
                             See accompanying notes.


<PAGE>



                             SUREWEST COMMUNICATIONS
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                  Years ended December 31, 2001, 2000 and 1999
                Increase (Decrease) in Cash and Cash Equivalents
                             (amounts in thousands)
<TABLE>

                                                    2001              2000              1999
                                                    ----              ----              ----
<CAPTION>
<S>                                                   <C>               <C>             <C>
  Maturities of held-to-maturity
     Investments                                    14,555             6,654            5,800
   Investment in cellular partnership                    -            (9,902)               -
   Return of investment in cellular
     partnership                                     5,513            18,046            7,578
   Investment in long-term
    certificate of deposit with
    related party                                       -            (15,000)               -
   Redemption of long-term certificate of
    deposit with related party                      15,000                -                 -
   Proceeds from sale of investment
    in cellular partnership                              -           236,153                -
   Other, net                                          691              (379)             349
                                                  --------          --------          -------
       Net cash provided by (used in)
        investing activities                       (46,731)          136,071          (52,697)

  Cash flows from financing activities:
    Principal payments of long-term
      debt                                          (2,143)           (2,143)          (2,143)
    Increase in short-term borrowings                    -            40,000                -
    Repayment of short-term borrowings                   -           (40,000)               -
    Dividends paid                                 (15,342)          (15,640)         (15,822)
    Proceeds from exercise of stock
      options                                          288                 -                -
    Repurchase of common stock                     (18,532)          (13,124)               -
    Investment in subsidiary by
      minority partner                                   -               805                -
  Other, net                                           (79)                -                -
                                                 ---------         ---------         --------
        Net cash used in
         financing activities                      (35,808)          (30,102)         (17,965)
                                                 ---------         ---------         --------
  Increase (decrease) in cash and
   cash equivalents                               (115,435)          159,069          (27,954)

  Cash and cash equivalents at
   beginning of year                               169,955            10,886           38,840
                                                 ---------         ---------         --------

  Cash and cash equivalents at
   end of year                                   $  54,520         $ 169,955         $ 10,886
                                                 =========         =========         ========
</TABLE>

                             See accompanying notes.
<PAGE>

                             SUREWEST COMMUNICATIONS
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999
                (dollars in thousands, except per share amounts)

1.   Summary of significant accounting policies

     Business and basis of accounting

     SureWest  Communications,  formerly Roseville  Communications Company, (the
     "Company") is a holding company with subsidiaries  that provide  integrated
     communications  services.  The Company's  wholly-owned  principal operating
     subsidiary is Roseville Telephone Company ("Roseville Telephone"). SureWest
     Directories,  Roseville Long Distance Company  ("Roseville Long Distance"),
     SureWest  Internet,  QuikNet,  Inc.  ("QuikNet"),   SureWest  Wireless  and
     Roseville   Alternative   Company   ("Roseville   Alternative")   are  each
     wholly-owned  subsidiaries of the Company. SureWest Wireless is the manager
     of and owns  100% of West  Coast PCS LLC,  which  does  business  using the
     SureWest  Wireless  name  and  provides  wireless  personal   communication
     services ("PCS").  The Company expects that the sources of its revenues and
     its cost  structure  may be different in future  periods as a result of its
     entry into new communications markets.

     The consolidated financial statements have been prepared in accordance with
     accounting  principles  generally  accepted  in the  United  States,  which
     require  management  to make  estimates  and  assumptions  that  affect the
     amounts reported in the financial statements and accompanying notes. Actual
     results could differ from those estimates.

     Principles of consolidation

     The consolidated  financial  statements include the accounts of the Company
     and   its   wholly-owned   subsidiaries.   All   significant   intercompany
     transactions have been eliminated.

     Regulation  and estimated  shareable  earnings  obligations

     Certain of the  Company's  rates are subject to  regulation  by the Federal
     Communications  Commission  ("F.C.C.") and the California  Public Utilities
     Commission  ("P.U.C.").  Pending and future  regulatory  actions may have a
     material  impact  on the  Company's  consolidated  financial  position  and
     results of operations.

     Total revenues from telephone  services are affected by rates authorized by
     various  regulatory  agencies.  Intrastate  service  rates are  subject  to
     regulation by the P.U.C.  With respect to toll calls initiated by customers
     of  interexchange  carriers,  interexchange  carriers are  assessed  access
     charges based on tariffs filed by Roseville  Telephone.  Interstate service
     rates are subject to  regulation  by the F.C.C.  With respect to interstate
     services,  Roseville Telephone has filed its own tariff with the F.C.C. for
     all elements of access  services  except carrier  common line charges,  for
     which  Roseville  Telephone  concurs  with  tariffs  filed by the  National
     Exchange Carrier Association.


<PAGE>



1.   Summary of significant accounting policies (CONTINUED)

     The FCC monitors Roseville Telephone's  interstate earnings through the use
     of annual cost  separation  studies  prepared by Roseville  Telephone which
     utilize  estimated cost  information  and projected  demand usage.  The FCC
     establishes  rules that  carriers  must  follow in the  preparation  of the
     annual  studies.  On January 23, 2001, the FCC issued a Memorandum  Opinion
     and Order to another  telephone  company in which it clarified how Internet
     traffic,  which  the FCC had prior to that date  characterized  as  largely
     interstate  in  nature,   should  be  treated  for  rate  making  purposes.
     Additionally,  under  current FCC rules  governing  rate making,  Roseville
     Telephone  is required to  establish  interstate  rates based on  projected
     demand  usage for its various  services at the  beginning  of each year and
     determine the actual  earnings from these rates at the end of the year once
     actual volumes and costs are known.

     When  Roseville  Telephone  completed  its first  analysis  of 2000  actual
     interstate earnings and the true-up analysis of 1999 interstate earnings in
     January 2001, those studies reflected the FCC's January 2001  clarification
     order on Internet  traffic and actual  traffic and cost levels.  During the
     latter half of the 1999 through 2000  monitoring  period and the year ended
     2001,  Internet traffic and DSL service grew  substantially,  far exceeding
     Roseville Telephone's estimates.  The combination of the increase in actual
     volumes  relating to Internet  traffic and DSL  services  over the original
     estimates and the FCC's alternative  treatment of Internet traffic resulted
     in actual  earnings  exceeding the levels  allowed by the FCC. Based on the
     preliminary  cost studies for the 1999 through 2000  monitoring  period and
     the year ended  December  31,  2001,  the  Company  recognized  liabilities
     relating to Roseville  Telephone's  estimated interstate shareable earnings
     obligations  of $8,100 and $3,200 during the fourth quarter of 2000 and the
     year ended December 31, 2001, respectively, through reductions to revenues.
     During the year ended December 31, 2001,  Roseville Telephone made payments
     to certain  telecommunications  companies  aggregating $6,800 relating to a
     portion of these  obligations.  In addition,  during the fourth  quarter of
     2001, the Company  changed its estimate  relating to a portion of Roseville
     Telephone's  interstate shareable earnings obligations,  principally due to
     the closing of the 1997  through  1998  monitoring  period.  This change in
     accounting estimate increased the Company's  consolidated 2001 revenues and
     net income by $2,150 and $1,290 ($0.08 per share), respectively.

     Roseville  Telephone  bills Pacific Bell, a wholly-owned  subsidiary of SBC
     Communications  Inc., various charges for certain local service and network
     access service revenues pursuant to certain agreements  described below. Of
     the  Company's  total  revenues  in 2001,  2000 and 1999,  3%, 11% and 11%,
     respectively,  were recorded under these agreements.  In 1999, Pacific Bell
     expressed  interest in withdrawing from the designated carrier plan ("DCP")
     for Roseville  Telephone's toll traffic and to enter into a new,  permanent
     compensation  arrangement for extended area service  ("EAS").  The DCP is a
     compensation  arrangement  between Roseville Telephone and Pacific Bell for
     certain intralata toll services. Pacific Bell also paid Roseville Telephone
     $11,500 per year for EAS pursuant to a Settlement Transition Agreement.  In
     November 2000, the P.U.C.  authorized  Pacific Bell to terminate its annual
     EAS payments to Roseville Telephone effective November 30, 2000. The P.U.C.
     authorized  replacement  funding  on an  interim  basis  using the  current
     reserve in the California High Cost Fund and denied  permanent  replacement
     funding.

<PAGE>

1.   Summary of significant accounting policies (CONTINUED)

     The P.U.C. also opened an Order Instituting  Investigation for the purposes
     of determining  whether  recovery of all, none, or a portion of the $11,500
     annual payments should come from Roseville Telephone's  ratepayers or other
     regulatory recovery mechanisms. These proceedings began in 2001 and will be
     conducted  through 2003.  The P.U.C.  has made no indication as to what, if
     any, changes will be forthcoming  relating to EAS revenues.  The results of
     these  proceedings and their potential  effects on Roseville  Telephone can
     not yet be determined.  In addition, since the DCP arrangement with Pacific
     Bell expired in December 2001,  Roseville Telephone now bills and keeps its
     customers toll traffic. The impact of ending the DCP arrangement and moving
     to a bill and keep basis on Roseville  Telephone's results of operations is
     not material.

     In 1996,  the  P.U.C.  issued  a  decision  in  connection  with  Roseville
     Telephone's general rate proceeding,  which authorized  Roseville Telephone
     to implement a New  Regulatory  Framework  ("NRF") for  services  furnished
     within Roseville  Telephone's  service area in order to accommodate  market
     and regulatory movement toward competition and greater pricing flexibility.
     Under the NRF,  Roseville  Telephone is subject to ongoing  monitoring  and
     reporting  requirements,  including a sharing  mechanism  whereby Roseville
     Telephone  may be required to share  earnings with  customers  based on its
     earned annual rate-of-return.

     In  accordance  with the  requirements  of its  general  rate  case  order,
     Roseville  Telephone  filed an  application  for review of its NRF in 1999.
     This proceeding  considered  modifications to the NRF structure,  including
     potential changes to the current monitoring and reporting requirements, the
     earnings sharing  mechanism,  and related matters.  In accordance with NRF,
     Roseville  Telephone is subject to, among other things, a sharing mechanism
     whereby  Roseville  Telephone  may  be  required  to  share  earnings  with
     customers  through a reduction  to  revenues  if its earned  annual rate of
     return exceeds that authorized by the P.U.C. In addition, the P.U.C. Office
     of Ratepayer  Advocates ("ORA") undertook a verification audit of Roseville
     Telephone's  non-regulated  and  affiliated  transactions  pursuant  to the
     general rate case and other P.U.C. orders. In June 2001, the P.U.C. adopted
     its  decision  in this  matter  (the  "Decision").  The  P.U.C.  ruled that
     Roseville  Telephone  must  change the method  used to  allocate  costs for
     services provided by Roseville  Telephone to its affiliates,  the treatment
     of certain  directory  revenues and the treatment of internal-use  software
     costs.  The  Decision  did not suspend the sharing  mechanism  and required
     Roseville  Telephone to further  amend its  intrastate  shareable  earnings
     filing  for 1998 and 1999 to  provide  an  additional  $1,000 in  shareable
     earnings, which was recorded during the three months ended June 30, 2001 as
     a reduction of revenues. Additionally, in accordance with the provisions of
     the Decision, the Company recorded additional liabilities and reductions of
     revenues of approximately  $5,000 relating to estimated  shareable earnings
     during  2001.  In December  2001,  the P.U.C.  denied the  application  for
     rehearing of the Decision filed by Roseville Telephone.

     As of December 31, 2001, the Company's consolidated balance sheet reflected
     aggregate   liabilities  of  $16,597  relating  to  Roseville   Telephone's
     estimated  interstate and intrastate  shareable earnings  obligations.  The
     calculations supporting these liabilities are very

<PAGE>


1.   Summary of significant accounting policies (CONTINUED)

     complex and involve a variety of estimates prior to the ultimate settlement
     of  such  obligations.   In  addition,   Roseville  Telephone's  interstate
     shareable  earnings  obligations  lapse over time if Roseville  Telephone's
     interexchange carrier and other customers do not claim the amounts ascribed
     to them. Accordingly, it is reasonably possible that management's estimates
     of the  Company's  liabilities  for  interstate  and  intrastate  shareable
     earnings  obligations  could  change  in the  near  term,  and the  amounts
     involved could be material.

     Cash equivalents and short-term investments

     The Company  invests its excess cash in high-quality  debt  instruments and
     money market mutual funds. The Company considers highly liquid  investments
     with  maturities of three months or less from the  acquisition  date of the
     instrument to be cash equivalents.  Short-term  investments at December 31,
     2001 and 2000 have  maturities  ranging  from  greater than 90 days to less
     than one year.

     Management  determines the appropriate  classification of securities at the
     time of purchase and reevaluates  such designation as of each balance sheet
     date.  At December 31, 2001 and 2000,  all  securities  are  designated  as
     held-to-maturity  because management has the positive intent and ability to
     hold the securities until maturity.  Held-to-maturity securities are stated
     at cost,  adjusted for  amortization of premiums and accretion of discounts
     to maturity.  Such  amortization and accretion,  as well as any interest on
     the securities, is included in interest income.

     The following is a summary of the Company's cash equivalents and short-term
     investments  as of December  31,  2001 and 2000 at  amortized  cost,  which
     approximates fair market value:
<TABLE>

                                                  2001              2000
                                                --------          --------
<CAPTION>
        <S>                                     <C>                 <C>
         Commercial paper                      $  9,450           $104,447
         Money market mutual funds               32,545             61,808
         Repurchase agreements                    4,370              1,635
                                               --------           --------
                                               $ 46,365           $167,890
                                               ========           ========
</TABLE>
     Fair values of financial instruments

     As of  December  31, 2001 and 2000,  the  Company's  financial  instruments
     consist of cash,  cash  equivalents,  short-term  investments,  a long-term
     certificate of deposit with a related party and long-term debt.  Management
     believes the carrying values of cash  equivalents,  short-term  investments
     and the long-term  certificate  of deposit with a related party at December
     31, 2001 and 2000,  which are at amortized  cost,  approximated  their fair
     values at such dates.  The aggregate fair value of the Company's  long-term
     debt (including current  maturities) was approximately  $44,085 and $44,739
     at  December  31,  2001  and  2000,  respectively.  Fair  values  for  cash
     equivalents  and short-term  investments  were  determined by quoted market
     prices. Fair values for the long-term certificate of deposit with a related
     party and  long-term  debt were  determined  through  discounted  cash flow
     analyses  based on the Company's  current  incremental  interest  rates for
     similar instruments.

<PAGE>

1.   Summary of significant accounting policies (CONTINUED)

     Inventories

     Telephone construction inventories consist of materials and supplies, which
     are stated at average cost.  Nonregulated wireline equipment inventory held
     for resale is stated at the lower of average cost or market value. Wireless
     PCS handset and  accessory  inventories  are stated at the lower of cost or
     replacement value.

     Property, plant and equipment

     Property,  plant and  equipment is recorded at cost.  The cost of additions
     and  substantial   improvements   to  property,   plant  and  equipment  is
     capitalized.  The cost of  maintenance  and repairs is charged to operating
     expense  when  incurred.  Retirements  and other  reductions  of  regulated
     telephone plant and equipment with a cost of approximately $14,696,  $2,394
     and  $3,586 in 2001,  2000 and 1999,  respectively,  were  charged  against
     accumulated depreciation with no gain or loss recognized in accordance with
     the composite group remaining life methodology utilized for telephone plant
     assets.  When property  applicable to  non-telephone  operations is sold or
     retired,  the asset and related  accumulated  depreciation are removed from
     the accounts and the associated gain or loss is recognized.

     Property, plant and equipment is depreciated using the straight-line method
     over  their  estimated  economic  lives,  which  range  from 3 to 40 years.
     Average annual composite depreciation rates were 7.48%, 7.31%, and 6.74% in
     2001,  2000  and  1999,   respectively.   Prior  to  Roseville  Telephone's
     discontinuance of Statement of Financial  Accounting Standards ("SFAS") No.
     71, "Accounting for the Effects of Certain Types of Regulation" (Note 2) in
     December 2000,  depreciation  expense for regulated operations was computed
     on a straight-line basis using rates approved by the P.U.C.

     Intangible Assets

     Wireless PCS and LMDS  licenses  are stated at cost.  Wireless PCS licenses
     are  amortized  over their  estimated  useful  lives of 20 years  using the
     straight-line  method.  Accumulated  amortization  was  $1,195  and $713 at
     December 31, 2001 and 2000, respectively.

     As described below under "Recent accounting  pronouncements" and in Note 4,
     the goodwill  recognized in connection  with the  acquisition of QuikNet in
     July 2001 is stated at cost and is not being amortized.

     Stock-based compensation

     The Company  accounts for  stock-based  awards to  employees  and others in
     accordance with Accounting  Principles Board Option No. 25, "Accounting for
     Stock Issued to Employees" ("APB No. 25"), and related interpretations. The
     pro forma disclosures required by SFAS No. 123, "Accounting for Stock-Based
     Compensation," are included in Note 10.


<PAGE>



1.   Summary of significant accounting policies (CONTINUED)

     Advertising costs

     The costs of  advertising  are charged to expense as incurred.  Advertising
     expense was $3,364, $2,387 and $1,351 in 2001, 2000 and 1999, respectively.

     Income taxes

     The Company  accounts for income taxes using the  liability  method.  Under
     this method,  deferred tax assets and liabilities  are determined  based on
     differences  between the  financial  reporting  and tax basis of assets and
     liabilities  and are measured using the enacted tax rates and laws that are
     expected to be in effect when the differences are expected to reverse.

     Per share amounts

     Basic per share amounts are computed  using the weighted  average number of
     shares of the Company's common stock outstanding, less the weighted average
     number of unvested restricted common shares outstanding during the period.

     Diluted per share  amounts are  determined  in the same manner as basic per
     share amounts,  except the number of weighted average common shares used in
     the computations (i) includes unvested restricted common shares outstanding
     and (ii) is increased assuming the exercise of dilutive stock options using
     the treasury stock method.

     The following table presents the  calculations  of weighted  average common
     shares used in the  computations  of basic and  diluted  per share  amounts
     presented in the accompanying consolidated statements of income:
<TABLE>

                                                           Year ended December 31,
                                                           -----------------------
                                                      2001           2000           1999
                                                      ----           ----           ----
<CAPTION>
        <S>                                             <C>         <C>             <C>

       Basic:
          Weighted average shares of common
            stock outstanding                         15,338         15,630         15,822
          Less weighted average shares of
           restricted common stock
                                                          12             20              7
                                                    --------       --------       --------
          Weighted average common shares used
           in computing basic per share
           amounts
                                                      15,326         15,610         15,815
                                                    ========       ========       ========
       Diluted:
          Weighted average shares of common
            stock outstanding                         15,338         15,630         15,822
          Plus weighted average shares of
            common stock from the assumed
</TABLE>

<PAGE>



1.      Summary of significant accounting policies (CONTINUED)

<TABLE>
                                                       2001            2000           1999
                                                       ----            ----           ----
<CAPTION>
        <S>                                             <C>              <C>            <C>

           exercise of dilutive stock options            49               -              -
                                                    --------        --------       --------
          Weighted average common shares used
           in computing diluted per share
           amounts
                                                      15,387          15,630         15,822
                                                    ========        ========       ========
</TABLE>

        Statements of cash flows information

        During 2001, 2000 and 1999, the Company made payments for interest and
        income taxes as follows:
<TABLE>

                                                       2001           2000             1999
                                                       ----           ----             ----
<CAPTION>
        <S>                                              <C>            <C>              <C>

         Interest, net of amounts
           capitalized ($1,708 in 2001 -
           none in 2000 and 1999)                    $ 1,285        $ 3,507          $ 2,552
         Income taxes                                $93,466        $17,070          $19,141
</TABLE>

     Concentrations of credit risk and significant customer

     Substantially all of the Company's  revenues were from  communications  and
     related  services  provided in the Northern  California  area.  The Company
     performs ongoing credit evaluations of its customers'  financial  condition
     and management believes that adequate allowances for doubtful accounts have
     been provided.

     Approximately  3%,  11% and  11% of the  Company's  consolidated  operating
     revenues in 2001,  2000 and 1999,  respectively,  were  derived from access
     charges and other charges to Pacific Bell. No other customers accounted for
     more than 10% of consolidated operating revenues in these years.

     Recent accounting pronouncements

     On January 1, 2001,  the  Company  adopted  SFAS No. 133,  "Accounting  for
     Derivative  Instruments and Hedging  Activities," as amended.  SFAS No. 133
     standardizes  the accounting  for  derivatives  and hedging  activities and
     requires that all  derivatives  be recognized in the statement of financial
     position as either assets or liabilities at fair value. Changes in the fair
     value of  derivatives  that do not meet the hedge  accounting  criteria are
     required to be reported in operations.  The adoption of SFAS No. 133 had no
     effect on the Company's consolidated financial statements.

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 141,  "Business  Combinations,"  and SFAS No. 142,  "Goodwill and Other
     Intangibles  Assets."  SFAS No.  141  eliminates  the  pooling-of-interests
     method of  accounting  for  business  combinations,  except for  qualifying
     business  combinations  that  were  initiated  prior to July 1,  2001.  The
     Company has applied the  provision  of SFAS No. 141 to its  acquisition  of
     QuikNet,  which  occurred  on July 31,  2001.  Consequently,  the  goodwill
     recognized by the Company in connection  with its acquisition of QuikNet is
     not being  amortized,  but rather is reviewed  annually for impairment,  or
     more frequently, if impairment indicators arise, based on

1.   Summary of significant accounting policies (CONTINUED)

     the  guidance  in SFAS No.  142.  The  Company  will  adopt SFAS No. 142 on
     January 1, 2002.  The Company  believes its wireless PCS and LMDS  licenses
     have indefinite lives because such licenses can be renewed  indefinitely at
     little cost. Accordingly,  the application of the nonamortization provision
     of SFAS No. 142 to the  Company's  wireless  PCS  licenses  (the  Company's
     wireless  LMDS  licenses  were  not in  service  or being  amortized  as of
     December  31,  2001) is expected to result in an increase in the  Company's
     consolidated net income of $290 ($0.02 per share) in 2002. Beginning in the
     first quarter of 2002, the Company's wireless PCS and LMDS licenses will be
     carried at the lower of cost or fair value.  The Company will test goodwill
     for impairment  using the two-step  process  described in SFAS No. 142. The
     first step is to screen for  potential  impairment,  while the second  step
     measures  the amount of the  impairment,  if any.  The  Company  expects to
     perform  the  first  of the  required  impairment  tests  of  goodwill  and
     indefinite-lived  intangible  assets  as of  January  1,  2002 in the first
     quarter of 2002.  The Company does not presently  believe that any material
     impairment charges will result from these transitional impairment tests.

     In  August  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
     Retirement  Obligations."  SFAS No. 143  requires  that the fair value of a
     liability for an asset retirement obligation be recognized in the period in
     which it is  incurred if a  reasonable  estimate of fair value can be made.
     The  associated  asset  retirement  costs  are  capitalized  as part of the
     carrying amount of the long-lived  asset.  The Company is required to adopt
     SFAS No. 143 on January 1, 2003,  and it does not believe  the  adoption of
     SFAS No.  143 will have a  material  effect on its  consolidated  financial
     statements.

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
     Impairment or Disposal of Long-Lived  Assets,"  which  supersedes  SFAS No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to Be  Disposed  Of," and  provides  a single  accounting  model for
     long-lived  assets to be disposed of. The Company is required to adopt SFAS
     No. 144 on January 1, 2002,  and it does not believe  the  adoption of SFAS
     No.  144  will  have  a  material  effect  on  its  consolidated  financial
     statements.

     In April 2001, the FASB's  Emerging  Issues Task Force  ("EITF")  reached a
     consensus  regarding  the  provision  in EITF Issue 00-25,  "Vendor  Income
     Statement  Characterization  of Consideration from a Vendor to a Retailer,"
     dealing with  consideration  from a vendor to a reseller under  cooperative
     advertising  and other  arrangements.  This  provision  of EITF Issue 00-25
     states  that  consideration  from a vendor to a  resel1er  of the  vendor's
     products or services is presumed to be a reduction of the selling  price of
     the  vendor's  products  or  services,  unless the vendor (i)  receives  an
     identifiable   benefit  in  return  for  the  consideration  and  (ii)  can
     reasonably  estimate the fair value of the benefit received.  If the amount
     of consideration paid by the vendor exceeds the estimated fair value of the
     benefit  received,  the excess  amount is to be recorded by the vendor as a
     reduction of revenues.  The Company is required to adopt this  provision of
     EITF Issue 00-25 on January 1, 2002,  and it does not believe the  adoption
     of this new  guidance  will  have a  material  effect  on its  consolidated
     financial statements.

1.   Summary of significant accounting policies (CONTINUED)

     Reclassifications

     Certain amounts in the 2000 and 1999 consolidated financial statements have
     been reclassified to conform with the presentation of the 2001 consolidated
     financial statements.

2.   Discontinuance of Regulatory Accounting

     In December 2000,  management  determined that,  primarily as a result of a
     significant  increase in competition within Roseville  Telephone's  service
     area,  the  application  of SFAS No.  71,  "Accounting  for the  Effects of
     Certain  Types of  Regulation,"  was no longer  appropriate  for  Roseville
     Telephone.  As a result of the discontinuation of SFAS No. 71 accounting by
     Roseville Telephone,  the Company recorded an extraordinary non-cash charge
     of  $10,932,  which is net of related tax  benefits of $7,631,  in December
     2000.
<TABLE>

     The components of this charge are as follows:
<CAPTION>
                <S>                                                     <C>
          Change in plant-related balances                           $19,573
          Elimination of regulatory assets and liabilities, net      $(1,010)
          Total pre-tax charge                                       $18,563
          Total after-tax charge                                     $10,932
</TABLE>

     The change in plant-related  balances  primarily  represents an increase in
     accumulated  depreciation  of  $19,573  for  the  removal  of  an  embedded
     regulatory   asset   resulting  from  the  use  of  regulatory   lives  for
     depreciation  of property,  plant and equipment,  which have typically been
     longer than the respective  estimated  economic  lives.  The following is a
     comparison of new depreciation  lives to those prescribed by regulators for
     selected plant categories:

<TABLE>
                                               Average Lives in Years
                                               ----------------------
               Plant Category        Regulator                        Estimated
               --------------        Prescribed                       Economic
                                     ----------                       --------
<CAPTION>
                <S>                     <C>                              <C>
               Buildings                 38                              35
               Digital switches        13-16                             10
               Digital circuits           9                               9
               DSL equipment              9                               3
               Fiber optic cable         25                              20
               Conduit                   45                              40
               Metallic cable            17                              15
</TABLE>
     The  discontinuance  of SFAS No. 71 accounting by Roseville  Telephone also
     required the Company to eliminate  from its  consolidated  balance sheet at
     December 31, 2000 the effects of any other actions of  regulators  that had
     been recognized by Roseville  Telephone as assets and liabilities  pursuant
     to SFAS  No.  71,  but  would  not  have  been  recognized  as  assets  and
     liabilities by  non-regulated  enterprises  in general.  As of December 31,
     2000,  prior to the  discontinuance  of SFAS No. 71  accounting,  Roseville
     Telephone had recorded a net regulatory  liability of $1,010,  the majority
     of which related to the regulatory treatment of certain pension costs. Also
     included  in  Roseville  Telephone's  regulatory  asset  and  liability

 2.  Discontinuance of Regulatory Accounting (CONTINUED)

     elimination   adjustment  are  certain   insignificant  income  tax-related
     regulatory  assets  and  liabilities.  Additionally,  concurrent  with  its
     discontinuation  of SFAS  No.  71  accounting,  Roseville  Telephone  began
     accounting for interest on funds borrowed to finance construction  projects
     as an increase in property, plant and equipment and a reduction of interest
     expense.  Previously,  under  the  provisions  of SFAS  No.  71,  Roseville
     Telephone  accounted  for the  capitalization  of both  interest and equity
     costs allowed by regulators  during periods of construction as other income
     and an addition to the cost of plant constructed.

     The discontinuation of SFAS No. 71 accounting by Roseville Telephone had no
     effect on the accounting for any of the Company's other subsidiaries.

3.   REVENUE RECOGNITION

     The  Company  recognizes  revenue  when  (i)  persuasive   evidence  of  an
     arrangement  between the Company and the customer exists,  (ii) delivery of
     the product to the customer  has  occurred or service has been  provided to
     the customer, (iii) the price to the customer is fixed and determinable and
     (iv)  collectibility  of the sales  price is  reasonably  assured.  Certain
     revenues  derived  principally  from  local  telephone,  dedicated  network
     access, data communications and wireless services are billed in advance and
     recognized in subsequent  periods when the services are provided.  Revenues
     derived from other telecommunications services, principally network access,
     long distance,  billing and collection  services,  Internet access service,
     DSL, wireless PCS and alarm monitoring services,  are recognized monthly as
     services  are  provided.  Incremental  direct  costs of  telecommunications
     service  activation  are charged to expense in the period in which they are
     incurred.  Directory  publication  revenues and costs related to publishing
     and distributing  directories are recognized using the "circulation period"
     method,  under which revenues and related costs are recognized ratably over
     the expected useful life of the directory, generally one year from the date
     of  publication.  For all other  operations,  revenue  is  recognized  when
     products are delivered or services are rendered to customers.

     During  the fourth  quarter  of 2000,  the  Company  changed  its method of
     accounting,  retroactive to January 1, 2000,  for up-front fees  associated
     with telecommunications  service activation in accordance with the guidance
     contained in SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in
     Financial Statements." Previously, the Company had recognized such up-front
     fees as  revenues  upon  activation  of service.  Under the new  accounting
     method,  the Company now recognizes  up-front fees  associated with service
     activation over the expected duration of the customer relationships,  which
     presently ranges from one to five years,  using the  straight-line  method.
     The cumulative  effect of the change on prior years resulted in a charge to
     income of $3,273 (net of income taxes of $2,250),  which is included in net
     income for the year ended  December 31,  2000.  The effect of the change on
     the  year  ended   December  31,  2000  was  to  decrease   income   before
     extraordinary  loss and the cumulative  effect of the accounting  change by
     $508 ($0.03 per share). For the years ended December 31, 2001 and 2000, the
     Company recognized $1,708 and $2,380,  respectively,  of revenues that were
     included in the  cumulative  effect  adjustment as of January 1, 2000.  The
     effect of those revenues was

3.   REVENUE RECOGNITION (CONTINUED)

     to increase  income by $1,025 (net of income taxes of $683) and $1,417 (net
     of income  taxes of $963) for the years ended  December  31, 2001 and 2000,
     respectively.   The  pro  forma  amounts   presented  in  the  accompanying
     consolidated  statements of income were calculated  assuming the accounting
     change was made retroactively to prior periods.

4.   ACQUISITION OF BUSINESS AND MINORITY INTEREST

     On July 31,  2001,  the Company  acquired  100% of the  outstanding  common
     shares of QuikNet for $2,091 in cash.  The results of QuikNet's  operations
     have been included in the Company's  consolidated  financial  statements in
     periods ending  subsequent to July 31, 2001.  QuikNet is a provider of high
     speed Internet services in Northern California.

     The  acquisition  of QuikNet  enables the  Company to increase  its dial-up
     customer base and provide custom data services.

     The following  table  summarizes  the  estimated  fair values of the assets
     acquired and the liabilities  assumed at the date of acquisition,  July 31,
     2001, based on the Company's preliminary allocation of the purchase price:
<TABLE>
        <S>                                                           <C>
         Cash                                                   $      37
         Accounts receivable, net of allowance                         39
         Property, plant and equipment                                257
         Goodwill                                                   2,171
         Deferred tax benefit                                         121
         Prepaid expenses and other current assets                     37
                                                                 --------
             Total assets acquired                                  2,662

         Accounts payable and other accrued liabilities               378
         Deferred revenue                                              90
         Long-term debt                                                66
                                                                 --------
             Total liabilities assumed                                534
                                                                 --------
             Net assets acquired                                 $  2,128
                                                                 ========
</TABLE>

     The $2,171 of goodwill was assigned to the Telecom  segment,  none of which
     is expected to be deductible for tax purposes.

     On April 30, 2001, the Company acquired Foresthill  Telephone Co.'s ("FHT")
     1.8% interest in SureWest  Wireless for $2,500 in cash. The acquisition was
     accounted for as a purchase.  Consequently,  the $1,120 difference  between
     the historical  carrying value of this minority interest and its fair value
     was  recorded by the Company as an  increase to the  carrying  value of its
     wireless PCS  licenses.  As a result of this  acquisition,  the Company now
     owns 100% of SureWest  Wireless.  A former member of the Company's board of
     directors  was the  president,  at the  time of the  acquisition,  and sole
     shareholder of FHT.



5.   INVESTMENT IN SACRAMENTO-VALLEY LIMITED PARTNERSHIP ("SVLP")

     Roseville  Telephone and Roseville  Alternative,  with an aggregate  equity
     interest of  approximately  24%,  were limited  partners of SVLP, a limited
     partnership  formed  for  the  operation  of a  cellular  telephone  system
     principally in California. The Company accounted for its investment in SVLP
     using the equity method.

     Unaudited  summarized balance sheet information for SVLP as of December 31,
     2000 was as follows:
<TABLE>
                <S>                                             <C>
       Current assets                                         $  35,515
       Noncurrent assets, primarily cellular plant            $ 184,409
       Current liabilities                                    $  45,209
       Noncurrent liabilities                                 $  46,432
</TABLE>

     Summarized  income  statement  information  for  SVLP for the  years  ended
     December 31, 2000 and 1999 was as follows:
<TABLE>

                                     Unaudited
                                       2000              1999
                                       ----              ----
<CAPTION>
        <S>                                <C>          <C>

       Net revenues                 $ 227,333           $215,105
       Costs and expenses, net        183,070            169,407
                                    ---------           --------
       Net Income                   $  44,263           $ 45,698
                                    =========          =========
</TABLE>
     On November 3, 2000,  Roseville  Telephone and Roseville  Alternative  sold
     their collective 24% interest in SVLP to Verizon Wireless for approximately
     $236,150,  resulting  in a gain of $201,294.  As of December 31, 2000,  the
     Company had a $5,513 receivable from Verizon Wireless that originated prior
     to the sale. The Company  collected the balance of this  receivable  during
     2001.

     The following  table  reflects  certain  unaudited  pro forma  consolidated
     financial  information  for  each  of the two  years  in the  period  ended
     December 31, 2000 as if the sale of the  Company's  investment  in SVLP had
     occurred prior to January 1, 1999.  Such  unaudited pro forma  consolidated
     financial  information  excludes any income that could have been earned, or
     expenses that could have been avoided,  based upon  management's use of the
     proceeds from this transaction.
<TABLE>

                                                         2000           1999
                                                         ----           ----
<CAPTION>
        <S>                                             <C>             <C>
        Consolidated statement of operations data:
         Total operating revenues                    $  143,316     $  140,801
         Income before extraordinary loss
          and cumulative effect of change
          in accounting principle                    $   14,512     $   25,685
         Net income (loss)                           $      (53)    $   25,685
         Basic earnings (loss) per share             $        -     $     1.62
         Diluted earnings (loss) per share           $        -     $     1.62
</TABLE>



<PAGE>



6.   CREDIT ARRANGEMENTS

     Long-term  debt  outstanding  as of December 31, 2001 and 2000 consisted of
     the following:
<TABLE>

                                                                                     2001                2000
                                                                                     ----                ----
<CAPTION>
        <S>                                                                       <C>                    <C>
        Unsecured Series A Senior Notes, with
        interest payable semiannually at a
        fixed rate of 6.3%; principal payments are
        due in equal annual installments of
        approximately $3,636, commencing in
        December 2003 andending in December 2013                                $ 40,000            $ 40,000

        Unsecured term loan with a bank, with
        interest payable quarterly at a fixed
        rate of 6.22%; principal payments are due
        in equal quarterly installments of
        approximately $536, through December 2003                                  4,285               6,428
                                                                                --------            --------
        Total long-term debt                                                      44,285              46,428

        Less current portion                                                       2,143               2,143
                                                                                --------            --------

        Total long-term debt, net of current portion                            $ 42,142            $ 44,285
                                                                                ========            ========
</TABLE>

     At December 31,  2001,  the  aggregate  maturities  of long-term  debt were
     $2,143 in 2002, $5,779 in 2003 and $3,636 in 2004 through 2013.

     Certain of the aforementioned  credit arrangements contain various positive
     and negative  covenants  with respect to cash flow  coverage,  tangible net
     worth and leverage ratio.  These  provisions  could restrict the payment of
     dividends in certain circumstances;  however, the entire amount of retained
     earnings at December 31, 2001 and 2000 was unrestricted.

     In March 2000,  the Company  entered into a business loan  agreement with a
     bank for a $30,000 line of credit with a term of three years.  In September
     2000,  the bank  temporarily  amended the credit  facility  increasing  the
     borrowing capacity from $30,000 to $50,000 through December 30, 2001. As of
     December  31,  2001,  the amount  available  under the credit  facility was
     $30,000 and there were no amounts outstanding under this credit facility at
     December 31, 2001 and 2000.



<PAGE>



7.   INCOME TAXES

        Income tax expense consists of the following components:
<TABLE>

                                               2001               2000               1999
                                               ----               ----               ----
<CAPTION>
        <S>                                        <C>              <C>             <C>
        Current expense (benefit):
          Federal                            $  (4,613)          $  87,013          $  15,267
          State                                  1,101              22,403              4,513
                                             ---------           ---------          ---------
        Total current expense (benefit)         (3,512)            109,416             19,780

        Deferred expense (benefit):
          Federal                               10,050             (11,978)             1,526
          State                                    331              (2,282)               (31)
                                             ---------           ---------          ---------
        Total deferred expense (benefit)        10,381             (14,260)             1,495
                                             ---------           ---------          ---------
        Total income tax expense             $   6,869           $  95,156          $  21,275
                                             =========           =========          =========
</TABLE>

        Income tax expense differs from that computed by using the statutory
        federal tax rate (35% in all years presented) due to the following:
<TABLE>

                                                 2001              2000               1999
                                                 ----              ----               ----
<CAPTION>
        <S>                                     <C>                 <C>               <C>
        Computed at statutory rates            $ 6,015            $82,304           $18,559

        Increase (decrease):
          State taxes, net of federal benefit      930             13,079             2,913
          Other, net                               (76)              (227)             (197)
                                               --------           --------          --------
        Income tax expense                     $ 6,869            $95,156           $21,275
                                               ========           ========          ========
        Effective federal and state tax rate      40.0%              40.5%             40.1%
                                               ========           ========          ========
</TABLE>



<PAGE>



7.   INCOME TAXES (CONTINUED)

     The significant  components of the Company's deferred income tax assets and
     liabilities were as follows at December 31, 2001 and 2000:
<TABLE>

                                                                      Deferred Income Taxes
                                                                     ----------------------
                                                           2001                                 2000
                                                           ----                                 ----
                                            Assets            Liabilities         Assets          Liabilities
                                            ------            -----------         ------          -----------
<CAPTION>
        <S>                                  <C>                 <C>                  <C>              <C>
        Property, plant and
          equipment-primarily due to
          depreciation differences         $     -             $27,474             $     -          $21,573

        Differences in the timing of
          recognition of revenues           10,361                   -              10,778                -

        State franchise taxes                  640                   -               6,613                -

        Differences in the
         recognition of retirement-
         related obligations                 5,712                   -               5,692                -

        Other, net                           1,905               1,710               1,034            2,557
                                           -------             -------             -------          -------
        Total                               18,618              29,184              24,117           24,130

        Less current portion                   640                   -               6,613                -
                                           -------             -------             -------          -------

        Total deferred income taxes        $17,978             $29,184             $17,504          $24,130
                                           =======             =======             =======          =======

        Net long-term deferred
          income tax liability                                 $11,206                              $ 6,626
                                                               =======                              =======
</TABLE>

     As of December  31,2001,  the Company had net operating loss  carryforwards
     for federal tax  purposes  of  approximately  $390 which will expire in the
     years  2018  through  2021,  if not  utilized.  The  Company  also  had net
     operating loss carryforwards for state income tax purposes of approximately
     $218 which will expire in the years 2003 through 2011, if not utilized.


<PAGE>



8.   PENSION AND OTHER POSTRETIREMENT BENEFITS

     The  Company  sponsors  a  noncontributory  defined  benefit  pension  plan
     covering  substantially  all  employees.  Benefits  are  based  on years of
     service and the  employee's  average  compensation  during the five highest
     consecutive years of the last ten years of credited service.  The Company's
     funding policy is to contribute  annually an actuarially  determined amount
     consistent with applicable  federal income tax  regulations.  Contributions
     are intended to provide for benefits  attributed  to service to date.  Plan
     assets are primarily invested in collective trust accounts,  government and
     government  agency  obligations,  publicly  traded  stocks  and  bonds  and
     mortgage-related securities.

     Net periodic  pension cost for 2001,  2000 and 1999  included the following
     components:
<TABLE>

                                                     2001             2000             1999
                                                     ----             ----             ----
<CAPTION>
        <S>                                           <C>             <C>             <C>
      Service cost-benefits earned during the
       period                                      $  3,962         $  3,561        $  3,750

      Interest cost on projected benefit
       obligation                                     6,249            5,722           5,298

      Expected return on plan assets                 (6,485)          (6,418)         (5,964)

      Amortization of transition obligation             271              154             265
                                                   --------         --------        --------
      Net pension cost                             $  3,997         $  3,019        $  3,349
                                                   ========         ========        ========
</TABLE>

     The following table sets forth the change in benefit obligation,  change in
     plan assets and funded status as of December 31, 2001 and 2000:

<TABLE>
                                                      2001          2000
                                                      ----          ----
<CAPTION>
        <S>                                          <C>               <C>
       Change in benefit obligation:
       Benefit obligation at beginning of year      $ 83,858      $ 73,949
         Service cost                                  3,962         3,561
         Interest cost                                 6,249         5,722
         Plan amendments                                 415           123
         Actuarial losses (gain)                       2,770         3,178
         Benefits paid                                (3,559)       (2,675)
                                                    --------      --------
       Benefit obligation at end of year            $ 93,695      $ 83,858
                                                    ========      ========
</TABLE>


<PAGE>



8.   PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

<TABLE>

                                                          2001           2000
                                                          ----           ----
<CAPTION>
        <S>                                              <C>            <C>
       Change in plan assets:
       Fair value of plan assets at beginning of year  $ 77,934       $ 76,723
         Actual return on plan assets                    (4,863)         2,799
         Company contribution                             4,507          1,087
         Benefits paid                                   (3,559)        (2,675)
                                                       --------       --------
       Fair value of plan assets at end of year        $ 74,019       $ 77,934
                                                       ========       ========
       Funded status:
       Funded status of plan at end of year            $(19,676)      $ (5,924)
         Unrecognized actuarial loss                     11,507         (2,613)
         Unrecognized prior service cost                    511            101
         Unrecognized net transition obligation           1,107          1,375
                                                       --------       --------
       Accrued benefit cost                            $ (6,551)      $ (7,061)
                                                       ========       ========
</TABLE>

     The discount rates used in determining the projected benefit  obligation at
     December 31, 2001 and 2000 were 7.0% and 7.25%,  respectively.  The assumed
     rate  of  increase  in  future  compensation  levels  used to  measure  the
     projected  benefit  obligation was 6.0% at both December 31, 2001 and 2000.
     The expected  long-term  rate of return on plan assets used in  determining
     net pension cost was 8.5% in 2001, 2000 and 1999.

     Prior to December 31, 2001, the Company maintained two defined contribution
     retirement  plans,  the  Employee  Stock  Ownership  Plan  ("ESOP") and the
     Retirement Supplement Plan ("RSP") which together provided a retirement and
     savings feature for substantially  all employees.  As of December 31, 2001,
     the  Company  approved  an  amendment  to merge the RSP into the  ESOP.  In
     addition,  effective  January  2002,  the Company  approved an amendment to
     change  the  structure  of  the  Company's   provision  to  match  employee
     contributions to the ESOP from one-half of an employee's contributions,  to
     a dollar-for-dollar match up to six percent of an employee's salary.

     The ESOP will continue to have both a retirement and savings  feature.  The
     retirement  feature  allows for  qualified  tax deferred  contributions  by
     employees  under Section 401(k) of the Internal  Revenue Code (the "Code").
     The ESOP  provides for voting rights as to the  participant's  share of the
     Company's  common  stock held by the ESOP and for  certain  diversification
     rights of participant's  account balances.  Matching  contributions made by
     the Company under the RSP and ESOP amounted to $1,725, $1,645 and $1,499 in
     2001,  2000 and  1999,  respectively.  At  December  31,  2001,  11% of the
     Company's outstanding shares of common stock were held by the ESOP.



<PAGE>



8.   PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

     The Company provides certain postretirement benefits other than pensions to
     substantially all employees, including life insurance benefits and a stated
     reimbursement for Medicare supplemental insurance.  The benefit obligations
     and annual postretirement benefits costs relating to these benefits are not
     significant to the Company's consolidated financial position and results of
     operations.

9.   COMMITMENTS AND CONTINGENCIES

     Operating leases

     The Company leases certain  facilities and equipment used in its operations
     under  arrangements  accounted for as operating  leases and reflects  lease
     payments as rental expense for the periods to which they relate. Total rent
     expense was $2,999, $1,957 and $602 in 2001, 2000 and 1999, respectively.

     As of December 31, 2001 the Company had various  non-cancellable  operating
     leases with terms greater than one year.  Future minimum lease payments for
     all non cancellable operating leases at December 31, 2001 are as follows:
<TABLE>
        <S>                                    <C>
        2002                                  $ 2,533
        2003                                    2,446
        2004                                    1,978
        2005                                    1,195
        2006                                      619
        Thereafter                              3,089
                                               ------
        Total                                 $11,860
                                               ======
</TABLE>

     Other commitments

     As  of  December  31,  2001,   binding   commitments   for  future  capital
     expenditures approximate $6,400.

     In 2000,  the Company  entered into a 3-year  non-exclusive  agreement with
     Global Crossing Ltd. ("Global Crossing"), a long distance service provider,
     for the right to provide long distance  service to the Company's  customers
     at fixed prices during the term of the agreement.  As of December 31, 2001,
     the Company had a minimum  aggregate long distance service usage commitment
     of  approximately  $1,600.  The service  usage fee paid for the years ended
     December 31, 2001 and 2000,  were  consistent  with the minimum  commitment
     obligation at December 31, 2001. On January 28, 2002, Global Crossing filed
     for protection under Chapter 11 of the U.S. Bankruptcy Code. The Company is
     presently  unable to determine the impact,  if any, that Global  Crossing's
     bankruptcy  filing will have on the  Company's  long  distance  operations.
     However,  the Company  believes that it could procure long distance network
     transport services from other  telecommunications  providers.  In the event
     the  Company  must  procure   network   transport   services  from  another
     telecommunications  provider,  rates for such  service  may be higher  than
     those offered by Global Crossings.  However,  the Company believes that the
     impact on its results of operations  resulting from any potential change in
     transport  rates will not be material.

9.  COMMITMENTS  AND  CONTINGENCIES (CONTINUED)

     Litigation, regulatory proceedings and other contingencies

     The  Company  is  subject  to  certain  legal and  regulatory  proceedings,
     Internal  Revenue  Service  examinations,  and other claims  arising in the
     ordinary course of its business. In the opinion of management, the ultimate
     outcome  of these  matters  will not  materially  affect  the  consolidated
     financial position or results of operations of the Company.

10.  EQUITY INCENTIVE PLANS

     The  Company  has  adopted two equity  incentive  plans (the  "Plans")  for
     certain employees, outside directors, and consultants of the Company, which
     were  approved  by the  shareholders.  The  Company  authorized  for future
     issuance under the Plans one million  shares of  authorized,  but unissued,
     common  stock.  The Plans  permit  issuance by the Company of awards in the
     form of restricted shares,  stock units,  performance shares, stock options
     and  stock  appreciation  rights.  The  exercise  price  per  share  of the
     Company's common stock purchasable under any stock option shall not be less
     the 100% of the fair market value of a share of the Company's  common stock
     on the date of the grant,  and the  exercise  price  under a  non-qualified
     stock  option  shall not be less than 85% of the fair  market  value of the
     Company's common stock on the date of the grant.

     The following  table  summarizes  stock option activity for the years ended
     December 31, 2001 and 2000:
<TABLE>

                                              Shares of          Option Price
                                             Common Stock         Per Share
                                            _____________        ___________
<CAPTION>
        <S>                                  <C>                   <C>
       Balance as of December 31, 1999           -                    -

       Granted                                 631,200         $39.00 - $42.00
       Exercised                                     -                -
       Cancelled                               (18,700)        $39.00 - $42.00

       Balance as of December 31, 2000         612,500         $39.00 - $42.00

       Granted                                 169,800         $39.00 - $50.50
       Exercised                                (6,678)        $39.00 - $42.00
       Cancelled                               (35,735)        $39.00 - $50.50

       Balance as of December 31, 2001         739,887         $39.00 - $50.50

</TABLE>

<PAGE>



10.  EQUITY INCENTIVE PLANS (CONTINUED)

     The  following is a summary of status of the stock options  outstanding  at
     December 31, 2001:
<TABLE>

                                            Options Outstanding           Options Exercisable
                             ----------------------------------------------------------------------
                             ----------------------------------------------------------------------
                                          Weighted
                                          Average           Weighted                      Weighted
       Range of                           Remaining         Average                       Average
       Exercise              Number       Contractual       Exercise      Number          Exercise
       Prices                Of Shares    Life              Price         Of Shares       Price
       -----------------------------------------------------------------  --------------------------------
       -----------------------------------------------------------------  --------------------------------
<CAPTION>
        <S>                 <C>           <C>                   <C>         <C>             <C>

       $39.00 - $39.75       464,437      8.58              $39.23        102,532         $39.22
       $40.00 - $42.00       154,950      9.00              $40.30          9,500         $40.32
       $49.25 - $50.50       120,500      9.95              $50.44              -         $    -

       $39.00 - $50.50       739,887      8.89              $41.28        112,032         $39.31
</TABLE>

     During the year ended  December 31,  2001,  the Company  recorded  deferred
     stock-based compensation of approximately $363 as a result of issuing 8,450
     shares of the Company's restricted common stock to members of the Company's
     Board of Directors and Chief Executive Officer.  This amount was determined
     based on the fair market  value of such common  shares at the date of grant
     and is being  amortized to operations over the vesting periods (which range
     from 2 to 5 years) using a graded vesting method.  Amortization of deferred
     stock-based  compensation  for  the  year  ended  December  31,  2001,  was
     approximately $60.

     Pro forma Stock-Based Compensation Information

     Pro forma information  regarding the Company's  consolidated net income and
     earnings per share is  determined  as if the Company had  accounted for its
     employee stock options using the fair value method.  Under this method, the
     fair value of each option  granted is  estimated on the date of grant using
     the Black-Scholes valuation model.

     The Company uses the intrinsic  value method in accounting for its employee
     stock options  because,  as discussed  below,  the  alternative  fair value
     accounting  requires  the use of  option  valuation  models  that  were not
     developed for use in valuing  employee stock  options.  Under the intrinsic
     value  method,  when the exercise  price of the  Company's  employee  stock
     options  equals the  market  price of the  underlying  stock of the date of
     grant, no compensation expense is recognized.

     The  aforementioned  option  valuation  models  were  developed  for use in
     estimating   the  fair  value  of  traded  options  that  have  no  vesting
     restrictions  and are fully  transferable.  In addition,  option  valuation
     models require the input of highly  subjective  assumptions,  including the
     expected life of the option.  Because the Company's  employee stock options
     have characteristics  significantly  different from those of traded options
     and because  changes in the  subjective  input  assumptions  can materially
     affect  the fair  value  of the  estimate,  in  management's  opinion,  the
     existing models do not necessarily provide a reliable single measure of the
     fair value of the Company's employee stock options.


<PAGE>



10.  EQUITY INCENTIVE PLANS (CONTINUED)

     For the years  ended  December  31,  2001 and 2000,  the fair  value of the
     Company's stock-based awards to employees was estimated using the following
     weighted average assumptions:
<TABLE>

                                                      2001           2000
<CAPTION>
        <S>                                             <C>          <C>
        Expected life of options in years              5.0            5.2
        Volatility                                    26.7%          20.0%
        Risk-free interest rate                       4.24%          6.05%
        Expected dividend yield                       1.76%           2.5%
</TABLE>

     The weighted  average fair value of employee  stock options  granted during
     the  years  ended  December  31,  2001  and  2000  was  $12.25  and  $8.84,
     respectively.  For pro forma  purposes,  the  estimated  fair  value of the
     Company's   stock  based  awards  to  employees  is  amortized   using  the
     straight-line  method,  which would reduce net income by approximately $849
     and $364 for the years ended December 31, 2001 and 2000, respectively.  The
     result of applying the fair value method to the  Company's  employee  stock
     option grants would have  decreased  basic  earnings per share by $0.06 per
     share and $0.02 per share for the years ended  December 31, 2001, and 2000,
     respectively. The result of applying the fair value method to the Company's
     employee  stock option  grants would have  decreased  diluted  earnings per
     share by $0.06 per share and $0.02 per share for the years  ended  December
     31, 2001, and 2000, respectively.

11.  STOCK REPURCHASE

     In February 2000, the Board of Directors authorized the repurchase of up to
     one million shares of the Company's common stock. Additionally, the Company
     implemented  an oddlot  repurchase  program  during  2001.  The  shares are
     purchased  from  time to time  in the  open  market  or  through  privately
     negotiated transactions subject to overall financial and market conditions.
     Through  December 31, 2001,  approximately  742 shares of common stock have
     been  repurchased  through  both  programs.  As a result,  the  Company had
     authorization  from the Board of Directors to repurchase an additional  275
     outstanding shares.

12.  SHAREHOLDER RIGHTS PLAN AND CHANGE IN CONTROL AGREEMENT

     The  Company has a  Shareholder  Rights Plan  wherein  shareholders  of the
     Company  receive  rights to purchase  the  Company's  common  stock,  or an
     acquirer's  common  stock,  at a discount in certain  events  involving  an
     acquisition  of 20% or more of the Company's  common stock by any person or
     group in a transaction  not approved by the  Company's  Board of Directors.
     The rights expire in March 2008.

     The  Company  has  change  in  control  agreements  with  approximately  20
     employees,  which  provide  upon (1) a change in control of the Company and
     (2) a constructive  termination  of employment,  the payment of a severance
     benefit approximately equal to twice the employee's annual compensation.



<PAGE>



13.  BUSINESS SEGMENTS

     The Company has two  reportable  business  segments:  Telecom and PCS.  The
     Telecom segment primarily provides local,  network access and long distance
     services, directory advertising services, Internet services and the sale of
     non-regulated  products and services  principally to customers  residing in
     Roseville  Telephone's  service  area.  The PCS segment  provides  personal
     communications  services and the sale of related communications  equipment.
     The Company  evaluates the performance of these business  segments based on
     income (loss) from operations.

     These segments are strategic  business units that offer different  products
     and services.  The  accounting  policies of these  segments are the same as
     those described in Notes 1-3. The Company accounts for  intersegment  sales
     and transfers at prevailing market rates.  Intersegment sales and transfers
     between the Telecom and PCS segments  are not  significant.  The  Company's
     business segment information is as follows:
<TABLE>

                           2001            Telecom           PCS         Consolidated
<CAPTION>
        <S>                               <C>                <C>             <C>
       Total operating revenues            $150,664       $ 16,301         $166,695
       Depreciation and amortization         28,007         11,834           39,841
       Interest income                        4,803              -            4,803
       Interest expense, net of
        capitalized interest                    446         (1,760)          (1,314)
       Income tax expense (benefit)          19,324        (12,455)           6,869
       Net income (loss)                     28,441        (18,124)          10,317
       Assets                               320,836         91,507          412,343
       Capital expenditures                  40,711         28,845           69,556

</TABLE>


<PAGE>



13.    BUSINESS SEGMENTS (CONTINUED)
<TABLE>


                           2000            Telecom           PCS         Consolidated
<CAPTION>
        <S>                                 <C>              <C>                <C>

       Total operating revenues            $138,394        $ 4,922         $143,316
       Depreciation and amortization         22,747        $ 6,144           28,891
       Income from unconsolidated
        businesses                           10,089              -           10,089
       Interest income                        2,814              -            2,814
       Interest expense                      (1,629)        (2,594)          (4,223)
       Income tax expense (benefit)         103,282         (8,126)          95,156
       Extraordinary loss, net of
        tax                                 (10,932)             -          (10,932)
       Cumulative effect of change
        in accounting principle,
        net of tax                           (3,273)             -           (3,273)
       Net income (loss)                    137,618        (11,825)         125,793
       Assets                               452,814         76,128          528,942

       Capital expenditures                  45,973         41,261           87,234

                           1999             Telecom        PCS          Consolidated

       Total operating revenues            $140,191       $    610          140,801
       Depreciation and amortization         20,765          1,613           22,378
       Income from unconsolidated
        businesses                           10,129              -           10,129
       Interest income                        1,725              -            1,725
       Interest expense                      (2,660)          (805)          (3,465)
       Income tax expense (benefit)          23,791         (2,516)          21,275
       Net income (loss)                     37,927         (6,177)          31,750
       Assets                               294,782          38,405         333,187
       Investments in unconsolidated
        businesses                           38,426              -           38,426
       Capital expenditures                  34,762          23,640          58,402
</TABLE>

14.    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>


       2001                                           March 31       June 30         September 30     December 31
       ----                                           --------       -------         ------------     -----------
<CAPTION>
        <S>                                              <C>            <C>              <C>            <C>

       Operating revenues                             $42,434        $38,621         $40,674          $45,236

       Income from
        operations                                      6,056            499           1,619            4,589
       Net income                                     $ 4,986        $ 1,475         $ 1,447          $ 2,409
       Basic earnings per
        share                                         $  0.32       $   0.10        $   0.09          $  0.16
       Diluted earnings per
        share                                         $  0.32       $   0.10        $   0.09          $  0.16

</TABLE>


<PAGE>



14.    QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)

<TABLE>

       2000                                           March 31       June 30         September 30     December 31
       ----                                           --------       -------         ------------     -----------
<CAPTION>
        <S>                                                <C>          <C>              <C>            <C>

       Operating revenues                             $36,837        $37,535         $38,987          $29,957
       Income (loss) from operations                    9,304          9,437           9,717           (4,731)
       Income before extraordinary loss
        and cumulative effect of accounting
        change                                          7,610          7,313           7,456          117,619
       Extraordinary loss, net of tax                       -              -               -          (10,932)
       Cumulative effect of accounting
        change, net of tax                             (3,273)             -               -                -
       Net income                                     $ 4,337        $ 7,313         $ 7,456          $106,687

       Basic earnings per share:
         Income before extraordinary loss
          and cumulative effect of
          accounting
          change, net of tax                          $   0.48       $   0.47        $  0.48          $  7.54
         Extraordinary loss, net of tax                     -              -               -            (0.70)
         Cumulative effect of accounting
          change, net of tax                             (0.21)          -                 -                -
         Net income                                   $   0.27       $   0.47        $  0.48          $  6.84

       Diluted earnings per share:
         Income before extraordinary loss
          and cumulative effect of
          accounting
          change, net of tax                          $   0.49       $   0.47        $ 0.48           $  7.52
         Extraordinary loss, net of tax                    -              -               -             (0.70)
         Cumulative effect of accounting
          change, net of tax                             (0.21)           -               -                 -
         Net income                                   $   0.28       $  0.47         $  0.48          $  6.82
</TABLE>

     During the  fourth  quarter  of 2001,  the  Company  changed  its  estimate
     relating  to  a  portion  of  Roseville  Telephone's  interstate  shareable
     earnings  obligations,  principally  due to the closing of the 1997 through
     1998 monitoring  period.  This change in accounting  estimate increased the
     Company's  consolidated  2001  revenues and net income by $2,150 and $1,290
     ($0.08 per share), respectively.

     The Company adopted SAB 101, "Revenue Recognition in Financial Statements,"
     effective January 1, 2000, which requires non-recurring revenues associated
     with service and activation  charges to be deferred.  The cumulative effect
     of this change in accounting  principle was $3,273,  net of tax, or ($0.21)
     per share in 2000.

     For the  three-month  periods  ended  March 31, June 30,  September  30 and
     December 31, 2001 and 2000, the Company  recognized the following  revenues
     that were  included in the  cumulative  effect  adjustment as of January 1,
     2000:



<PAGE>
14.


     QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
<TABLE>
        <S>                                      <C>
        Three Months Ended:
          March 31, 2001                         $513
          June 30, 2001                          $462
          September 30, 2001                     $408
          December 31, 2001                      $325
          March 31, 2000                         $652
          June 30, 2000                          $620
          September 30, 2000                     $578
          December 31, 2000                      $530
</TABLE>

     The net effect of these  revenues in 2001 was to increase net income in the
     three-month  periods ended March 31, June 30,  September 30 and December 31
     by $308, $277, $245 and $195, respectively.

     The net effect of these  revenues in 2000 was to increase net income in the
     three-month  periods ended March 31, June 30,  September 30 and December 31
     by $388, $369, $344 and $316, respectively.

15.  OTHER RELATED PARTY TRANSACTIONS

     An officer of the Company is also a member of the Board of  Directors  of a
     local  banking  institution.  As of  December  31,  2000 the  Company had a
     $15,000  certificate  of deposit  with a term of greater than one year with
     the aforementioned banking institution.  In the fourth quarter of 2001, the
     Company  redeemed  this  certificate  of deposit for an amount equal to its
     historical carrying value, including accrued interest.

     A member of the Company's  Board of Directors is also an executive  officer
     and  director  of  a  certain  entity  from  which  the  Company  purchased
     approximately $545 and $1,000 in  telecommunications  equipment during 2001
     and 2000, respectively.

16.  SUBSEQUENT EVENT

     On December 6, 2001,  the Company  entered into an  agreement  with a third
     party to sell substantially all of the assets (which consisted  principally
     of  customer  contracts  and  equipment,  which had no net book value as of
     December 31, 2001) of the Company's alarm monitoring division,  which is an
     element of the Telecom  segment.  The total  sales price for the  Company's
     alarm monitoring assets was approximately $5,300, subject to certain future
     adjustments. As of December 31, 2001, the Company had received a deposit in
     the amount of $500 from the  purchaser of the  Company's  alarm  monitoring
     assets.  The sale of the Company's alarm monitoring  assets was consummated
     on January 25, 2002.

     Total operating  revenues  attributable  to the Company's alarm  monitoring
     division  during  2001,  2000 and 1999  were  $2,530,  $2,247  and  $2,046,
     respectively.




<PAGE>



     Item 9. Changes in and  Disagreements  with  Accountants  on Accounting and
          Financial Disclosure.

                  None
                                    PART III

     Item 10. Directors and Executive Officers of the Registrant

     For  information  regarding  the  executive  officers of the  Company,  see
     "Executive Officers of the Registrant" at the end of Part I of this report.
     Other information required by this item is incorporated herein by reference
     from  the  proxy   statement  for  the  annual  meeting  of  the  Company's
     shareholders to be held on May 17, 2002.

     Item 11. Executive Compensation.

     Incorporated  herein by reference  from the proxy  statement for the annual
     meeting of the Company's shareholders to be held on May 17, 2002.

     Item 12. Security Ownership of Certain Beneficial Owners and Management.

     Incorporated  herein by reference  from the proxy  statement for the annual
     meeting of the Company's shareholders to be held on May 17, 2002.

     Item 13. Certain Relationships and Related Transactions.

     Incorporated  herein by reference  from the proxy  statement for the annual
     meeting of the Company's shareholders to be held on May 17, 2002.

                                     PART IV

     Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a) 1 and 2. Financial Statements

          None

          3. Exhibits

          The exhibits listed on the accompanying Index to Exhibits are filed as
          part of this annual report.

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed during the fourth quarter of 2001.

     (c)  Separate  financial  statement of subsidiaries  not  consolidated  and
          fifty percent or less owned persons.

          The audited financial statements of a 50% or less owned unconsolidated
          company  are  submitted   inasmuch  as  the  report  of   registrant's
          independent auditors indicates reliance on an audit of the 50% or less
          owned unconsolidated  company's  consolidated financial statements for
          the year ended December 31, 1999 that was performed by other auditors.


<PAGE>




                      SACRAMENTO-VALLEY LIMITED PARTNERSHIP
                                 AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000
<TABLE>
                                 (In thousands)
ASSETS

CURRENT ASSETS:
<CAPTION>
    <S>                                                                <C>

  Cash                                                              $      9
  Accounts receivable, net of allowance for doubtful
    accounts of $1,080                                                25,668
  Due from general partner                                             9,288
  Other current assets                                                   550
                                                                  ----------
           Total current assets                                       35,515

PROPERTY, PLANT AND EQUIPMENT, Net                                   173,934

OTHER ASSETS, net of accumulated amortization of $3,050               10,475
                                                                  ----------
TOTAL ASSETS                                                        $219,924
                                                                  ==========

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                             $ 16,806
  Deferred revenue                                                     5,794
  Distributions payable                                               21,161
  Other current liabilities                                            1,448
                                                                 -----------
           Total current liabilities                                  45,209
                                                                 -----------
DEFERRED REVENUE                                                      46,355
                                                                 -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                              77
                                                                 -----------
PARTNERS' CAPITAL:
  General partner                                                    127,030
  Limited partners                                                     1,253
                                                                 -----------
           Total partners' capital                                   128,283
                                                                 -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL                            $ 219,924
                                                                 ===========
</TABLE>








                 See notes to consolidated financial statements.




<PAGE>
              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                        CONSOLIDATED STATEMENT OF INCOME
                          YEAR ENDED DECEMBER 31, 2000
<TABLE>
                                 (In thousands)
<CAPTION>
<S>                                                      <C>


OPERATING REVENUE                                     $ 227,333
                                                    -----------
OPERATING EXPENSES:
  Cost of revenues                                       65,089
  Selling, general and administrative                    93,853
  Depreciation and amortization                          25,296
                                                    -----------
           Total operating expenses                     184,238
                                                    -----------
OPERATING INCOME                                         43,095

INTEREST INCOME ON AMOUNTS DUE
  FROM GENERAL PARTNER                                    1,202

MINORITY INTEREST IN NET INCOME OF
  CONSOLIDATED SUBSIDIARY                                  (34)
                                                    -----------
NET INCOME                                             $ 44,263
                                                    ===========

ALLOCATION OF NET INCOME:
  General partner                                      $ 23,935
  Limited partners                                       20,328
                                                    -----------
TOTAL                                                  $ 44,263
                                                    ===========


</TABLE>

















                 See notes to consolidated financial statements


<PAGE>

                      SACRAMENTO-VALLEY LIMITED PARTNERSHIP
                                 AND SUBSIDIARY
             CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                          YEAR ENDED DECEMBER 31, 2000
                                 (in thousands)
<TABLE>



                             Partners'                                                                      Partners'
                              Capital                                                                        Capital
                            December 31,                                        Net           Sale of      December 31,
                                1999      Contributions       Distributions    Income        Interest         2000
General Partners:
<CAPTION>
<S>                              <C>         <C>                 <C>             <C>            <C>             <C>

AirTouch Cellular            $ 88,896  $    1,746          $    (49,216)      $ 23,935      $  61,669      $ 127,030

Limited Partners:

Centennial Cellular
 Telephone Company
  of Sacramento
  Valley                       38,760        3,901              (23,034)         9,685        (29,312)

Roseville Telephone
 Company                       38,760        3,901              (23,160)         9,537        (29,038)


Evans Cellular, Inc.            3,634          365               (1,354)           674         (3,319)

GTE Wireless Inc.               1,618          162                 (959)           432                        1,253
                                                                                                                  -
                         -----------      ----------          -----------       --------     ----------  ----------
Total                     $  171,668      $  10,075           $   (97,723)      44,263       $      -     $ 128,283
                         ===========      =========           ===========      ========      =========   ==========

</TABLE>















                 See notes to consolidated financial statements


<PAGE>

              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          YEAR ENDED DECEMBER 31, 2000
                                 (In thousands)
<TABLE>

CASH FLOWS FROM OPERATING ACTIVITIES:
<CAPTION>
   <S>                                                                              <C>
  Net income                                                                     $ 44,263
  Adjustments to reconcile net income
    to cash provided by operating activities:
    Depreciation and amortization                                                  25,296
    Minority interest in net income of consolidated subsidiary                         34
    Changes in assets and liabilities:
      Accounts receivable, net                                                    (1,144)
      Other current assets                                                          2,592
      Other assets                                                                    200
      Accounts payable and accrued expenses                                      (11,366)
      Deferred revenue                                                            (3,157)
      Other current liabilities                                                       216
                                                                                 --------
           Cash flows provided by operating activities                             56,934
                                                                                 --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment                                      (48,233)
  Change in due from general partner                                                7,269
                                                                                 --------
           Cash flows used in investing activities                               (40,964)
                                                                                 --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Contributions from partners                                                      10,075
  Distributions to partners                                                      (76,562)
  Distributions to minority interest in consolidated subsidiary                     (158)
  Proceeds from sublease of towers                                                 50,667
                                                                                 ========
           Cash flows used in financing activities                               (15,978)
                                                                                 --------
NET CHANGE IN CASH                                                                    (8)

CASH, Beginning of year                                                                17
                                                                                ---------
CASH, End of year                                                                    $  9
                                                                                =========

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
  Distributions not paid as of December 31, 2000                                  $21,161
                                                                                =========
</TABLE>

                See notes to consolidated financial statements


<PAGE>
                      SACRAMENTO-VALLEY LIMITED PARTNERSHIP
            AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 2000
                                 (In thousands)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization -  Sacramento-Valley  Limited  Partnership (the "Partnership")
     was formed on April 2, 1984. The principal  activity of the  Partnership is
     providing   cellular   service  in  the  Northern   California   area.  The
     Partnership's ownership percentages at December 31, 2000 are as follows:

        AirTouch Cellular, wholly-owned by a subsidiary of Verizon Wireless -
        General Partner                                       99.022%

        GTE Wireless, Inc. - Limited Partner                   0.978%


     On April 3, 2000, Vodafone Group Plc ("Vodaphone")  (formerly the parent of
     the  General  Partner)  and  Verizon  Communications  combined  their  U.S.
     Cellular, PCS, and paging business ("Vodaphone Acquisition"). This venture,
     Cellco ("Verizon  Wireless") offers nationwide  wireless services.  Verizon
     Communications  and  Vodafone  own 55% and 45%,  respectively,  of  Verizon
     Wireless.

     Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Redding
     MSA Limited Partnership ("RMLP") and the Partnership.  The Partnership owns
     a 97.1% interest in RMLP. All significant  intercompany  transactions  have
     been eliminated.

     Trade Receivables

     The  Partnership   generally  does  not  require  collateral.   Receivables
     generally are due within 30 days.

     Revenue Recognition

     The Partnership  earns revenue by providing  access to the cellular network
     (access  revenue),   for  usage  of  the  cellular  network  (airtime/usage
     revenue), which includes roaming and cellular long distance revenue. Access
     revenue is billed one month in advance and is recognized  when earned;  the
     unearned portion is included in accrued liabilities. Airtime/usage revenue,
     roaming  revenue and long distance  revenue are recognized when the service
     is rendered and included in accounts receivable. Equipment sales revenue is
     recognized when the equipment is delivered to and accepted by the customer.
     The Partnership's  revenue recognition  policies are in accordance with the
     Securities and Exchange  Commission's  Staff Accounting  Bulletin (SAB) No.
     101, "Revenue Recognition in Financial Statements."

     Depreciation

     Depreciation  of property and  equipment  is provided on the  straight-line
     method over estimated useful lives as follows: Years

       Buildings and leasehold improvements               5 - 18
       Cellular plant and equipment                       5 - 10
       Other equipment and furniture                      2 - 5

     Amortization

     Other  assets  includes FCC license  cost,  which are  amortized  using the
     straight line method over a term not to exceed 40 years.

     Long-Lived Assets

     Partnership  follows the provisions of the Financial  Accounting  Standards
     Board  ("FASB")  Statement  No.  121,  Accounting  for  the  Impairment  of
     "Long-Lived  Assets and for  Long-Lived  Assets to be  Disposed  Of," which
     requires  impairment  losses to be  recorded on  long-lived  assets used in
     operations when indicators of impairment are present. As December 31, 2000,
     management  believes that there was not any impairment of the Partnership's
     long-lived assets.

     Income Taxes

     No provision for income taxes has been made in the financial  statements of
     the Partnership.  The Partnership has no tax liability since taxable income
     or losses are allocated to the partners.

     Use of Estimates - The  preparation  of financial  statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and assumptions that affect the amounts reported in the financial
     statements and accompanying  notes.  Actual results could differ from those
     estimates.

     New Accounting Pronouncements

     In June 1998, the FASB issued a Statement of Financial Accounting Standards
     ("SFAS")  No.  133,  "Accounting  for  Derivative  Instruments  and Hedging
     Activities."  SFAS No. 133 establishes  accounting and reporting  standards
     requiring all  derivative  instruments  be recorded in the balance sheet as
     either an asset or liability measured at its fair value. The Partnership is
     not required to adopt SFAS No. 133 until  October 1, 2000.  As of September
     30, 2000, management believes that adoption of SFAS No. 133 will not have a
     material effect on its financial statements.

2.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>

        Property, plant and equipment consisted of:
                                                       December 31, 2000
<CAPTION>
        <S>                                                         <C>

       Land                                                   $       37
       Buildings and leasehold improvements                       39,993
       Cellular plant and equipment                              246,361
       Other equipment and furniture                              21,392
       Construction in progress                                   23,861
                  Total                                          331,644

       Less accumulated depreciation                             157,710
       Property, plant and equipment, net                       $173,934
                                                               =========
</TABLE>

     Related depreciation expense was $24,975.

     In August 1999, Vodafone signed a definitive  agreement with American Tower
     Corporation  ("ATC") for the sublease of all unused space on  approximately
     2,100 of its communication towers in exchange for $800,000 plus a five-year
     warrant to purchase 3 million ATC shares at $22 per share.  The transaction
     is being  closed  in  phases  starting  in the first  quarter  of 2000.  In
     connection  with the Vodafone  Acquisition,  the  agreement  was assumed by
     Verizon Wireless. The terms of the agreement differ for lease communication
     towers  versus those owned and ranges from 20 to 99 years.  Verizon will be
     required to pay ATC a monthly  maintenance  fee of  approximately  $1.5 per
     tower for the existing physical space used by their cellular equipment.  Up
     to  approximately  one hundred fifty (150) towers owned and operated by the
     Partnership  and  subsidiary are included in the above  transaction.  As of
     December 31, 2000,  133 towers owned and operated by the  Partnership  have
     been subleased.  The Partnership has received  approximately  $50,667 which
     has  been  recorded  as  deferred  revenue  and is being  amortized  on the
     straight-line method over the term of the agreement.

2.   COMMITMENTS

     Lease Commitments

     The   Partnership   leases   various   facilities   and   equipment   under
     noncancellable lease arrangements.  Most leases contain renewal options for
     varying  periods.  Related  rent  expense  under all  operating  leases was
     $5,413.

     Future  minimum lease  payments  required  under  noncancellable  operating
     leases with an initial term of one year or more at December 31, 2000 were:
<TABLE>
   <S>                                                   <C>
   2001                                                $6,157
   2002                                                 5,780
   2003                                                 5,514
   2004                                                 5,129
   2005                                                 4,854
   Thereafter                                          29,278

   Total minimum lease payments                      $ 56,712
                                                     ========
</TABLE>


3.   DUE FROM GENERAL PARTNER

     Under the terms of a management agreement,  cash receipts and disbursements
     are processed on behalf of the  Partnership  through the General  Partner's
     cash accounts. As a result, the Partnership maintains a due to/from account
     with the General  Partner which  reflects the net cash activity  related to
     the  Partnership's  operations.  The  Partnership  pays/earns  interest  on
     amounts  due  to/from  the  General  Partner at a rate equal to the General
     Partner's average borrowing rate (6.5% at December 31, 2000). There were no
     advances from the General  Partner  outstanding  at the year ended December
     31, 2000;  accordingly,  there was no related  interest  expense.  Interest
     income from the General  Partner was $1,202 for the year ended December 31,
     2000.

5.   RELATED PARTY TRANSACTIONS

     Certain  services are performed on behalf of the Partnership by the General
     Partner under the management  agreement.  These services  include legal and
     accounting,  engineering  and marketing,  general and  administrative,  and
     property and equipment  acquisition.  The  Partnership is charged for these
     services at the General  Partner's cost. The financial  statements  include
     expenses of $18,720, pursuant to the management agreement.

6.   VALUATION AND QUALIFYING ACCOUNT


<TABLE>

                                      Balance     Additions    Write-Offs     Balance
                                    Beginning    Charged to     Net of       at End
                                   of the Year   Operations   Recoveries   of the Year
<CAPTION>
        <S>                              <C>        <C>            <C>         <C>

     Accounts receivable allowance    $ 2,159      $ 2,549      $(3,628)     $ 1,080

</TABLE>

<PAGE>

              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY



                      Consolidated Financial Statements for
        the Year Ended December 31, 1999 and Independent Auditors' Report


<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Partners of Sacramento-Valley Limited Partnership and subsidiary:


We have audited the accompanying consolidated balance sheet of Sacramento-Valley
Limited  Partnership (the "Partnership") and subsidiary as of December 31, 1999,
and the related consolidated statements of income, changes in partners' capital,
and cash flows and the financial statement schedule I - valuation and qualifying
account for the year then ended.  These  financial  statements and the financial
statement schedule are the responsibility of the Partnership's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and the financial statement schedule based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of   Sacramento-Valley   Limited
Partnership  and  subsidiary  as of December 31, 1999,  and the results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles. Also, in our opinion, the consolidated
financial  statement  schedule,   when  considered  in  relation  to  the  basic
consolidated  financial  statements  taken as a whole,  presents  fairly  in all
material respects the information set forth therein.




/s/ DELOITTE & TOUCHE LLP

San Francisco, California
March 8, 2000

<PAGE>




                      SACRAMENTO-VALLEY LIMITED PARTNERSHIP
                                 AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999
                                 (In thousands)
<TABLE>

ASSETS


CURRENT ASSETS:
<CAPTION>
  <S>                                                                 <C>
  Cash                                                               $  17
  Accounts receivable, net of allowance for doubtful
    accounts of $2,159                                              24,524
  Due from general partner                                          12,383
  Inventories                                                        4,174
  Other current assets                                               3,142
                                                                ----------
           Total current assets                                     44,240

PROPERTY, PLANT AND EQUIPMENT, Net                                 150,774

FCC LICENSES, NET                                                    9,886

OTHER NONCURRRENT ASSETS                                             1,012
                                                                ----------
TOTAL ASSETS                                                      $205,912
                                                                ==========

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable, trade                                         $ 21,364
  Deferred revenue                                                   4,639
  Accrued commissions                                                2,356
  Accrued employee benefits                                          2,550
  Accrued taxes                                                      1,902
  Other current liabilities                                          1,232
                                                               -----------
           Total current liabilities                                34,043
                                                               -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                           201
                                                               -----------
PARTNERS' CAPITAL:
  General partner                                                   88,896
  Limited partners                                                  82,772
                                                               -----------
           Total partners' capital                                 171,668
                                                               -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL                          $ 205,912
                                                               ===========
</TABLE>






                 See notes to consolidated financial statements.

<PAGE>

              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                        CONSOLIDATED STATEMENT OF INCOME
                          YEAR ENDED DECEMBER 31, 1999
                                 (In thousands)

<TABLE>
<CAPTION>
<S>                                                              <C>
OPERATING REVENUE                                                $ 215,105
                                                               -----------

OPERATING EXPENSES:
  Cost of revenues                                                  56,684
  Selling, general and administrative:
   General partner and affiliates                                   15,681
   Other                                                            73,769
  Depreciation and amortization                                     25,900
                                                               -----------

           Total operating expenses                                172,034
                                                               -----------

OPERATING INCOME                                                    43,071

OTHER INCOME                                                         2,136

INTEREST INCOME ON AMOUNTS DUE
  FROM GENERAL PARTNER                                                 600

MINORITY INTEREST IN NET INCOME OF
  CONSOLIDATED SUBSIDIARY                                            (109)
                                                               -----------

NET INCOME                                                        $ 45,698
                                                               ===========

ALLOCATION OF NET INCOME:
  General partner                                                 $ 22,793
  Limited partners                                                  22,905
                                                               -----------

TOTAL                                                             $ 45,698
                                                               ===========

</TABLE>






                 See notes to consolidated financial statements


<PAGE>

<TABLE>
                                 SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                                CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                             YEAR ENDED DECEMBER 31, 1999
                                                    (in thousands)



                      General
                      Partner          Limited Partners
                      --------         -----------------------------------------------
                                        Centennial
                                        Cellular
                                        Telephone
                                        Company of      Roseville          Evans          GTE
                      AirTouch          Sacramento      Telephone        Cellular       Wireless
                      Cellular            Valley         Company            Inc.           Inc.           Total
                     --------            ---------     ----------         --------      ---------        ------
<CAPTION>
<S>                     <C>             <C>                 <C>              <C>        <C>                <C>

Partners' capital,
 January 1, 1999       $75,663           $35,611          $35,611          $3,338         $1,487        $151,710

Contributions            6,542             3,079            3,079             288            128          13,116

Distributions          (16,102)           (7,577)          (7,577)           (710)          (316)        (32,282)

Contributions
 due from limited
  partners                   -            (3,079)          (3,079)           (288)          (128)         (6,574)

 Net Income             22,793            10,726           10,726           1,006            447          45,698
                       --------          --------         -------          ------         ------        --------

Partner's capital,
 December 31, 1999     $88,896           $38,760          $38,760          $3,634         $1,618        $171,668
                       =======           =======          =======          ======         ======        ========


</TABLE>







                 See notes to consolidated financial statements


<PAGE>




              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          YEAR ENDED DECEMBER 31, 1999
                                 (In thousands)
<TABLE>
<S>                                                                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                         $  45,698
  Adjustments to reconcile net income
    to cash provided by operating activities:
    Depreciation and amortization                                       25,900
    Minority interest in net income of
    consolidated subsidiary                                                109
    Loss of sale on equipment                                              171
    Changes in assets and liabilities:
      Accounts receivable, net                                          (2,866)
      Inventories                                                        5,187
      Other current assets                                              (1,995)
      Other noncurrent assets                                               79
      Accounts payable, trade                                           (4,413)
      Deferred revenue                                                   1,332
      Accrued commissions                                                 (753)
      Accrued employee benefits                                            562
      Accrued taxes                                                       (387)
      Other current liabilities                                             73
                                                                      --------
           Cash flows provided by operating activities                  68,697
                                                                      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment                            (31,430)
  Proceeds from sale of equipment                                          103
  Change in due from general partner                                    (5,021)
                                                                      --------
           Cash flows used in investing activities                     (36,348)
                                                                      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to partners                                            (32,282)
  Distributions to minority interest
  in consolidated subsidiary                                               (86)
                                                                      --------
           Cash flows used in financing activities                     (32,368)
                                                                      --------
NET CHANGE IN CASH                                                         (19)

CASH, Beginning of year                                                     36
                                                                      --------
CASH, End of year                                                     $     17
                                                                      ========
</TABLE>


<PAGE>




              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          YEAR ENDED DECEMBER 31, 1999
                                 (In thousands)
<TABLE>


SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: -
<CAPTION>
<S>                                                            <C>
 Acquisition of property, plant and equipment included
  in accounts payable, trade at year-end                       $  5,495
                                                               ========

 Contribution of property, plant and equipment by              $  6,542
  the General Partner                                          ========

</TABLE>































                 See notes to consolidated financial statements


<PAGE>



              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   YEAR ENDED DECEMBER 31, 1999 (In thousands)


1.   DESCRIPTION  TO  OF  PARTNERSHIP  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING
     POLICIES

     Organization

     Sacramento-Valley  Limited  Partnership (the  "Partnership")  was formed on
     April 2,  1984  under  the laws of the  State of  California  and  provides
     wireless  telecommunications  services in the Northern California area. The
     Partnership's ownership interests are as follows:
<TABLE>
        <S>                                                              <C>

        General Partner:
          AirTouch Cellular, wholly-owned by a subsidiary of
          Vodafone AirTouch Plc. ("Vodafone AirTouch")                 49.878%

        Limited Partners:
          Centennial Cellular Telephone Company of Sacramento Valley   23.472%
          Roseville Telephone Company.                                 23.472%
          Evans Cellular, Inc.                                          2.200%
          GTE Wireless, Inc.                                            0.978%

</TABLE>

     Profits and losses are allocated based on respective partnership interests.
     Capital calls and  distributions  are made quarterly,  at the discretion of
     the General Partner.

     Financial Statement Presentation

     The financial  statements  have been prepared in accordance  with generally
     accepted accounting principles ("GAAP").  Conformity with GAAP requires the
     use of estimates and assumptions that affect the reported amounts of assets
     and  liabilities,  disclosure of contingent  assets and  liabilities at the
     date of the financial statements,  and the reported amounts of revenues and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates

     Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Redding
     MSA Limited Partnership ("RMLP") and the Partnership.  The Partnership owns
     a 97.1% interest in RMLP. All significant  intercompany  transactions  have
     been eliminated.

     Inventory

     Inventory  consists  of  wireless   communications   equipment   (primarily
     handsets).  Inventory  is stated at the  lower of cost or  market.  Cost is
     determined using the first-in,  first-out or average method.  Any losses on
     the sales of handsets to customers are recognized at the time of sale.


<PAGE>



     Property, Plant and Equipment

     Property,  plant  and  equipment  are  recorded  at cost.  Depreciation  is
     computed using the  straight-line  method over the estimated useful life of
     the  asset.  Land is not  depreciated.  Gains and losses on  disposals  are
     included in income at amounts equal to the difference  between the net book
     value of the  disposed  assets and the  proceeds  received  upon  disposal.
     Expenditures for  replacements  and  improvements  are  capitalized,  while
     expenditures  for maintenance  and repairs are charged against  earnings as
     incurred.  Assets under  construction are not depreciated until placed into
     service.

     FCC Licenses

     The Federal Communications Commission ("FCC") issues cellular licenses that
     enable  U.S.  cellular  carriers to provide  service in  specific  Cellular
     Geographic  Service Areas. A cellular license is issued  conditionally  for
     ten years.  Historically,  the FCC has routinely  granted license  renewals
     providing the licensees have complied with applicable rules,  policies, and
     the  Communications  Act of 1934, as amended.  The Partnership  records FCC
     licenses at cost and  believes it has  complied  and intends to continue to
     comply  with  applicable  standards.  The  Partnership  amortizes  the  FCC
     licenses  using  the  straight-line  method  over  40  years.   Accumulated
     amortization of FCC licenses  totaled $2,827 at December 31, 1999.  Related
     amortization expense was $318 in 1999.

     Valuation of Long-lived Assets

     The  Partnership  periodically  reviews the  carrying  value of  long-lived
     assets and certain identifiable intangible assets,  including FCC licenses,
     for impairment  when events or changes in  circumstances  indicate that the
     book  value of an  asset  may not be  recoverable.  An  impairment  loss is
     recognized  whenever  the  review  demonstrates  that the  book  value of a
     long-lived asset is not recoverable.

     Revenue Recognition

     Operating  revenues  primarily  consist of charges to customers for monthly
     access  charges,  cellular  airtime  usage,  prepaid  airtime  usage,  long
     distance  and roamer  charges.  Revenues  are  recognized  as services  are
     provided.

     Unbilled  revenues,  resulting  from  cellular  service  provided  from the
     billing  cycle  date to the end of each  period  and  from  other  cellular
     carriers'  customers using the Partnership's  cellular systems for the last
     half of each period,  are estimated and recorded as  receivables.  Unearned
     monthly access charges relating to periods after period end are deferred.

     Concentration of Credit Risk

     Due to the diversity and large number of customers within the Partnership's
     service  area,   concentrations  of  credit  risk  with  respect  to  trade
     receivables   are  limited.   The  Partnership   performs   ongoing  credit
     evaluations  of  its  customers  and  in  certain   circumstances   obtains
     refundable  deposits.  The  Partnership  maintains  reserves for  potential
     credit losses and, historically,  such losses have been within management's
     expectations.


<PAGE>



     Income Taxes

     No  provisions  have been made for federal or state income taxes since such
     taxes, if any, are the responsibility of the individual partners.

     Advertising Costs

     The Partnership expenses advertising costs as incurred. Advertising expense
     was $10,269 in 1999.

2.       PROPERTY, PLANT AND EQUIPMENT

       Property, plant and equipment consisted of:

<TABLE>

                                                Depreciable       December 31,
                                                Lives (Years)          1999
<CAPTION>
        <S>                                            <C>              <C>

     Land                                                              $ 37
     Buildings and leasehold improvements           5-18             36,205
     Cellular plant and equipment                   5-10            204,103
     Other equipment and furniture                  2-5              20,417
     Construction in progress                                        23,160

          Total                                                     283,922

     Less accumulated depreciation                                  133,148

     Property, plant and equipment, net                            $105,774

</TABLE>

     Related depreciation expense was $25,582 in 1999.

3.   COMMITMENTS AND CONTINGENCIES

     Lease Commitments

     The Partnership leases various facilities and equipment under noncancelable
     lease  arrangements.  Most  leases  contain  renewal  options  for  varying
     periods.  Related rent  expense  under all  operating  leases was $4,824 in
     1999.

     Future minimum lease payments required under noncancelable operating leases
     with an initial term of one year or more at December 31, 1999 were:
<TABLE>
        <S>                                                            <C>

       2000                                                          $5,460
       2001                                                           4,031
       2002                                                           4,640
       2003                                                           4,263
       2004                                                           4,147
       Thereafter                                                    35,987

       Total minimum lease payments                                $ 58,528
                                                                   ========
</TABLE>



<PAGE>



     CONTINGENCIES

     In December of 1998,  the  Partnership  was named as a defendant in a class
     action lawsuit,  Parrish versus AirTouch Cellular. The lawsuit alleges that
     the  defendant   conspired  to  fix  prices  of  cellular  services  across
     California,  and seeks damages up to $100,000.  The Partnership  intends to
     defend itself vigorously.  While the outcome is uncertain,  management does
     not believe that this proceeding will have a material adverse effect on the
     Partnership's financial position or results of operations.

     The  Partnership  is  subject  to  state   regulation  of  the  "terms  and
     conditions"  of cellular  service  other than rates and market entry and is
     party to various  legal  proceedings  in the  ordinary  course of business.
     Although  the  ultimate   resolution   of  these   proceedings   cannot  be
     ascertained,  management  does not  believe  they  will  have a  materially
     adverse  effect on the  financial  position or results of operations of the
     Partnership.

4.   RELATED PARTY TRANSACTIONS

     The General Partner is reimbursed for all Partnership  expenditures made as
     General Partner. As provided in the Partnership  agreement,  certain system
     operations and selling, general and administrative expenses incurred by the
     General  Partner on behalf of the  Partnership  are  passed  through to the
     Partnership.

     The Partnership  participates in a centralized cash management  arrangement
     with  the  General  Partner.  The  General  Partner  pays  or  charges  the
     Partnership monthly interest,  computed using the General Partner's average
     borrowing  rate (5.09% at December  31, 1999) on the amounts due to or from
     the Partnership.

     In December 1999, the General Partner contributed network equipment with an
     appraised fair market value of $6,542 to the Partnership.  As a result, the
     General  Partner issued a capital call which required the Limited  Partners
     to  contribute  cash of $6,574,  to  maintain  their  respective  ownership
     percentages.  As of  December  31,  1999,  the  contributions  had not been
     received.  These  amounts  are due from the  Limited  Partners on March 13,
     2000, and were recorded as  contributions  in the period,  with the related
     receivable amounts being shown as a reduction in Partners' Capital.

5.   MCI COMMUNICATIONS SETTLEMENT

     In December 1999, the Partnership  settled all outstanding  litigation with
     MCI Communications pertaining to a contract breach regarding retail kiosks.
     As a result of this settlement,  the Partnership was awarded $2,136,  which
     was recorded as other income in the financial statements.  The cash payment
     was received in January 2000

6.   MAJOR SUPPLIER

     The Partnership  purchases  substantially all of its network equipment from
     one supplier.





<PAGE>

7.   SUBSEQUENT EVENTS

     In  January  2000,  Vodafone  AirTouch  entered  in  to a  tower  sub-lease
     agreement  ("the  Agreement")  with American Tower  Corporation  ("American
     Tower").  Concurrent with the original sublease  agreement,  American Tower
     also  entered  a  build-to-suit  agreement  whereby  American  Tower has an
     exclusive  right to  construct  new towers in certain  domestic  markets to
     Vodafone  AirTouch's   specifications  that  will  be  leased  to  Vodafone
     AirTouch.  The term of the Agreement  differs for leased sites versus sites
     owned by the  company  and  ranges  up to 99  years.  Under  the  Agreement
     Vodafone AirTouch will transfer the right to lease available space on up to
     2,100  cellular  towers  owned by Vodafone  AirTouch in exchange for a cash
     payment  of  approximately  $380 per  tower.  Vodafone  AirTouch  will also
     receive  a  warrant  to  purchase   3,000,000   shares  of  American  Tower
     Corporation  Class A Common Stock (subject to reduction if fewer than 2,100
     towers are  sublease).  Vodafone  AirTouch will be required to pay American
     Tower a monthly  maintenance  fee of  approximately  $1.5 per tower for the
     existing physical space used by their cellular equipment. Vodafone AirTouch
     will retain title to the tower  equipment  and will have the right of first
     refusal for leasing  additional space on the tower. Up to approximately one
     hundred  sixty  (160)  towers  owned and  operated by the  Partnership  and
     subsidiary  are  included  in the above  transaction.  The  Partnership  is
     entitled to payments of approximately  $380 per tower subleased to American
     Tower under the terms of the Agreement. The Partnership is also entitled to
     a proportionate  share of the warrants issued. The Agreement is expected to
     close in multiple tranches during the year 2000.

     In September 1999,  Vodafone AirTouch and Bell Atlantic  Corporation ("Bell
     Atlantic")   entered  into  an  Alliance  Agreement  under  which  Vodafone
     AirTouch.  Would  contribute  its U.S.  wireless  interest to the  existing
     Cellco Partnership  ("Cellco"),  an existing general  partnership formed by
     Bell Atlantic, in exchange for a partnership interest in Cellco, subject to
     certain regulatory and other approvals.  Upon obtaining such approvals,  as
     applicable,   Vodafone  Air  Touch's   interest  in  the   Partnership  and
     subsidiary,  will  be  contributed  to  Cellco  as  part  of  the  Alliance
     Agreement.  The  Alliance  Agreement  is  expected  to close in the  second
     quarter of 2000.

<PAGE>

              SACRAMENTO-VALLEY LIMITED PARTNERSHIP AND SUBSIDIARY

                  SCHEDULE I - VALUATION AND QUALIFYING ACCOUNT
                   YEAR ENDED DECEMBER 31, 1999 (In thousands)



<TABLE>


                                    Balance at   Charged to               Balance at
                                     Beginning   Costs and                  End of
                                     of Period    Expenses   Deductions     Period

YEAR ENDED DECEMBER 31, 1999:
<CAPTION>
<S>                                       <C>     <C>            <C>            <C>

 Allowance for
 doubtful accounts                     $ 1,823     $ 4,286    $(3,950)(a)   $ 2,159
</TABLE>


(a) Amounts reflect items written off, net of recoveries.












<PAGE>













                             SUREWEST COMMUNICATIONS
                                INDEX TO EXHIBITS
                                 (Item 14 (A) 3)

<TABLE>
                                                                                          Method
    Exhibit No.                               Description                                of Filing          Page
    -----------                               -----------                                ---------          ----
<CAPTION>
        <S>              <C>                                                            <C>                  <C>

        3(a)          Articles of Incorporation of Registrant, together with          Incorporated by        -
                      Certificate of Amendment of Articles of Incorporation dated        reference
                      January 25, 1996 and Certificate of Amendment of Articles
                      of Incorporation dated June 21, 1996 (Filed as Exhibit 3(a)
                      to Form 10-Q Quarterly Report for the quarter ended
                      September 30, 1996)

        3(b)          Certificate of Amendment of Articles of Incorporation dated     Incorporated by        -
                      May 18, 2001 (Filed as Exhibit 3(b) to Form 10-Q Quarterly         reference
                      Report for the quarter ended June 30, 2001)

        3(c)          Bylaws of Registrant (Filed as Exhibit 3(b)to Form 10-K         Incorporated by        -
                      Annual Report of the Registrant for the year ended December        reference
                      31, 2000)

        4(a)          Shareholder Rights Plan(Filed as Exhibit 2.1 to Form 8-A        Incorporated by        -
                      Registration Statement under the Securities Act of 1934)           reference

       10(a)          Credit Agreement of Roseville Telephone Company with Bank       Incorporated by        -
                      of America National Trust and Savings Association, dated           reference
                      March 27, 1992, with respect to $25,000,000 term loan
                      (Filed as Exhibit 10(a) to Form 10-Q Quarterly Report of
                      Registrant for the quarter ended March 31, 1992)

       10(b)          Note Purchase Agreement for Series A Senior Notes in the        Incorporated by        -
                      aggregate amount of $40,000,000 dated December 9, 1998             reference
                      (Filed as Exhibit 10(b) to Form 10-K Annual Report of
                      Registrant for the year ended December 31, 1998)

       10(c)          Operating Agreement of West Coast PCS LLC  (Filed as            Incorporated by        -
                      Exhibit 10(c) to Form 10-K Annual Report of Registrant for         reference
                      the year ended December 31, 1997)

</TABLE>

<PAGE>






                             SUREWEST COMMUNICATIONS
                                INDEX TO EXHIBITS
                                 (Item 14 (A) 3)
<TABLE>

                                                                                          Method
    Exhibit No.       Description                                                        of Filing          Page
<CAPTION>
        <S>             <C>                                                              <C>                <C>

       10(d)          1999 Restricted Stock Bonus Plan (Filed as Exhibit 10(d) to     Incorporated by        -
                      Form 10-K Annual Report of Registrant for the year ended           reference
                      December 31, 1998)

       10(e)          2000 Equity Incentive Plan (Filed as                             Incorporated          -
                      Exhibit 10 (e) to form 10-K Annual Report of Registrant for      by reference
                      the year ended December 31, 1999)

       10(f)          Business Loan Agreement of Registrant with Bank of America,     Incorporated by        -
                      dated March 15, 2000, as amended by Amendment No. 1 dated          reference
                      as of April 10, 2000 (Filed as Exhibit 10 (f) to Form 10-Q
                      Quarterly Report of Registrant for the  quarter ended March
                      31, 2000)

       10 (g)         Letter agreement dated January 16, 2001                         Incorporated by        -
                      between Registrant and Brian H. Strom (Filed as Exhibit 10         reference
                      (g) to Form 10-K Annual Report of Registrant for the  year
                      ended December 31, 2000)

       10 (h)         Letter agreement dated January 16, 2001                         Incorporated by        -
                      between Registrant and Michael D. Campbell (Filed as               reference
                      Exhibit 10 (h) to Form 10-K Annual Report of Registrant for
                      the year ended December 31, 2000)

       10 (i)         Letter agreement dated January 16, 2001                         Incorporated by        -
                      between Registrant and Jay B. Kinder (Filed as Exhibit 10          reference
                      (i) to Form 10-K Annual Report of Registrant for the year
                      ended December 31, 2000)

       10 (j)         Letter agreement dated January 16, 2001                         Incorporated by        -
                      between Registrant and Phillip D. Germond (Filed as Exhibit        reference
                      10 (j) to Form 10-K Annual Report of Registrant for the
                      year ended December 31, 2000)

</TABLE>

<PAGE>





                             SUREWEST COMMUNICATIONS
                                INDEX TO EXHIBITS
                                 (Item 14 (A) 3)

<TABLE>
                                                                                          Method
    Exhibit No.       Description                                                        of Filing          Page
<CAPTION>
        <S>              <C>                                                            <C>                   <C>
       10 (k)         Letter agreement dated January 16, 2001                         Incorporated by        -
                      between Registrant and Robert M. Burger (Filed as Exhibit          reference
                      10 (k) to Form 10-K Annual Report of Registrant for the
                      year ended December 31, 2000)

        23.1          Consent of Ernst & Young LLP, Independent Auditors              Filed herewith         94

        23.2          Independent Auditors Consent                                    Filed herewith         95


</TABLE>





<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                             SUREWEST COMMUNICATIONS
                                  (Registrant)


Date: March 15, 2002              By:            /s/ Brian H. Strom
                                                 Brian H. Strom,
                                                 President and Chief
                                                 Executive Officer


Date: March 15, 2002              By:            /s/Michael D. Campbell
                                                 Michael D. Campbell,
                                                 Executive Vice President
                                                 and Chief Financial Officer



<PAGE>



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Date: March 15, 2002                              /s/ Thomas E. Doyle
                                                  Thomas E. Doyle,
                                                  Chairman of the Board

Date: March 15, 2002                              /s/ Brian H. Strom
                                                  Brian H. Strom,
                                                  President and Chief
                                                  Executive Officer; Director

Date: March 15, 2002                              /s/ Michael D. Campbell
                                                  Michael D. Campbell,
                                                  Executive Vice President
                                                  and Chief Financial Officer

Date: March 15, 2002                              /s/ John R. Roberts III
                                                  John R. Roberts III,
                                                  Director

Date: March 15, 2002                              /s/ Chris L. Branscum
                                                  Chris L. Branscum,
                                                  Director

Date: March 15, 2002                              /s/ Neil J. Doerhoff
                                                  Neil J. Doerhoff,
                                                  Director

Date: March 15, 2002                              /s/ Kirk C. Doyle
                                                  Kirk C. Doyle,
                                                  Director

Date: March 15, 2002                              /s/ Timothy D. Taron
                                                  Timothy D. Taron,
                                                  Director




<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                             SUREWEST COMMUNICATIONS
                                  (Registrant)


Date: March 15, 2002                By:             Brian H. Strom,
                                                    President and Chief
                                                    Executive Officer


Date: March 15, 2002                 By:            Michael D. Campbell,
                                                    Executive Vice President
                                                    and Chief Financial Officer


<PAGE>



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.


Date: March 15, 2002                               Thomas E. Doyle,
                                                   Chairman of the Board

Date: March 15, 2002                               Brian H. Strom,
                                                   President and Chief
                                                   Executive Officer; Director

Date: March 15, 2002                               Michael D. Campbell,
                                                   Executive Vice President
                                                   and Chief Financial Officer

Date: March 15, 2002                               John R. Roberts III,
                                                   Director

Date: March 15, 2002                               Chris L. Branscum,
                                                   Director

Date: March 15, 2002                               Neil J. Doerhoff,
                                                   Director

Date: March 15, 2002                               Kirk C. Doyle,
                                                   Director

Date: March 15, 2002                               Timothy D. Taron,
                                                   Director






<PAGE>



                                  EXHIBIT 23.1
               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the (1) Registration Statement
(Form S-8 No. 333-42870) pertaining to the SureWest Communications 2000 Equity
Incentive Plan and (2) Registration Statement (Form S-8 No.333-42868) pertaining
to the SureWest Communications 1999 Restricted Stock Bonus Plan of our report
dated February 8, 2002, with respect to the consolidated financial statements of
SureWest Communications included in the Annual Report (Form 10-K) for the year
ended December 31, 2001.


                                                           /s/Ernst & Young LLP


Sacramento, California
March 20, 2002


<PAGE>



                                  EXHIBIT 23.2
                          INDEPENDENT AUDITORS' CONSENT




We consent to the incorporation by reference in these Registration Statements of
SureWest Communications, formerly known as Roseville Communications Company,
(the "Company") on Form S-8 (Nos. 333-42868 and 333-42870) of our report dated
March 8, 2000 on the consolidated financial statements of Sacramento Valley
Limited Partnership and subsidiary, appearing in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001.


                                                           /s/Deloitte & Touche


San Francisco, California
March 21, 2002