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, 2002

              [ ] 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.                         [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2. Yes [X] No [ ]

On March  3,  2003,  the  registrant  had  14,537,144  shares  of  Common  Stock
outstanding and an approximate  aggregate  public market value of  approximately
$316,588,095  (based on 12,781,110 shares of Common Stock held by non-affiliates
and a closing  price of $24.77 per share of Common Stock on the Nasdaq  National
Market).  On June 28, 2002,  which was the last business day of the registrant's
most recently  completed  second fiscal  quarter,  the registrant had 14,562,689
shares of Common Stock outstanding and its public market value was approximately
$680,964,766   (based  on  12,816,954  shares  of  Common  Stock  then  held  by
non-affiliates  and a closing price that day of $53.13 per share of Common Stock
on the Nasdaq National Market).  These public market value calculations  exclude
shares  held  on the  stated  dates  by  registrant's  employee  benefit  plans,
directors  and  officers on the  assumption  such shares may be shares  owned by
affiliates.  (Exclusion  from these public  market value  calculations  does not
imply affiliate status for any other purpose).


                       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 16, 2003.


<PAGE>



                                TABLE OF CONTENTS

<TABLE>

ITEM NO.                                                                                                       PAGE
<S>              <C>                                                                                            <C>

PART I

          1.    Business..................................................................................      4
          2.    Properties................................................................................      8
          3.    Legal Proceedings.........................................................................      9
          4.    Submission of Matters to a Vote of Security Holders.......................................     12


PART II

          5.    Market for Registrant's Common Equity and Related
                Stockholder Matters.......................................................................     14
          6.    Selected Financial Data...................................................................     14
          7.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations.......................................................     17
         7A.    Quantitative and Qualitative Disclosures About Market Risk................................     36
          8.    Financial Statements and Supplementary Data...............................................     37
          9.    Changes in and Disagreements With Accountants on Accounting
                and Financial Disclosure..................................................................     76


PART III

         10.    Directors and Executive Officers of the Registrant........................................      76
         11.    Executive Compensation....................................................................      76
         12.    Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters................................................      76
         13.    Certain Relationships and Related Transactions............................................      77
         14.    Controls and Procedures...................................................................      77
         15.    Exhibits, Financial Statement Schedules, and Reports on
                Form 8-K..................................................................................      77

SIGNATURES      ..........................................................................................      82
CERTIFICATIONS............................................................................................      85
</TABLE>



<PAGE>



                                     PART I

Item 1. Business.

SureWest  Communications (the "Company") was incorporated in 1995 under the laws
of the State of California to serve as a  communications  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,  SureWest  Broadband,  SureWest
Custom Data Services  (formerly  QuikNet,  Inc.),  SureWest  Wireless,  SureWest
Televideo ("SureWest Broadband/Residential Services"), and Roseville Alternative
Company ("Roseville Alternative").

Substantially all of the Company's revenues are in the  communications  services
industry. Approximately 1%, 3% and 11% of the Company's total operating revenues
in 2002,  2001 and 2000,  respectively,  were  derived  from access  charges and
charges for other services to SBC Communications  Inc. ("SBC") (formerly 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  the  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.").  The Company 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                           2002              2001               2000
------------------------           ----              ----               ----
<S>                                <C>                <C>                <C>
Revenues from services subject
  to regulation                     67%               69%                75%
Other revenues                      33%               31%                25%
                                   ----              ----               ----
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,
network  access and toll  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 SBC, 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.  In recent years,
Roseville Telephone has experienced a significant increase in competition.

For  many  years,  the  area  served  by  Roseville  Telephone  has  experienced
significant  residential,  commercial and industrial  development,  although the
pace of  development  has  lessened in recent  years,  including  the year ended
December 31, 2002.  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  from services  subject to  regulation,  which  include local  service,
network access service and toll service revenues,  constituted approximately 67%
of the Company's total  operating  revenues in 2002.  Other Roseville  Telephone
revenues are derived  primarily  from the  provision  of  directory  advertising
services, billing and collection services,  nonregulated sales and services, and
other miscellaneous  services.  Nonregulated revenues are derived from the sale,
lease and maintenance of telecommunications  equipment,  payphone services,  and
network  access  services.  In  addition,   nonregulated  revenues  include  the
operations of SureWest Broadband,  a Competitive Local Exchange Carrier ("CLEC")
operating as a division of  Roseville  Telephone,  which  offers local  service,
network access  service and toll service to customers in the greater  Sacramento
region, excluding Roseville Telephone's service area.

Total revenues from certain 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. Additionally, Roseville Telephone bills
SBC various  charges  for certain  local  service  and  network  access  service
revenues.  Interstate  access  rates  and  resulting  earnings  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
("NECA").  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.

Other Operations

SureWest Directories  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 outside of Roseville  Telephone's service
area.

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. The Company's non-exclusive agreement with Global Crossing expires
in July 2003. On January 28, 2002,  Global  Crossing filed for protection  under
Chapter 11 of the U.S.  Bankruptcy  Code.  Effective  December 2002, the Company
entered into a 2-year non-exclusive agreement with Sprint Communications Company
L.P.  ("Sprint"),  a long-distance  service  provider,  for the right to provide
network  transport  services to the Company's  customers at a fixed price during
the term of the agreement.  The Company has a monthly minimum usage  requirement
of $25 thousand  effective June 2003. The minimum usage  requirement for 2003 is
$175  thousand.  Rates for the  services  that will be  provided  by Sprint  are
substantially  the same as those  offered  by Global  Crossing.  Therefore,  the
Company does not believe that Global  Crossing's  bankruptcy  filing will have a
material effect on its consolidated financial position or results of operations.

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

SureWest Custom Data Services  provides legacy Internet  services in addition to
custom data solutions, which include collocation and bandwidth.

SureWest  Televideo  provides  bundled  high-speed  Internet,  digital cable and
telephone services under the SureWest Broadband/Residential Services name in the
Sacramento Metropolitan area.

Wireless Operations

SureWest  Wireless  was formed for the purpose of  providing  wireless  personal
communications  services.  During 1997,  SureWest  Wireless  purchased  from the
F.C.C.  licenses to offer wireless  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.

Certain  operations  of the Company are reliant  upon the  services  provided by
WorldCom,  Inc. ("WorldCom"),  which filed for bankruptcy protection on July 21,
2002.   The  Company   believes   that  it  can  procure   services  from  other
telecommunication  providers,  if  necessary,  and that the impact of WorldCom's
bankruptcy filing will not have a material effect on it's consolidated financial
position or results of operations.



Sale of Alarm Monitoring Division

On January 25,  2002,  the Company sold  substantially  all of the assets of its
alarm monitoring  division,  which was a component of the Telecom  segment,  for
approximately $5.2 million, subject to certain future adjustments, which are not
expected to be  material.  This sale  resulted in a pre-tax gain of $4.4 million
during 2002.  Through  December 31, 2002, the Company had received cash proceeds
of $5.0 million,  of which $500 thousand was received  during the fourth quarter
of 2001, related to the sale of the alarm monitoring  division assets. The alarm
monitoring assets consisted primarily of customer contracts and equipment, which
had a net book value of approximately  $355 thousand as of the date of the sale.
The  purchaser  of the assets  has  commenced  litigation  against  the  Company
relating  to  claims  in  connection  with  certain  contracts  assigned  to the
purchaser.  Given the early stages of the litigation,  it is not yet possible to
determine  its  ultimate  outcome.  However,  the Company  does not believe this
litigation  will have a material  adverse  effect on the Company's  consolidated
financial   position  or  results  of  operations.   Total  operating   revenues
attributable to the Company's alarm  monitoring  division during the years ended
2002,  2001 and  2000  were  $279  thousand,  $2.5  million  and  $2.2  million,
respectively.

Acquisition of the Assets of Western Integrated Networks, LLC

On July 12,  2002,  the  Company  purchased  substantially  all of the assets of
Western Integrated Networks, LLC and certain affiliates (collectively, "WIN") in
a transaction  supervised by the United States Bankruptcy Court for the District
of Colorado. The assets of WIN acquired by the Company, consisted principally of
accounts  receivable and property,  plant and equipment.  The purchase price for
the assets of WIN consisted of (i) $12 million in cash, (ii) acquisition related
costs  of $560  thousand,  and  (iii)  the  assumption  of  certain  liabilities
aggregating $4.6 million relating principally to executory contracts and capital
lease  obligations for certain  vehicles.  Under the terms of the asset purchase
agreement,  $1.2 million of the aggregate  purchase  price was held in an escrow
account to protect  the  Company  in the event of any  claims  available  to the
Company. On January 28, 2003, $150 thousand was released to the Company, and the
balance remains in the escrow  account.  Prior to December 31, 2002, the Company
sold certain  equipment  acquired in the  transaction  for $2.2  million,  which
equaled its aggregate carrying value at the date of sale.

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 to permit the Company to
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  earnings from its interest in SVLP  constituted
approximately 4% of the Company's income before income taxes in 2000.

Employees

At  December  31,  2002,  the  Company  had 944  employees,  none  of  whom  are
represented by a union.

Competition

There continues to be increased competition facing telecommunications providers.
As a result of industry,  legislative and regulatory  developments,  the Company
continues to face competitive challenges. These developments, however, have also
provided the Company with significant growth opportunities.

The Company's  Telecom  operations,  a  substantial  portion of which relates to
Roseville  Telephone's  historic  incumbent local exchange  carrier  operations,
faces competition from  facilities-based  competitors,  interexchange  carriers,
resellers  and others.  In addition,  customers  have  substituted  wireless and
Internet  alternatives in place of traditional  telephone  lines.  The Company's
wireless  affiliate  has benefited  from such  substitutions.  In addition,  the
Company's long distance service competes with the largest national providers.

SureWest  Wireless is one of nine wireless  providers in the Sacramento  region.
Accordingly,  it faces  significant  competition  from both large  national  and
regional cellular and PCS providers of wireless services.

The Company's Internet affiliate competes against the largest national providers
of  Internet  and  high-speed  data  service   together  with  smaller  regional
providers.

SureWest Directories faces competition from other directory publishers servicing
the areas covered by the Company's  directories,  together with competition from
other advertising sources.

While certain of the Company's  operations subject to regulation have and may in
the future  experience  customer  reductions  from  increased  competition,  the
Company  believes  that its entry into  newer  businesses  in recent  years will
offset customer losses,  and that the newer businesses will provide  significant
revenue opportunities.

Available information

The  Company's  Annual  Report on Form  10-K,  Quarterly  Reports  on Form 10-Q,
Current Reports on Form 8-K and amendments to reports filed pursuant to Sections
13(a)  and  15(d) of the  Securities  Exchange  Act of  1934,  as  amended,  are
available on our website at www.surewest.com, when such reports are available on
the Securities and Exchange Commission website.

Item 2. Properties.

The  Company  owns and  leases  office  facilities  and  related  equipment  for
executive headquarters,  administrative personnel, central office buildings, and
operations in Roseville,  Citrus  Heights,  Granite Bay, and other  locations in
Sacramento and Placer Counties. The Company's executive headquarters,  principal
business and administrative office, and operations facility which are located in
Roseville,  consist of 282,000  square feet. The Company leases a 233,000 square
foot facility in McClellan  Park for its Broadband  operations.  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  Wireless  antennas.  See  Note  10  in  the  Notes  to
Consolidated  Financial Statements for information regarding the Company's lease
obligations. 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
wireless antennas,  towers, pole lines, head-end,  remote terminals,  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  jointly-owned with other entities,
and leases space on  facilities 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 indicated 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.  Under the NRF, Roseville Telephone
is subject to ongoing monitoring and reporting requirements, including a sharing
mechanism  whereby  Roseville  Telephone  is  required  to share  earnings  with
customers  through a reduction of revenues if its earned  annual  rate-of-return
exceeds that authorized by the P.U.C.

In accordance with the  requirements  of its general rate case order,  Roseville
Telephone filed an application for review of its NRF in 1999. In connection with
this proceeding,  the P.U.C.'s 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
Decision  did not suspend the  sharing  mechanism  as  Roseville  Telephone  had
requested,  and further provided 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. Additionally,  in accordance with the provisions of
the Decision, the Company recorded certain liabilities and reduction of revenues
relating to estimated intrastate shareable earnings obligations.

Prior to January 1, 2002,  Roseville  Telephone  billed SBC various  charges for
certain local service and network  access  service  revenues in accordance  with
certain  agreements as described  below. Of the Company's total revenues for the
years ended  December 31, 2002 and 2001,  less than 10% was recorded under these
agreements in each period.  In 1999, SBC expressed  interest in withdrawing from
the designated carrier plan ("DCP") for Roseville  Telephone's toll traffic. The
DCP was a  compensation  arrangement  between  Roseville  Telephone  and SBC for
certain  intrastate toll services.  Roseville  Telephone and SBC agreed to allow
the DCP  arrangement to expire in December 2001. The  termination of the DCP did
not have a material impact on the Company's  consolidated  financial position as
of December 31, 2002 or results of operations for the year then ended.

In  1999,  SBC  also  expressed  interest  in  entering  into a  new,  permanent
compensation  arrangement for extended area service  ("EAS").  At that time, SBC
had been paying Roseville Telephone $11.5 million per year for EAS pursuant to a
Settlement Transition Agreement.  In November 2000, the P.U.C. authorized SBC to
terminate its annual EAS payments to Roseville  Telephone effective November 30,
2000. The P.U.C.  authorized  replacement  funding to Roseville  Telephone on an
interim  basis  using  the  current  reserve  in the  California  High Cost Fund
("CHCF").  In addition,  the P.U.C.  opened an Order  Instituting  Investigation
("OII") for the purpose of determining  whether future recovery of all, none, or
a portion of the $11.5  million  annual  payments  previously  received from SBC
should come from Roseville  Telephone's  ratepayers or other regulatory recovery
mechanisms. This proceeding began in 2001, evidentiary hearings were held during
2002, and briefing was completed in February 2003. In this  proceeding,  the ORA
recommends that the P.U.C. discontinue Roseville Telephone's present interim EAS
funding from the CHCF without replacement revenues from ratepayers. The P.U.C.'s
decision  in this  matter  is  expected  during  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 cannot yet be determined.

Roseville Telephone's  operations may also be impacted by the Telecommunications
Act  of  1996  (the  "Act").  The  Act  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.

Given the ongoing  activities of 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.

There are a number of other regulatory  proceedings occurring at the federal and
state  levels  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 cannot be determined at this time.

The regulatory  proceedings  occurring at the state and federal levels described
above may also 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.


<PAGE>



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 2002.



<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, 2003 are as follows:
<TABLE>
<CAPTION>
Name                   Age   Positions and Offices

<S>                    <C>    <C>
Thomas E. Doyle        74    Chairman of the Board of Directors (since 2000)

Kirk C. Doyle          49    Vice-Chairman and Secretary (since 2002)

Brian H. Strom         60    President and Chief Executive Officer of the Company (since 1993)

Michael D. Campbell    54    Executive Vice President (since 1996), Chief Financial Officer of the
                             Company (since 1994) and Treasurer (since 2000)

Jay B. Kinder          58    Senior Vice President and Chief Operating Officer - Roseville Telephone
                             Company (since 2000)

Bill M. DeMuth         53    Vice President and Chief Technology Officer of the Company (since 2000)

David Marsh            54    Vice President and Chief Information Officer of the Company (since 2000)

Robert M. Burger       46    Senior Vice President and Chief Operating Officer - SureWest Wireless
                             (since 2000)

Philip D. Germond      53    Vice President, Customer Operations - Roseville Telephone Company (since
                             2002)

Fred A. Arcuri         50    Senior Vice President and Chief Operating Officer - SureWest Broadband
                             (since 2001)

Barbara J. Nussbaum    53    Vice President, Administration - of the
                             Company (since 2002)

Peter C. Drozdoff      47    Vice President, Marketing - of the Company
                             (since 2002)

Darla J. Yetter        42    Assistant Secretary (since 2000)

</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 predecessor  plans to the SureWest KSOP (a Company  employee benefit
plan) and disclosure, in limited circumstances, of third party transactions. The
price per share for the  quarters  ended  March 31,  2001 and June 30,  2001 was
$40.00.

On September  6, 2001 the  Company's  common  stock began  trading on the Nasdaq
National Market ("NASDAQ") under the symbol "SURW".  According to the records of
the Company's  transfer agent, the Company's  approximate number of shareholders
was 7,686 as of March 3, 2003. 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 and each of the four quarters of 2002:
<TABLE>
                                             NASDAQ National Market
                                        High                      Low
<CAPTION>
<S>                                     <C>                       <C>
September 30, 2001                     $45.48                   $40.35
December 31, 2001                      $58.90                   $45.48
March 31, 2002                         $56.59                   $48.08
June 30, 2002                          $57.25                   $42.00
September 30, 2002                     $53.80                   $29.03
December 31, 2002                      $40.99                   $21.45
</TABLE>


The Company paid cash  dividends on its common stock of $0.25 per share for each
quarter of 2002 and 2001.

Item 6. Selected Financial Data
<TABLE>

                                   2002            2001              2000            1999            1998
                                   ----            ----              ----            ----            ----
                                   (amounts in thousands, except per share amounts)
<CAPTION>
<S>                                   <C>             <C>              <C>              <C>              <C>
Total operating revenues           $188,910        $166,234          $143,194        $140,801        $126,682
Gain on sale of investment in
 cellular partnership              $      -        $      -          $201,294        $      -        $      -
Net income                         $ 11,249        $ 10,317          $125,793        $ 31,750        $ 25,049

Basic earnings per share(1)        $   0.76        $   0.67          $   8.06        $   2.01        $   1.58
Diluted earnings per share(1)      $   0.76        $   0.67          $   8.05        $   2.01        $   1.58

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

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

</TABLE>


<PAGE>
<TABLE>
                                    2002            2001             2000            1999           1998
                                    ----            ----             ----            ----           ----
                                    (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 re
 troactively:

 Income before extraordinary
  loss and cumulative effect
  of change in accounting
  principle                         $  11,249       $  10,317        $ 139,998       $ 31,926       $ 24,749

 Net income                         $  11,249       $  10,317        $ 129,066       $ 31,926       $ 24,749

 Basic per share amounts:

 Income before extraordinary
  loss and cumulative effect
  of change in accounting
  principle                         $    0.76       $    0.67        $    8.97       $   2.02       $   1.56

 Net income                         $    0.76       $    0.67        $    8.27       $   2.02       $   1.56

 Diluted per share amounts:

 Income before extraordinary
  loss and cumulative effect
  of change in accounting
  principle                         $    0.76       $    0.67        $    8.96       $   2.02       $   1.56

 Net income                         $    0.76       $    0.67        $    8.26       $   2.02       $   1.56

Cash dividends per share(2)         $    1.00       $    1.00        $    1.00       $   1.00       $   0.85
Property, plant and
 equipment, at cost                 $ 575,581       $ 524,505        $ 469,389       $383,896       $328,437
Total assets                        $ 398,120       $ 412,343        $ 528,942       $333,187       $315,877
Long-term obligations               $  51,971       $  42,142        $  44,285       $ 46,428       $ 48,571

Shares of common stock used
  to calculate:
  Basic earnings per share(1)          14,728          15,326           15,610         15,815         15,815
  Diluted earnings per
   share(1)                            14,795          15,387           15,630         15,822         15,815

</TABLE>



(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.

                                Company Overview

Corporate Structure

SureWest  Communications  (the "Company") is a holding company with wholly-owned
subsidiaries  operating  in  the  Telecommunications  ("Telecom")  and  Wireless
segments.

The  Telecom  segment is aligned  with  specific  subsidiaries  of the  Company.
Roseville  Telephone Company  ("Roseville  Telephone"),  provides local and toll
telephone services,  network access services,  billing and collection  services,
directory advertising services and certain nonregulated  services.  Nonregulated
revenues  include the  operations of SureWest  Broadband,  a  Competitive  Local
Exchange Carrier ("CLEC") operating as a division of Roseville Telephone,  which
offers local  service,  network  access service and toll service to customers in
the greater Sacramento region,  excluding  Roseville  Telephone's  service area.
SureWest Directories 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 outside of Roseville  Telephone's service
area. Roseville Long Distance Company ("Roseville Long Distance"), is engaged in
the provision of long  distance  services.  SureWest  Internet is engaged in the
provision  of high speed and dial-up  Internet  services.  SureWest  Custom Data
Services  (formerly  QuikNet,  Inc.) is engaged in the  provision of custom data
solutions.  SureWest Televideo ("SureWest  Broadband/Residential  Services"),  a
recently-formed  subsidiary  of the Company,  acquired  from Western  Integrated
Networks,  LLC and  affiliates  certain  assets,  which the  company is using to
provide  high  speed  Internet,  digital  cable and  telephone  services  in the
Sacramento area.

The Wireless segment  consists of the Company's  subsidiary  SureWest  Wireless,
which provides wireless personal communications services.

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.

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 or 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, and digital
cable 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

The Telecom segment derives its revenue from local service, network access, long
distance services,  directory advertising services,  Internet services,  digital
cable, and the sale of non-regulated products and services.

Certain of the Company's customers have filed for bankruptcy protection in 2002,
the most notable of which was WorldCom, Inc. ("WorldCom"),  which, together with
its affiliates, filed for bankruptcy protection on July 21, 2002. As a result of
the WorldCom  bankruptcy  filing,  the Company recognized as bad debt expense in
2002 $1.3  million  relating  to sums owing from  WorldCom  to the  Company  for
services prior to the bankruptcy filing.

With respect to post-petition  obligations,  WorldCom had proposed pursuant to a
provision of the  Bankruptcy  Code, and the  Bankruptcy  Court has agreed,  that
utilities are entitled to "adequate  assurances"  that WorldCom will satisfy its
obligations  for  post-petition  services.  In its  original  filings,  WorldCom
proposed its own set of  assurances to utilities,  but such  assurances  did not
include either deposits or advance  payments.  Ultimately,  the Bankruptcy Court
granted to all  utilities  that  provide  post-petition  services  to  WorldCom,
including  the  Company,  an  administrative  expense  priority  claim  for  all
post-petition  services.  Although the Bankruptcy Court did not require WorldCom
to provide any deposits or advance payments as adequate assurance of payment, it
did provide,  with respect to any  post-petition  services provided after August
14, 2002, that each utility will have a junior superiority  administrative claim
senior  to  other  administrative  claims  and  junior  only  to the  claims  of
WorldCom's  post-petition  lenders.  If WorldCom fails to pay for  post-petition
services,  a utility can either take  appropriate  action  under any  applicable
tariff  or  regulation,  or seek,  on an  expedited  basis,  an  order  from the
Bankruptcy Court requiring immediate payment or other relief.

Revenues from services subject to regulation constituted  approximately 67%, 69%
and 75% of the  Company's  total  operating  revenues  in 2002,  2001 and  2000,
respectively. Such revenues, 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  SBC
Communications  Inc. ("SBC") (formerly  Pacific Bell),  long distance  carriers,
competitive  access  providers  and  subscribers  for network  access  services,
interstate  settlement  revenues from the National Exchange Carrier  Association
("NECA"),  and support payments from the Universal Service Fund and a California
High Cost Fund ("CHCF").

Total revenues from certain 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 NECA.

The F.C.C. 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 F.C.C.  establishes
rules that carriers must follow in the  preparation  of the annual  studies.  In
January  2001,  the  F.C.C.  issued a  Memorandum  Opinion  and Order to another
telephone company in which it clarified how Internet  traffic,  which the F.C.C.
had prior to that date characterized as largely interstate in nature,  should be
treated.  Additionally,  under  current  F.C.C.  rules  governing  rate  making,
Roseville Telephone is required to establish interstate rates based on projected
demand usage for its various  services and  determine  the actual  earnings from
these rates once actual volumes and costs are known.

During 2000 and 2001, Internet traffic and DSL service grew  substantially,  far
exceeding  Roseville  Telephone's  estimates,  which resulted in actual earnings
exceeding the levels allowed by the F.C.C.  Based on  preliminary  cost studies,
the Company recognized  liabilities relating to Roseville  Telephone's estimated
interstate  shareable earnings obligations of $650 thousand and $3.2 million for
the years ended December 31, 2002 and 2001, respectively,  through reductions of
revenues  related  to  Roseville   Telephone's  estimated  interstate  shareable
earnings  obligations.  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  (no similar  payments were
made in 2002 or 2000,  and the Company is currently  seeking  refunds of certain
amounts paid in 2001; however, there is presently no assurance that such amounts
are  recoverable).  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.

In May 2002, the D.C. Circuit Court of Appeals (the "Court") issued its decision
in ACS of Anchorage v. F.C.C.  The Court determined that a tariff filed properly
under Section 204 "streamlined" procedures and allowed to go into effect without
suspension is deemed lawful,  and the carrier is not  subsequently  obligated to
pay refunds for earnings  higher than the permitted rate of return as prescribed
by the F.C.C. for that monitoring  period.  Subsequent to the Court's  decision,
certain  telecommunication  companies filed a petition for rehearing.  In August
2002, the petitions for rehearing were denied by the Court, and later that month
the Court's  order became  effective.  For the  monitoring  periods 1999 through
2001,  Roseville Telephone filed tariffs pursuant to the streamlined  procedures
and such tariffs were not suspended or  investigated.  Consequently,  during the
third  quarter  of 2002,  the  Company  changed  its  estimate  for a portion of
Roseville Telephone's interstate shareable earnings obligations related to those
monitoring  periods.  This change in accounting estimate increased the Company's
consolidated  revenues by $5.1 million and net income by $3.1 million ($0.21 per
share), respectively, for the year ended December 31, 2002.


Prior to January 1, 2002,  Roseville  Telephone  billed SBC various  charges for
certain local service and network  access  service  revenues in accordance  with
certain  agreements as described  below. Of the Company's total revenues for the
years ended December 31, 2002, 2001 and 2000, 1%, 3% and 11%, respectively,  was
recorded under these agreements in each period. In 1999, SBC expressed  interest
in  withdrawing   from  the  designated   carrier  plan  ("DCP")  for  Roseville
Telephone's  toll  traffic.  The  DCP  was a  compensation  arrangement  between
Roseville  Telephone and SBC for certain  intrastate  toll  services.  Roseville
Telephone  and SBC  agreed to allow the DCP  arrangement  to expire in  December
2001. The termination of the DCP did not have a material impact on the Company's
consolidated financial position as of December 31, 2002 or results of operations
for the year then ended.

In  1999,  SBC  also  expressed  interest  in  entering  into a  new,  permanent
compensation  arrangement for extended area service  ("EAS").  At that time, SBC
had been paying Roseville Telephone $11.5 million per year for EAS pursuant to a
Settlement Transition Agreement.  In November 2000, the P.U.C. authorized SBC to
terminate its annual EAS payments to Roseville  Telephone effective November 30,
2000. The P.U.C.  authorized  replacement  funding to Roseville  Telephone on an
interim  basis using the current  reserve in the CHCF.  In addition,  the P.U.C.
opened an Order Instituting Investigation ("OII") for the purpose of determining
whether  future  recovery of all, none, or a portion of the $11.5 million annual
payments  previously  received from SBC should come from  Roseville  Telephone's
ratepayers or other  regulatory  recovery  mechanisms.  This proceeding began in
2001,  evidentiary hearings were held during 2002, and briefing was completed in
February 2003. In this  proceeding,  the Office of Ratepayer  Advocates  ("ORA")
recommended that the P.U.C.  discontinue  Roseville  Telephone's present interim
EAS funding from the CHCF without  replacement  revenues  from  ratepayers.  The
P.U.C.'s decision in this matter is expected during 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 cannot yet be determined.

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  is  required  to share  earnings  with
customers  through a reduction of revenues if its earned  annual  rate-of-return
exceeds that authorized by the P.U.C.

In accordance with the  requirements  of its general rate case order,  Roseville
Telephone filed an application for review of its NRF in 1999. In connection with
this  proceeding,  the P.U.C.'s 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  Decision  did not  suspend the sharing
mechanism  as  Roseville  Telephone  had  requested  and 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.
Additionally,  in accordance  with the  provisions of the Decision,  the Company
recorded  liabilities and reduction of revenues of $1.8 million and $6.0 million
relating to estimated intrastate shareable earnings obligations during the years
ended December 31, 2002 and 2001, respectively.

Beginning in January 2002,  Roseville Telephone began paying a consumer dividend
for intrastate  shareable  earnings  obligations  relating to the years 1998 and
1999. A portion of the consumers' intrastate service charges will be returned in
the form of a surcredit  over 12 months or until a threshold  of $4.6 million is
met. For the year ended  December 31,  2002,  $4.3 million had been  returned to
consumers.

As of December 31, 2002,  the Company's  consolidated  balance  sheet  reflected
aggregate   liabilities  of  $9.4  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 earnings obligations could change in the near term, and the
amounts involved could be material.

As a result of the Company's annual cost separation studies, the Company changed
its estimate for a portion of Roseville  Telephone's  interstate  and intrastate
shareable earnings obligations during the fourth quarter of 2002. This change in
accounting  estimate  increased  the  Company's  consolidated  revenues  by $1.1
million  and net  income by $671  thousand  ($0.05 per share) for the year ended
December 31, 2002.

Wireless Revenue

The Wireless  segment derives its revenue from the provision of wireless digital
personal   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,  roaming
service  and custom  calling  features.  Wireless  services  are  provided  on a
month-to-month basis and are generally billed in advance.

                           Significant Business Events

Sale of Alarm Monitoring Division

On January 25,  2002,  the Company sold  substantially  all of the assets of its
alarm monitoring  division,  which was a component of the Telecom  segment,  for
approximately $5.2 million, subject to certain future adjustments, which are not
expected to be  material.  This sale  resulted in a pre-tax gain of $4.4 million
during 2002.  Through  December 31, 2002, the Company has received cash proceeds
of $5.0 million,  of which $500 thousand was received  during the fourth quarter
of 2001, related to the sale of the alarm monitoring  division assets. The alarm
monitoring assets consisted primarily of customer contracts and equipment, which
had a book value of approximately  $355 thousand as of the date of the sale. The
purchaser of the assets has commenced litigation against the Company relating to
claims in connection with certain contracts assigned to the purchaser. Given the
early stages of the  litigation it is not yet possible to determine its ultimate
outcome.  However,  the Company  does not believe  this  litigation  will have a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.  Total operating  revenues  attributable to the Company's
alarm  monitoring  division during the years ended 2002, 2001 and 2000 were $279
thousand, $2.5 million and $2.2 million, respectively.

Acquisition of the Assets of Western Integrated Networks, LLC

On July 12,  2002,  the  Company  purchased  substantially  all of the assets of
Western Integrated Networks, LLC and certain affiliates (collectively, "WIN") in
a transaction  supervised by the United States Bankruptcy Court for the District
of Colorado.  The assets of WIN acquired by the Company consisted principally of
accounts  receivable and property,  plant and equipment.  The purchase price for
the assets of WIN consisted of (i) $12 million in cash, (ii) acquisition related
costs  of $560  thousand,  and  (iii)  the  assumption  of  certain  liabilities
aggregating $4.6 million relating principally to executory contracts and capital
lease  obligations for certain  vehicles.  Under the terms of the asset purchase
agreement,  $1.2 million of the aggregate  purchase  price was held in an escrow
account to protect  the  Company  in the event of any  claims  available  to the
Company. On January 28, 2003, $150 thousand was released to the Company, and the
balance remains in the escrow  account.  Prior to December 31, 2002, the Company
sold certain  equipment  acquired in the  transaction  for $2.2  million,  which
equaled its aggregate carrying value at the date of sale.


Acquisition of SureWest Custom Data Services

Effective  July 31, 2001,  the Company  acquired all of the  outstanding  common
stock of SureWest Custom Data Services 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,  "Business  Combinations." The assets of
SureWest  Custom Data Services  acquired by the Company,  which had an aggregate
fair value of $491 thousand,  consisted principally of cash, accounts receivable
and property,  plant and  equipment.  The  liabilities  of SureWest  Custom Data
Services  assumed  by the  Company,  which had an  aggregate  fair value of $534
thousand,  consisted  principally of accounts  payable and long-term  debt. As a
result of this acquisition, the Company recorded $2.2 million of goodwill, which
was assigned to the Telecom segment.

Purchase of Wireless Minority Interest

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

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 ("SVLP")
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. 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 17 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 and Exchange  Commission  ("SEC") Staff  Accounting  Bulletin
("SAB") No. 101, "Revenue Recognition in Financial Statements", 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,  2002,  2001 and
2000,  the Company  recognized  $1.9  million,  $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 $1.1 million (net of income  taxes of $750  thousand),  $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, 2002,  2001 and 2000,
respectively.

                              Results of Operations

2002 versus 2001

Net income for 2002 was $11.2  million,  or $0.76 per share,  compared  with net
income of $10.3  million,  or $0.67 per  share,  for  2001.  Operating  revenues
increased  $22.7  million in 2002,  offset by an  increase  of $19.8  million in
operating  expenses,  increasing the Company's operating income by $2.9 million,
or 23%, compared to the same period in 2001. The increase in operating income is
due   principally   to   the   Company's    aggressive    expansion   into   new
telecommunications markets. The continued growth in the Company's wireless, CLEC
and Internet  operations  resulted in increased  operating income of 14%, 9% and
55%,  respectively,  for the year ended  December 31, 2002  compared to the same
period in 2001.  In addition,  the increase in net income and earnings per share
for 2002 is due in part to the 1) changes in accounting estimate associated with
the Company's interstate and intrastate shareable earnings obligations described
previously,  which increased net income by $3.7 million ($0.25 per share) and 2)
the sale of  substantially  all of the assets of the Company's alarm  monitoring
division, which resulted in a $4.4 million pre-tax gain.

     Operating Revenues:

Revenues from services  subject to  regulation,  which include local and network
access  services,  increased  $11.7  million,  or 10%,  compared  to 2001.  This
increase was due to the combined effects of 1) increased network access revenues
due to expanded  demand for DSL services and  dedicated  access,  2) access line
growth of 2%, and 3) changes in accounting  estimate pertaining to the Company's
provision  for  its  estimated  interstate  and  intrastate  shareable  earnings
obligations.  These  changes in  accounting  estimate  increased  the  Company's
consolidated  revenues by $6.2 million and net income by $3.7 million ($0.25 per
share) for the year ended December 31, 2002.

Wireless service revenues increased $7.4 million,  or 46%, compared to 2001 as a
result of a 28% overall  increase in the average  subscriber base. The growth in
subscriber  base  resulted  in  increased  feature,  long  distance,   directory
assistance and activation  revenues.  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 $587 thousand,  compared to 2001 due to
increased  advertising  sales.  Revenues from  non-regulated  sales and services
decreased by $1.6 million, or 21%, compared to 2001 due primarily to the sale of
the Company's alarm monitoring  division in the first quarter of 2002, offset in
part by an increase in revenues related to the growth of SureWest Broadband, the
Company's CLEC.

Other operating revenues  primarily consist of Internet services,  long distance
services,  custom data services,  digital cable, billing and collection services
and other  miscellaneous  services.  Other  operating  revenues  increased  $4.6
million,  or 33%,  compared to 2001 due primarily to continued  additions to the
Internet  customer  base and  increased  revenues from the additions of SureWest
Custom Data Services in the third quarter of 2001 and SureWest  Televideo in the
third  quarter of 2002.  The  increase  was offset in part by a decrease  in the
Company's  billing and  collection  services  revenues as certain  interexchange
carriers began to perform their own billing and collection function.

         Operating Expenses:

Total operating expenses increased $19.8 million, or 13%, compared to 2001. Cost
of  services  and  products  increased  $6.7  million,  or 12%,  during 2002 due
primarily to 1) increased  costs in long distance,  tower rents,  wireless phone
handset  subsidies  and  roaming  charges  related to the  increased  demand for
wireless services,  2) increased transport expenses related to the growth of the
Company's  CLEC  operations,  and 3) increased  expenses  from the  additions of
SureWest  Custom  Data  Services  in the  third  quarter  of 2001  and  SureWest
Televideo in the third quarter of 2002.

Customer  operations and selling expense  increased $1.7 million,  or 5%, during
2002 due primarily to 1) increased  customer  service,  product  advertising and
marketing associated with wireless subscriber growth, 2) increased expenses from
the additions of SureWest  Custom Data Services in the third quarter of 2001 and
SureWest  Televideo in the third  quarter of 2002,  and 3)  increased  sales and
advertising  expense  related to the growth of the Company's CLEC. The increases
were  partially  offset by  decreased  dealer  commissions  related to  wireless
service.

General  and  administrative  expenses  increased  $6.0  million,  or  23%,  due
primarily to the additions of SureWest Custom Data Services in the third quarter
of 2001 and  SureWest  Televideo  in the third  quarter  of 2002.  In  addition,
general  and  administrative  expenses  increased  during  2002  due to the $1.3
million bad debt expense recognized, associated with access charge billings to a
customer that has filed for bankruptcy  protection.  In July 2002,  WorldCom and
its affiliated companies filed for bankruptcy protection under Chapter 11 of the
United States  Bankruptcy Code. The Company  recognized $1.3 million of bad debt
expense  during 2002 relating to the  obligations of WorldCom to the Company for
the period prior to the bankruptcy  filing.  These increases were offset in part
due to one-time expenses incurred during the prior year related to the Company's
name change.

Depreciation and amortization  increased $5.3 million,  or 13%, during 2002 as a
result of increases in wireless property,  plant and equipment, and amortization
of internal-use  software.  This increase was partially  offset by a decrease in
amortization  relating to the Company's wireless licenses due to the adoption of
SFAS No. 142 as described below. In addition, during the fourth quarter of 2002,
the Company  increased  the  estimated  useful  lives  primarily  related to its
wireless  switching and voice mail equipment from five to ten years. This change
in  accounting  estimate  did not have a  material  impact  on the  consolidated
financial  position or results of  operations  of the Company for the year ended
December 31, 2002.

         Other Income (Expense), Net:

Other income (expense),  net,  decreased $1.4 million,  or 33%, compared to 2001
due  primarily  to 1) reduced  interest  income  resulting  from  lower  average
invested  balances during 2002 and 2) increased  interest expense resulting from
higher average  short-term  borrowings  during 2002. This decrease was partially
offset by the gain from the sale of the Company's alarm  monitoring  division in
January 2002.

         Income Taxes:

Income taxes  increased $557 thousand,  as compared to 2001, due primarily to an
increase in income  subject to tax. The  effective  federal and state income tax
rate was 39.8% in 2002, compared to 40.0% in 2001.

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 was 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 $23.0  million in 2001,  offset by an  increase of $34.0  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 from services  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,
the Company also  experienced 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 $3.5 million,  or 34%, 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 SureWest
Custom  Data  Services  and  increased  dedicated  access  provided  by SureWest
Broadband.

         Operating Expenses:

Total operating expenses increased $34.0 million, or 28%, compared to 2000. Cost
of  services  and  products  increased  $9.4  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 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 30%, 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 $6.1 million, or 31%, during 2001.
These  increases were 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  Wireless  property,  plant and  equipment,
amortization  of network  software  and  Wireless  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 pre-tax 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 pre-tax gain on the sale of
its interest in SVLP in 2000.  The  effective  federal and state income tax rate
was 40.0% 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 a $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 No.  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 provided by
operating  activities  was $45.8  million  in 2002.  Net cash used in  operating
activities was $32.9 million in 2001. Net cash provided by operating  activities
was $53.1  million in 2000.  The increase in cash from  operating  activities in
2002,  compared to 2001, was due primarily to an approximate $90 million payment
of income tax in 2001 related to the sale of the Company's cellular  partnership
interest in 2000. The Company used cash flows from operations, proceeds from the
sale of the Company's alarm monitoring division assets, proceeds from short-term
borrowings   and  existing  cash  and  cash   equivalents  to  fund  1)  capital
expenditures of $43.4 million pertaining to ongoing plant construction projects,
2) common stock repurchases of $14.5 million in the open market, 3) common stock
repurchases  from one of the Company's  employee benefit plans of $15.0 million,
4) dividends of $14.8 million,  5) principal  payments of $2.1 million to retire
long-term  debt, and 6) the purchase of  substantially  all of the assets of WIN
for $12.5 million, as described below.

The  Company's  most  significant  use of funds in 2003 is expected to be for 1)
budgeted  capital  expenditures  of  approximately  $61.1 million,  2) scheduled
payments of long-term  debt of $5.8  million,  3) support of the  operations  of
SureWest Broadband/Residential Services up to an anticipated $5.6 million and 4)
support of the operations of SureWest Wireless of up to $5.0 million.

On July 12, 2002, the Company  purchased  substantially all of the assets of WIN
in a  transaction  supervised  by the  United  States  Bankruptcy  Court for the
District of Colorado.  The purchase price for the assets of WIN consisted of (i)
$12 million in cash, (ii) direct  acquisition costs of $560 thousand,  and (iii)
the assumption of certain current liabilities  aggregating $4.6 million relating
principally  to executory  contracts  and capital lease  obligations.  Under the
terms of the asset purchase  agreement,  $1.2 million of the aggregate  purchase
price was held in an escrow  account to protect  the Company in the event of any
claims available to the Company. On January 28, 2003, $150 thousand was released
to the Company, and the balance remains in the escrow account. Prior to December
31, 2002, the Company sold certain  equipment  acquired in the  transaction  for
$2.2 million, which equaled its aggregate carrying value at the date of sale.

On May 17, 2002,  the Company's  shareholders  approved a proposal to change the
Company's state of incorporation from California to Delaware.  In addition,  the
shareholders  approved an increase of the Company's authorized common stock from
100  million  shares to 200  million  shares  with a par value of $0.01 and also
authorized 10 million shares of preferred  stock with a par value of $0.01.  The
enactment of the  aforementioned  approvals  was left to the  discretion  of the
Board of Directors.  At present,  the  reincorporation has not been implemented,
but is anticipated to occur in 2003.

In February  2000,  the Board of Directors  authorized the repurchase of up to 1
million  shares  of the  Company's  common  stock.  In June  2002,  the Board of
Directors  approved the  repurchase of an additional  500 thousand  shares.  The
shares are purchased  from time to time in the open market or through  privately
negotiated  transactions  subject to overall  financial  and market  conditions.
Additionally, the Company implemented an odd-lot repurchase program during 2001.
Through  December 31, 2002,  approximately 1 million shares of common stock have
been repurchased through the programs.  The Company has remaining  authorization
from the Board of Directors to repurchase an additional 469 thousand outstanding
shares.

On March 13,  2003,  the Company  completed a note  purchase  agreement  for the
issuance  of its  unsecured  Series B Senior  Notes  ("Series  B Notes")  in the
aggregate  principal  amount of $60  million.  The  Series B Notes  have a final
maturity of ten years and an average  life of eight  years.  Interest is payable
semi-annually  at a fixed  rate of 4.74%.  Principal  payments  are due in equal
annual  installments of $12 million commencing in March 2009 and ending in March
2013.  The Company will use a portion of the  proceeds  from the issuance of the
Series  B Notes  to  retire  certain  short-term  borrowings  with an  aggregate
outstanding principal balance of $15 million as of December 31, 2002.

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 July 2002,  the
bank amended the credit  facility  increasing  the  borrowing  capacity from $30
million to $50 million  through June 1, 2004. At December 31, 2002,  the Company
had utilized $15 million of the borrowing capacity.  Interest on such borrowings
is based on a LIBOR-based  pricing formula and is payable monthly.  The interest
rate as of December 31, 2002 was 2.74%.

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 a fixed
price during the term of the agreement. This agreement expires in July 2003, and
the  Company has a minimum  remaining  aggregate  long  distance  service  usage
commitment  of  approximately  $280 thousand as of December 31, 2002. On January
28, 2002,  Global  Crossing  filed for  protection  under Chapter 11 of the U.S.
Bankruptcy  Code.  Effective  December 2002,  the Company  entered into a 2-year
non-exclusive  agreement with Sprint Communications  Company L.P. ("Sprint"),  a
long-distance  service  provider,  for the right to  provide  network  transport
services  to the  Company's  customers  at fixed  prices  during the term of the
agreement.  The Company has a monthly minimum usage  requirement of $25 thousand
effective  June 2003. The minimum usage  requirement  for 2003 is $175 thousand.
Rates for the  services  that will be provided by Sprint are  substantially  the
same as those  offered  by Global  Crossing.  Therefore,  the  Company  does not
believe that Global Crossing's  bankruptcy filing will have a material effect on
its consolidated financial position or results of operations.

On January 25,  2002,  the Company sold  substantially  all of the assets of its
alarm monitoring  division,  which was a component of the Telecom  segment,  for
approximately $5.2 million, subject to certain future adjustments, which are not
expected to be  material.  This sale  resulted in a pre-tax gain of $4.4 million
during 2002.  Through  December 31, 2002, the Company has received cash proceeds
of $5.0 million,  of which $500 thousand was received  during the fourth quarter
of 2001, related to the sale of the alarm monitoring  division assets. The alarm
monitoring assets consisted primarily of customer contracts and equipment, which
had a book value of approximately  $355 thousand as of the date of the sale. The
purchaser of the assets has commenced litigation against the Company relating to
claims in connection with certain contracts assigned to the purchaser. Given the
early stages of the litigation, it is not yet possible to determine its ultimate
outcome.  However,  the Company  does not believe  this  litigation  will have a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.  Total operating  revenues  attributable to the Company's
alarm  monitoring  division during the years ended 2002, 2001 and 2000 were $279
thousand, $2.5 million and $2.2 million, respectively.

The  Company  had cash and cash  equivalents  at  December  31,  2002,  of $20.4
million.  Subsequently,  the Company  received the proceeds from the issuance of
its  Series B Notes in the  aggregate  principal  amount  of $60.0  million,  as
described  above.  Accordingly,  the Company  believes that its working  capital
position,  the  proceeds  available  from the  issuance  of the  Series B Notes,
operating cash flows and borrowing  capacity are more than sufficient to satisfy
its liquidity  requirements in 2003. While the bankruptcy filing by WorldCom and
its affiliates may subsequently  have an adverse effect on the Company's results
of  operations,  the  Company  does not  currently  believe  that  the  WorldCom
bankruptcy  will  impair,  in any way,  the  Company's  ability to  satisfy  its
liquidity  requirements.  In addition,  the Company has borrowing capacity under
its bank business loan agreement, and believes, given its financial position and
debt-to-equity  position,  it has  substantial  additional  short and  long-term
borrowing capacity.

As of December 31, 2002, the Company's contractual obligations were as follows:
<TABLE>

                           2003     2004-2005  2006-2007  Thereafter    Total
                                    (amounts in thousands)
<CAPTION>
<S>                        <C>         <C>        <C>         <C>        <C>
Short-term borrowings
 refinanced on a
 long-term basis         $15,000     $    -     $    -     $     -     $15,000
Long-term debt           $ 5,779     $7,272     $7,272     $21,820     $42,143
Capital leases           $   309     $  559     $   35     $    13     $   916
Operating leases         $ 4,654     $6,883     $4,329     $ 7,644     $23,510
Unconditional purchase
 obligations             $ 2,560     $    -     $    -     $     -     $ 2,560
</TABLE>


                           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  greater  than one year with such  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 (no similar purchases were made in 2002).

During the second quarter of 2002, the Company  repurchased  300 thousand shares
of its common stock from one of its employee benefit plans. The Company utilized
two  separate  independent  third party  entities  for the purpose of  providing
fairness   opinions  in  connection  with  the  transaction.   The  shares  were
repurchased at a price of $50 per share and were retired upon repurchase.

                   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.  Management has discussed  development  and
selection  of  critical   accounting  policies  and  estimates  with  its  Audit
Committee.


o    As discussed more fully in Note 1, total  revenues from telephone  services
     are affected by rates authorized by various regulatory agencies. The F.C.C.
     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 F.C.C.
     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 P.U.C.,  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 2, 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 or  determinable  and (iv)  collectibility  of the sales  price is
     reasonably assured.

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 1, the Company  states its  inventories at
     lower of cost or  market.  In  assessing  the  ultimate  recoverability  of
     inventories,  the Company is required to make  estimates  regarding  future
     customer demand.

o    As  discussed  more  fully in Note 1,  property,  plant and  equipment  and
     intangible assets are recorded at cost. 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 17. In assessing  the  recoverability  of the  Company's
     property,  plant and  equipment  and  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.

o    As discussed  more fully in Notes 1 and 8, 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, 2002  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    As   discussed   more  fully  in  Note  9,  the  Company  has  pension  and
     post-retirement  benefit costs and obligations.  The Company's  pension and
     post-retirement  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
     post-retirement benefit costs and obligations.

o    As more  fully  described  in Notes 1 and 10,  the  Company is a party to a
     variety of litigation,  regulatory proceedings and other contingencies that
     arise in the ordinary course of business. The Company is required to assess
     the likelihood of any adverse  judgments or outcomes to these  matters,  as
     well as potential  ranges of probable  losses for certain of these matters.
     The   determination  of  the  liabilities   required,   if  any,  for  loss
     contingencies is made after careful  analysis of each individual  issue. In
     the opinion of management,  the ultimate  outcome of these matters will not
     materially affect the Company's consolidated financial position and results
     of operations.

                        Recent Accounting Pronouncements

The Company  adopted SFAS No. 142,  "Goodwill and Other  Intangible  Assets," on
January 1, 2002.  SFAS No. 142 addresses  accounting  and reporting for acquired
goodwill  and other  intangible  assets  and  supersedes  APB  Opinion  No.  17,
"Intangible  Assets." The Company  believes its wireless and LMDS  licenses have
indefinite  lives  because such licenses can be renewed  indefinitely  at little
cost. Accordingly, the Company has applied the nonamortization provision of SFAS
No. 142 to the Company's  wireless and LMDS licenses  effective January 1, 2002,
which resulted in an increase in the Company's  consolidated  net income of $305
thousand  ($0.02 per share) for the year ended  December 31, 2002. The Company's
operating results for the year ended December 31, 2001 included $483 thousand of
amortization related to the Company's wireless and LMDS licenses. In the absence
of such  amortization,  the  Company's  adjusted  net  income for the year ended
December 31, 2001 would have been $10.6 million ($0.69 per share).  Beginning in
the first quarter of 2002, the Company's  wireless and LMDS licenses are carried
at the lower of cost or fair value (the  application  of this  provision of SFAS
No. 142 had no effect on the Company's  consolidated  financial statements as of
and for the year ended  December  31,  2002).  The  goodwill  recognized  by the
Company in connection  with its  acquisition of SureWest Custom Data Services in
July 2001 is not being  amortized  based on the  provisions of SFAS Nos. 141 and
142.  Instead,  under the  provisions of SFAS No. 142,  goodwill is evaluated at
least annually for impairment in a two-step process.  The first step screens for
potential  impairment and the second step measures any impairment loss resulting
from step one.  The  Company  tests for  impairment  annually  during the fourth
quarter.  The Company  completed  its annual  impairment  test during the fourth
quarter of 2002 and did not identify any impairment.

On December 31, 2002, the Financial  Accounting  Standards Board ("FASB") issued
SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure."  SFAS No. 148 amends  SFAS No.  123,  "Accounting  for  Stock-Based
Compensation," to provide  alternative  methods of transition for an entity that
voluntarily  changes  to the fair value  method of  accounting  for  stock-based
employee compensation.  In addition, it also amends the disclosure provisions of
SFAS No. 123 to require  prominent  disclosure about the effects on reported net
income including per share amounts,  of an entity's  accounting policy decisions
with  respect  to  stock-based  employee  compensation  in  annual  and  interim
financial  statements.  SFAS No.  148 does not  amend  SFAS No.  123 to  require
companies to account for their stock-based employee  compensation using the fair
value  method.  The  disclosure  provisions  of  SFAS  No.  123  were  effective
immediately  in 2002.  As of December  31,  2002,  the Company does not have any
immediate  plans to change its method of  accounting  for  stock-based  employee
compensation to the fair value method.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with an Exit or Disposal Activity." SFAS No. 146 revises the accounting for exit
and disposal  activities  under  Emerging  Issues Task Force  ("EITF") Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs  to  Exit  an   Activity   (Including   Certain   Costs   Incurred   in  a
Restructuring),"   by  extending  the  period  in  which  expenses   related  to
restructuring  activities  are  reported.  A  commitment  to a plan  to  exit an
activity or dispose of long-lived  assets will no longer be sufficient to record
a one-time charge for most  restructuring  activities.  Instead,  companies will
record exit or disposal  costs when they are  "incurred"  and can be measured at
fair value. In addition, the resultant liabilities will be subsequently adjusted
for changes in estimated cash flows. SFAS No. 146 is effective prospectively for
exit or disposal activities initiated after December 31, 2002. Companies may not
restate previously issued financial  statements for the effect of the provisions
of SFAS No. 146, and liabilities that a company  previously  recorded under EITF
Issue No.  94-3 are  grandfathered.  The  Company  has  adopted  SFAS No. 146 on
January 1, 2003,  and it does not believe that the adoption of this new standard
will have a material effect on its consolidated financial statements.

On January 1, 2002,  the  Company  adopted  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  adoption of SFAS No. 144 did not have a material  effect on
the Company's consolidated financial statements.

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  2002,  the FASB's EITF reached a consensus on EITF Issue No.  00-21,
"Accounting for Revenue  Arrangements  with Multiple  Deliverables."  Under EITF
Issue No. 00-21, revenue arrangements with multiple deliverables are required to
be divided into separate units of accounting  under certain  circumstances.  The
Company will prospectively  adopt EITF Issue No. 00-21 for arrangements  entered
into beginning after June 30, 2003, and it does not believe the adoption of this
new  guidance  will  have  a  material  effect  on  its  consolidated  financial
statements.

On January 1, 2002,  the Company  adopted the  provision of EITF Issue No. 01-9,
"Accounting  for  Consideration  Given by a Vendor to a  Customer  (Including  a
Reseller of the Vendor's Products)," dealing with consideration from a vendor to
a reseller under cooperative advertising and other arrangements.  This provision
of EITF Issue No. 01-9 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
application of this new guidance did not have a material effect on the Company's
consolidated  financial  statements  as of and for the year ended  December  31,
2002.

In November 2002, the FASB issued  interpretation  ("FIN") No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others." FIN No. 45 requires certain guarantees to
be recorded at fair value,  which is different from current  practice,  which is
generally  to record a  liability  only when a loss is probable  and  reasonably
estimable.  FIN No.  45 also  requires  a  guarantor  to  make  significant  new
disclosures, even when the likelihood of making any payments under the guarantee
is remote. The disclosure  provisions of FIN No. 45 are effective immediately in
2002.  The  Company  is  required  to  adopt  the  recognition  and  measurement
provisions  of FIN No. 45 on a  prospective  basis with  respect  to  guarantees
issued or modified  after  December 31,  2002.  The Company does not believe the
adoption of the recognition and measurement provisions of FIN No. 45 will have a
material effect on its consolidated financial statements.

                          Regulatory and Legal Matters

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.   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.

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.


<PAGE>




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 ...................................      38

Consolidated Balance Sheets as of December 31, 2002 and 2001 .....      39

Consolidated Statements of Income for each of the three years
in the period ended December 31, 2002.............................      41

Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended December 31, 2002.............      44

Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 2002.......................      45

Notes to Consolidated Financial Statements .......................      48


<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, 2002 and 2001,  and the related  consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 2002. 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.

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  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  consolidated   financial  position  of  SureWest
Communications  at December 31, 2002 and 2001, and the  consolidated  results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December 31, 2002, in conformity  with  accounting  principles  generally
accepted in the United States.

As discussed in Note 1 to the  consolidated  financial  statements,  in 2002 the
Company  discontinued  the amortization of certain  indefinite-lived  intangible
assets in accordance with Statement of Financial  Accounting  Standards No. 142,
Goodwill and Other Intangible Assets. As discussed in Note 2 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.  As
discussed  in Note 17 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.




                                                            /s/Ernst & Young LLP

Sacramento, California
February 7, 2003,
except for Note 18, as
to which the
date is March 13, 2003


<PAGE>



                             SUREWEST COMMUNICATIONS
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2002 and 2001
                             (amounts in thousands)
<TABLE>
<CAPTION>


                        ASSETS                         2002           2001
                        ------                         ----           ----
<S>                                                   <C>             <C>
Current assets:
   Cash and cash equivalents                        $ 20,385       $ 54,520
   Short-term investments                                  -          1,723
   Accounts receivable (less allowances of
     $1,705 and $1,068 at December 31,
     2002 and 2001, respectively)                     21,128         20,282
   Refundable income tax                               6,868          2,619
   Inventories                                         4,649          3,324
   Deferred income tax asset                               -            640
   Deferred directory costs                            3,657          3,260
   Prepaid expenses and other current assets           2,325          1,726
                                                    --------       --------
     Total current assets                             59,012         88,094

Property, plant and equipment:
   In service                                        553,744        492,323
   Under construction                                 21,837         32,182
                                                    --------       --------
                                                     575,581        524,505
Less accumulated depreciation                        255,320        216,432
                                                    --------       --------
                                                     320,261        308,073

Intangible and other assets:
   Wireless licenses, net                             13,566         13,566
   Goodwill                                            2,171          2,171
   Intangible asset relating to pension
    plans                                              1,507              -
   Intangible asset relating
    to favorable operating leases, net                 1,260              -
   Deferred charges and other assets                     343            439
                                                    --------       --------
                                                      18,847         16,176
                                                    --------       --------
                                                    $398,120       $412,343
                                                    ========       ========

</TABLE>


                             See accompanying notes.



<PAGE>



                             SUREWEST COMMUNICATIONS
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                           December 31, 2002 and 2001
                             (amounts in thousands)

<TABLE>

LIABILITIES AND SHAREHOLDERS' EQUITY                    2002           2001
------------------------------------                    ----           ----
<CAPTION>
<S>                                                      <C>           <C>
Current liabilities:
Current portion of long-term debt                     $ 5,779        $ 2,143
Current portion of capital lease obligations              309              -
Accounts payable and other accrued
 liabilities                                            8,493         11,093
Estimated shareable earnings obligations                9,350         16,597
Advance billings and deferred revenues                  8,142          8,144
Accrued pension benefits                                5,613          7,714
Accrued compensation                                    4,902          4,218
                                                     --------       --------
Total current liabilities                              42,588         49,909

Short-term borrowings refinanced on a
 long-term basis                                       15,000              -
Long-term debt                                         36,364         42,142
Long-term capital lease obligations                       607              -
Deferred income taxes                                  26,552         11,206
Other liabilities and deferred revenues                 8,004          7,293
Commitments and contingencies

Shareholders' equity:
 Common stock, without par value; 100,000
    shares authorized, 14,529 and 15,110 shares
    issued and outstanding at December 31, 2002
    and 2001, respectively                            158,567        172,083
   Deferred stock-based compensation                     (116)          (303)
   Accumulated other comprehensive loss                (1,637)             -
   Retained earnings                                  112,191        130,013
                                                     --------       --------
     Total shareholders' equity                       269,005        301,793
                                                     --------       --------
                                                     $398,120       $412,343
                                                     ========       ========

</TABLE>



                             See accompanying notes.


<PAGE>



                             SureWest Communications
                        consolidated statements of income
                  Years ended December 31, 2002, 2001 and 2000
                (amounts in thousands, except per share amounts)
<TABLE>


                                             2002              2001               2000
                                             ----              ----               ----
<CAPTION>
<S>                                           <C>              <C>                <C>
Operating revenues:
   Local service                          $ 67,705          $ 65,524           $ 65,708
   Network access service                   58,598            49,120             41,357
   Wireless service                         23,732            16,301              4,922
   Directory advertising                    14,824            14,237             13,044
   Nonregulated sales and
    services                                 5,758             7,330              7,931
   Other                                    18,293            13,722             10,232
                                          --------          --------           --------
     Total operating revenues              188,910           166,234            143,194

Operating expenses:
   Cost of services and products            61,429            54,686             45,326
   Customer operations and selling          34,860            33,175             25,564
   General and administrative               31,805            25,769             19,686
   Depreciation and amortization            45,126            39,841             28,891
                                          --------          --------           --------
     Total operating expenses              173,220           153,471            119,467
                                          --------          --------           --------
Income from operations                      15,690            12,763             23,727

Other income (expense):
   Interest income                             739             4,803              2,814
   Interest expense                         (1,876)           (1,314)            (4,223)
   Equity in earnings of cellular
    partnership                                  -                 -             10,089
   Gain on sale of investment in
    cellular partnership                         -                 -            201,294
   Gain on sale of alarm
    monitoring assets                        4,435                 -                  -
   Allowance for funds used during
    construction                                 -                 -              1,219
   Other, net                                 (313)              934                234
                                          --------          --------           --------
   Total other income, net                   2,985             4,423            211,427
                                          --------          --------           --------
Income before income taxes,
  extraordinary loss and cumulative
  effect of change in accounting
  principle                                 18,675            17,186            235,154

Income taxes                                 7,426             6,869             95,156
                                          --------          --------           --------
Income before extraordinary loss
  and cumulative effect of
  change in accounting principle            11,249            10,317            139,998

Extraordinary loss, net of $7,631
  tax benefit in 2000                            -                 -            (10,932)
</TABLE>
                             See accompanying notes.

<PAGE>



                             SureWest Communications
                  consolidated statements of income (CONTINUED)
                  Years ended December 31, 2002, 2001 and 2000
                (amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                            2002              2001                2000
                                            ----              ----                ----
<S>                                         <C>               <C>                   <C>
Cumulative effect of change in
  accounting principle, net of
  $2,250 tax benefit in 2000                     -                 -             (3,273)
                                         ---------         ---------           --------
Net income                               $  11,249         $  10,317           $125,793
                                         =========         =========           ========
Basic per share amounts:
  Income before extraordinary loss
     and cumulative effect of change
     in accounting principle             $    0.76         $    0.67           $   8.97
    Extraordinary loss,
     net of tax benefit                          -                 -              (0.70)
    Cumulative effect of change in
     accounting principle, net of tax
      benefit                                    -                 -              (0.21)
                                         ---------         ---------           --------
Net income                               $    0.76         $    0.67           $   8.06
                                         =========         =========           ========
Shares of common stock used to
    calculate basic per share
    amounts                                 14,728            15,326             15,610
                                         =========         =========           ========

Diluted per share amounts:
    Income before extraordinary loss
     and cumulative effect of change
     in accounting principle             $    0.76         $    0.67           $   8.96
    Extraordinary loss, net of tax
     benefit                                     -                 -              (0.70)
    Cumulative effect of change in
     accounting principle, net of
     tax benefit                                 -                 -              (0.21)
                                         ---------         ---------           --------
Net income                               $    0.76         $    0.67           $   8.05
                                         =========         =========           ========
Shares of common stock used to
    calculate diluted per share
    amounts                                 14,795            15,387             15,630
                                         =========         =========           ========

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              $  11,249            $  10,317        $139,998
</TABLE>

                             See accompanying notes.
<PAGE>



                             SureWest Communications
                  consolidated statements of income (CONTINUED)
                  Years ended December 31, 2002, 2001 and 2000
                (amounts in thousands, except per share amounts)
<TABLE>


                                             2002             2001                2000
                                             ----             ----                ----
<CAPTION>
<S>                                           <C>              <C>                <C>
 Net income                              $  11,249        $  10,317            $129,066

 Basic per share amounts:

   Income before extraordinary loss
    and cumulative effect of change
    in accounting principle              $    0.76        $    0.67            $   8.97

 Net income                              $    0.76        $    0.67            $   8.27

 Diluted per share amounts:

   Income before extraordinary loss
    and cumulative effect of change
    in accounting principle              $    0.76        $    0.67            $   8.96

 Net income                              $    0.76        $    0.67            $   8.26
</TABLE>






                             See accompanying notes.


<PAGE>



                             SUREWEST COMMUNICATIONS
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 2002, 2001 and 2000
                             (amounts in thousands)

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

   Issuance of common stock upon
    exercise of options                   23           896                -              -                  -             896
  Issuance of restricted common
   stock                                   2            46                -              -                  -              46
  Repurchase of common
   stock                                (606)      (15,149)               -              -            (14,318)        (29,467)
   Amortization of deferred
    stock-based compensation               -             -              187              -                  -             187
Tax benefits from stock plans              -           691                -              -                  -             691
Minimum pension and post-
  retirement benefit obligation
  adjustment, net of income taxes          -             -                -          (1,637)                -          (1,637)
Cash dividends                             -             -                -              -            (14,753)        (14,753)
Net income                                 -             -                -              -                 11,249      11,249
                                    --------      --------         --------         ---------        ---------       --------
Balance at December 31, 2002          14,529      $158,567         $   (116)        $(1,637)         $112,191        $269,005
                                    ========      ========         ========         =========        =========       ========
</TABLE>



                             See accompanying notes.


<PAGE>



                             SUREWEST COMMUNICATIONS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2002, 2001 and 2000
                Increase (Decrease) in Cash and Cash Equivalents
                             (amounts in thousands)
<TABLE>

                                                   2002              2001               2000
                                                   ----              ----               ----
<CAPTION>
<S>                                                <C>                <C>                  <C>
 Cash flows from operating activities:
     Net income                                 $  11,249          $ 10,317           $ 125,793
     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              45,126            39,841              28,891
         Equity component of allowance
           for funds used during construction           -                -                 (653)
         Provision for deferred income taxes       17,128            10,381             (14,260)
         Equity in earnings of cellular
           partnership                                  -                 -             (10,089)
         Gain on sale of cellular partnership           -                 -            (201,294)
         Gain on sale of alarm
           monitoring assets                       (4,435)                -                   -
         Provision for doubtful accounts            3,811             2,896                 836
         Stock-based compensation                     202                60                   -

         Other, net                                    (4)              838                (439)
         Net changes in:
           Receivables                             (4,269)            1,374              (4,953)
           Refundable and accrued income
             taxes, net                            (3,558)          (94,669)             92,380
           Inventories, prepaid expenses
             and other current assets              (1,376)             (774)             (1,482)
           Payables, accrued liabilities
             and other deferred credits           (18,070)           (3,160)             24,165
                                                 --------           --------           --------
         Net cash provided by (used in)
           operating activities                    45,804           (32,896)             53,100

  Cash flows from investing activities:
     Purchase of substantially all of
       the assets from Western Integrated
       Networks, LLC                              (12,529)                -                   -
     Proceeds from the sale of alarm
       monitoring assets                            4,495                 500                 -
     Purchase of business, net of
       cash acquired                                    -            (2,091)                  -
     Purchase of minority interest in
       subsidiary                                       -            (2,500)                  -
</TABLE>

                             See accompanying notes.
<PAGE>



                             SUREWEST COMMUNICATIONS
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                  Years ended December 31, 2002, 2001 and 2000
                Increase (Decrease) in Cash and Cash Equivalents
                             (amounts in thousands)
<TABLE>

                                               2002              2001               2000
                                               ----              ----               ----
<CAPTION>
   <S>                                         <C>               <C>                <C>
   Capital expenditures for property,
     plant and equipment                     (43,354)          (69,556)           (87,234)
   Purchase of wireless licenses                   -                 -             (4,642)
   Purchases of held-to-maturity
     investments                                   -            (8,843)            (7,625)
   Maturities of held-to-maturity
     investments                               1,723             14,555             6,654
   Investment in cellular partnership              -                  -            (9,902)
   Return of investment in cellular
     partnership                                   -              5,513            18,046
   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                                    192                691              (379)
                                             --------          --------          --------
       Net cash provided by (used in)
        investing activities                 (49,473)           (46,731)          136,071

  Cash flows from financing activities:
    Principal payments of long-term
      debt                                     (2,142)           (2,143)           (2,143)
    Increase in short-term borrowings          15,000                 -            40,000
    Repayment of short-term borrowings              -                 -           (40,000)
    Dividends paid                            (14,753)          (15,342)          (15,640)
    Proceeds from exercise of stock
      options                                     896               288                 -
    Repurchase of common stock                (29,467)          (18,532)          (13,124)
    Investment in subsidiary by
      minority partner                              -                 -               805
  Other, net                                        -               (79)                -
                                            ---------         ---------         ---------
        Net cash used in
         financing activities                 (30,466)          (35,808)          (30,102)
                                            ---------         ---------         ---------
</TABLE>

                             See accompanying notes.

<PAGE>



                             SUREWEST COMMUNICATIONS
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                  Years ended December 31, 2002, 2001 and 2000
                Increase (Decrease) in Cash and Cash Equivalents
                             (amounts in thousands)
<TABLE>
   <S>                                   <C>            <C>         <C>
  Increase (decrease) in cash and
   cash equivalents                    (34,135)    (115,435)      159,069

  Cash and cash equivalents at
   beginning of year                    54,520      169,955        10,886
                                     ---------    ---------     ---------

  Cash and cash equivalents at
   end of year                       $  20,385    $  54,520     $ 169,955
                                     =========    =========     =========


</TABLE>



                             See accompanying notes.


<PAGE>




                             SUREWEST COMMUNICATIONS
                   notes to consolidated financial statements
                        December 31, 2002, 2001 and 2000
           (amounts in thousands, except share and per share amounts)

1.   Summary of significant accounting policies

     Business and basis of accounting

     SureWest   Communications   (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,  SureWest Custom
     Data  Services  (formerly  QuikNet,  Inc.),  SureWest  Wireless,   SureWest
     Televideo   ("SureWest   Broadband/Residential   Services")  and  Roseville
     Alternative Company ("Roseville  Alternative") are each subsidiaries of the
     Company.   SureWest  Wireless  provides  wireless  personal   communication
     services. 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  preparation  of financial  statements  in conformity  with  accounting
     principles  generally accepted in the United States requires  management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and  liabilities  at the date of the financial  statements and the reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results may differ materially from those estimates.  The Company's critical
     accounting  estimates include (i) revenue recognition and the establishment
     of  estimated  shareable  earnings   obligations  and  accounts  receivable
     allowances (Notes 1 and 2), (ii) inventory valuation (Note 1), (iii) useful
     life assignments and impairment evaluations associated with property, plant
     and equipment and  intangible  assets (Note 1), (iv)  valuation  allowances
     associated  with  deferred  tax  assets  (Notes 1 and 8), (v)  pension  and
     post-retirement benefit costs and obligations (Note 9) and (vi) anticipated
     outcomes of  litigation,  regulatory  proceedings  and other  contingencies
     (Notes 1 and 10).

     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.

     Reclassifications

     Certain amounts in the 2001 and 2000 consolidated financial statements have
     been reclassified to conform with the presentation of the 2002 consolidated
     financial statements.

     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  certain  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 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 F.C.C. 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
     F.C.C.  establishes  rules that carriers must follow in the  preparation of
     the annual studies. In January 2001, the F.C.C. issued a Memorandum Opinion
     and Order to another  telephone  company in which it clarified how Internet
     traffic,  which the F.C.C. had prior to that date  characterized as largely
     interstate in nature, should be treated. Additionally, under current F.C.C.
     rules governing rate making,  Roseville  Telephone is required to establish
     interstate  rates based on projected  demand usage for its various services
     and determine the actual  earnings from these rates once actual volumes and
     costs are known.

     During 2000 and 2001,  Internet traffic and DSL service grew substantially,
     far exceeding  Roseville  Telephone's  estimates,  which resulted in actual
     earnings  exceeding the levels  allowed by the F.C.C.  Based on preliminary
     cost  studies,  the Company  recognized  liabilities  relating to Roseville
     Telephone's estimated interstate shareable earnings obligations of $650 and
     $3,200  for the years  ended  December  31,  2002 and  2001,  respectively,
     through reductions of revenues related to Roseville  Telephone's  estimated
     interstate shareable earnings  obligations.  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 (no
     similar  payments  were made in 2002 or 2000,  and the Company is currently
     seeking  refunds  of  certain  amounts  paid in  2001;  however,  there  is
     presently no assurance  that such  amounts are  recoverable).  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.

     In May 2002,  the D.C.  Circuit Court of Appeals (the  "Court")  issued its
     decision  ACS of  Anchorage v. F.C.C.  The Court  determined  that a tariff
     filed properly under Section 204 "streamlined" procedures and allowed to go
     into effect  without  suspension is deemed  lawful,  and the carrier is not
     subsequently  obligated  to  pay  refunds  for  earnings  higher  than  the
     permitted  rate of return as prescribed by the F.C.C.  for that  monitoring
     period.  Subsequent  to the  Court's  decision,  certain  telecommunication
     companies filed a petition for rehearing. In August 2002, the petitions for
     rehearing were denied by the Court,  and later that month the Court's order
     became effective.  For the monitoring periods 1999 through 2001,  Roseville
     Telephone  filed tariffs  pursuant to the  streamlined  procedures and such
     tariffs were not suspended or investigated.  Consequently, during the third
     quarter  of 2002,  the  Company  changed  its  estimate  for a  portion  of
     Roseville Telephone's  interstate shareable earnings obligations related to
     those monitoring periods.  This change in accounting estimate increased the
     Company's  consolidated  2002  revenues  by $5,092 and net income by $3,065
     ($0.21 per share) for the year ended December 31, 2002.

     Prior to January 1, 2002,  Roseville  Telephone  billed SBC  Communications
     Inc.  ("SBC")  (formerly  Pacific Bell)  various  charges for certain local
     service and network  access  service  revenues in  accordance  with certain
     agreements  as described  below.  Of the Company's  total  revenues for the
     years ended December 31, 2002, 2001 and 2000, 1%, 3% and 11%, respectively,
     was recorded under these agreements in each period.  In 1999, SBC expressed
     interest  in  withdrawing  from the  designated  carrier  plan  ("DCP") for
     Roseville Telephone's toll traffic. The DCP was a compensation  arrangement
     between Roseville  Telephone and SBC for certain  intrastate toll services.
     Roseville  Telephone and SBC agreed to allow the DCP  arrangement to expire
     in December 2001. The termination of the DCP did not have a material impact
     on the Company's consolidated financial position as of December 31, 2002 or
     results of operations for the year then ended.

     In 1999,  SBC also  expressed  interest in entering  into a new,  permanent
     compensation  arrangement for extended area service ("EAS").  At that time,
     SBC had been paying Roseville  Telephone  $11,500 per year for EAS pursuant
     to  a  Settlement  Transition  Agreement.  In  November  2000,  the  P.U.C.
     authorized SBC to terminate its annual EAS payments to Roseville  Telephone
     effective November 30, 2000. The P.U.C.  authorized  replacement funding to
     Roseville  Telephone on an interim  basis using the current  reserve in the
     California High Cost Fund ("CHCF"). In addition, the P.U.C. opened an Order
     Instituting  Investigation  ("OII") for the purpose of determining  whether
     future  recovery of all, none, or a portion of the $11,500 annual  payments
     previously  received  from  SBC  should  come  from  Roseville  Telephone's
     ratepayers or other regulatory recovery  mechanisms.  This proceeding began
     in 2001,  evidentiary  hearings  were held during  2002,  and  briefing was
     completed in February  2003.  In this  proceeding,  the Office of Ratepayer
     Advocates  ("ORA")  recommended  that  the  P.U.C.   discontinue  Roseville
     Telephone's  present interim EAS funding from the CHCF without  replacement
     revenues from ratepayers.  The P.U.C.'s decision in this matter is expected
     during 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 cannot yet
     be determined.

     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 is required to share earnings with customers  through a reduction
     of revenues if its earned annual rate-of-return  exceeds that authorized by
     the P.U.C.

     In  accordance  with the  requirements  of its  general  rate  case  order,
     Roseville  Telephone filed an application for review of its NRF in 1999. In
     connection with this proceeding,  the P.U.C.'s 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
     Decision did not suspend the sharing  mechanism as Roseville  Telephone had
     requested and further  provided 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. Additionally,  in accordance with
     the provisions of the Decision,  the Company recorded  certain  liabilities
     and  reduction  of  revenues  of $1,750 and $6,000  relating  to  estimated
     intrastate  shareable earnings  obligations during the years ended December
     31, 2002 and 2001, respectively.

     Beginning  in January  2002,  Roseville  Telephone  began paying a consumer
     dividend for  intrastate  shareable  earnings  obligations  relating to the
     years 1998 and 1999. A portion of the consumers' intrastate service charges
     will be  returned  in the form of a  surcredit  over 12  months  or until a
     threshold  of $4,600 is met. For the year ended  December 31, 2002,  $4,311
     had been returned to consumers.

     As of December 31, 2002, the Company's consolidated balance sheet reflected
     aggregate liabilities of $9,350 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  earnings  obligations
     could change in the near term, and the amounts involved could be material.

     As a result of the Company's  annual cost separation  studies,  the Company
     changed its estimate for a portion of Roseville Telephone's  interstate and
     intrastate  shareable  earnings  obligations  during the fourth  quarter of
     2002.   This  change  in  accounting   estimate   increased  the  Company's
     consolidated  revenues  by $1,115 and net income by $671  ($0.05 per share)
     for the year ended December 31, 2002.

     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.  There were no short-term investments at
     December  31,  2002.  Short-term  investments  at  December  31,  2001  had
     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, 2002 and 2001,  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,  2002 and 2001 at  amortized  cost,  which
     approximates fair market value:
<TABLE>

                                                  2002               2001
                                                --------           --------
<CAPTION>
         <S>                                     <C>                 <C>

         Commercial paper                       $      -           $  9,450
         Money market mutual funds                 2,112             32,545
         Repurchase agreements                         -              4,370
                                                --------           --------
                                                $  2,112           $ 46,365
                                                ========           ========
</TABLE>
     Fair values of financial instruments

     As of  December  31, 2002 and 2001,  the  Company's  financial  instruments
     consist  of cash,  cash  equivalents,  short-term  investments,  short-term
     borrowings,  long-term  debt  and  capital  lease  obligations.  Management
     believes the carrying values of cash equivalents and short-term investments
     at December 31, 2002 and 2001,  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 $43,728 and
     $44,085 at December 31, 2002 and 2001,  respectively.  The  aggregate  fair
     values of the Company's short-term borrowings and capital lease obligations
     were $15,000 and $862 as of December 31, 2002, respectively (none in 2001).
     Fair values for cash equivalents and short-term investments were determined
     by quoted market  prices.  Fair values for the long-term  debt,  short-term
     borrowings and capital lease obligations were determined through discounted
     cash flow analyses  based on the  Company's  current  incremental  interest
     rates for similar instruments.

     Allowance for doubtful accounts

     Allowances for doubtful debts are  maintained for estimated  losses,  which
     result  from  the  inability  of  customers  to  make  required   payments.
     Allowances  are  based on the  likelihood  of  recoverability  of  accounts
     receivable  based on past  experience  and  management's  best estimates of
     current bad debt exposures.

     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
     handset and accessory  inventories  are stated at the lower of average cost
     or market value.  Inventories at SureWest Internet are comprised of modems,
     which are stated at the lower of average cost or market value.

     Property, plant and equipment

     Property,   plant  and  equipment  is  recorded  at  cost.   Additions  and
     substantial improvements are capitalized.  Retirements and other reductions
     of regulated  telephone  plant and equipment with a cost of  approximately,
     $6,470,  $14,696  and  $2,394 in 2002,  2001 and 2000,  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.  The
     useful lives of property,  plant and  equipment  are  estimated in order to
     determine  the  amount  of  depreciation  and  amortization  expense  to be
     recorded.  The  useful  lives  are  estimated  at the time the  assets  are
     acquired and are based on historical  experience  with similar  assets,  as
     well as taking into account  anticipated  technological  or other  changes.
     Average annual composite  depreciation rates were 7.1%, 7.48% and 7.31%, in
     2002,  2001  and  2000,   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 17)
     in  December  2000,  depreciation  expense  for  regulated  operations  was
     computed on a straight-line basis using rates approved by the P.U.C.

     Effective  November 1, 2002,  the Company  increased the  estimated  useful
     lives primarily related to its wireless  switching and voice mail equipment
     from five to ten years.  This change in accounting  estimate  decreased the
     Company's  2002  depreciation  expense by $206 and  increased the Company's
     2002 consolidated net income by $124 ($0.01 per share).

     Intangible assets

     Wireless and LMDS licenses are stated at cost. Accumulated amortization was
     $1,195 at December 31, 2002 and 2001.

     As  described  below in "Recent  accounting  pronouncements",  the  Company
     adopted SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1,
     2002. The Company has applied the nonamortization provision of SFAS No. 142
     to the Company's wireless and LMDS licenses and to the goodwill  associated
     with the  acquisition  of SureWest  Custom Data Services in periods  ending
     after December 31, 2001.

     Stock-based compensation

     The Company  accounts for  stock-based  awards to (i)  employees  using the
     intrinsic value method and (ii) non-employees using the fair value method.

     Under the intrinsic value method,  when the exercise price of the Company's
     employee stock options  equals the market price of the underlying  stock on
     the date of grant,  no  compensation  expense is recognized.  The following
     table illustrates the pro forma effect on net income and earnings per share
     for the  years  ended  December  31,  2002,  2001 and 2000 had the  Company
     applied  the fair  value  method  to  account  for  stock-based  awards  to
     employees:
<TABLE>
                                            2002              2001            2000
                                            ----              ----            ----
<CAPTION>
<S>                                      <C>                       <C>             <C>
Net income, as reported                   $  11,249         $ 10,317        $125,793
Add stock-based employee
  compensation expense included in
  the determination of net
  income as reported, net of tax                122              36              -
Less stock-based employee
  compensation expense that would
  have been included in the
  determination of net income if
  the fair value method had been
  applied to all awards,
  net of tax                                 (1,303)           (849)           (364)
                                          ---------        --------        --------
Pro forma net income                      $  10,068        $  9,504        $125,429
                                          =========        ========        ========
Basic net income per share:
  As reported                             $    0.76        $   0.67        $   8.06
  Pro forma                               $    0.68        $   0.62        $   8.04
Diluted net income per share:
  As reported                             $    0.76        $   0.67        $   8.05
  Pro forma                               $    0.68        $   0.62        $   8.02
</TABLE>

     Advertising costs

     The costs of  advertising  are charged to expense as incurred.  Advertising
     expense was $3,659, $3,364 and $2,387 in 2002, 2001 and 2000, respectively.

     The Company makes market  development  funds  ("MDF")  available to certain
     retailers that serve as agents for SureWest  Wireless for the reimbursement
     of co-branded  advertising  expenses. To the extent that MDF is used by the
     Company's customers for co-branded advertising,  and (i) the agents provide
     the Company with  third-party  evidence of such  co-branded  advertising as
     prescribed by Company policy and (ii) the Company can  reasonably  estimate
     the fair value of its portion of the advertising,  such amounts are charged
     to advertising expense as incurred.

     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 bases 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,
                                                                    -----------------------
                                                          2002              2001              2000
                                                          ----              ----              ----
<CAPTION>
        <S>                                             <C>                 <C>                 <C>

       Basic:
          Weighted average shares of common
           stock outstanding                             14,737            15,338            15,630
          Less weighted average shares of
           restricted common stock                            9                12                20
                                                        --------          --------          --------
          Weighted average common shares used
           in computing basic per share
           amounts                                        14,728            15,326            15,610
                                                        ========          ========          ========
       Diluted:
          Weighted average shares of common
           stock outstanding                             14,737            15,338            15,630
         Plus weighted average shares of
           common stock from the assumed
           exercise of dilutive stock options                58                49                 -
                                                        --------          --------          --------
          Weighted average common shares
           used in computing diluted per
           share amounts                                  14,795           15,387            15,630
                                                        ========          ========          ========
</TABLE>

     Statements of cash flows information

     During  2002,  2001 and 2000,  the Company  made  payments for interest and
     income taxes as follows:
<TABLE>

                                              2002        2001        2000
                                              ----        ----        ----
<CAPTION>
        <S>                                  <C>            <C>       <C>
         Interest, net of amounts
           capitalized ($1,074 in 2002,
           $1,708 in 2001 and none
           in 2000)                          $ 2,485     $ 1,285     $ 3,507
         Income taxes                        $ 2,812     $93,466     $17,070
</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 1%, 3% and 11% of the Company's  consolidated
     operating revenues in 2002, 2001 and 2000, respectively,  were derived from
     access charges and other charges to SBC. No other  customers  accounted for
     more than 10% of consolidated operating revenues in these years.

     Other comprehensive income

     Significant  components of the Company's other comprehensive  income (loss)
     are as follows:
<TABLE>

                                                    Year Ended December 31,
                                     Cumulative
                                      Amounts            2002            2001                2000
                                  ----------------- --------------- ---------------- ---------------------
                                  ----------------- --------------- ---------------- ---------------------
<CAPTION>
        <S>                         <C>                  <C>            <C>              <C>
      Net Income                  $ 112,191         $  11,249       $  10,317        $125,793
      Minimum pension and
       post-retirement benefit
       liability adjustment,
       net of income taxes of
       $1,138 in 2002 (none
       in 2001 or 2000)              (1,637)        (1,637)                -                -
                                  ---------         ---------       ---------        ---------
      Other comprehensive
       income                     $ 110,554         $   9,612       $ 10,317         $125,793
                                  =========         =========       =========        =========
</TABLE>

     Recent accounting pronouncements

     The Company adopted SFAS No. 142,  "Goodwill and Other Intangible  Assets,"
     on January 1, 2002.  SFAS No. 142  addresses  accounting  and reporting for
     acquired  goodwill and other  intangible  assets and supersedes APB Opinion
     No. 17,  "Intangible  Assets."  The Company  believes its wireless and LMDS
     licenses  have  indefinite  lives  because  such  licenses  can be  renewed
     indefinitely  at little  cost.  Accordingly,  the  Company  has applied the
     nonamortization  provision  of SFAS No. 142 to the  Company's  wireless and
     LMDS licenses  effective  January 1, 2002, which resulted in an increase in
     the  Company's  consolidated  net income of $305  ($0.02 per share) for the
     year ended December 31, 2002. The Company's  operating results for the year
     ended  December  31,  2001  included  $483 of  amortization  related to the
     Company's wireless and LMDS licenses.  In the absence of such amortization,
     the  Company's  adjusted  net income for the year ended  December  31, 2001
     would have been $10,600  ($0.69 per share).  Beginning in the first quarter
     of 2002, the Company's  wireless and LMDS licenses are carried at the lower
     of cost or fair value (the  application  of this  provision of SFAS No. 142
     had no effect on the Company's  consolidated financial statements as of and
     for the year ended  December  31,  2002).  The goodwill  recognized  by the
     Company in connection with its acquisition of SureWest Custom Data Services
     in July 2001 is not being  amortized  based on the  provisions of SFAS Nos.
     141 and 142.  Instead,  under the  provisions of SFAS No. 142,  goodwill is
     evaluated at least annually for impairment in a two-step process. The first
     step  screens for  potential  impairment  and the second step  measures any
     impairment  loss  resulting from step one. The Company tests for impairment
     annually  during the  fourth  quarter.  The  Company  completed  its annual
     impairment  test during the fourth quarter of 2002 and did not identify any
     impairment.

     On December 31, 2002,  the Financial  Accounting  Standards  Board ("FASB")
     issued SFAS No. 148, "Accounting for Stock-Based  Compensation - Transition
     and  Disclosure."  SFAS No.  148  amends  SFAS  No.  123,  "Accounting  for
     Stock-Based Compensation," to provide alternative methods of transition for
     an entity that  voluntarily  changes to the fair value method of accounting
     for  stock-based  employee  compensation.  In addition,  it also amends the
     disclosure provisions of SFAS No. 123 to require prominent disclosure about
     the effects on reported  net income,  including  per share  amounts,  of an
     entity's  accounting policy decisions with respect to stock-based  employee
     compensation in annual and interim financial statements.  SFAS No. 148 does
     not  amend  SFAS  No.  123  to  require  companies  to  account  for  their
     stock-based  employee   compensation  using  the  fair  value  method.  The
     disclosure  provisions of SFAS No. 123 were effective  immediately in 2002.
     As of December 31, 2002,  the Company does not have any immediate  plans to
     change its method of accounting for  stock-based  employee  compensation to
     the fair value method.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated  with an Exit or  Disposal  Activity."  SFAS No. 146 revises the
     accounting  for exit and disposal  activities  under  Emerging  Issues Task
     Force ("EITF") Issue No. 94-3, "Liability  Recognition for Certain Employee
     Termination Benefits and Other Costs to Exit an Activity (Including Certain
     Costs  Incurred  in a  Restructuring),"  by  extending  the period in which
     expenses related to restructuring  activities are reported. A commitment to
     a plan to exit an activity or dispose of  long-lived  assets will no longer
     be  sufficient  to  record  a  one-time   charge  for  most   restructuring
     activities. Instead, companies will record exit or disposal costs when they
     are  "incurred"  and  can be  measured  at fair  value.  In  addition,  the
     resultant   liabilities  will  be  subsequently  adjusted  for  changes  in
     estimated cash flows.  SFAS No. 146 is effective  prospectively for exit or
     disposal  activities  initiated after December 31, 2002.  Companies may not
     restate  previously  issued  financial  statements  for the  effect  of the
     provisions  of SFAS No.  146,  and  liabilities  that a company  previously
     recorded  under EITF Issue No.  94-3 are  grandfathered.  The  Company  has
     adopted  SFAS No. 146 on January 1, 2003,  and it does not believe that the
     adoption  of  this  new  standard  will  have  a  material  effect  on  its
     consolidated financial statements.

     On January 1, 2002, the Company  adopted 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 adoption of SFAS No. 144 did not
     have a material effect on the Company's consolidated financial statements.

     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  2002,  the FASB's EITF  reached a  consensus  on EITF Issue No,
     00-21,  "Accounting for Revenue  Arrangements with Multiple  Deliverables."
     Under EITF Issue No. 00-21, revenue arrangements with multiple deliverables
     are required to be divided into separate units of accounting  under certain
     circumstances.  The Company will  prospectively  adopt EITF Issue No. 00-21
     for  arrangements  entered into beginning  after June 30, 2003, and it does
     not believe the adoption of this new guidance  will have a material  effect
     on its consolidated financial statements.

     On January 1, 2002,  the Company  adopted the  provision  of EITF Issue No.
     01-9,  "Accounting  for  Consideration  Given  by a  Vendor  to a  Customer
     (Including   a  Reseller  of  the   Vendor's   Products),"   dealing   with
     consideration from a vendor to a reseller under cooperative advertising and
     other  arrangements.  This  provision  of EITF Issue No.  01-9  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  application of this new guidance did not have a material effect on the
     Company's  consolidated  financial  statements as of and for the year ended
     December 31, 2002.

     In  November  2002,  the  FASB  issued   interpretation   ("FIN")  No.  45,
     "Guarantor's   Accounting  and  Disclosure   Requirements  for  Guarantees,
     Including  Indirect  Guarantees  of  Indebtedness  of  Others."  FIN No. 45
     requires  certain  guarantees  to be  recorded  at  fair  value,  which  is
     different from current  practice,  which is generally to record a liability
     only when a loss is  probable  and  reasonably  estimable.  FIN No. 45 also
     requires a guarantor to make  significant  new  disclosures,  even when the
     likelihood  of making any  payments  under the  guarantee  is  remote.  The
     disclosure  provisions of FIN No. 45 are effective immediately in 2002. The
     Company is required to adopt the recognition and measurement  provisions of
     FIN No. 45 on a  prospective  basis with  respect to  guarantees  issued or
     modified after December 31, 2002. The Company does not believe the adoption
     of the  recognition  and  measurement  provisions of FIN No. 45 will have a
     material effect on its consolidated financial statements.

2.   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 or 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,   and  digital  cable,  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.

     Certain of the Company's customers have filed for bankruptcy  protection in
     2002,  the most notable of which was WorldCom,  Inc.  ("WorldCom"),  which,
     together with its affiliates,  filed for bankruptcy  protection on July 21,
     2002.  As  a  result  of  the  WorldCom   bankruptcy  filing,  the  Company
     recognized,  as bad debt expense in 2002 $1,300 relating to sums owing from
     WorldCom to the Company for services prior to the bankruptcy filing.

     With respect to post-petition  obligations,  WorldCom had proposed pursuant
     to a provision of the Bankruptcy Code, and the Bankruptcy Court has agreed,
     utilities are entitled to "adequate  assurances" that WorldCom will satisfy
     its  obligations  for  post-petition  services.  In its  original  filings,
     WorldCom  proposed  its  own  set of  assurances  to  utilities,  but  such
     assurances did not include either deposits or advance payments. Ultimately,
     the Bankruptcy  Court granted to all utilities  that provide  post-petition
     services to WorldCom,  including  the Company,  an  administrative  expense
     priority  claim for all  post-petition  services.  Although the  Bankruptcy
     Order did not require  WorldCom to provide any deposits or advance payments
     as adequate  assurance  of payment,  it did  provide,  with  respect to any
     post-petition  services  provided after August 14, 2002,  that each utility
     will  have a  junior  superiority  administrative  claim  senior  to  other
     administrative   claims  and  junior  only  to  the  claims  of  WorldCom's
     post-petition lenders. If WorldCom fails to pay for post-petition services,
     a utility can either take appropriate action under any applicable tariff or
     regulation,  or seek, on an expedited  basis,  an order from the Bankruptcy
     Court requiring immediate payment or other relief.

     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  and  Exchange   Commission   ("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 was $508  ($0.03 per
     share).  For the years ended December 31, 2002,  2001 and 2000, the Company
     recognized $1,875, $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 to increase  income by $1,125 (net of income
     taxes of $750),  $1,025  (net of income  taxes of $683) and $1,417  (net of
     income taxes of $963) for the years ended December 31, 2002, 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.

3.   ASSET PURCHASE

     On July 12, 2002, the Company purchased  substantially all of the assets of
     Western  Integrated  Networks,  LLC and certain  affiliates  (collectively,
     "WIN") in a transaction  supervised by the United States  Bankruptcy  Court
     for the  District of  Colorado.  The  purchase  price for the assets of WIN
     consisted of (i) $12,000 in cash, (ii) direct acquisition costs of $560 and
     (iii) the  assumption of certain  current  liabilities  aggregating  $4,579
     relating  principally to executory contracts and capital lease obligations.
     Under the terms of the asset  purchase  agreement,  $1,200 of the aggregate
     purchase  price was held in an escrow account to protect the Company in the
     event of any claims available to the Company. On January 28, 2003, $150 was
     released to the  Company,  and the balance  remains in the escrow  account.
     Prior to December 31, 2002, the Company sold certain equipment  acquired in
     the transaction for $2,157,  which equaled its aggregate  carrying value at
     the date of sale.

     The Company  does not believe the assets  acquired  from WIN  constitute  a
     self-sustaining,  integrated  set  of  activities  and  assets  that  would
     constitute  a business,  principally  due to the absence of an  established
     customer base at WIN or  significant  revenue  generating  activities as of
     July 12, 2002.  Since July 12,  2002,  the Company has been  utilizing  the
     assets  acquired from WIN to offer  bundled  high-speed  Internet,  digital
     cable  and  telephone  services  under the  SureWest  Broadband/Residential
     Services name in the Sacramento metropolitan area.

     The following  table  summarizes  the  estimated  fair values of the assets
     acquired and liabilities assumed at the date of acquisition, July 12, 2002,
     based  on  the  Company's  preliminary  allocation  of  the  aforementioned
     purchase price:
<TABLE>
<CAPTION>
        <S>                                                       <C>
         Accounts receivable, net                            $   615
         Equipment held for sale                               2,157
         Other current assets                                    943
         Property, plant and equipment                        12,064
         Intangible asset relating
          to favorable operating leases                        1,360
                                                              ------
            Total assets acquired                             17,139

         Current liabilities assumed under
          executory contracts                                  3,345
         Liabilities assumed under capital
          lease obligations                                    1,064
         Other liabilities                                       170
                                                              ------

            Total liabilities assumed                          4,579
                                                              ------

            Net assets acquired                              $12,560
                                                              ======
</TABLE>

     The carrying  values of the assets and  liabilities of WIN that the Company
     is using in its ongoing operations have been preliminarily  adjusted in the
     accompanying  consolidated  financial  statements  based on their estimated
     fair values as of July 12, 2002.  The equipment  purchased from WIN that is
     held for sale  consists  primarily  of  network  assets  located in Dallas,
     Texas.  Such  equipment is stated at its estimated fair value less costs of
     disposal in the accompanying consolidated financial statements. The Company
     expects to complete the sale of such equipment  during the first quarter of
     2003 at an amount that  approximates  the aggregate  carrying value of this
     equipment as of December 31, 2002. The Company's preliminary purchase price
     allocation is subject to change when additional  information concerning the
     fair values of the assets  acquired  and  liabilities  assumed  from WIN is
     obtained.

     The property, plant and equipment acquired from WIN consists principally of
     a primary  processing  center,  video head end equipment,  a  fiber-coaxial
     cable  network  located  in  the  Sacramento  metropolitan  area,  software
     licenses and office  furniture and equipment.  The Company is  depreciating
     these assets on a straight-line  basis over estimated  useful lives ranging
     from three to fifteen years.

     In  addition,  the  Company  recognized  an  intangible  asset  related  to
     favorable operating leases assumed from WIN. This intangible asset is being
     amortized to rent expense over the remaining lease terms,  which range from
     two to ten  years.  For the year  ended  December  31,  2002,  the  Company
     amortized $100 of this intangible asset.

4.   SALE OF ALARM MONITORING DIVISION

     On January 25, 2002,  the Company sold  substantially  all of the assets of
     its  alarm  monitoring  division,  which  was a  component  of the  Telecom
     segment, for approximately  $5,150,  subject to certain future adjustments,
     which are not expected to be material. This sale resulted in a pre-tax gain
     of $4,435 during 2002.  Through December 31, 2002, the Company had received
     cash  proceeds  of  $4,995,  of which $500 was  received  during the fourth
     quarter  of 2001,  related  to the sale of the  alarm  monitoring  division
     assets.  The  alarm  monitoring  assets  consisted  primarily  of  customer
     contracts and equipment,  which had a net book value of approximately  $355
     as of the date of the sale.  The  purchaser  of the  assets  has  commenced
     litigation  against  the  Company  relating  to claims in  connection  with
     certain contracts assigned to the purchaser.  Given the early stages of the
     litigation  it is not yet  possible  to  determine  its  ultimate  outcome.
     However,  the Company does not believe this litigation will have a material
     adverse effect on the Company's  consolidated financial position or results
     of operations. Total operating revenues attributable to the Company's alarm
     monitoring  division  during the years ended 2002, 2001 and 2000 were $279,
     $2,530 and $2,247, respectively.

5.   ACQUISITION OF BUSINESS AND MINORITY INTEREST

     Effective July 31, 2001, the Company acquired all of the outstanding common
     stock of SureWest  Custom Data Services for $2,100 in cash. The acquisition
     was accounted  for as a purchase in accordance  with SFAS No. 141 "Business
     Combinations."  The assets of SureWest Custom Data Services acquired by the
     Company,  which had an aggregate fair value of $491, consisted  principally
     of cash,  accounts  receivable  and  property,  plant  and  equipment.  The
     liabilities of SureWest Custom Data Services assumed by the Company,  which
     had an  aggregate  fair value of $534,  consisted  principally  of accounts
     payable and long-term  debt. As a result of this  acquisition,  the Company
     recorded  $2,171 of goodwill,  which was  assigned to the Telecom  Segment.
     None of this goodwill is deductible for tax purposes.

     During the second  quarter of 2001,  the Company  acquired from  Foresthill
     Telephone Co. ("FHT") its 1.8% interest in SureWest  Wireless for $2,500 in
     cash. As a result of the acquisition, the Company now owns 100% of SureWest
     Wireless.  A former member of the Company's  Board of Directors was, at the
     time of the acquisition, the President and sole shareholder of FHT.

6.   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.

     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 pre-tax gain of $201,294.

     The following  table  reflects  certain  unaudited  pro forma  consolidated
     financial  information  for the year ended December 31, 2000 as if the sale
     of the Company's  investment in SVLP had occurred prior to January 1, 2000.
     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>
<CAPTION>

                                                                 2000
        <S>                                                     <C>
        Consolidated statement of operations data:
         Total operating revenues                            $  143,194
         Income before extraordinary loss
          and cumulative effect of change
          in accounting principle                            $   14,512
         Net loss                                            $      (53)
         Basic earnings (loss) per share                     $        -
         Diluted earnings (loss) per share                   $        -
</TABLE>

7.   CREDIT ARRANGEMENTS

     Long-term  debt  outstanding  as of December 31, 2002 and 2001 consisted of
     the following:
<TABLE>

                                                               2002                2001
                                                               ----                ----
<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 and
        ending 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               2,143               4,285
                                                             --------            --------
        Total long-term debt                                   42,143              44,285

        Less current portion                                    5,779               2,143
                                                             --------            --------

        Total long-term debt, net of current portion         $ 36,364            $ 42,142
                                                             ========            ========
</TABLE>

     At December 31,  2002,  the  aggregate  maturities  of long-term  debt were
     $5,779, in 2003, then $3,636 annually through 2013 totaling $36,364.

     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, 2002 and 2001 was unrestricted.

     On March 13, 2003, the Company completed a note purchase  agreement for the
     issuance of its unsecured  Series B Senior Notes  ("Series B Notes") in the
     aggregate  principal  amount of  $60,000  (Note 18) with a  maturity  of 10
     years.  The Company  will use a portion of the  proceeds to retire  certain
     short-term  borrowings with an aggregate  outstanding  principal balance of
     $15,000 as of December 31, 2002.  Consequently,  such short-term borrowings
     have  been  presented  as  a  long-term   liability  in  the   accompanying
     consolidated balance sheet as of December 31, 2002.

     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 July 2002,
     the bank amended the credit facility increasing the borrowing capacity from
     $30,000 to $50,000  through June 1, 2004. At December 31, 2002, the Company
     had utilized $15,000 of the borrowing capacity. Interest on such borrowings
     is based on a  LIBOR-based  pricing  formula  and is payable  monthly.  The
     interest rate as of December 31, 2002 was 2.74%.

8.   INCOME TAXES

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

                                               2002               2001               2000
                                               ----               ----               ----
<CAPTION>
        <S>                                      <C>               <C>                  <C>
        Current expense (benefit):
          Federal                            $ (9,095)           $ (4,613)          $ 87,013
          State                                  (607)              1,101             22,403
                                             --------            --------           --------
        Total current expense (benefit)        (9,702)             (3,512)           109,416

        Deferred expense (benefit):
          Federal                              15,010              10,050            (11,978)
          State                                 2,118                 331             (2,282)
                                             --------            --------           --------
        Total deferred expense (benefit)       17,128              10,381            (14,260)
                                             --------            --------           --------
        Total income tax expense             $  7,426            $  6,869           $ 95,156
                                             ========            ========           ========
</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>
                                                   2002               2001               2000
                                                   ----                ----              ----
<CAPTION>
        <S>                                         <C>               <C>                <C>
        Computed at statutory rates             $ 6,536             $ 6,015            $82,304

        Increase (decrease):
          State taxes, net of federal benefit       982                 930             13,079
          Other, net                                (92)                (76)              (227)
                                                --------            --------           --------
        Income tax expense                      $ 7,426             $ 6,869            $95,156
                                                ========            ========           ========
        Effective federal and state tax rate       39.8%               40.0%              40.5%
                                                ========            ========           ========
</TABLE>

     The significant  components of the Company's deferred income tax assets and
     liabilities were as follows at December 31, 2002 and 2001:

<TABLE>
                                                                    Deferred Income Taxes
                                                                   ----------------------
                                                                2002                                    2001
                                                                ----                                    ----
                                                Assets            Liabilities              Assets          Liabilities
                                                ------            -----------              ------          -----------
<CAPTION>
        <S>                                      <C>                     <C>              <C>            <C>
        Property, plant and
          equipment-primarily due to
          depreciation differences             $     -             $32,128             $     -          $27,474

        Differences in the timing of
          recognition of revenues                7,182                   -              10,361                -

        State franchise taxes                        -                   -                 640                -

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

        Other, net                               6,432               8,038               1,905            1,710
                                               -------             -------             -------          -------
        Total                                   13,614              40,166              18,618           29,184

        Less current portion                         -                   -                 640                -
                                               -------             -------             -------          -------

        Total deferred income taxes            $13,614             $40,166             $17,978          $29,184
                                               =======             =======             =======          =======

        Net long-term deferred
          income tax liability                                     $26,552                              $11,206
                                                                   =======                              =======
</TABLE>

     As of December 31, 2002, the Company had net operating  loss  carryforwards
     for federal income 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
     $3,286,  which will expire in the years 2003 through 2012, if not utilized.
     The Company also had research and development tax credit  carryforwards  of
     approximately  $100 each  for federal  and state  income tax  purposes. The
     federal credit will expire in 2022 if it is not utilized. The state credits
     have no expiration date.

9.   PENSION AND OTHER POST-RETIREMENT BENEFITS

     The Company  sponsors a  noncontributory  defined benefit pension plan (the
     "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.  Pension  Plan  assets  are  primarily  invested  in
     collective trust accounts,  government and government  agency  obligations,
     publicly traded stocks and bonds and mortgage-related securities.

     The Company also has a  Supplemental  Executive  Retirement  Plan ("SERP"),
     which provides  supplemental  retirement  benefits to certain executives of
     the Company.  The SERP provides for incremental  pension payments partially
     to offset the  reduction in amounts that would have been payable  under the
     Pension Plan if it was not for  limitations  imposed by federal  income tax
     regulations.

     Net periodic  pension  cost for 2002,  2001 and 2000 under the Pension Plan
     and SERP included the following components:

<TABLE>
                                                       2002             2001             2000
                                                       ----             ----             ----
<CAPTION>
        <S>                                              <C>            <C>             <C>
      Service cost-benefits earned during the
       period                                        $  4,552         $  4,060        $  3,652

      Interest cost on projected benefit
       obligation                                       6,866            6,394           5,858

      Expected return on plan assets                   (6,368)          (6,487)         (6,418)

      Amortization of transition obligation               510              385             265
                                                     --------         --------        --------
      Net pension cost                               $  5,560         $  4,352        $  3,357
                                                     ========         ========        ========
</TABLE>

     The following table sets forth the change in benefit obligation,  change in
     plan assets and funded  status of the Pension  Plan and SERP as of December
     31, 2002 and 2001:
<PAGE>

<TABLE>
                                                              2002                2001
                                                              ----                ----
<CAPTION>
        <S>                                                     <C>               <C>
       Change in benefit obligation:
       Benefit obligation at beginning of year              $ 95,460            $ 85,807
         Service cost                                          4,552               4,060
         Interest cost                                         6,866               6,394
         Plan amendments                                           -                 358
         Actuarial losses (gain)                              (4,026)              2,510
         Benefits paid                                        (3,999)             (3,669)
                                                            --------            --------
       Benefit obligation at end of year                    $ 98,853            $ 95,460
                                                            ========            ========

                                                              2002                2001
                                                              ----                ----
       Change in plan assets:
       Fair value of plan assets at beginning of year       $ 74,019            $ 77,934
         Actual return on plan assets                         (8,158)             (4,863)
         Company contribution                                 11,943               4,617
         Benefits paid                                        (3,999)             (3,669)
                                                            --------            --------
       Fair value of plan assets at end of year             $ 73,805            $ 74,019
                                                            ========            ========
       Funded status:
       Funded status of plan at end of year                 $(25,048)           $(21,441)
         Unrecognized actuarial loss                          22,210              11,861
         Unrecognized prior service cost                         667                 759
         Unrecognized net transition obligation                  840               1,107
         Intangible asset                                     (4,282)                  -
                                                            --------            --------
       Accrued benefit cost                                 $ (5,613)           $ (7,714)
                                                            ========            ========
</TABLE>

     The discount rates used in determining the projected benefit  obligation at
     December 31, 2002 and 2001 were 6.75% and 7.0%,  respectively.  The assumed
     rates of  increase  in  future  compensation  levels  used to  measure  the
     projected  benefit  obligation  were 5.0% and 6.0% at December 31, 2002 and
     2001,  respectively.  The expected  long-term rate of return on plan assets
     used  in  determining   net  pension  cost  was  8.5%  in  2002  and  2001,
     respectively.

     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 retirement and
     savings features for substantially  all employees.  The Company approved an
     amendment  to merge the RSP into the ESOP as of  December  31,  2001 and 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.

     In addition,  effective June 1, 2002, the Company  approved an amendment to
     establish the SureWest  KSOP (the "KSOP"),  replacing the ESOP, in order to
     allow  its  participants  an  opportunity  to  diversify  their  retirement
     holdings.  All of the assets held in the ESOP were transferred to the KSOP.
     The Company has retained an investment  management company to be the record
     keeper and fund  manager of the KSOP.  Employees  may  choose  from  eleven
     investment  options,  including  the  Company's  Stock Fund.  The KSOP 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 KSOP provides for voting
     rights as to the participant's  share of the Company's common stock held by
     the  KSOP  and for  certain  diversification  rights  of the  participant's
     account  balances.  Aggregate  matching  contributions  made by the Company
     under the KSOP, RSP and ESOP were $1,962,  $1,725 and $1,645 in 2002,  2001
     and  2000,  respectively.  At  December  31,  2002,  9%  of  the  Company's
     outstanding shares of common stock was held by the KSOP.

     The Company provides certain  post-retirement  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  post-retirement  benefits  costs relating to these
     benefits  are  not  significant  to the  Company's  consolidated  financial
     position and results of operations.

10.  COMMITMENTS AND CONTINGENCIES

     Capital and operating leases

     As a result of the acquisition by SureWest  Televideo of certain WIN assets
     in July 2002  (Note 3) the  Company  assumed  capital  leases  for  certain
     vehicles.  These leases bear interest at imputed rates of 6.3% to 16.2% per
     annum  and  expire  through  December  2010.  The  capitalized   costs  and
     accumulated amortization related to assets under capital leases were $1,064
     and $105, respectively, as of December 31, 2002. The amortization of assets
     under  capital  leases is included  in the  depreciation  and  amortization
     expense in the accompanying consolidated financial statements

     The Company leases certain  facilities and equipment used in its operations
     under  arrangements  accounted for as operating leases. The facility leases
     generally  require the Company to pay operating costs,  including  property
     taxes,  insurance and  maintenance,  and certain of them contain  scheduled
     rent increases and renewal options.  The Company recognizes rent expense on
     a straight-line  basis over the term of each lease.  Total rent expense for
     all operating leases was $4,238,  $2,999 and $1,957 in 2002, 2001 and 2000,
     respectively.

     As of December 31, 2002, the Company had various non-cancellable  operating
     and capital  leases with terms greater than one year.  Future minimum lease
     payments for all  non-cancellable  operating and capital leases at December
     31, 2002 are as follows:

<TABLE>
                                  Operating          Capital
                                    Leases           Leases
                                   --------         --------
<CAPTION>
        <S>                           <C>                  <C>
      2003                         $ 4,654           $   419
      2004                           3,908               412
      2005                           2,975               230
      2006                           2,398                32
      2007                           1,931                 7
      Thereafter                     7,644                22
                                  --------          --------
                                   $23,510           $ 1,122

      Less: amount representing interest                 206
                                                     --------
      Present value of net minimum lease payments        916

      Less:  current portion                             309
                                                     --------
                                                     $   607
</TABLE>
                                                     ========

     Other commitments

     As of December  31, 2002,  binding  commitments  for minimum long  distance
     service  usage,  as  described  below,  and  future  capital   expenditures
     approximate $2,560 in the aggregate.

     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 a fixed price during the term of the agreement.  This agreement  expires
     in July  2003,  and the  Company  has a minimum  remaining  aggregate  long
     distance service usage commitment of approximately  $280 as of December 31,
     2002.  On January 28, 2002,  Global  Crossing  filed for  protection  under
     Chapter  11 of the U.S.  Bankruptcy  Code.  Effective  December  2002,  the
     Company  entered  into  a  2-year   non-exclusive   agreement  with  Sprint
     Communications  Company L.P. ("Sprint"),  a long-distance service provider,
     for the  right to  provide  network  transport  services  to the  Company's
     customers at fixed prices during the term of the agreement. The Company has
     a monthly minimum usage requirement of $25 effective June 2003. The minimum
     usage  requirement  for 2003 is $175.  Rates for the services  that will be
     provided by Sprint are  substantially  the same as those  offered by Global
     Crossing.  Therefore,  the Company does not believe that Global  Crossing's
     bankruptcy filing will have a material effect on its consolidated financial
     position or results of operations.

     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.

11.  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  (subject to upward  adjustment
     based upon the Company's issued and outstanding 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
     than 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, 2002 and 2001:
<TABLE>

                                              Shares of           Option Price
                                             Common Stock          Per Share
<CAPTION>
        <S>                                    <C>                  <C>
       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

       Granted                                 180,250          $30.07 - $55.74
       Exercised                               (22,805)         $39.00 - $40.00
       Cancelled                               (32,210)         $39.00 - $50.50
                                              ---------

       Balance as of December 31, 2002         865,122          $30.07 - $55.74
                                               ========
</TABLE>
<TABLE>

     The following is a summary of the status of the stock  options  outstanding
     at December 31, 2002:

                                                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>

       $30.07 - $30.49            31,000              9.77          $30.35                   -        $    -
       $37.63 - $40.00           626,422              8.02          $39.11             199,579        $39.25
       $40.50 - $49.50            83,700              8.88          $43.15              12,676        $42.13
       $50.37 - $55.74           124,000              8.89          $50.85              49,836        $50.50
                                 -------                                               -------

       $30.07 - $55.74           865,122              8.30          $40.87             262,091        $41.53
                                 ======                                                =======
</TABLE>


     During the year ended December 31, 2002, the Company issued 1,500 shares of
     the Company's restricted common stock, which had a fair market value of $46
     as of the date of grant,  to certain  members  of  management  and  outside
     counsel.  For the year  ended  December  31,  2001,  the  Company  recorded
     deferred  stock-based  compensation  of $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 certain  members of  management.  These amounts were
     determined based on the fair market value of such common shares at the date
     of grant and are being  amortized  to  operations  over the vesting  period
     (which  range  from  two  to  5  years)  using  a  graded  vesting  method.
     Stock-based  compensation  expense  related to these issuances was $202 and
     $60 for the years ended December 31, 2002 and 2001, respectively.

     Pro forma Stock-Based Compensation Information

     Pro forma information  regarding the Company's  consolidated net income and
     earnings per share (Note 1) 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 method 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.

     For the years  ended  December  31,  2002 and 2001,  the fair  value of the
     Company's stock-based awards to employees was estimated using the following
     weighted average assumptions:
<TABLE>

                                                   2002            2001
                                                   ----            ----
<CAPTION>
        <S>                                        <C>               <C>
        Expected life of options in years          4.0              5.0
        Volatility                                39.95%           26.7%
        Risk-free interest rate                    2.54%           4.24%
        Expected dividend yield                    2.13%           1.76%
</TABLE>

12.  STOCK REPURCHASE

     In February 2000, the Board of Directors authorized the repurchase of up to
     1 million  shares of Company  common  stock.  In June,  2002,  the Board of
     Directors approved the repurchase of an additional 500 thousand shares. The
     shares  are  purchased  from  time to time in the open  market  or  through
     privately  negotiated  transactions subject to overall financial and market
     conditions.  Additionally,  the Company  implemented an odd-lot  repurchase
     program during 2001.  Through  December 31, 2002,  approximately  1 million
     shares of common  stock have been  repurchased  through the  programs.  The
     Company  has  remaining  authorization  from  the  Board  of  Directors  to
     repurchase an additional 469 thousand outstanding shares.

13.  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.

14.  BUSINESS SEGMENTS

     The Company has two reportable business segments: Telecom and Wireless. The
     Telecom segment primarily provides local,  network access and long distance
     services, directory advertising services, Internet services, digital cable,
     and  the  sale  of  non-regulated  products  and  services  principally  to
     customers residing in Roseville  Telephone's service area and outside area.
     The Wireless 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 and 2. The Company  accounts  for  intersegment
     sales and transfers at  prevailing  market  rates.  Intersegment  sales and
     transfers  between the Telecom and Wireless  segments are not  significant.
     The Company's business segment information is as follows:
<TABLE>

                           2002                  Telecom            Wireless           Consolidated
                           ----                 --------            --------           ------------
<CAPTION>
        <S>                                      <C>                  <C>                    <C>
       Total operating revenues                 $165,178           $ 23,732              $188,910
       Depreciation and amortization              30,221             14,905                45,126
       Interest income                               738                  1                   739
       Interest expense, net of
        capitalized interest                        (451)            (1,425)               (1,876)
       Income (loss) from operations              40,659            (24,969)               15,690
       Income tax expense (benefit)               18,177            (10,751)                7,426
       Net income (loss)                          26,919            (15,670)               11,249
       Assets                                    306,288              91,832              398,120
       Capital expenditures                       32,704              10,650               43,354

                           2001                  Telecom            Wireless           Consolidated
                           ----                 --------            --------           ------------
       Total operating revenues                 $149,933           $ 16,301              $166,234
       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 (loss) from operations              41,680            (28,917)               12,763
       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

                           2000                  Telecom           Wireless            Consolidated
                           ----                  -------           --------           ------------
       Total operating revenues                 $138,272            $ 4,922              $143,194
       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 (loss) from operations              41,861            (18,134)               23,727
       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
</TABLE>

15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>

       2002                           March 31       June 30         September 30     December 31
       ----                           --------       --------        ------------     -----------
<CAPTION>
        <S>                               <C>             <C>             <C>            <C>
       Operating revenues             $ 43,964       $ 43,793        $ 52,346         $ 48,807
       Income from
        operations                    $  5,129       $  3,047        $  7,026         $    488
       Net income                     $  5,609       $  1,703        $  3,852         $     85
       Basic earnings per
        share                         $   0.37       $   0.12        $   0.26         $   0.01
       Diluted earnings  per
        share                         $   0.37       $   0.12        $   0.26         $   0.01


       2001                           March 31       June 30         September 30     December 31
       ----                           --------       -------         ------------     -----------
       Operating revenues             $ 42,264       $ 38,336        $ 40,318         $ 45,316
       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>



     On January 25, 2002,  the Company sold  substantially  all of the assets of
     its  alarm  monitoring  division,  which  was a  component  of the  Telecom
     segment,  for approximately  $5,150,  subject to certain future adjustments
     which are not expected to be material. This sale resulted in a pre-tax gain
     of $4,435 during the quarter ended March 31, 2002.

     During  the  third  quarter  of 2002,  as a result  of  certain  legal  and
     regulatory developments,  the Company changed its estimate for a portion of
     Roseville Telephone's  interstate shareable earnings obligations related to
     the 1999  through  2001  monitoring  periods.  This  change  in  accounting
     estimate  increased the Company's  consolidated  revenues by $5,092 and net
     income by $3,065 ($0.21 per share)  during the quarter ended  September 30,
     2002.

     As a result of the Company's  annual cost separation  studies,  the Company
     changed its estimate for a portion of Roseville Telephone's  interstate and
     intrastate  shareable  earnings  obligations  during the fourth  quarter of
     2002.   This  change  in  accounting   estimate   increased  the  Company's
     consolidated  revenues  by $1,115 and net income by $671  ($0.05 per share)
     for the quarter ended December 31, 2002.

     Effective  November 1, 2002,  the Company  increased the  estimated  useful
     lives primarily related to its wireless  switching and voice mail equipment
     from five to ten years.  This change in accounting  estimate  decreased the
     Company's  2002  depreciation  expense by $206 and  increased the Company's
     consolidated  net income by $124  ($0.01 per share) for the  quarter  ended
     December 31, 2002.

     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 revenues and net income by $2,150 and $1,290 ($0.08
     per share), respectively, for the quarter ended December 31, 2001.

     The  Company  adopted  SEC Staff  Accounting  Bulletin  No.  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, ($0.21 per share) in 2000.

     For the  three-month  periods  ended  March 31, June 30,  September  30 and
     December 31, 2002 and 2001, the Company  recognized the following  revenues
     that were  included in the  cumulative  effect  adjustment as of January 1,
     2000:
<TABLE>
<CAPTION>
        <S>                                     <C>
        Three Months Ended:
          March 31, 2002                        $535
          June 30, 2002                         $488
          September 30, 2002                    $449
          December 31, 2002                     $402
          March 31, 2001                        $513
          June 30, 2001                         $462
          September 30, 2001                    $408
          December 31, 2001                     $325
</TABLE>


     The net effect of these  revenues in 2002 was to increase net income in the
     three-month  periods ended March 31, June 30,  September 30 and December 31
     by $321, $293, $270 and $241, respectively.

     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.

16.  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 greater than one year with such
     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, (no similar purchases were made during 2002).

     On May 31, 2002, the company  repurchased 300 thousand shares of its common
     stock from one of its  employee  benefit  plans.  The Company  utilized two
     separate  independent  third party  entities  for the purpose of  providing
     fairness  opinions  in  connection  with the  transaction.  The shares were
     repurchased at a price of $50 per share and were retired upon purchase.

17.  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
     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.

18.  SUBSEQUENT EVENT

     On March 13, 2003, the Company completed a note purchase  agreement for the
     issuance of its unsecured  Series B Senior Notes  ("Senior B Notes") in the
     aggregate  principal  amount of  $60,000.  The  Series B Notes have a final
     maturity  of ten years and an  average  life of eight  years.  Interest  is
     payable semi-annually at a fixed rate of 4.74%.  Principal payments are due
     in equal annual installments of $12,000 commencing in March 2009 and ending
     in March 2013.  The  Company  will use a portion of the  proceeds  from the
     issuance of the Series B Notes to retire certain short-term borrowings with
     an aggregate  outstanding  principal  balance of $15,000 as of December 31,
     2002 (Note 7).



<PAGE>



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

                  Not applicable.
                                    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 16, 2003.

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 16, 2003.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

Equity Compensation Plan Information

The Company maintains the 1999 Restricted Stock Bonus Plan (the "1999 Plan") and
the 2000 Equity Incentive Plan (the "2000 Plan"), pursuant to which it may grant
equity awards to eligible persons. The 1999 Plan and the 2000 Plan were approved
by the Company's shareholders.

The following table provides information about equity awards under the 1999 Plan
and the 2000 Plan.


<TABLE>

                                                                                    Number of securities
                                                                                    remaining available
                                 Number of securities                               for future issuance
                                 to be issued upon          Weighted-average        under equity
                                 exercise of outstanding    exercise price of       compensation plans
                                 options, warrants and      outstanding options     (excluding securities
Plan Category                    rights                     warrants and rights     reflected in column (a)
                                           (a)                     (b)                        (c)
                                 -------------------------- ----------------------- ------------------------
                                 -------------------------- ----------------------- ------------------------
<CAPTION>
<S>                                      <C>                    <C>                             <C>
Equity compensation
plans approved by
security holders                         865,122                 $40.87                   223,056

Equity compensation
plans not approved
by security holders                            -                      -
                                         -------                                          -------
             Total                       865,122                 $40.87                   223,056
                                         =======                                          =======

</TABLE>


     (1)  The 1999 Plan permits only the issuance of  Restricted  Shares.  As of
          December 31,  2002,  the Company had made  Restricted  Share grants in
          respect of 33,893  shares of the Company's  common stock,  and 166,107
          shares of the Company's  common stock remain  available under the 1999
          Plan.

     (2)  The 2000 Plan, as originally  approved by the Company's  shareholders,
          contemplated  the  issuance of up to 800,000  shares of the  Company's
          common  stock.  Thereafter,  the  Company's  shareholders  approved an
          increase  to 950,000  shares  and the  incorporation  of an  evergreen
          provision  pursuant to which the number of shares of the Company stock
          which  shall be made  available  under the 2000 Plan  shall be 950,000
          shares  plus an annual  increase to be added on January 1 of each year
          beginning  January 1, 2003 equal to the lesser of (i) 149,035  shares,
          or (ii) 1% of the outstanding shares.

Additional  information  required by Item 12 is incorporated herein by reference
from the proxy statement for the annual meeting of the Company's shareholders to
be held on May 16, 2003.

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 16, 2003.

Item 14. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Company  management,  including the chief executive  officer and chief financial
officer,  have  evaluated the Company's  disclosure  controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c).  under the Securities  Exchange Act of
1934, as amended) as of a date (the "Evaluation Date") within 90 days before the
filing date of this Annual Report on Form 10-K. The chief executive  officer and
chief  financial  officer have concluded  that, as of the  Evaluation  Date, the
Company's  disclosure  controls and  procedures are effective to ensure that all
material  information  required to filed in this Annual  Report on Form 10-K has
been made known to them in a timely fashion.

Changes in Internal Controls

Subsequent to the  Evaluation  Date,  there were no  significant  changes in the
Company's internal controls or in other factors that could significantly  affect
the Company's disclosure controls and procedures.

                                     PART IV

Item 15. 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 2002.


<PAGE>













                                              SUREWEST COMMUNICATIONS
                                                 INDEX TO EXHIBITS
                                                  (Item 15 (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
                      January 4, 1994 (Filed as Exhibit 10(c) to Form 10-K Annual
                      Report of Registrant for the year ended December 31, 1993)

       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)          Supplement to Note Purchase Agreement for Series B Senior       Incorporated by        -
                      Notes in the aggregate amount of $60,000,000 dated March           reference
                      13, 2003 (Filed as Exhibit 99.1 to the Form 8-K filed March
                      13, 2003).

</TABLE>

<PAGE>







                                              SUREWEST COMMUNICATIONS
                                                 INDEX TO EXHIBITS
                                                  (Item 15 (A) 3)
<TABLE>

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


       10(d)          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), as amended by Amendment No. 2 dated as of
                      September 15, 2000, Amendment No. 3 dated as of July 17,
                      2001, and Amendment No. 4 dated as of June 26, 2000 (Filed
                      as Exhibit 10(l) to Form 10-Q Quarterly Report of
                      Registrant for the Quarter ended June 30, 2002).

       10(e)          Amendment No. 5 to Business Loan Agreement dated February       Filed herewith         89
                      26, 2003.

       10(f)          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(g)          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 (h)         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 (i)         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 (j)         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)
</TABLE>


<PAGE>


                                        SUREWEST COMMUNICATIONS
                                           INDEX TO EXHIBITS
                                            (Item 15 (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 Philip D. Germond (Filed as Exhibit         reference
                      10 (j) to Form 10-K Annual Report of Registrant for the
                      year ended December 31, 2000)

        10(l)         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         91


       99(a)          Certification of Brian Strom, President and Chief Executive     Filed herewith         92
                      Officer, pursuant to 18 U.S.C. Section 1350, as adopted
                      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

       99(b)          Certification of Michael Campbell, Executive Vice President     Filed herewith         93
                      and Chief Financial Officer, pursuant to 18 U.S.C. Section
                      1350, as adopted pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002

</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 13, 2003               By:             /s/ Brian H. Strom
                                                   ------------------
                                                   Brian H. Strom,
                                                   President and Chief
                                                   Executive Officer


Date: March 13, 2003               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 13, 2003                               /s/ Thomas E. Doyle
                                                   -------------------
                                                   Thomas E. Doyle,
                                                   Chairman of the Board

Date: March 13, 2003                               /s/ Brian H. Strom
                                                   ------------------
                                                   Brian H. Strom,
                                                   President and Chief
                                                   Executive Officer; Director

Date: March 13, 2003                               /s/ Michael D. Campbell
                                                   -----------------------
                                                   Michael D. Campbell,
                                                   Executive Vice President
                                                   and Chief Financial Officer

Date: March 13, 2003                               /s/ John R. Roberts III
                                                   -----------------------
                                                   John R. Roberts III,
                                                   Director

Date: March 13, 2003                               /s/ Chris L. Branscum
                                                   ---------------------
                                                   Chris L. Branscum,
                                                   Director

Date: March 13, 2003                               /s/ Neil J. Doerhoff
                                                   --------------------
                                                   Neil J. Doerhoff,
                                                   Director

Date: March 13, 2003                               /s/ Kirk C. Doyle
                                                   -----------------
                                                   Kirk C. Doyle,
                                                   Director

Date: March 13, 2003                               /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 13, 2003               By:
                                                   ---------------------------
                                                   Brian H. Strom,
                                                   President and Chief
                                                   Executive Officer


Date: March 13, 2003               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 13, 2003
                                                   -----------------------------
                                                   Thomas E. Doyle,
                                                   Chairman of the Board

Date: March 13, 2003
                                                   -----------------------------
                                                   Brian H. Strom,
                                                   President and Chief
                                                   Executive Officer; Director

Date: March 13, 2003
                                                   -----------------------------
                                                   Michael D. Campbell,
                                                   Executive Vice President
                                                   and Chief Financial Officer

Date: March 13, 2003
                                                   -----------------------------
                                                   John R. Roberts III,
                                                   Director

Date: March 13, 2003
                                                   -----------------------------
                                                   Chris L. Branscum,
                                                   Director

Date: March 13, 2003
                                                   -----------------------------
                                                   Neil J. Doerhoff,
                                                   Director

Date: March 13, 2003
                                                   -----------------------------
                                                   Kirk C. Doyle,
                                                   Director

Date: March 13, 2003
                                                   -----------------------------
                                                   Timothy D. Taron,
                                                   Director


                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002


I, Brian H. Strom, President and Chief Executive Officer, certify that:

     1.   I  have   reviewed  this  annual  report  on  Form  10-K  of  SureWest
          Communications;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the periods in this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.



                                 Date: March 13, 2003
                                 Brian H. Strom
                                 President and Chief Executive Officer


                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, Michael D. Campbell,  Executive Vice President and Chief  Financial  Officer,
certify that:

1.   I have reviewed this annual report on Form 10-K of SureWest Communications;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements were made, not misleading with respect to the periods covered in
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.



                               Date: March 13, 2003
                               Michael D. Campbell
                               Executive Vice President and
                               Chief Financial Officer


<PAGE>



                        AMENDMENT NO. 5 TO LOAN AGREEMENT


     This  Amendment No. 5 (the  "Amendment")  dated as of February 26, 2003, is
between Bank of America,  N.A.  (the "Bank") and  SureWest  Communications  (the
"Borrower"), formerly known as Roseville Communications Company.

                                    RECITALS

     A. The Bank and the Borrower entered into a certain Business Loan Agreement
dated  as of  March  15,  2000  (together  with  any  previous  amendments,  the
"Agreement").

     B. The Bank and the Borrower desire to amend the Agreement.

                                    AGREEMENT

     1.  Definitions.  Capitalized  terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.

     2. Amendments. The Agreement is hereby amended as follows:

          2.1 Paragraph  1.7(a)(i) is hereby  amended to read in its entirety as
     follows:

               (i)  standby  letters of credit  with a maximum  maturity  not to
          extend beyond the Expiration  Date. The standby  letters of credit may
          include  a  provision   providing  that  the  maturity  date  will  be
          automatically  extended  each year for an  additional  year unless the
          Bank gives written  notice to the contrary;  provided,  however,  that
          each letter of credit must  include a final  maturity  date which will
          not be subject to automatic extension.

          2.2  Paragraph  7.6(e) is hereby  amended to read in its  entirety  as
     follows:

               (e) Additional  debts with maturities  longer than five (5) years
          from their  respective dates of origination in an aggregate amount not
          exceeding One Hundred  Million Dollars  ($100,000,000)  outstanding at
          any one time.

          3.  Representations  and  Warranties.  When the  Borrower  signs  this
     Amendment, the Borrower represents and warrants to the Bank that: (a) there
     is no event  which is, or with  notice or lapse of time or both would be, a
     default  under the Agreement  except those  events,  if any, that have been
     disclosed in writing to the Bank or waived in writing by the Bank,  (b) the
     representations  and warranties in the Agreement are true as of the date of
     this Amendment as if made on the date of this Amendment, (c) this Amendment
     does not  conflict  with any law,  agreement,  or  obligation  by which the
     Borrower is bound, and (d) this Amendment is within the Borrower's  powers,
     has been duly authorized,  and does not conflict with any of the Borrower's
     organizational papers.

          4. Effect of Amendment.  Except as provided in this Amendment,  all of
     the terms and  conditions of the  Agreement  shall remain in full force and
     effect.

          5. Counterparts.  This Amendment may be executed in counterparts, each
     of  which  when so  executed  shall be  deemed  an  original,  but all such
     counterparts together shall constitute but one and the same instrument.


          This  Amendment is executed as of the date stated at the  beginning of
     this Amendment.




                     Bank of America, N.A.


                     /s/Robert L. Munn Jr.
                     Robert L. Munn, Jr., Senior Vice
                     President


                     SureWest Communications



                     /s/Michael Campbell
                     Michael D. Campbell, Executive Vice
                     President, Chief Financial Officer and Treasurer


                     /s/Brian H. Strom
                     Brian H. Strom, President and Chief
                     Executive Officer



<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, (2) Registration Statement (Form S-8 No.333-42868) pertaining to
the  SureWest   Communications   1999  Restricted   Stock  Bonus  Plan  and  (3)
Registration  Statement (Form S-8 No. 333-87222) pertaining to the SureWest KSOP
of our report dated  February 7, 2003,  except for Note 18, as to which the date
is March 13, 2003,  with respect to the  consolidated  financial  statements  of
SureWest  Communications  included in the Annual Report (Form 10-K) for the year
ended December 31, 2002.

                                                            /s/Ernst & Young LLP




Sacramento, California
March 13, 2003




<PAGE>



                                 EXHIBIT 99 (a)

                            CERTIFICATION PURSUANT TO
                  18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of SureWest Communications (the "Company"),
on Form 10-K for the period ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"),  the undersigned,  as
the Chief  Executive  Officer of the Company,  hereby  certifies  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

1.   The Report  fully  complies  with the  requirements  of  Section  13(a) and
     Section 15(d) of the Securities Exchange Act of 1934; and

2.   The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.

                                 March 13, 2003

                                 /s/Brian H. Strom
                                 Brian H. Strom
                                 President and Chief Executive Officer

<PAGE>



                                 EXHIBIT 99 (b)
                            CERTIFICATION PURSUANT TO
                  18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of SureWest Communications (the "Company"),
on Form 10-K for the period ended December 31, 2002 as filed with the Securities
and Exchange Commission of the date hereof (the "Report"),  the undersigned,  as
the Chief  Financial  Officer of the Company,  hereby  certifies  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

1.   The Report  fully  complies  with the  requirements  of  Section  13(a) and
     Section 15(d) of the Securities Exchange Act of 1934; and

2.   The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.

                                  March 13, 2003

                                  /s/Michael Campbell
                                  Michael Campbell
                                  Executive Vice President and
                                  Chief Financial Officer