<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.


                         COMMISSION FILE NUMBER 1-12342

                                  ------------


                          AIRTOUCH COMMUNICATIONS, INC.

A DELAWARE CORPORATION                         I.R.S. EMPLOYER NUMBER 94-3213132

                              ONE CALIFORNIA STREET
                             SAN FRANCISCO, CA 94111
                                 (415) 658-2000

                                  ------------


          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------

COMMON STOCK, $.01 PAR VALUE, WITH             NEW YORK STOCK EXCHANGE
 PREFERRED STOCK PURCHASE RIGHTS               PACIFIC STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: None.

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. / /

Based on the composite closing sales price on March 22, 1996, the aggregate
market value of all voting stock held by nonaffiliates was approximately $15.7
billion. At March 22, 1996, 498,628,011 shares of common stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the
indicated Parts of this Form 10-K:

                  1995 Annual Report to Stockholders - Part II
                  1996 Proxy Statement - Part III
<PAGE>   2
                                TABLE OF CONTENTS
         
                                 --------------

                                     PART I
<TABLE>
<S>         <C>
ITEM 1      Business..................................................................
ITEM 2      Properties................................................................
ITEM 3      Legal Proceedings.........................................................
ITEM 4      Submission of Matters to a Vote of Security Holders.......................
            Executive Officers of the Registrant......................................

                                     PART II

ITEM 5      Market for Registrant's Common Equity and Related Stockholder Matters.....
ITEM 6      Selected Financial Data...................................................
ITEM 7      Management's Discussion and Analysis of Financial Condition
              and Results of Operations...............................................
ITEM 8      Financial Statements and Supplementary Data...............................
ITEM 9      Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure.....................................

                                    PART III

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

                                     PART IV

ITEM 14     Exhibits, Financial Statement Schedules and Reports on Form 8-K...........
</TABLE>

----------------

Unless the context otherwise requires, references to the "Company" herein
include AirTouch Communications, Inc. and entities over which it has or shares
operational control.

This Form 10-K includes trademarks or service marks of the Company and of other
companies that are the property of their respective owner. TalkAlong is a
trademark of U S WEST, Inc.

Proportionate customer data is obtained, for each system over which the Company
has or shares operational control, by multiplying (i) the aggregate number of
customers of such system by (ii) the Company's ownership interest in the
licensee operating such system. Proportionate customer data does not include
information with respect to the Company's cost-based investments or certain
equity-based investments that are not material to the Company's operating
results or financial condition taken as a whole.

The term "POPs" means the population of a licensed market (based on population
estimates for such market) multiplied by the Company's ownership interest in a
licensee operating in that market as of the date specified, and includes 
networks under construction and the markets of certain cost-based investments 
not included in proportionate results.

Private Securities Litigation Reform Act Safe Harbor Statement: When used in
this Report, the words "estimate," "project," "intend," "expect" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to risks and uncertainties that could cause actual results to differ
materially. For a discussion of such risks, see "Business-Investment
Considerations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which 
<PAGE>   3
speak only as of the date hereof. The Company undertakes no obligation to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

                                       3
<PAGE>   4
                                     PART I

ITEM 1.  BUSINESS.

OVERVIEW

AirTouch Communications, Inc. is one of the world's leading wireless
telecommunications companies, with significant cellular interests in the United
States, Europe and Asia. The Company's proportionate worldwide cellular and
broadband PCS interests represented 164.9 million POPs and more than 3 million
customers at December 31, 1995. In the United States, the Company has
approximately 52 million proportionate cellular and broadband PCS POPs. The
Company controls or shares control over cellular systems in ten of the 30
largest cellular markets, including Los Angeles, San Francisco, San Diego,
Detroit and Atlanta, and through PCS PrimeCo, L.P., shares control over 11 major
broadband PCS markets. Internationally, the Company had 112.9 million cellular
POPs as of December 31, 1995, and held significant ownership interests, with
board representation and substantial operating influence, in national cellular
systems operating in Germany, Japan, Portugal, Sweden, Belgium, Italy, Spain and
Madras, India, and in systems under construction in South Korea and Madhya
Pradesh, India. In February 1996, the Company's consortium was awarded one of
two new national cellular licenses in Poland. Based on industry surveys, the
Company is also among the largest providers of paging services in the United
States, with approximately 2.3 million units in service at December 31, 1995.

The following table sets forth the Company's cellular and broadband PCS POPs and
proportionate customers at December 31, 1995.

<TABLE>
<CAPTION>
                                                                        PROPORTIONATE
                                                             POPS(1)     CUSTOMERS(2)
                                                             -------     ------------
                                                          (IN MILLIONS) (IN THOUSANDS)
<S>                                                        <C>           <C>
Domestic Cellular:
   Southern California                                         15.8            *
   San Francisco Bay Area                                       3.1            *
   Sacramento Valley                                            1.8            *
   Michigan/Ohio(3)                                            11.2            *
   Georgia and Kansas/Missouri                                  5.1            *
   Other domestic interests                                      .7            *
                                                              -----
   Domestic Cellular Subtotal                                  37.7        2,262
                                                              -----        =====
Domestic Broadband PCS                                         14.3           -- 
                                                              -----
Domestic Total                                                 52.0        2,262
                                                              =====        =====

International Cellular:(4)
   Belgium                                                      2.5           59
   Germany                                                     28.4          507
   India                                                       36.9            *
   Italy                                                        6.8            7
   Japan                                                       13.0          108
   Poland                                                       7.5           -- 
   Portugal                                                     2.3           39
   Sweden                                                       4.5           75
   South Korea                                                  4.8           -- 
   Spain                                                        6.2            2
                                                              -----        -----
International Total                                           112.9          797
                                                              -----        -----
Worldwide Total                                               164.9        3,059
                                                              =====        =====
</TABLE>

-------------
*    Not disclosed.

(1)  "POPs" means the population of a licensed market (based on population
     estimates for such market) multiplied by the Company's ownership
     interest in a licensee operating in such market as of the date
     specified. Includes networks under construction and markets of certain
     cost-based investments not included in proportionate financial results.

                                       4
<PAGE>   5
(2)      Proportionate customer data does not include customers to systems where
         the Company accounts for its investment on a cost basis. For a list of
         such systems, see "Domestic Cellular" and "International Cellular."
         Proportionate data also excludes information for certain equity-based
         investments that are not material to the Company's operating results or
         financial condition taken as a whole.

(3)      POPs and proportionate customers for the Michigan/Ohio region reflect
         both the Company's 50% interest in a partnership with Cellular
         Communications, Inc. and the Company's ownership of approximately 37.6%
         of the outstanding common stock of CCI at December 31, 1995.

(4)      Includes POPs for South Korea, Madhya Pradesh and certain regions of
         Japan, where the systems have not yet commenced operations. Includes
         POPs for Poland, where the Company's consortium was awarded a national
         cellular license in February 1996.

                                       5
<PAGE>   6
INVESTMENT CONSIDERATIONS

The following factors, in addition to the other information contained elsewhere
herein, should be considered carefully in evaluating the Company and its
business.

COMPETITION

The sale of cellular and paging services in each of the Company's markets has
become increasingly competitive. In the United States, where the Company
previously had one cellular competitor in each market, the Company in the near
future will face up to eight wireless competitors due to the introduction of
broadband personal communications services ("PCS") on frequencies recently
auctioned by the Federal Communications Commission ("FCC") and specialized
mobile radio ("SMR") services on existing SMR frequencies. PCS providers have
already begun service in select markets in the United States, and competitors
are expected to begin offering PCS services in most of the Company's markets
between late 1996 and early 1997. One SMR operator is currently offering digital
SMR service in the Los Angeles and San Francisco markets and has announced plans
to construct a nationwide system with its partners that would offer service in
several of the Company's other cellular markets. Depending on voice quality,
system reliability, system coverage, product offerings, marketing techniques and
pricing, such services may be competitive with the Company's cellular service.
The Telecommunications Act of 1996 may have removed certain restrictions on the
ability of the Company's competitors to offer as a single package a variety of
services, such as wireless voice and data, paging, long-distance, local landline
and cable services, some of which the Company does not currently provide.
Increased competition could result in pricing pressure, which contributes to
lower revenues per customer, and higher customer acquisition costs resulting in
lower profit margins. See also "Business-Domestic Cellular-Competition" and
"Business-Paging-Competition."

There is also significant competition in the Company's international markets.
For example, the Company's ventures in Germany and Sweden currently face
competition from two other providers, as will its venture in Poland once it
commences service. In Japan there are as many as four cellular licensees and
three Personal Handy Phone licensees in certain regions. Government-operated
cellular systems in these and other countries have become increasingly
competitive with privately operated systems. In addition, it is expected that
additional licenses will be issued in many of the markets in which the Company
and its ventures provide services. For instance, it is expected that the German
government will issue an additional 1800 MHz cellular license in 1997 or 1998.
See also "Business-International Cellular-Competition."

TECHNOLOGY

The operations of the Company and its joint ventures depend in part upon the
successful deployment of continuously evolving wireless communications
technologies. The Company licenses technologies from a number of vendors and
makes significant capital expenditures in connection with the deployment of
such technologies. There can be no assurance that such technologies will be
developed according to anticipated schedules, that they will perform according
to expectations, or that they will achieve commercial acceptance. The Company
may be required to make more capital expenditures than is currently expected if
vendors fail to meet anticipated schedules, if a technology's performance falls
short of expectations, or if commercial acceptance is not achieved.

REGULATION

The licensing, construction, operation, sale and acquisition of wireless
systems, as well as the number of competitors permitted in each market, are
regulated in the United States by the FCC and by its counterparts in other
countries. In addition, certain aspects of the Company's domestic wireless
operations may be subject to public utility regulation in the state in which
service is provided and to local regulation. Frequently, regulatory consent is
necessary for the change in ownership of licenses. The siting and construction
of transmitter towers, antennas and equipment shelters are often subject to
state or local zoning, land use and other local regulation. The California
Public Utilities Commission ("CPUC") is investigating whether California
cellular carriers have complied with rules regarding the filing of applications
and permits to locate and construct cell sites, although no formal allegations
of wrongdoing have been made against the Company. However, no assurance can be
given that the outcome of such investigation or other regulatory determinations
or changes by federal, state or foreign governmental authorities will not have
an adverse effect on the Company's business. In connection with the
Telecommunications Act of 1996, the FCC is 

                                       6
<PAGE>   7
expected to conduct more than 80 rulemaking proceedings during 1996. The outcome
of these proceedings could have a material effect on regulation governing the
Company's operations.

The Company's international and domestic wireless licenses are granted for
specific periods of time. The most significant domestic cellular and paging
licenses are granted for a period of ten years. The Company believes that each
of its expiring domestic licenses will be renewed based upon its prior
experience with expired licenses and upon FCC rules establishing a presumption
in favor of licensees that have substantially complied with their regulatory
obligations during the initial license period. However, there can be no
assurance that any domestic or international license will be renewed. See
"Business-Regulation."

FUTURE FUNDING REQUIREMENTS

The Company expects that its existing domestic cellular operations will require
significant amounts of capital in 1996 and future years, as will the
construction of the 11 PCS systems by PCS PrimeCo, L.P. ("PCS PrimeCo"), the
Company's PCS partnership with Bell Atlantic Corporation ("Bell Atlantic"),
NYNEX Corporation ("NYNEX") and U S WEST, Inc. ("U S WEST"). In addition, the
construction of cellular systems in international markets where the Company's
consortia have been awarded licenses within the past several years will require
substantial capital contributions by the Company. The Company also has certain
obligations to purchase the remaining equity in Cellular Communications, Inc.
("CCI") or alternatively to pay a "make-whole" amount to CCI. See
"Business-Domestic Cellular-Joint Ventures-New Par." To meet its financing
needs, the Company currently has a $2 billion committed revolving credit
facility, has the ability to sell commercial paper in aggregate amounts
available for borrowing under the committed revolving credit facility, and has
filed with the Securities and Exchange Commission a registration statement for
potential debt and/or equity proceeds of $2 billion. While the Company will
apply its operating cash flow and borrowings under its existing credit
facilities to the commitments described above, these obligations, as well as any
additional obligations arising from the Company's pursuit of acquisitions and
other new opportunities, will require the Company to seek additional sources of
financing in the next few years. The Company believes that it will be able to
access these sources on terms and in amounts that will be adequate to accomplish
its objectives, although there can be no assurance that such will be the case.
The Company's senior unsecured long-term debt has been assigned an implied
rating of BBB+ by Standard & Poor's Ratings Group and a rating of Baa2 by
Moody's Investors Service, Inc., and its commercial paper has been assigned a
rating of A-2 by Standard & Poor's and P-2 by Moody's, based in part upon each
agency's respective analysis of the expected future financial performance of the
Company. These ratings may be revised or withdrawn by the rating agency at any
time, and there can be no assurance that the Company will be able to maintain
such ratings. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources."

DILUTION OF OPERATING RESULTS

Over the past several years, the Company's consortia were awarded digital
cellular licenses in India, Italy, Japan, Poland, South Korea and Spain, and the
Company is continuing to pursue new opportunities in international markets. In
March 1995, PCS PrimeCo was awarded eleven 30 MHz licenses in the FCC's
broadband PCS auctions for a licence cost of approximately $1.1 billion. The
Company's indirect interest in PCS PrimeCo is currently 25%, but will increase
upon the contribution by U S WEST and the Company of their respective interests
in PCS PrimeCo to their joint venture, WMC Partners, L.P. See "Business-Domestic
Cellular-Joint Ventures-WMC Partners." As a result of costs associated with the
foregoing international and domestic system deployments, the Company's
investments will incur losses which will, at least in the near term, have a
dilutive effect on the Company's earnings.

ANTITRUST PROCEEDINGS

The Company believes that its cellular pricing and marketing practices were and
are in compliance with antitrust laws. The Company, however, is a defendant in a
number of class action complaints with respect to its Los Angeles, San Francisco
and San Diego operations, which allege that the Company conspired to fix retail
and wholesale cellular prices. The Company does not believe that the class
actions, if adversely decided, would have a material adverse effect on its
financial condition. No assurance can be given as to the foregoing, however, or
that an any disposition of these proceedings, if adverse to the Company, might
not materially adversely affect the Company's results of operations in the year
of such disposition. See Item 3, "Legal Proceedings."

                                       7
<PAGE>   8
CCI TRANSACTION

Concurrent with the formation in 1991 of an equally owned joint venture with CCI
("New Par"), the Company purchased 5% of the equity in CCI, agreed to purchase
additional equity in CCI, and obtained the right to acquire all of CCI's
remaining equity in stages over the next several years. Pursuant to that
transaction, in October 1995 and January 1996, the Company purchased 10.04
million shares of CCI stock and options to acquire an additional 2.4 million
shares, bringing the Company's ownership interest in CCI to approximately 37.6%
of the outstanding stock. The Company also has the right (but not the
obligation) over a 12-month period pursuant to an appraisal process commencing
in August 1996 to purchase the remainder of CCI (but excluding any assets and
related liabilities other than CCI's interest in New Par unless otherwise agreed
by the partners) at a price that reflects the appraised private market value of
CCI (excluding such assets and related liabilities) at that time. In the event
the Company does not exercise such right, New Par effectively terminates, with
the Company receiving the assets it contributed and CCI becoming obligated to
sell its assets, including those relating to the joint venture, to a third
party. If New Par's assets (and related liabilities) are sold within a specified
period (not to exceed two years) at less than the appraised price, the Company
will be obligated to effect a "make-whole" payment to CCI's stockholders to the
extent of any shortfall. The Company's exercise of its rights to purchase
additional equity in CCI will depend upon the Company's evaluation of the market
for CCI's stock, CCI's business prospects and financial condition, other
investment opportunities available to the Company, prospects for the Company's
business, general economic conditions and other factors. No assurance can be
given that the Company's investment in CCI will be favorable to the Company or
that any sale of the joint venture assets, if required, will be consummated at a
price that will eliminate the Company's make-whole obligation. See 
"Business-Domestic Cellular-Joint Ventures-New Par."

IMPLICATIONS OF LICENSEE OWNERSHIP STRUCTURE

The Company holds most of its domestic cellular properties and its domestic
broadband PCS properties through partnership interests, a number of which are
controlling interests. Upon the contribution of certain of the Company's
domestic cellular properties to its joint venture with U S WEST, control over
such properties will, to a certain extent, be shared with U S WEST. See
"Business-Domestic Cellular-Joint Ventures-WMC Partners." In addition, the
Company's interests in international wireless licenses are held almost
exclusively through foreign entities in which the Company is a significant, but
not controlling, owner. Under the governing documents for certain of these
partnerships and corporations, certain key matters such as the approval of
business plans and decisions as to the timing and amount of cash distributions
may not be approved without the consent of the Company's partners, or may be
approved without the consent of the Company. Although the Company has not been
materially impeded by the nature of its wireless ownership interests from
pursuing its corporate objectives, no assurance can be given that it will not
experience difficulty in this regard in the future. The Company may enter into
similar arrangements as it participates in consortia "formed" or "organized" to
pursue additional wireless opportunities.

FLUCTUATIONS IN THE VALUE OF WIRELESS LICENSES

A substantial portion of the Company's assets consists of interests in entities
holding cellular licenses, the value of which will depend significantly upon the
success of the operations of such entities and the growth and future direction
of the cellular industry generally. Values of licenses also have been affected
by fluctuations in the level of supply and demand for such licenses. In
addition, the infrequency with which licenses are traded or sold may increase
the difficulty of establishing values for the Company's license interests. Any
transfer of control of an entity holding a domestic license is subject to prior
FCC (and possibly state regulatory) approval. Analogous governmental approvals
are required for transfers of interests in foreign licenses. Where licenses are
held by partnerships or foreign corporations, transfers of ownership interests
in such entities are often subject to contractual restrictions.

The Company believes that future international cellular opportunities will arise
primarily through awards by developing countries, where operating and political
risks may be greater and potential returns lower than in countries in which the
Company currently has investments. In addition, investment returns from
acquisitions of interests in existing entities holding wireless licenses or from
licenses acquired through auctions may be lower than those resulting from the
Company's early license awards because of the substantial purchase prices
required to acquire such interests.

EXCHANGE RATE FLUCTUATIONS

Foreign currency exchange rates are increasingly material to the Company's
results of operations. The Company evaluates the risk of significant exchange
rate volatility and its ability to hedge as part of its decision whether to

                                       8
<PAGE>   9
pursue an international opportunity. A significant weakening against the dollar
of the currency of a country where the Company generates revenues or earnings
may adversely affect the Company's results, while any weakening of the dollar
against such currency could have an adverse effect if the Company is obligated
to make significant foreign currency denominated capital investments in such
country. The Company attempts to mitigate the effect of foreign currency
fluctuations through the use of foreign currency contracts and foreign
denominated credit arrangements. There can be no assurance that the Company will
be successful in its foreign currency hedging efforts.

RADIO FREQUENCY EMISSIONS CONCERNS

Media reports have suggested that certain radio frequency ("RF") emissions from
portable cellular telephones might be linked to cancer. The Company has
collected and reviewed relevant scientific information and, based on such
information, is not aware of any credible evidence linking the usage of portable
cellular telephones with cancer. The FCC currently has a rulemaking proceeding
pending to update the guidelines and methods it uses for evaluating RF emissions
in radio equipment, including cellular telephones. While the proposal would
impose more restrictive standards on RF emissions from low-power devices such as
portable cellular telephones, it is anticipated that all cellular telephones
currently marketed and in use will comply with those standards. The
Telecommunications Act of 1996 requires that the FCC complete action in that
rulemaking proceeding within 180 days after February 7, 1996. Additional
concerns have been expressed about the safety of emissions from cellular
facilities which transmit calls to customers' telephone handsets. The Company's
facilities are licensed by the FCC and comply with the exposure levels set by
the FCC. The Telecommunications Act of 1996 provides that state and local
governments may not regulate the placement, construction or modification of
personal wireless service facilities on the basis of the environmental effects
of RF emissions as long as such facilities comply with the FCC's regulations
concerning such emissions. However, local authorities still have jurisdiction
over zoning and permitting of such facilities.

FRAUD

The cellular industry continues to be subject to fraudulent activity. Cloning,
which is one form of such fraud, refers to the use of scanners and other
electronic devices to illegally obtain telephone numbers and electronic serial
numbers during cellular transmission. These stolen telephone and serial number
combinations can be programmed into a cellular phone and used to obtain
fraudulent access to cellular networks. Roaming fraud occurs when a phone
programmed with a number stolen from the Company's customer is used to place
fraudulent calls from another carrier's market, resulting in a roaming fee
charged to the Company that cannot be collected from the customer. The Company
is working to reduce the negative impacts of fraud through investment in new
technologies and the deployment of other measures. In its own markets the
Company has had significant success in detecting and reducing fraudulent usage
of numbers stolen from the Company's customers. However, the Company continues
to experience significant levels of roaming fraud. The cost of cellular fraud
could have a significant impact on the Company's operating results for the
foreseeable future.

ECONOMIC FLUCTUATIONS

The Company's performance is affected by the general condition of the economy,
with demand for wireless services and the amount of cellular use tending to
decline when economic growth and retail activity decline. It is not possible for
the Company to accurately predict economic fluctuations and the impact of such
fluctuations on its performance.

                                       9
<PAGE>   10
DOMESTIC CELLULAR

The Company is one of the largest providers of cellular services in the United
States, with interests in some of the most attractive cellular markets based
upon total population and demographic characteristics. The Company's United
States cellular interests represented over 37 million POPs and more than 2.2
million proportionate customers at December 31, 1995. The Company has or shares
operational control over cellular systems in Los Angeles, San Francisco, San
Diego, Atlanta, Detroit, Cleveland, San Jose, Sacramento, Cincinnati and Kansas
City. These cities represent ten of the 30 largest cellular markets in the
United States.

Prior to the broadband PCS auctions, the FCC licensed only two cellular systems
in each market. One license was initially reserved for applicants affiliated
with a company engaged in the wireline telephone business (the "wireline
licensee") and the other was initially reserved for a non-wireline licensee.
Through FCC license applications and grants, the Company acquired controlling
interests in wireline licensees in San Diego, the greater Los Angeles area,
including Oxnard and Ventura, and the greater Sacramento area, including
Stockton and Reno. Following the FCC's initial license awards, the Company
acquired additional cellular interests throughout the United States. In
evaluating acquisition opportunities, the Company considers the attractiveness
of the market for cellular services, the Company's ability to control or
significantly influence the operations of the system and the opportunity to
create regional networks through integration with the Company's existing systems
or by acquiring licenses in adjacent markets.

The following table sets forth as of December 31, 1995 by region (i) the markets
in which the Company owns an interest in a cellular system, (ii) whether each
such system is the wireline or non-wireline licensee, (iii) the total population
of the market served by such system, (iv) the Company's percentage ownership in
the operator of the system, and (v) the Company's POPs based on its percentage
ownership.

<TABLE>
<CAPTION>
                                           WIRELINE/     TOTAL       INDIRECT    COMPANY'S
                                             NON-     POPULATION(1)  OWNERSHIP      POPS
                  MARKET                   WIRELINE  (IN THOUSANDS) PERCENTAGE (IN THOUSANDS)
                  ------                   --------  -------------- ---------- --------------
<S>                                        <C>       <C>            <C>        <C>
Southern California Region
        Los Angeles (4)(6) ...............    WL        14,767        84.00%      12,404
        San Diego (4)(6) .................    WL         2,671       100.00%       2,671
        Oxnard/Ventura (4)(6) ............    WL           711        50.00%         356
        Las Vegas, NV (3) ................    WL           983        27.79%         273
        Santa Barbara (5) ................    WL           382        10.00%          38
        San Luis Obispo (5) ..............    WL           226        10.00%          23
                                                        ------                    ------
        Subtotal .........................              19,740                    15,765
                                                        ------                    ------

San Francisco Bay Area Region
        San Francisco/Oakland (3)(6) .....   NWL         3,863        47.00%       1,816
        San Jose (3)(6) ..................   NWL         1,570        47.00%         738
        Vallejo (3)(6) ...................   NWL           492        50.00%         246
        Santa Rosa (3)(6) ................   NWL           416        40.18%         167
        Salinas/Monterey (3)(6) ..........   NWL           353        42.96%         152
                                                        ------                    ------
        Subtotal                                         6,694                     3,119
                                                        ------                    ------

Sacramento Valley Region
        Sacramento (4)(6) ................    WL         1,467        49.88%         732
        Stockton (4)(6) ..................    WL           528        49.88%         263
        Modesto (4)(6) ...................    WL           416        49.88%         208
        Reno, NV (4)(6) ..................    WL           288        49.88%         144
        Chico (4)(6) .....................    WL           195        49.88%          97
        Redding (4)(6) ...................    WL           164        48.43%          79
        Yuba City (4)(6) .................    WL           139        49.88%          69
</TABLE>

                                       10
<PAGE>   11
<TABLE>
<CAPTION>
                                                 WIRELINE/     TOTAL      INDIRECT
                                                   NON-     POPULATION(1)  OWNERSHIP           POPS
                       MARKET                    WIRELINE  (IN THOUSANDS) PERCENTAGE      (IN THOUSANDS)
                       ------                    --------  -------------- ----------      --------------
<S>                                              <C>       <C>            <C>             <C>
Sacramento Valley Region (continued)
        Storey, NV (4)(6)...................         WL        108         49.88%               54
        Tehama (4)(6).......................         WL         97         49.88%               49
        Sierra (4)(6).......................         WL         91         49.88%               45
        Lander, NV (3)......................         WL         50         50.00%               25
        Modoc (4)(6)........................         WL         59         25.00%               15
        Mineral, NV (4)(6)..................         WL         30         50.00%               15
        White Pine, NV (4)(6)...............         WL         13        100.00%               13
        Del Norte (5).......................         WL        208          5.60%               12
        Fresno (5)..........................         WL        744          1.10%                8
        Bakersfield (5).....................         WL        617          1.10%                7
        Visalia/Tulare (5)..................         WL        352          1.10%                4
                                                             -----                           -----
        Subtotal                                             5,566                           1,839
                                                             -----                           -----

Michigan/Ohio Region (2)
        Detroit, MI (3)(6)..................        NWL      4,602         68.43%            3,149
        Cleveland, OH (3)(6)................        NWL      1,842         68.43%            1,261
        Cincinnati, OH (3)(6)...............        NWL      1,513         68.43%            1,036
        Columbus, OH (3)(6).................        NWL      1,302         68.43%              891
        Dayton, OH (3)(6)...................        NWL        852         68.43%              583
        Toledo, OH/MI (3)(6)................        NWL        794         68.43%              543
        Grand Rapids, MI (3)(6).............        NWL        735         68.43%              503
        Akron, OH (3)(6)....................        NWL        682         68.43%              467
        Flint, MI (3)(6)....................        NWL        506         68.43%              346
        Lansing, MI (3)(6)..................        NWL        499         68.43%              341
        Saginaw/Bay City, MI (3)(6).........        NWL        403         68.43%              276
        Canton, OH (3)(6)...................        NWL        405         68.43%              277
        Hamilton/Middletown, OH (3)(6)......        NWL        318         68.15%              217
        Lorain/Elyria, OH (3)(6)............        NWL        281         68.43%              192
        Lima, OH (3)(6).....................        NWL        222         68.43%              152
        Mercer, OH (3)(6)...................        NWL        224         68.43%              153
        Muskegon, MI (3)(6).................        NWL        188         67.12%              126
        Springfield, OH (3)(6)..............        NWL        186         61.06%              114
        Clinton, OH (3)(6)..................        NWL        173         68.43%              118
        Mansfield, OH (3)(6)................        NWL        127         68.43%               87
        Ashtabula, OH (3)(6)................        NWL        103         68.43%               70
        Morrow, OH(3)(6)....................        NWL        448         68.43%              306
                                                             -----                           -----
        Subtotal                                            16,405                          11,208
                                                             -----                           -----

Georgia Region
        Atlanta (4)(6)......................        NWL      3,111        100.00%            3,111
        Chattooga (4)(6)....................        NWL        205        100.00%              205
        Athens (4)(6).......................        NWL        169         86.84%              147
        Jasper (4)(6).......................        NWL        123        100.00%              123
                                                             -----                           -----
        Subtotal                                             3,608                           3,586
                                                             -----                           -----

Kansas/Missouri Region
        Kansas City, KS/MO (3)(6)...........        NWL      1,518         50.00%              759
        Wichita, KS (4)(6)..................        NWL        480        100.00%              480
        Topeka, KS (4)(6)...................        NWL        200         78.01%              156
        St. Joseph, MO (3)(6)...............        NWL         98         43.50%               43
        Lawrence, KS (3)(6).................        NWL         90         50.00%               45
                                                             -----                           -----
        Subtotal                                             2,386                           1,483
                                                             -----                           -----
</TABLE>


                                       11
<PAGE>   12
<TABLE>
<CAPTION>
                                             WIRELINE/     TOTAL      INDIRECT
                                               NON-     POPULATION(1)  OWNERSHIP           POPS
                   MARKET                    WIRELINE  (IN THOUSANDS) PERCENTAGE      (IN THOUSANDS)
                   ------                    --------  -------------- ----------      --------------
<S>                                          <C>       <C>            <C>             <C>
Other
    Dallas/Fort Worth, TX (3) .........         NWL         4,344       17.00%             739
                                                           ------                       ------
    Subtotal                                                4,344                          739
                                                           ------                       ------
TOTAL                                                      58,743                       37,739
                                                           ======                       ======
</TABLE>

--------------
(1)      1995 Donnelly Marketing Information Service population estimates.

(2)      The Company's ownership percentage and POPs for the Michigan/Ohio
         region reflect both the Company's 50% ownership interest in New Par and
         the Company's ownership of approximately 37.6% of the outstanding
         equity in CCI at December 31, 1995.

(3)      Accounted for under the equity method.

(4)      Accounted for under the consolidation method.

(5)      Accounted for under the cost method.

(6)      Operating results are included in the proportionate cellular operating
         results presented in Item 6, "Selected Financial Data," and in Item 7,
         "Management's Discussion and Analysis of Financial Condition and
         Results of Operations-Proportionate Results of Operations."

MARKETING

The Company aggressively markets its cellular services in its managed markets,
which are Los Angeles, San Diego, Sacramento and Atlanta, under the AirTouch
Cellular name through its own sales force and arrangements with independent
agents, as well as through newspaper, television, and radio advertising and
telemarketing via toll-free telephone numbers. In certain markets, the Company's
cellular service is sold through resellers who, pursuant to FCC requirements,
are allowed to purchase blocks of cellular telephone numbers and access to
cellular services at wholesale rates for resale to the public. Agents are
independent contractors who solicit customers for the Company's cellular
service, and typically include specialized cellular stores, automobile dealers,
specialized electronics stores and department stores. The Company generally pays
its agents a commission for each customer who uses the Company's service for a
specified period and makes residual payments to the agent based on the
customer's ongoing service charges. The Company has been taking steps to align
sales costs with revenues by emphasizing residual payments to agents over
upfront commissions and utilizing Company controlled distribution channels such
as direct sales and telemarketing. The Company has increasingly targeted the
consumer market with special promotions and pricing plans and by expanding into
consumer electronics stores and other mass-market distribution channels.

The Company's systems in the San Francisco Bay Area, Michigan/Ohio and Kansas 
market cellular service under the Cellular One brand name. In addition, the 
Company's Georgia regional network is part of SouthReach(R), a service offered 
with three other cellular operators in the southeastern United States.

On March 20, 1996, the Company and U S WEST announced that U S WEST Cellular
will assume the AirTouch Cellular brand in May 1996, throughout its 12-state 
service area. U S WEST Cellular properties cover 20 million people including 
the major cellular markets of Seattle, Portland, Denver, Phoenix, 
Minneapolis/St. Paul and Salt Lake City. After the brand introduction, the 
AirTouch Cellular brand will cover most states west of the Mississippi.

SERVICES

In addition to providing high quality wireless telephone service, in most
markets the Company makes custom calling services such as voice mail, call
forwarding, call waiting, three way calling, no-answer and busy transfer
available to customers. In 1994, the Company introduced display messaging, a
service that allows a cellular phone to receive and store voice mail messages,
short alphanumeric messages and pages even if the handset is in use or switched
off, and AirTouch 411 Connect(SM), an enhanced directory assistance service that
enables callers to be connected to the party whose number was requested without
hanging up and redialing. In 1995, the Company introduced AirTouch Voice Mail
Alert!(SM), which notifies cellular customers when they have a new message
waiting to be heard. In its Sacramento market, the Company introduced
TalkAlong(TM), an affordable and attractively packaged cellular phone sold at
local retail outlets that can be activated by a single call to the Company.

                                       12
<PAGE>   13
The Company charges its customers for service activation, monthly access,
per-minute airtime and custom calling features, and generally offers a variety
of pricing options, most of which combine a fixed monthly access fee and
per-minute charges. The Company pays the local telephone service company
directly for interconnection of cellular telephone calls with the wireline
telephone network. Customers are billed directly by their selected long-distance
carrier or by the Company, which provides the billing service for a fee to the
long-distance carrier. In late 1994, the Company began offering its own
long-distance service in its Los Angeles, Sacramento, San Diego and Atlanta
markets.

The Company maintains a customer service department in each of its cellular
markets for billing and service inquiries. Using a toll free telephone number,
customers are able to report any problems and obtain up-to-date information with
respect to their accounts. Through the use of sophisticated monitoring
equipment, these technicians are able to check the performance of the cellular
network.

TECHNOLOGY

The Company is an industry leader in cellular technology. The Company's Los
Angeles network was the first to introduce cell site sectorization and
overlay/underlay techniques which simultaneously provide increased coverage in
high traffic areas and umbrella coverage of difficult terrain. In 1991, the
Company became the first to deploy microcells, which make use of low power
antennas located significantly farther from cell sites than permitted by earlier
technology, thereby allowing coverage inside buildings, in canyons and tunnels
and in other areas that are difficult or impossible to serve with conventional
cellular technology. Microcell technology also includes a fast hand-off
capability, which is valuable in downtown settings where a greater number of
antennas allows the network to operate efficiently in high traffic areas at 
lower power settings.

The Company has also developed advanced network design and management tools. The
Company's proprietary software predicts cell site coverage, which is critical in
engineering new cellular networks and in making design improvements to existing
systems. Other proprietary software developed by the Company detect and analyze
system problems, allowing the Company to react quickly, often before the problem
noticeably affects service quality.

Currently, in most markets the radio transmission between the cellular telephone
and the cell site is an analog transmission, and both the cellular telephone and
the transmitting equipment are designed to send and receive voice signals
exclusively in this mode. The Company believes that recently developed digital
technology will offer many advantages over analog technology, including
substantially increased capacity, greater call privacy, lower operating costs,
reduced susceptibility to fraud and the opportunity to provide improved data
transmissions. The Company expects that the transition by customers who prefer
digital service will occur over a number of years, and that cellular systems
will maintain transmitting equipment to serve both formats for the foreseeable
future. Manufacturers currently offer dual-mode cellular telephones capable of
sending and receiving both analog and digital transmissions.

The Company has selected Code Division Multiple Access ("CDMA") as its digital
technology. The Company was an early proponent of CDMA research and worked with
Qualcomm Incorporated ("QUALCOMM") and others to develop this technology. The
Company expects to introduce CDMA service on a commercial basis in portions of
its Los Angeles market, focusing first on transferring high-usage customers to
the CDMA network. Motorola is providing CDMA network infrastructure equipment.
The Company and Motorola are working together to conclude final optimization of
CDMA to ensure that it meets the Company's high standards for commercial
introduction. PCS PrimeCo will also deploy CDMA technology, and the Company's
three PCS partners, Bell Atlantic, NYNEX, and U S WEST have also chosen CDMA 
as their digital cellular standard.

CMT Partners, the Company's joint venture with AT&T Wireless Services, Inc.
("AT&T Wireless," successor in interest to McCaw Cellular Communications, Inc. 
("McCaw")), introduced digital cellular service based on Time Division
Multiple Access ("TDMA") technology in the San Francisco Bay Area in October
1993.

COMPETITION

The cellular services industry in the United States is highly competitive.
Cellular systems compete principally on the basis of network quality, customer
service, price and coverage area. Currently, the Company's chief competition in
each market is from the other cellular carrier. In certain markets, the Company
also competes at the retail level with resellers. The Company believes that its
technological expertise, emphasis on quality and customer service, large
coverage areas, and development of new products and services make it a strong
competitor.

                                       13
<PAGE>   14
The Company will face greater competition in the near future. In 1995, the FCC
issued broadband PCS licenses for Blocks A and B, and expects to auction the
remaining four broadband PCS blocks during 1996. The entrance of PCS licensees
into the Company's cellular markets, anticipated to occur in 1996 and 1997, is
expected to provide significant competition for the Company's existing cellular
networks. Broadband PCS service is expected to be similar to current cellular
technology in providing "anytime, anywhere" voice and data services to mobile
users, although PCS may offer additional features not available from analog
cellular carriers today. The Company has formed an alliance with Bell Atlantic,
NYNEX and U S WEST to provide PCS service. See "Business-Domestic Cellular-Joint
Ventures-PCS PrimeCo."

The FCC has permitted SMR system operators to construct digital mobile
communications systems on existing SMR frequencies in many metropolitan areas
throughout the United States. These multi-site configuration systems will offer
interconnected mobile telephone service and, depending on voice quality and
system reliability, may compete with the Company's cellular services. One SMR
operator is currently offering digital SMR service in the Los Angeles and San
Francisco markets and has announced plans to construct a nationwide system with
its partners that would offer service in several of the Company's other cellular
markets.

AT&T's entry into the wireless market through the acquisition of McCaw may
increase the competition that the Company faces in Los Angeles and Sacramento,
where its cellular operations compete with the former McCaw operations now owned
by AT&T Wireless. These operations may be able to use the AT&T brand name,
sales, customer service and distribution channels. The Company and AT&T Wireless
jointly operate cellular systems in San Francisco, San Jose, Dallas, Kansas City
and certain other markets through CMT Partners. See "Business-Domestic
Cellular-Joint Ventures-CMT Partners."

For further discussion of competition, see "Business-Investment
Considerations-Competition."

JOINT VENTURES

NEW PAR. In August 1991, the Company and CCI formed New Par, to which CCI
contributed its cellular systems, located primarily in Ohio, and the Company
contributed its cellular systems in Michigan and Ohio. New Par is equally owned
by CCI and the Company and is governed by a four-person committee, with two
members appointed by each company.

In connection with the formation of New Par, the Company and CCI entered into an
agreement (the "Merger Agreement") under which the Company purchased 5% of the
equity in CCI, agreed to purchase additional equity in CCI and obtained the
right to acquire all of CCI's remaining equity in stages over time. Pursuant to
the Merger Agreement, in October 1995, the Company purchased 10.04 million
shares of stock of CCI at $60 per share for a total of $602.4 million, and
options to purchase 10,700 shares for approximately $0.3 million. As of December
31, 1995, the Company's ownership interest in CCI was approximately 37.6% of the
outstanding stock. Also pursuant to the Merger Agreement, in January 1996, the
Company purchased additional options representing approximately 2.4 million
shares of CCI stock for an aggregate consideration of approximately $107.7
million. The option purchase did not affect the Company's percentage ownership
of the outstanding stock of CCI. The average exercise price of the Company's
options acquired in 1995 and 1996 is approximately $15 per share. Under the
Merger Agreement, the Company has the right to increase its ownership in CCI to
up to 49% through open market purchases, privately negotiated transactions, or
otherwise.

Pursuant to a process commencing in August 1996, the Company has the right, by
causing CCI to redeem all of its redeemable stock not held by the Company (the
"Redemption"), to acquire CCI, including its interests in New Par and such other
CCI assets and related liabilities as the Company and CCI may agree upon, at a
price per share that reflects the appraised private market value of New Par (and
such other CCI assets and related liabilities as the Company and CCI agree shall
be retained by the Company) determined in accordance with an appraisal process
set forth in the Merger Agreement. Prior to determining whether to cause the
Redemption, the Company has the opportunity to evaluate up to three different
appraisal values over a 12-month period pursuant to an appraisal process that
begins in August 1996. The Company will finance any Redemption by providing to
CCI any necessary funds.

In the event that the Company does not exercise its right to cause the
Redemption, CCI is obligated to commence promptly a process to sell itself (and,
if directed by the Company, the Company's interest in New Par). In the event
that the Company does not direct CCI to sell the Company's interest in New Par,
such partnership will dissolve and the assets will be returned to the
contributing partners. Alternatively, CCI may purchase the Company's interest in
CCI or in CCI and New Par, as the case may be, at a price based upon their
appraised values determined in 

                                       14
<PAGE>   15
accordance with the Merger Agreement. If CCI or its interest in New Par is sold
within certain specified time periods, not to exceed two years, for a price less
than the appraised private market value, the Company is obligated to pay to all
CCI stockholders a specified percentage of such shortfall.

The amount and timing of any acquisition of additional equity interests in CCI
will depend upon the Company's evaluation of the market for the CCI stock, CCI's
business, prospects and financial condition, other investment opportunities
available to the Company, prospects for the Company's own business, general
economic conditions, money and stock market conditions and other developments,
as well as the Company's rights and obligations under the Merger Agreement.

CMT PARTNERS. In September 1993, the Company and AT&T Wireless (at the time,
McCaw) formed CMT Partners, an equally owned partnership that holds interests in
cellular systems operating in San Francisco, San Jose, Dallas/Ft. Worth, Kansas
City and certain adjacent suburban areas. In a related transaction, the Company
purchased McCaw's Wichita and Topeka systems. CMT Partners is governed by a
four-person committee consisting of two members from each company. CMT Partners
has a fifteen year term, ending in 2008, which may be extended or shortened
under certain circumstances. Upon dissolution of CMT Partners its assets will be
sold unless either the Company or AT&T Wireless elects to have the assets
distributed in kind to the partners.

WMC PARTNERS. In July 1994, the Company and U S WEST entered into an agreement
to combine their domestic cellular properties into a partnership known as WMC
Partners, L.P. ("WMC") in a multi-phased transaction. WMC is governed by an
eight-member committee consisting of four representatives of the Company
(including the president) and three of U S WEST, with an independent member to
cast tie-breaking votes in certain deadlock situations. Voting in the
partnership committee is in proportion to the partners' percentage interests,
and supermajority votes are required in connection with certain matters,
including the approval of business plans.

During the initial phase of the transaction ("Phase I"), which commenced on
November 1, 1995, WMC began providing certain support services to both
companies' domestic cellular and PCS operations, which will continue to be owned
and operated separately by the individual partners throughout Phase I.

In the next phase ("Phase II"), the partners will contribute their existing
domestic cellular properties to WMC, subject to obtaining required consents and
authorizations. Pursuant to the joint venture agreement, this contribution will
occur following the lifting of certain restrictions imposed by the Modification
of Final Judgment ("MFJ") (or earlier, at the Company's option), but in no
event later than July 25, 1998. The Telecommunications Act of 1996 provided
sufficient relief from the restrictions imposed by the MFJ for Phase II to
occur, and the parties are seeking to obtain regulatory and other approvals and
to satisfy other conditions precedent to entering into Phase II. The Company
and U S WEST currently expect that their initial interests in WMC at the
commencement of Phase II will be approximately 70% and 30%, respectively.
However, the actual initial interests of the Company and U S WEST in WMC at the
commencement of Phase II will depend, among other things, upon the timing of
the Phase II closing, the ability of the parties to contribute their domestic
cellular properties to WMC, the timing of the parties' contribution of their
PCS partnership to WMC (and the value of the PCS partnership), and the status
of the Company's transaction with CCI. Subsequent to the closing of Phase II,
each partner will deconsolidate for financial reporting purposes the operations
contributed by it to WMC, using instead the equity method of accounting to
report their respective percentage interests in subsequent operating results of
WMC. The Company could experience near-term earnings dilution in connection
with the contribution of its cellular properties to WMC. The extent of such
dilution, which could be material, will depend upon the relative profitability
of the Company's and U S WEST's respective operations subsequent to the
contribution of such operations.

Concurrent with the formation of WMC, the parties' formed an equally owned
partnership to pursue new PCS opportunities. The partnership is a partner in PCS
PrimeCo. The companies' PCS partnership also will be contributed to WMC. The
timing of such contribution is at U S WEST's discretion and will occur either at
the closing of Phase II or a date selected by U S WEST no later than mid-1998.
The Company expects the PCS partnership to make significant capital investments
for the build-out of PCS markets and to experience substantial operating losses
associated with the start-up phase of the PCS business, which is expected to
last several years. Upon the contribution of the PCS partnership to WMC, the
Company's share of capital investments and operating losses related to the PCS
partnership will increase from 50% to its percentage ownership of WMC. See
"Business-Domestic Cellular-Joint Ventures-PCS PrimeCo."

U S WEST has the right, which is exercisable after (i) the commencement of Phase
II, (ii) the contribution of the PCS partnership, and (iii) the completion of
the Company's transaction with CCI have occurred and expires on July

                                       15
<PAGE>   16
25, 2004, to exchange its interest in WMC for up to 19.9% of the Company's
common stock outstanding at the time of the exchange. Any such exchange would be
made at a ratio reflecting the appraised private market value of U S WEST's
interest in WMC and the appraised public market value of the shares of the
Company's common stock to be acquired by U S WEST in the exchange. In the event
that the value of U S WEST's interest in WMC determined by such appraisals would
result in the issuance to U S WEST of more than 19.9% of the Company's then
outstanding common stock, U S WEST is entitled to receive the excess in the form
of non-voting preferred stock. The Company has amended its stockholder rights
agreement so that U S WEST will not be deemed to be an "Acquiring Person," as
defined therein, by reason of its rights in connection with the exchange.

U S WEST also has the right, exercisable between July 25, 1999, and July 25,
2009, to exchange its interest in WMC for common stock of the Company to be held
by a trust for purposes of systematic sale to the public. Any such exchange
would be made at a ratio reflecting the appraised private market value of U S
WEST's interest in WMC and an average trading price of the Company's common
stock during a period prior to U S WEST's exercise of the right.

The Company has the right to cause the exchange to occur either (a) after full
relief from certain operational restrictions placed on Bell Operating Companies
or July 25, 2004, whichever is later, if there is a deadlock with U S WEST
regarding the management of WMC or (b) at any time after such relief has been
obtained, if at such time U S WEST holds less than a 5% interest in WMC.

Upon the exercise by U S WEST of its right to exchange its interest in WMC for
capital stock of the Company, U S WEST will be entitled to certain governance
rights (including representation on the Company's Board of Directors), as well
as registration rights. U S WEST is subject to certain standstill restrictions
with respect to the Company through July 25, 2004, unless such restrictions are
earlier terminated or suspended.

On March 20, 1996, the Company and U S WEST announced that U S WEST Cellular 
will assume the AirTouch Cellular brand in May 1996, throughout its 12-state 
service area. U S WEST Cellular properties cover 20 million people including 
the major cellular markets of Seattle, Portland, Denver, Phoenix, 
Minneapolis/St. Paul and Salt Lake City.

PCS PRIMECO. In October 1994, the joint venture between the Company and U S WEST
("ATI/USW") joined with the joint venture between Bell Atlantic and NYNEX
("BA/NYN") to form a partnership to jointly pursue PCS opportunities, called PCS
PrimeCo. PCS PrimeCo is owned equally by ATI/USW and BA/NYN, and is governed by
a board composed of three members from each of ATI/USW and BA/NYN. In March
1995, PCS PrimeCo was awarded eleven 30 MHz PCS licenses covering over 57
million POPs in the Chicago, Dallas, Tampa, Houston, Miami, New Orleans,
Milwaukee, Richmond, San Antonio, Jacksonville and Honolulu markets with bids of
approximately $1.1 billion. The acquired markets complement the existing
domestic cellular franchises of the partners. PCS PrimeCo is in the process of
constructing PCS systems in the 11 markets. The Company has already contributed
its share of the PCS license costs and of certain buildout expenses.
Additionally, the Company expects to continue to make significant capital
contributions to PCS PrimeCo and to experience substantial operating losses
associated with the start-up phase of the PCS business, which is expected to
last several years. Currently, the Company has a 25% indirect interest in PCS
PrimeCo, through an interest in its PCS partnership with U S WEST. The Company's
interest in PCS PrimeCo, and accordingly its share of capital contributions and
losses, will increase upon the contribution of the Company's PCS partnership
with U S WEST to WMC. See "Domestic Cellular-Joint Ventures-WMC Partners."

Either ATI/USW or BA/NYN may cause PCS PrimeCo to be dissolved on October 20,
2001, and any PCS properties owned by it to be allocated between them according
to agreed criteria. Bell Atlantic and NYNEX each are subject to certain
standstill restrictions with respect to the Company through October 20, 2001,
unless such restrictions are earlier terminated or suspended.

TOMCOM. Concurrent with the formation of PCS PrimeCo, ATI/USW and BA/NYN formed
another partnership called TOMCOM, L.P. TOMCOM was formed to develop technical
and service standards for the partners' wireless properties, pursue national
marketing strategies, develop information technology, create a national
distribution strategy and implement joint purchasing arrangements. TOMCOM is
governed by a board composed of three members from each of ATI/USW and BA/NYN.

                                       16
<PAGE>   17
Unlike the Company's joint venture with U S WEST, the agreements with BA/NYN do
not provide for a merger of cellular properties. Accordingly, each of ATI/USW
and BA/NYN will continue to hold such properties separately.


                                       17
<PAGE>   18
INTERNATIONAL CELLULAR

The Company has been highly successful in obtaining significant interests in
cellular licenses in some of the world's most attractive markets. The Company's
international cellular interests represented over 112.9 million POPs and 797,000
proportionate customers at December 31, 1995. The following table summarizes the
Company's international cellular investments:

                   OVERVIEW OF INTERNATIONAL CELLULAR VENTURES
           (ALL INFORMATION AS OF 12/31/95 UNLESS OTHERWISE INDICATED)

<TABLE>
<CAPTION>
COUNTRY/VENTURE                                    MARKET        SERVICE          TOTAL             AIRTOUCH            TOTAL 
                                                 POPULATION   INITIATION DATE    VENTURE           INTEREST(1)        LICENSEES
                                                (IN MILLIONS)                   CUSTOMERS                             IN MARKET
<S>                                               <C>          <C>             <C>                 <C>                <C> 
Germany/Mannesmann Mobilfunk                        81.6          6/92         1,457,000             34.8%               3

Portugal/Telecel                                     9.9         10/92           170,000             23.0%(2)            2

Sweden/NordicTel(3)                                  8.8          9/92(4)        147,000             51.1%               3

Belgium/Belgacom Mobile                             10.1          1/94(4)        235,000             25.0%               2

Spain/Airtel                                        39.2         10/95            16,000             16.0%(5)            2

Italy/Omnitel-Pronto Italia                         58.2         10/95            60,000             11.7%(6)            2

Japan
     Tokyo Digital Phone                            42.2          4/94                 *             15.0%               7(8)
     Kansai Digital Phone                           20.6          5/94                 *             13.0%               7(8)
     Central Digital Phone                          14.4          7/94                 *             13.0%               7(8)
                                                                               ---------
                                                                                 787,000

Japan
     Digital TU-KA(7)                               46.3            --                --              4.5%               7(8)

South Korea/Shinsegi                                44.9            --                --             10.7%               2

India - Madras/RPG Cellular Services Limited         6.7          9/95                 *             20.0%               2

India - Madhya Pradesh/CCIL                         72.7            --                --             49.0%               2

Poland/Polkomtel(9)                                 38.8            --                --             19.3%               3
</TABLE>


*        Not disclosed.

(1)      Exclusive of any options, warrants or other rights to increase
         ownership.

(2)      Under an agreement with other shareholders, the Company funds Telecel
         as if it held a 38.89% interest. Amounts funded in excess of the
         Company's actual interest are in the form of interest-free convertible
         loans.

(3)      Through a wholly-owned subsidiary named NordicTel Dk (Dk), NordicTel
         formerly owned 20% of Danish GSM operator Dansk Mobiltelefon ("DMT").
         When the Company became the principal owner of NordicTel, certain DMT
         shareholders claimed the move violated the DMT joint venture agreement
         and could trigger a transfer to them of Dk's interest in DMT. The issue
         is in arbitration.

(4)      The Company acquired its interest after commercial launch. In Belgium,
         reflects launch of digital system only. Analog system was launched in
         January 1987.

(5)      Reflects increase from 15.8% to 16% in February 1996.

(6)      Indirect ownership interest through Pronto-Italia S.p.A.

(7)      Includes Kyushu, Chugoku, Tohoku, Hokkaido, Hokuriku and Shikoku
         regions. Customers will not be disclosed in proportionate customers
         because the Company accounts for these investments on a cost basis.

(8)      Includes up to three licensees operating limited mobility Personal
         Handyphone Services.

(9)      License awarded in February 1996.

                                       18
<PAGE>   19
1995 INTERNATIONAL HIGHLIGHTS

In 1995, the Company increased its ownership interests in its German and Italian
ventures. In India, it acquired an interest in a company licensed to provide
cellular service in Madras, and its consortium won a license to provide service
in the telecom circle in the Madhya Pradesh region. The Company acquired
ownership interests in Japanese Digital TU-KA consortia owning licenses to
operate in the Tohoku, Hokkaido, Hokuriku, and Shikoku markets. In February
1996, the Polish government awarded Polkomtel, a consortium in which the Company
has a 19.3% interest, one of two new national cellular licenses. Poland has a
population of approximately 38.8 million people. As a result of February's
award, there will be three cellular service providers in Poland.

OWNERSHIP RIGHTS AND OBLIGATIONS

The structure of the Company's international cellular interests typically
reflects government preferences or requirements that local owners hold at least
a majority interest in their telecommunications licenses. However, in
structuring its international investments, the Company attempts to obtain
operating influence through board representation, the right to appoint certain
key members of management and consent rights with respect to significant
matters, including amounts of capital contributions, incurrence of recourse debt
and fundamental corporate transactions. In addition, the Company tries to assure
its ability to maintain a position of influence in the company by obtaining
rights of first refusal on future sales and issuances of equity. The particular
governance rights of the Company vary from venture to venture, and are often
dependent upon the size of the Company's investment relative to other investors.
The Company currently has the majority interest in its Swedish venture, the
largest ownership interest in its Spanish venture, the second largest ownership
interest in its German and Italian ventures and in three of its Japanese
ventures, and the third largest ownership interest in its Portuguese and Korean
ventures. In Belgium, the Company is the sole private partner in a joint venture
with the state-owned telecommunications company.

COMPETITION

While competition varies from market to market, in general competition is
increasing in every international market in which the Company's ventures
operate. In most markets, the government-operated cellular system represents at
least one competitor, and countries are increasingly offering third and fourth
cellular licenses in each market. In Japan, there are as many as seven wireless
licensees in certain markets. The Company expects that the German government
will issue an additional 1800 MHz cellular license in 1998, and that the Swedish
government may issue a license to construct a nationwide broadband PCS network
in the near future, bringing the total number of wireless networks to four. In
addition, in 1998 telecommunications regulation in the European Union ("EU")
will be significantly liberalized, enabling a broader group of companies to gain
wider access to the telecommunications industry. See "Business-Investment
Considerations-Competition."

TECHNOLOGY

LEAD TECHNOLOGICAL PARTNER. The Company usually plays the lead role in the
design and construction of the cellular networks for the ventures in which it
has ownership interests. For example, the Company has taken the technical lead
in the construction of the digital cellular systems in Germany, Portugal,
Belgium, Italy, and Spain, as well as for the networks under construction in
South Korea, India (Madhya Pradesh) and Poland, and was integrally involved in
the design and construction of three of the systems in Japan. In each of those
markets, the Company has appointed the director of engineering, who is
responsible for network construction and technical operations.

GSM. The Company's cellular systems in Europe and India conform to the GSM
digital cellular standard. Developed by a standards body within the European
Telecommunications Standards Institute with substantial input from the Company's
engineers, the GSM standard is a wide-band TDMA standard substantially different
from United States TDMA technology and has been adopted by more than 50
countries worldwide, including all those in the EU and others such as Australia,
New Zealand, Singapore, Hong Kong and South Africa. The Company's German
venture, Mannesmann Mobilfunk GmbH, was the first GSM system to offer commercial
service. An employee of one of the Company's European subsidiaries currently
holds the position of Deputy Chairman of the GSM MOU Association, an
organization with 156 members representing 86 countries that oversees GSM
technical standards and promotes the use of GSM throughout the world.

The GSM standard allows users to place and receive calls on any GSM cellular
telephone while traveling in all countries utilizing the standard. A subscriber
identification module ("SIM") card, which contains a microchip

                                       19
<PAGE>   20
identifying the customer, is necessary in order to utilize GSM cellular service.
By inserting the SIM card into any GSM telephone, customers can make calls from
the telephone and have the calls billed directly to them. The card also allows
the subscriber's home GSM system to locate the subscriber on any GSM network
throughout the world. In addition to these conveniences, the SIM card can reduce
fraud significantly, because each subscriber has a unique personal
identification number that must be used in conjunction with the card.

JAPAN DIGITAL CELLULAR STANDARD. The technology utilized by the Company's
Japanese ventures represents Japan's entry into second-generation cellular
communications. The Japan Digital Cellular standard uses narrowband Japanese
TDMA technology and allows enhanced roaming potential and expanded supplementary
services potential. To provide service to customers away from their home
regions, certain of the Company's Japanese ventures are implementing automatic
roaming throughout their combined coverage areas. Customers of any of the
companies will be able to initiate and receive calls anywhere within the
combined coverage area. Two separate digital system frequencies will be utilized
throughout Japan: the 800 MHz band and the 1500 MHz band.

KOREAN CDMA. The Company's cellular venture in South Korea is employing CDMA
technology, developed by Samsung under a license from Qualcomm.

NEW OPPORTUNITIES

The Company constantly evaluates opportunities to increase its ownership in its
existing international ventures, especially where contractual rights of first
refusal provide the Company with favorable opportunities. The Company also plans
to continue pursuing opportunities to acquire new interests in wireless systems
throughout the world. The Company believes that its proven technical, operating
and marketing expertise make it a highly desired participant in consortia formed
to pursue new international opportunities and has been a significant factor in
the success of the subsequent license applications by its consortia.

The Company measures each international investment against such criteria as
demographic factors, the degree of economic, political and regulatory stability,
the quality of local partners and the degree to which the Company would control
or meaningfully participate in management. Until recently, the Company's primary
focus in pursuing licenses had been Western Europe and Asia because the Company
believes that these regions provide the highest potential for value creation;
however, the Company has increasingly been considering opportunities in other
parts of the world. The Company is currently considering pursuing licenses in
Taiwan and Brazil, and expects to pursue other opportunities in the future. The
pursuit of new international wireless telecommunications opportunities is
expected to remain highly competitive, especially in light of the trend toward
the "auctioning" of new wireless licenses in international markets, as opposed
to merit-based selection criteria.

DOMESTIC PAGING

The Company offers local, regional, statewide, and nationwide paging services
under the AirTouch Paging or Message Center USA brand name in over 167 markets
in 29 states, including many of the largest metropolitan areas in the United
States, such as Atlanta, Austin, Boston, Chicago, Cincinnati, Cleveland,
Columbus, Dallas/Fort Worth, Denver, Detroit, El Paso, Fresno, Hartford,
Houston, Indianapolis, Jacksonville, Kansas City, Las Vegas, Los Angeles,
Louisville, Miami, New York, Orlando, Philadelphia, Phoenix, Portland, Reno,
Sacramento, Salt Lake City, St. Louis, San Antonio, San Diego, the San Francisco
Bay Area, Seattle, Tampa/St. Petersburg, Tucson, and Washington, D.C. As of
December 31, 1995, the Company had over 2.4 million paging units in service,
including 349,000 paging units acquired from Message Center Beepers. Based upon
industry surveys, the Company was among the largest providers of paging services
in the United States. The Company's growth strategy is to expand into new
markets through start-ups or acquisitions, to increase its share in existing
markets by providing superior customer service, to refine its mix of
distribution channels, and to provide new narrowband PCS services. As part of
this strategy, during the fourth quarter of 1995, the Company completed its
acquisition of Message Center Beepers, a privately held paging company with
operations predominately in the Northeastern United States.

                                       20
<PAGE>   21
SERVICES

The Company currently offers numeric display, alphanumeric, tone-only and tone
and voice paging service. More than 85% of the Company's customers use numeric
display units, which alert the customer and then display a short message,
usually a telephone number entered by the calling party. The Company's paging
revenues consist primarily of monthly charges for paging service and equipment
rental.

The Company also offers, under the name AirTouch America(R), nationwide 
coverage on its own private carrier paging frequencies through an inter-carrier
agreement with other paging providers and as a reseller of nationwide common 
carrier paging services. In addition, the Company offers a voice retrieval 
service called AirTalkSM, which allows callers to leave voice messages instead 
of telephone numbers. The Company offers, in certain markets, AirTouch News 
CastSM, which provides updated news, financial reports, and weather and sports
information.

In 1994, the Company acquired one nationwide 50/12.5 KHz narrowband PCS license
and three regional 50/12.5 KHz licenses covering the Northeast, Central and
Western regions of the United States. Narrowband PCS may include advanced two -
way acknowledgement paging, data messaging, electronic mail, facsimile
transmissions and voice paging. The Company is currently evaluating different
technology platforms from different suppliers to provide the infrastructure and
customer equipment for its narrowband PCS services. The Company expects to
introduce two-way acknowledgement paging in certain markets in 1996.

MARKETING

The Company utilizes a decentralized marketing approach, tailored to each
market, to promote and sell its paging services. In all of its markets, the
Company relies on both direct and indirect sales channels. The Company conducts
its direct marketing through its sales, service and customer service
representatives, who are located in the Company's local offices in each market.
The Company's indirect sales channels generally consist of resellers, who
purchase paging services from the Company in bulk quantities at a wholesale
monthly rate, and agents and retailers, who sell only pagers and refer
purchasers to the Company for service at the Company's rates. The Company
typically pays agents and retailers a commission for such referrals.

COMPETITION

The Company's paging operations face intense competition from local or regional
carriers as well as from carriers with a broad nationwide presence. Paging
systems compete primarily on the basis of system reliability, geographic
coverage, customer service and price. The Company believes that its extensive
experience in the paging business and emphasis on cost control and customer
service make it an effective paging competitor. Competition is expected to
intensify when narrowband PCS offerings become available in the Company's paging
markets. In addition, in 1995, long-distance carriers Sprint and MCI entered the
paging market as resellers and the paging industry began to consolidate rapidly
with smaller paging carriers being acquired by larger paging carriers. The
largest carrier now has well over 6 million units in service and the second
largest has over 4 million units in service.

INTERNATIONAL PAGING

PORTUGAL

Through Telecel, the Company owns a 23% interest in Telechamada-Servico de
Chamada de Pessoas, S.A. ("Telechamada"), Portugal's first nationwide private
paging company. Telechamada offers numeric and alphanumeric paging services and
began service in October 1992, the same date that Telecel's nationwide cellular
service became available. At December 31, 1995, Telechamada had approximately
35,000 customers.

SPAIN

The Company holds a 17.5% indirect interest in Sistelcom-Telemensaje, S.A.,
which was awarded a nationwide paging license by the Spanish government in
August 1992. Sistelcom-Telemensaje offers tone-only, numeric and alphanumeric
paging services.


                                       21
<PAGE>   22
THAILAND

The Company provides nationwide paging service in Thailand through a 49%
interest in PerCom Service Limited ("PerCom"), which has served all of
Thailand's major population centers since February 1991, and through a wholly
owned subsidiary that has provided service in Bangkok since 1987. These
companies operate together under the name PacLink and jointly serve
approximately 113,900 customers as of December 31, 1995.

FRANCE

The Company has an 18.5% interest in Infomobile, S.A., which offers commercial
paging services in Paris and is constructing a nationwide paging network that
will utilize the European radio messaging standard, ERMES. The Company has
agreed to sell its interest in Infomobile to Bouygues, S.A., Infomobile's
majority shareholder. The transaction is expected to close in March 1996.

OTHER SERVICES

TELETRAC.  In January 1996, the Company sold its vehicle location and fleet 
tracking services business.

GLOBALSTAR. The Company holds a 6.4% interest in Globalstar, L.P.
("Globalstar"), a joint venture led by Loral Space and Communications
Corporation and Qualcomm that will construct and operate a satellite-based
network utilizing CDMA technology to offer communications services on a
worldwide basis. The initial satellite launches are expected to take place in
1997 and 1998, with initial service expected to begin in late 1998. Full
coverage is expected by 1999. The Company has exclusive service provider status
in the United States, Austria, Belgium, the Caribbean, Indonesia, Japan,
Malaysia, The Netherlands, Portugal and Switzerland. The Company is currently in
negotiations to obtain co-exclusive provider status in Canada and Mexico. In
1995, the Company initiated formation of a venture with Sime Darby to provide
Globalstar services in Malaysia.

INTERNATIONAL LONG DISTANCE

The Company presently holds a 10% interest in International Digital
Communications ("IDC"). IDC provides long-distance telephone service between
Japan and over 90 international destinations, including the United States, to
business and residential customers. IDC also offers private leased circuit
services within Japan. In 1991, IDC began offering service over a 5,200 mile
undersea fiber optic cable, the first such cable to connect Japan directly with
the U.S. mainland.

AIR-TO-GROUND

The Company also provides air-to-ground telephone services for general aviation
customers, allowing customers to place calls over the public switched telephone
network while in an airplane, in Elmira, New York, New York City, Atlanta,
Denver, Houston, Phoenix, Seattle and Spokane.

INVESTMENT IN QUALCOMM

The Company owns 400,000 shares of common stock of QUALCOMM, a publicly held
developer of digital mobile communications technology. The Company also holds
warrants to purchase approximately 780,000 additional shares of QUALCOMM common
stock at an exercise price of $5.50 per share, expiring in November 1998.

EMPLOYEES

At December 31, 1995, the Company and its wholly owned subsidiaries had
approximately 6,650 employees. None of the Company's domestic employees are
represented by a labor organization, although employees of certain international
subsidiaries are represented by unions or trade organizations. Management
considers its relations with the Company's employees to be good.

REGULATION

The Company is subject to federal and state regulation as a provider of cellular
and paging services. In addition, the international cellular and paging
operations in which the Company has interests are also subject to regulation.
See "Business-Investment Considerations-Regulation."


                                       22
<PAGE>   23
RECENT DOMESTIC DEVELOPMENTS

Telecommunications Legislation. On February 8, 1996, President Clinton signed
the Telecommunications Act of 1996 (the "Act") into law. The new law
fundamentally changes the domestic rules and regulations under which all
providers of telecommunications services operate. In connection with the
implementation of the Act, the FCC is expected to conduct more than 80 rule
making proceedings during 1996.

The Act affects the Company in a number of ways. First, the Act eliminates the
restrictions set forth in the Modification of Final Judgment ("MFJ") on the
operations of Bell Operating Companies ("BOCs") and replaces them with specific
statutory requirements. The Act settles a claim made by the U.S. Department of
Justice during 1995 that AirTouch was subject to restrictions imposed on BOCs
under the MFJ because the new statutory definition of a BOC excludes entities
such as AirTouch. Accordingly, the Company is not currently subject to the new
statutory restrictions placed on BOCs by the Act. However, WMC is deemed an
affiliate of a BOC by virtue of U S WEST's ownership interest. The Act permits
commercial mobile radio service ("CMRS") affiliates of BOCs, such as WMC, to
offer long-distance service immediately upon enactment and exempts CMRS
operators from equal access requirements otherwise imposed on local telephone
companies, allowing the Company and WMC to sell long-distance services without
having to advertise for their competitors. As a result, the legislation removes
a major obstacle to consummating the second phase of the WMC joint venture.
However, as a BOC affiliate, WMC is subject to restrictions regarding the
provision of long-distance services other than in connection with CMRS. See
"Business-Domestic Cellular-Joint Ventures-WMC Partners."

The Act also modifies requirements for local telephone companies to provide
interconnection services to cellular carriers, which could impact the cost to
the Company of such service. The Company is unable to quantify the impact on its
operations of the changes resulting from the Act.

Federal Preemption of State Regulation. The Company's cellular, paging and PCS
licenses are issued and regulated by the FCC. In August 1995, the FCC preempted
state regulation of cellular rates and market entry, pursuant to the Omnibus
Budget Reconciliation Act of 1993. Because states are preempted from regulating
cellular rates, much of the state regulation to which the Company was previously
subject has been rendered void. Effective January 1, 1996, the Company's paging
services are no longer subject to tariffs, surcharges and user fees levied by
the California Public Utilities Commission ("CPUC") as a result of an amendment
to the California Public Utilities Code. The Company continues to be subject to
state regulation of "terms and conditions" of cellular service other than rates.
The Company does not anticipate that such state regulation will interfere with
efficient operation of its wireless businesses.

California Bundling Restrictions. In 1995, the CPUC removed its prohibition on
the bundling of cellular equipment with carrier service. Previously, cellular
service providers in California were prohibited from requiring that customers
activate service to receive discounts on cellular equipment.

Paging Application Suspension. On February 9, 1996, the FCC released a Notice of
Proposed Rulemaking ("NPRM") on market area licensing for all commercial mobile
radio paging licenses. As part of that NPRM, the FCC temporarily ceased
processing new applications for CMRS paging facilities, except those new
applications for facilities completely located within the existing interference
contour of a CMRS paging licensee. This suspension may last through 1996 and may
require the Company to use its nationwide frequencies to expand and start up new
markets. The NPRM also seeks to auction market area CMRS paging licenses, with
the incumbent licensees being allowed to continue operating their existing
systems.

INTERNATIONAL

The Company's international cellular and paging operations provide services
pursuant to the terms of licenses granted by the telecommunications agency or
similar supervisory authority in the various countries. Such agencies typically
also promulgate and enforce regulations regarding the construction and operation
of network equipment. Other regulations commonly encountered in international
markets include legal restrictions on the percentage ownership of
telecommunications licensees by foreign entities such as the Company, and
transfer restrictions or governmental approval requirements regarding changes in
the ownership of such licensees.

                                       23
<PAGE>   24
ITEM 2.  PROPERTIES.

For each market served by the Company's cellular operations, the Company
maintains at least one sales or administrative office and many transmitter and
antenna sites. Some of the facilities are leased and some are owned. The Company
also maintains both owned and leased sales and administrative facilities for its
paging services. The Company believes that its facilities are suitable for its
current business and that additional facilities will be available to satisfy its
foreseeable needs.

ITEM 3.  LEGAL PROCEEDINGS.

In November 1993, four class action complaints were filed, three in Orange
County Superior Court and one in the United States District Court for the
Central District of California, naming, among others, the Company, and alleging
that the Company, as general partner of Los Angeles SMSA Limited Partnership,
and Los Angeles Cellular Telephone Company conspired to fix the prices of retail
and wholesale cellular radio services in the Los Angeles market. The complaints
seek damages for the class "in a sum in excess of $100,000,000." The federal
suit has been dismissed and the three state cases have been consolidated for
purposes of discovery. The case has been removed to federal court. The other
cases have been stayed pending resolution of a motion to remand the case to
state court. The Company does not believe that these proceedings will have a 
material adverse effect on the Company's financial position.

In 1994, two class action complaints were filed, one in San Diego County
Superior Court and one in the United States District Court for the Southern
District of California, alleging that the Company and U S WEST conspired to fix
the prices of retail and wholesale cellular radio services in the San Diego
market. The state case has been stayed pending the outcome of the federal case.
Discovery is taking place and a class has been agreed to for certification. In
late 1995, the California Court of Appeals reversed a state trial court
decision dismissing the remaining plaintiff in a suit originally brought by a
U S WEST agent against U S WEST and the Company in 1990. The Company does not 
believe that these proceedings will have a material adverse  effect on the 
Company's financial position.

In 1994, a class action complaint was filed in San Francisco Superior Court
alleging that Bay Area Cellular Telephone Company, in which the Company has an
indirect interest, and GTE Mobilnet conspired to fix the prices of retail and
wholesale cellular radio services in the San Francisco Bay Area market. This
action is still in the preliminary pleading phase. The Company intends to defend
itself vigorously and does not expect that these proceedings will have a
material adverse effect on its financial condition.

In September 1995, a class action lawsuit was brought on behalf of all the
Company's cellular customers nationwide regarding customer notification of the
Company's practice with respect to billing for fractional minutes of service. No
dispositive motions have been filed in the proceeding and discovery has not yet
begun. The Company believes the lawsuit to be without merit.

The Company is party to various other legal proceedings in the ordinary course
of business. Although the ultimate resolution of these various other proceedings
cannot be ascertained, management does not believe they will have a material
adverse effect on the results of operations or financial position of the
Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders during the quarter ended
December 31, 1995.

                                       24
<PAGE>   25
EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below is certain information concerning the persons who serve as
executive officers of the Company. The executive officers serve at the pleasure
of the Board of Directors and are subject to removal at any time.

<TABLE>
<CAPTION>
       NAME                     AGE                  POSITION AND OFFICES HELD
       ----                     ---                  -------------------------
<S>                             <C>        <C>
    Sam Ginn                     59        Chairman of the Board and Chief Executive Officer

    C. Lee Cox                   55        Vice Chairman of the Board

    Arun Sarin                   41        Vice Chairman of the Board

    Mohan S. Gyani               44        Executive Vice President and Chief Financial Officer

    Margaret G. Gill             56        Senior Vice President, Legal, External Affairs and Secretary

    Dwight Jasmann               60        Vice President, Human Resources and Corporate Services
</TABLE>

Mr. Ginn has been Chairman of the Board and Chief Executive Officer of the
Company since December 1993. He was Chairman of the Board, President and Chief
Executive Officer of Pacific Telesis Group from 1988 to April 1994 and became a
director of Pacific Telesis Group in 1983. He was Chairman of the Board of
Pacific Bell from 1988 to April 1994. Mr. Ginn is also a director of Chevron
Corporation, Safeway Inc., Transamerica Corporation, and Hewlett-Packard
Company.

Mr. Cox was named Vice Chairman of the Board in November 1994, and has been
President and Chief Executive Officer of AirTouch Cellular since November 1990.
He was President and Chief Operating Officer of the Company from December 1993
to November 1994. He was President and Chief Executive Officer of the Company
from 1987 to December 1993, was a director of the Company from 1987 to April
1993 and became a director again in January 1994. He was a director and a Group
President of Pacific Telesis Group from 1988 to April 1994. Mr. Cox is a
director of Cellular Communications, Inc. and Pacific Gas & Electric Company.

Mr. Sarin became Vice Chairman of the Board in August 1995, and has been
President and Chief Executive Officer of AirTouch International since May 1995.
He was Senior Vice President, Corporate Strategy/Development and International
Operations until August 1995, and was also responsible for Human Resources
through 1994. He was Vice President, Organization Design of Pacific Telesis
Group from March 1993 to April 1994. Mr. Sarin joined Pacific Telesis Group in
1984 and held a variety of positions there until the spin-off of the Company in
April 1994.

Mr. Gyani became Executive Vice President and Chief Financial Officer of the
Company in September 1995. From November 1993 until that time he was Vice
President, Finance and Treasurer of the Company. He was Vice President and
Treasurer of Pacific Telesis Group from March 1993 to November 1993. From
February 1992 to March 1993 he was Vice President and Controller at Pacific
Bell. From November 1991 to February 1992 he was Vice President Financial
Assurance for Pacific Bell. From April 1989 to November 1991 he was Assistant
Treasurer at Pacific Telesis Group. Mr. Gyani is a director of Cellular
Communications, Inc.

Mrs. Gill became Senior Vice President, Legal, External Affairs and Secretary of
the Company in January 1994. She had been a partner in the law firm of Pillsbury
Madison & Sutro since 1973 and was the head of the firm's Corporate and
Securities Group. Mrs. Gill is a director of Consolidated Freightways, Inc.

Mr. Jasmann has been Vice President, Human Resources and Corporate Services
since January 1995. He was an international telecommunications consultant from
1993 to 1994. From 1987 to 1992 he was President and Managing Director for AT&T
Asia/Pacific Communications Services, Inc. Mr. Jasmann is a director of Elcotel,
Inc.


                                       25
<PAGE>   26
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

Part of the information required by this Item is set forth in the Company's 1995
Annual Report to Stockholders on page 65, which portions are incorporated herein
by reference.

The Company currently intends to retain future earnings for the development of
its business and does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. The Company's future dividend policy will be
determined by its Board of Directors on the basis of various factors, including
the Company's results of operation, financial condition, capital requirements
and investment opportunities.

ITEM 6.  SELECTED FINANCIAL DATA.

The information required by this Item is set forth in the Company's 1995 Annual
Report to Stockholders on pages 18 through 20, which portions are incorporated
herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

The information required by this Item is set forth in the Company's 1995 Annual
Report to Stockholders on pages 21 through 37, which portions are incorporated
herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this Item is set forth in the Company's 1995 Annual
Report to Stockholders on pages 38 through 64, which portions are incorporated
herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

The information required by this Item is set forth in the Company's Current
Report on Form 8-K: Date of Report: June 30, 1995, which is incorporated herein
in its entirety by reference.

  
                                       26
<PAGE>   27
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this Item is set forth under "Executive Officers of
the Registrant" at the end of Part I of this report and under the headings
"Class II-Nominees for Election", "Class III-Directors Continuing in Office
Until the 1997 Annual Meeting of Stockholders" and "Class I-Directors Continuing
in Office Until the 1998 Annual Meeting of Stockholders" on pages 2 through 4
and "Compliance with Section 16(a) of the Exchange Act" on page 21 of the
Company's 1996 Proxy Statement, which are incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION.

The information required by this Item is set forth under the headings "Director
Compensation" on page 5 and "Executive Compensation" and "Employment Contracts
and Termination of Employment or Change-in-Control Arrangements" on pages 9
through 19 of the Company's 1996 Proxy Statement, which are incorporated herein
by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this Item is set forth on pages 7 and 8 of the
Company's 1996 Proxy Statement, which is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is set forth under the heading "Certain
Relationships and Related Transactions" on pages 19 and 20 of the Company's 1996
Proxy Statement, which are incorporated herein by reference.

                                       27
<PAGE>   28
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report:

    1.  Financial Statements:

        AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES

            The financial statements required by this Item are set forth in the
            Company's 1995 Annual Report to Stockholders on pages 38 through 64,
            which portions are incorporated herein by reference.

        CMT PARTNERS

            Report of Independent Accountants 
            Consolidated Balance Sheets - December 31, 1995 and 1994
            Consolidated Statements of Income and Changes in Partners' Equity -
            For the year ended December 31, 1995 and 1994 and the four-month
                period from September 1, 1993 (inception) to December 31, 1993 
            Consolidated Statements of Cash Flows - For the year ended December
                31, 1995 and 1994 and the four-month period from September 1,
                1993 (inception) to December 31, 1993
            Notes to Consolidated Financial Statements
            Financial Statement Schedules
                Report of Independent Accountants
                Schedule II - Valuation and Qualifying Accounts and Reserves

        MANNESMANN MOBILFUNK GMBH

            Independent Auditors' Report
            Balance Sheets - December 31, 1995 and 1994
            Statements of Income - Years ended December 31, 1995, 1994, and 1993
            Statements of Capital Subscribers' Equity - Years ended December 31,
                1995, 1994, and 1993 
            Statements of Cash Flows - Years ended December 31, 1995, 1994, and
                1993 
            Notes to Financial Statements

        NEW PAR

            Report of Independent Auditors
            Consolidated Balance Sheets - December 31, 1995 and 1994
            Consolidated Statements of Income - Years ended December 31, 1995,
                1994, and 1993
            Consolidated Statement of Partners' Capital - Years ended December
                31, 1995, 1994, and 1993 
            Consolidated Statements of Cash Flows - Years ended December 31,
                1995, 1994, and 1993 
            Notes to Consolidated Financial Statements
            Financial Statement Schedules
                Schedule II - Valuation and Qualifying Accounts

        CELLULAR COMMUNICATIONS, INC.

            The financial statements required by this Item are incorporated
            herein by reference to the Cellular Communications, Inc. Annual
            Report on Form 10-K for the period ended December 31, 1995, Item 8
            and Item 14(a) and (d), File No. 1-10789.


                                       28
<PAGE>   29
    2.  Financial Statement Schedules:

        AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES

            Schedule II -- Valuation and Qualifying Accounts and Reserves

            Schedules other than those listed above are omitted because they are
            either not required or not applicable, or the required information
            is presented in the Consolidated Financial Statements.

    3.  Exhibits.

        Exhibits identified in parentheses below, on file with the Commission,
        are incorporated by reference as exhibits hereto.

        EXHIBIT
        NUMBER    DESCRIPTION
        ------    -----------

         3.1      Certificate of Incorporation of the Company, as filed with the
                  Secretary of State of the State of Delaware on September 19,
                  1994 (Exhibit 3.i to the Company's Form 8-K - Date of Report:
                  December 15, 1994, File No. 1-12342)

         3.2      Designation, Preferences and Rights of Series A Participating
                  Preferred Stock of the Company, as filed with the Secretary of
                  State of the State of Delaware on December 15, 1994 (Exhibit
                  3.2 to the Company's Form 8-B, File No. 1-12342, filed January
                  27, 1995)

         3.3      Amended By-laws of the Company as of February 8, 1996

         4.1      Form of Common Stock certificate (Exhibit 4.1 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1994, File No. 1-12342))

         4.2      Rights Agreement between the Company and The Bank of New York,
                  Rights Agent, dated as of September 19, 1994 (Exhibit 4 to the
                  Company's Current Report on Form 8-K - Date of Report:
                  December 15, 1994, File No. 1-12342)

         10.1     Joint Venture Agreement between Mannesmann Kienzle GmbH,
                  Pacific Telesis Netherlands B.V., Cable and Wireless plc, DG
                  Bank Deutsch Genossenschaftsbank and Lyonnaise des Eaux SA
                  dated June 30, 1989 (Exhibit 10.43 to the Company's
                  Registration Statement on Form S-1, Registration No. 33-68012,
                  filed August 27, 1993)

         10.2     Amended and Restated Plan of Merger and Joint Venture
                  Organization by and among the Company, CCI, CCI Newco, Inc.
                  and CCI Newco Sub, Inc. dated as of December 14, 1990 (Exhibit
                  1 to the Company's Statement on Schedule 13D filed on February
                  18, 1992, File No. 1-12342)

         10.3     Termination Agreement by and among Pacific Telesis Group, the
                  Company, CCI and Cellular Communications of Ohio, Inc. dated
                  December 11, 1992 (Exhibit 5 to Amendment No. 28 to the
                  Company's Statement on Schedule 13D filed on December 12,
                  1992, File No. 1-12342)

         10.4     Separation Agreement by and between the Company and Pacific
                  Telesis Group, dated as of October 7, 1993 (Exhibit 10.1 to
                  the Company's Registration Statement on Form S-1, Registration
                  No. 33-68012, filed August 27, 1993)

         10.5     Amendment No. 1 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated November 2, 1993 (Exhibit
                  10.2 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1993, File No. 1-12342)

         10.6     Amendment No. 2 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated as of March 25, 1994 (Exhibit
                  10.6 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1994, File No. 1-12342)

         10.7     Amendment No. 3 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated as of April 1, 1994 (Exhibit
                  10.7 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1994, File No. 1-12342)

         10.8     Amendment No. 4 to Separation Agreement between the Company
                  and Pacific Telesis Group dated as of March 21, 1995

         10.9     Agreement on Retirement and Relocation Benefits between Mr.
                  Christensen and the Company, dated as of March 31, 1994
                  (Exhibit 10.10 to the Company's Annual Report on Form 10-K for
                  the period ended December 31, 1994, File No. 1-12342)


                                       29

<PAGE>   30
         10.10    Amended and Restated Joint Venture Organization Agreement
                  dated as of September 30, 1995 between the Company and U S
                  WEST Inc. (Exhibit 2.1 to the Company's Quarterly Report on
                  Form 10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.11    Amended and Restated Agreement of Limited Partnership of WMC
                  Partners, L.P. dated as of September 30, 1995 by and between
                  the Company and U S WEST Inc. (Exhibit 10.1 to the Company's
                  Quarterly Report on Form 10-Q for the period ended September
                  30, 1995, File No. 1-12342)

         10.12    Amended and Restated Agreement of Limited Partnership of PCS
                  Nucleus, L. P. dated as of September 30, 1995 by and between
                  the Company and U S WEST Inc. (Exhibit 10.2 to the Company's
                  Quarterly Report on Form 10-Q for the period ended September
                  30, 1995, File No. 1-12342)

         10.13    Amended and Restated Investment Agreement dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.3 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342) 

         10.14    Amended and Restated Agreement of Exchange dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.4 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.15    Amended and Restated Trust Agreement of Exchange dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.5 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.16    Agreement of Limited Partnership dated as of October 20, 1994
                  between CELLCO Partnership and WMC Partners, L.P. (Exhibit
                  10.1 to the Company's Form 8-K - Date of Report: October 20,
                  1994, File No. 1-12342) 

         10.17    Agreement of Limited Partnership dated as of October 20, 1994
                  of PCS PrimeCo, L.P. (Exhibit 10.2 to the Company's Form 8-K -
                  Date of Report: October 20, 1994, File No. 1-12342)
                  

         10.18    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications, Inc. and Bell Atlantic Corporation
                  (Exhibit 10.3 to the Company's Form 8-K - Date of Report:
                  October 20, 1994, File No. 1-12342) 

         10.19    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications and NYNEX Corporation (Exhibit 10.4 to
                  the Company's Form 8-K - Date of Report: October 20, 1994,
                  File No. 1-12342) 

         10.20    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications and CELLCO Partnership (Exhibit 10.5
                  to the Company's Form 8-K - Date of Report: October 20, 1994,
                  File No. 1-12342) 

         10.21    Credit Agreement between the Company, Bank of America National
                  Trust and Savings Association and The Other Financial
                  Institutions Party Thereto dated July 20, 1995 (Exhibit 10 to
                  the Company's Quarterly Report on Form 10-Q for the period
                  ended June 30, 1995, File No. 1-12342)

         10.22    Amended and Restated Partnership Agreement dated as of
                  September 1, 1993 by and between Members of the PacTel Group
                  and Members of the McCaw Group (Exhibit 28(a) to McCaw
                  Cellular Communications, Inc. Current Report on Form 8-K for
                  the period ended October 1, 1991, File No. 0-16051)

         10.23    Representative Employment Agreement for Messrs. Ginn, Cox,
                  Sarin and Gyani and Mrs. Gill (Exhibit 10.22 to the Company's
                  Annual Report on Form 10-K for the period ended December 31,
                  1994, File No. 1-12342) 

         10.24    Representative Employment Agreement for other officers of the
                  Company (Exhibit 10.23 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1994) 

         10.25    Form of Indemnity Agreement between the Company and each of
                  its directors and certain officers (Exhibit 10.24 to the
                  Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342) 

         10.26    Trust Agreement No. 1 for AirTouch Communications, Inc.
                  Supplemental Executive Pension Plan Benefits (Exhibit 10.25 to
                  the Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342) 

         10.27    AirTouch Communications, Inc. Deferred Compensation Plan
                  (Exhibit 10.26 to the Company's Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342) 

         10.28    AirTouch Communications, Inc. Deferred Compensation Plan for
                  Nonemployee Directors (Exhibit 10.10 to the Company's Annual
                  Report on Form 10-K for the period ended December 31, 1993,
                  File No. 1-12342)

                                       30
<PAGE>   31
         10.29    AirTouch Communications, Inc. Supplemental Executive Pension
                  Plan (Exhibit 10.12 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1993, File No. 1-12342)

         10.30    AirTouch Communications, Inc. Executive Life Insurance Plan
                  (Exhibit 10.13 to the Company's Annual Report on Form 10-K for
                  the period ended December 31, 1993, File No. 1-12342)
        

         10.31    AirTouch Communications, Inc. Executive Long-Term Disability
                  Plan (Exhibit 10.14 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1994, File No. 1-12342)

         10.32    Description of the Company's Business Travel Accident
                  Insurance for Non-Employee Directors (Exhibit 10.31 to the
                  Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342)

         10.33    AirTouch Communications, Inc. 1993 Long Term Stock Incentive
                  Plan Amended and Restated as of December 15, 1994

         10.34    Description of the Executive Financial Counseling Program

         13       1995 Annual Report to Security Holders - Financial Section

         21       Subsidiaries of the Registrant

         23.1     Consent of Price Waterhouse LLP

         23.2     Consent of Coopers & Lybrand LLP

         23.3     Consent of Ernst & Young LLP

         23.4     Consent of KPMG Deutsche Treuhand-Gesellschaft

         23.5     Consent of Coopers & Lybrand LLP - Re: CMT Partners

         23.6     Consent of Ernst & Young LLP - Re: New Par

         24       Power of Attorney

         27       Financial Data Schedule

         99.1     The Company's Current Report on Form 8-K: Date of Report: June
                  30, 1995, File No. 1-12342

         99.2     Coopers & Lybrand LLP Report of Independent Accountants on the
                  Company's consolidated financial statements for each of the
                  two years in the period ended December 31, 1994


         99.3     Annual Report on Form 11-K for the AirTouch Communications,
                  Inc. Retirement Plan for the year 1995 (To be filed as an
                  amendment hereto within 180 days of the end of the period
                  covered by this report)

         99.4     Cellular Communications, Inc. financial statements for each of
                  the three years in the period ended December 31, 1995
                  (Cellular Communications, Inc. Annual Report on Form 10-K for
                  the period ended December 31, 1995, Item 8 and Item 14(a) and
                  (d), File No. 1-10789)

(b)      Reports on Form 8-K:

                  Date of Report:  June 30, 1995
                  Date of Report:  September 20, 1995
                  Date of Report:  October 10, 1995


                                       31
<PAGE>   32
                                   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.

AIRTOUCH COMMUNICATIONS, INC.

By:           /s/  Mohan S. Gyani
              ---------------------------------
              Mohan S. Gyani
              Executive Vice President and Chief Financial Officer

              Date:  March 26, 1996

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

<TABLE>
<CAPTION>
Signatures                              Title
----------                              -----
<S>                               <C>
Sam Ginn *                        Chairman of the Board and Chief Executive Officer
                                  (Principal Executive Officer)

Mohan S. Gyani *                  Executive Vice President and Chief
                                  Financial Officer
                                  (Principal Financial and Accounting Officer)

C. Lee Cox *                      Vice Chairman of the Board

Arun Sarin                        Vice Chairman of the Board

Carol Bartz *                         Director

James R. Harvey *                     Director

Paul Hazen *                          Director

Donald G. Fisher *                    Director

Arthur Rock  *                        Director

Charles R. Schwab *                   Director

George P. Shultz *                    Director
</TABLE>

* By:         /s/  Mohan S. Gyani
              --------------------------------------------
              Mohan S. Gyani, Attorney-in-fact
              Executive Vice President and Chief Financial Officer

              Date:  March 26, 1996


                                       32
<PAGE>   33
                                    INDEX TO
            SEPARATE FINANCIAL STATEMENTS OF SIGNIFICANT ENTITIES NOT
         CONSOLIDATED AND AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
                          FINANCIAL STATEMENT SCHEDULES

<TABLE>
<S>                                                                                  <C>
CMT PARTNERS
   Report of Independent Accountants............................................      S-3
   Consolidated Balance Sheets - December 31, 1995 and 1994 ....................      S-4
   Consolidated Statements of Income and Changes in Partners' Equity - for the
     years ended December 31, 1995 and 1994 and the four-month period
     from September 1, 1993 (inception) to December 31, 1993 ...................      S-5
   Consolidated Statements of Cash Flows - for the years ended
     December 31, 1995 and 1994 and the four-month period
     from September 1, 1993 (inception) to December 31, 1993 ...................      S-6
   Notes to Financial Statements................................................      S-7
   Financial Statement Schedules
     Report of Independent Accountants..........................................     S-15
     Schedule II - Valuation and Qualifying Accounts and Reserves ..............     S-16

MANNESMANN MOBILFUNK GMBH
   Independent Auditors' Report.................................................     S-18
   Balance Sheets - December 31, 1995 and 1994..................................     S-19
   Statements of Income (Loss) - Years ended December 31, 1995, 1994 and 1993 ..     S-21
   Statements of Capital Subscribers' Equity - Years ended
     December 31, 1995, 1994, and 1993..........................................     S-22
   Statements of Cash Flows - Years ended December 31, 1995, 1994 and 1993 .....     S-23
   Notes to Financial Statements................................................     S-24

NEW PAR
   Report of Independent Auditors...............................................     S-36
   Consolidated Balance Sheets - December 31, 1995 and 1994 ....................     S-37
   Consolidated Statements of Income - Years ended
     December 31, 1995, 1994 and 1993...........................................     S-38
   Consolidated Statements of Partners' Capital - Years ended
     December 31, 1995, 1994 and 1993...........................................     S-39
   Consolidated Statements of Cash Flows - Years ended
     December 31, 1995, 1994 and 1993...........................................     S-40
   Notes to Consolidated Financial Statements...................................     S-41
   Financial Statement Schedules
     Schedule II - Valuation and Qualifying Accounts............................     S-53

CCI
   The financial statements required by this Item are incorporated herein by
   reference to the Cellular Communications, Inc. Annual Report on Form 10-K for
   the period ended December 31, 1995, Item 8 and Item 14 (a) and (d), File 
   No. 1-10789.

AIRTOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
   Financial Statement Schedules
    Reports of Independent Accountants..........................................      X-1
    Schedule II - Valuation and Qualifying Accounts and Reserves ...............      X-3
</TABLE>


                                       S-1
<PAGE>   34
                                  CMT PARTNERS

                        CONSOLIDATED FINANCIAL STATEMENTS

               for the years ended December 31, 1995 and 1994 and
          for the four-month period from September 1, 1993 (inception)
                              to December 31, 1993

                                     S-2
<PAGE>   35
                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of CMT Partners:

We have audited the accompanying consolidated balance sheets of CMT Partners
(the Partnership) as of December 31, 1995 and 1994 and the related consolidated
statements of income, changes in partners' equity and cash flows for the years
ended December 31, 1995 and 1994, and for the four-month period from September
1, 1993 (inception) to December 31, 1993. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit. We did not audit
the financial statements of Kansas Combined Cellular, which statements reflect
total assets of 14% and 13% as of December 31, 1995 and 1994, respectively, and
total revenues of 16%, 12%, and 13% for the years ended December 31, 1995 and
1994, and for the four-month period from September 1, 1993 (inception) to
December 31, 1993, respectively. Those statements were audited by other auditors
whose reports have been furnished to us, and our opinion, insofar as it relates
to the amounts included for Kansas Combined Cellular, is based solely on the
report of other auditors.

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

In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of CMT Partners as of
December 31, 1995 and 1994 and the results of its operations and its cash flows
for the years ended December 31, 1995 and 1994, and for the four-month period
from September 1, 1993 (inception) to December 31, 1993 in conformity with
generally accepted accounting principles.

/s/ Coopers & Lybrand L.L.P.

San Francisco, California

February 1, 1996

                                     S-3
<PAGE>   36
                                  CMT PARTNERS

                           CONSOLIDATED BALANCE SHEETS

                           December 31, 1995 and 1994

                                 (in thousands)
<TABLE>
<CAPTION>


                                    ASSETS                                                  1995                1994
<S>                                                                                     <C>                <C>
Current assets:
   Cash and cash equivalents                                                            $  1,317           $   2,150
   Accounts receivable:
       Trade accounts receivable, net of allowance for doubtful accounts
            of $4,424 and $3,135 in 1995 and 1994, respectively                           80,129              59,441
       Other accounts receivable, net of allowance for doubtful accounts
            of $1,265 and $93 in 1995 and 1994, respectively                              25,126              18,190
   Due from affiliates                                                                       210               3,466
   Inventory                                                                              12,205               5,028
   Other                                                                                   4,961               1,059
                                                                                        --------           ---------
           Total current assets                                                          123,948              89,334

Property and equipment, net of accumulated depreciation of $189,143
   and $150,693 in 1995 and 1994, respectively                                           224,798             189,986
Unconsolidated investment                                                                104,574             105,423
Intangibles, net of accumulated amortization of $34,368 and $30,502 in
   1995 and 1994, respectively                                                            73,864              76,464
                                                                                        --------           ---------
                                                                                        $527,184           $ 461,207
                                                                                        ========           =========

                  LIABILITIES AND PARTNERS' EQUITY

Current liabilities:

   Accounts payable                                                                     $ 21,814           $  18,201
   Accrued expenses                                                                       30,557              28,306
   Other current liabilities                                                               5,699               3,251
                                                                                        --------           ---------
           Total current liabilities                                                      58,070              49,758
                                                                                        --------           ---------
Minority interests                                                                        14,226              13,158
                                                                                        --------           ---------
Commitments and contingencies (Note 8).

Partners' equity                                                                         454,888             398,291
                                                                                        --------           ---------
     Total partners' equity                                                              454,888             398,291
                                                                                        --------           ---------
                                                                                        $527,184           $ 461,207
                                                                                        ========           =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                     S-4
<PAGE>   37
                                  CMT PARTNERS

                      CONSOLIDATED STATEMENTS OF INCOME AND
                           CHANGES IN PARTNERS' EQUITY

                 for the years ended December 31, 1995 and 1994,
          and the four-month period from September 1, 1993 (inception)
                              to December 31, 1993

                                 (in thousands)

<TABLE>
<CAPTION>
                                                         1995           1994            1993
<S>                                                 <C>            <C>              <C>
Revenues                                            $ 515,010      $ 404,209        $110,848

Expenses:
    Cost of revenues                                  120,242         78,700          20,102
    Selling, general and administrative               193,304        154,849          45,380
    Depreciation and amortization                      50,319         41,835          19,615
                                                    ---------      ---------        --------
                                                      363,865        275,384          85,097
                                                    ---------      ---------        --------
       Operating income                               151,145        128,825          25,751

Earnings in unconsolidated investment                  24,651         18,363           4,178
Minority interests                                     (7,799)        (6,955)         (1,662)
                                                    ---------      ---------        --------
       Net income                                     167,997        140,233          28,267

Partners' equity, beginning of period                 398,291        349,458         361,191
Distributions to partners                            (111,400)      (104,200)        (32,000)
Contribution from partners                                 --         12,800           4,800
Contribution receivable from partner                       --             --         (12,800)
                                                    ---------      ---------        --------
Partners' equity, end of period                     $ 454,888      $ 398,291        $349,458
                                                    =========      =========        ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.


                                       S-5
<PAGE>   38
                                  CMT PARTNERS

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 for the years ended December 31, 1995 and 1994,
          and the four-month period from September 1, 1993 (inception)
                              to December 31, 1993

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                         1995            1994           1993
<S>                                                                 <C>             <C>             <C>
Cash flows from operating activities:
    Net income                                                      $ 167,997       $ 140,233       $ 28,267
                                                                    ---------       ---------       --------
Adjustments to reconcile net income to net cash provided by
       operating activities:

    Depreciation and amortization                                      50,319          41,835         19,615
    Minority interest                                                   7,799           6,955          1,662
    Earnings in unconsolidated investment                             (24,651)        (18,363)        (4,178)
    Loss on disposition of property and equipment                       1,171           1,644             25
    Changes in assets and liabilities:
      Trade accounts receivable, net                                  (20,688)        (23,191)        (2,917)
      Other accounts receivable, net                                   (6,936)        (12,409)        (2,352)
      Inventory                                                        (7,177)         (2,093)            --
      Other current assets                                             (3,902)           (537)        (1,153)
      Accounts payable                                                  3,613          10,547          1,771
      Accrued expenses                                                  2,251           4,301          7,035
      Other current liabilities                                         2,448            (583)            37
                                                                    ---------       ---------       --------
                                                                        4,247           8,106         19,545
                                                                    ---------       ---------       --------
              Net cash provided by operating activities               172,244         148,339         47,812
                                                                    ---------       ---------       --------

Cash flows from investing activities:
    Purchase of property and equipment                                (82,436)        (69,585)       (17,864)
    Contributions to unconsolidated investment                             --          (5,099)        (4,800)
    Distributions from unconsolidated investment                       25,500          13,600             --
    (Increase) decrease in other assets                                (1,266)            245           (658)
                                                                    ---------       ---------       --------
              Net cash used for investing activities                  (58,202)        (60,839)       (23,322)
                                                                    ---------       ---------       --------
Cash flows from financing activities:
    Distributions to partners of CMT                                 (111,400)       (104,200)       (32,000)
    Distributions to minority partners                                 (6,731)         (4,980)        (2,100)
    Due to (from) affiliates, net                                       3,256            (585)        (4,645)
    Partners' contribution                                                 --          12,800          4,800
                                                                    ---------       ---------       --------
              Net cash used for financing activities                 (114,875)        (96,965)       (33,945)
                                                                    ---------       ---------      ---------
                  Net decrease in cash                                   (833)         (9,465)        (9,455)
Cash and cash equivalents, beginning of period                          2,150          11,615         21,070
                                                                    ---------       ---------      ---------
Cash and cash equivalents, end of period                            $   1,317       $   2,150      $  11,615
                                                                    =========       =========      =========
</TABLE>

Supplemental disclosure of noncash activities:
         As of December 31, 1993, $12.8 million of the initial contribution from
         a partner was outstanding. The amount of the contribution was paid by
         the partner in 1994.

   The accompanying notes are an integral part of these financial statements.

                                       S-6
<PAGE>   39
                                  CMT PARTNERS

                         NOTES TO FINANCIAL STATEMENTS



1.    ORGANIZATION AND NATURE OF OPERATIONS:

      CMT Partners (the Partnership) was formed on September 1, 1993 (inception)
      pursuant to the Amended and Restated Partnership Agreement dated as of
      September 1, 1993 between subsidiaries of AirTouch Communications, Inc.
      (ATI), formerly PacTel Corporation, and subsidiaries of AT&T Wireless
      Services, Inc. (AT&TWS), formerly McCaw Cellular Communications, Inc.
      (MCCI). The Partnership is a Delaware general partnership equally owned by
      ATI and AT&TWS through the following contributions:

<TABLE>
<CAPTION>
                                                                                               CONTRIBUTIONS
                                                                                                    TO
                                    GENERAL PARTNERS                                           CMT PARTNERS
<S>                                                                                            <C>
                  AirTouch Communications, Inc.:
                     Bay Area Cellular Telephone Company (BACTC)                                   61.099%
                     Interest in A Block licensee in Dallas-Fort Worth, TX (D/FW)                  33.915%

                  AT&T Wireless Services, Inc.:
                     Cagal Cellular Communications Corporation (Cagal)                             80.370%
                     Salinas Cellular Telephone Company (Salinas)                                  85.930%
                     Napa Cellular Telephone Company (Napa)                                        99.999%
                     Net operating assets of A Block licensee in
                         Kansas City, MO (Kansas City)                                            100.000%
                     St. Joseph CellTel Co (St. Joseph)                                            87.000%
                     Net operating assets of A Block licensee in
                         Lawrence, KS (Lawrence)                                                  100.000%
                     BACTC                                                                         32.900%
</TABLE>

      The initial contributions were accounted for at the net book value of the
      assets and liabilities of the entities. Each of the entities holds a
      license or licenses from the Federal Communication Commission (FCC) and
      state authorities to operate cellular telephone systems in Metropolitan
      Statistical Areas (MSAs) as listed below:

<TABLE>
<CAPTION>
<S>                                                            <C>
         Bay Area Cellular Telephone Company                   San Francisco/San Jose, CA
         Metroplex                                             Dallas-Fort Worth, TX
         Cagal Cellular Communications Corporation             Santa Rosa, CA
         Salinas Cellular Telephone Company                    Salinas, CA
         Napa Cellular Telephone Company                       Napa/Vallejo, CA
         Net operating assets of A Block licensee              Kansas City, MO
         St. Joseph CellTel Co                                 St. Joseph, MO
         Net operating assets of A Block licensee              Lawrence, KS
</TABLE>





                                   Continued
                                                          
                                      S-7
<PAGE>   40
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         PRINCIPLES OF CONSOLIDATION:

         The consolidated financial statements of the Partnership include the
         accounts of all significant ownership interests which include the
         accounts of BACTC, Combined Suburban Cellular (CSC), and Kansas
         Combined Cellular (KCC). CSC is comprised of the Cagal, Salinas and
         Napa cellular markets. KCC is comprised of the Kansas City, St. Joseph,
         and Lawrence cellular markets.

         USE OF ESTIMATES:

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         REVENUE RECOGNITION:

         Cellular air time and access charges are recorded as revenue when
         earned. Sales of equipment and related services are recorded when the
         goods and services are delivered.

         CASH AND CASH EQUIVALENTS:

         Cash and cash equivalents consist of investments with original
         maturities of less than three months. The carrying amount approximates
         fair value because of the short maturity of those instruments.

         ALLOCATION OF PROFITS AND LOSSES:

         In general, profits and losses incurred by the Partnership are
         allocated to the partners pro rata in accordance with their partnership
         ownership percentage.




                                   Continued

                                      S-8
<PAGE>   41
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

         INVENTORY:

         Inventory consists of cellular phones and related equipment. Inventory
         is stated at the lower of cost or replacement cost. Gains and losses on
         the sale of cellular equipment are recognized at the time of sale.

         PROPERTY AND EQUIPMENT:

         Property and equipment are stated at historical cost. Depreciation is
         computed using the straight-line method over the estimated useful lives
         of the assets.

                                                     DEPRECIABLE LIFE

                   Cellular equipment                   3 - 7 years
                   Cellular towers/shelters             5 - 15 years
                   Other                                3 - 7 years

         Leasehold improvements are amortized using the straight-line method
         over the shorter of the lease term or the estimated useful life of the
         asset. When property and equipment are retired or sold, the cost and
         accumulated depreciation of dispositions are removed from the accounts,
         and any gain or loss is reflected in income.

         Repairs and maintenance costs are charged to expense when incurred.
         Renewals and betterments are capitalized and depreciated over the
         remaining useful lives of the assets.

         INTANGIBLES:

         Intangible assets primarily represent costs incurred in the acquisition
         and development of the cellular licenses and acquisition of subscriber
         lists. The costs of the cellular licenses are being amortized over 40
         years using the straight-line method. The costs of the subscribers
         lists are being amortized over three years using the straight-line
         method.

         INCOME TAXES:

         The income or loss of CMT Partners and its consolidated subsidiaries
         are included in the tax returns of the individual partners.
         Accordingly, no provision has been made for income taxes for these
         entities in the financial statements.



                                   Continued

                                      S-9 
<PAGE>   42
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

         MINORITY INTERESTS:

         Minority interests represent equity interests held by entities other
         than CMT Partners for the general partnerships serving the St. Joseph,
         BACTC and Salinas markets and the corporation serving the Cagal market.

         RECLASSIFICATIONS:

         Certain items in the financial statements for the four-month period
         from September 1, 1993 (inception) to December 31, 1993 and for the
         year ended and as of December 31, 1994 have been reclassified to
         conform to the 1994 and 1995 presentation. These reclassifications have
         no effect on previously reported net income or partners' equity.

3.    PROPERTY AND EQUIPMENT:

      Property and equipment at December 31, 1995 and 1994 consists of the
      following:
<TABLE>
<CAPTION>

                                                                      1995            1994
                                                                        (in thousands)
<S>                                                              <C>             <C>
          Land                                                   $   1,724       $   1,454
          Cellular property and equipment                          333,375         276,259
          Administrative assets                                     50,184          33,511
                                                                 ---------       ---------
                                                                   385,283         311,224
          Less accumulated depreciation and amortization          (189,143)       (150,693)
                                                                 ---------       ---------
                                                                   196,140         160,531
          Cellular system under construction                        28,658          29,455
                                                                 ---------       ---------
                                                                 $ 224,798       $ 189,986
                                                                 =========       =========
</TABLE>

      Administrative assets primarily consist of office furniture and fixtures,
      including leasehold improvements and computer equipment.



                                   Continued

                                     S-10 
<PAGE>   43
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

4.    ACCRUED EXPENSES:

      Accrued expenses consist of the following:
<TABLE>
<CAPTION>

                                                          1995          1994
                                                            (in thousands)
<S>                                                    <C>           <C>
           Accrued commissions                         $ 7,065       $ 5,718
           Accrued employee benefits                     5,945         5,019
           Other                                        17,547        17,569
                                                       -------       -------
                                                       $30,557       $28,306
                                                       =======       =======
</TABLE>


5.    UNCONSOLIDATED INVESTMENT:

      The unconsolidated investment represents an investment in Dallas-Fort
      Worth Signal Partnership which owns approximately 34% of Metroplex, the A
      Block licensee in Dallas-Fort Worth, Texas. Accordingly, the investment
      has been accounted for by the equity method of accounting. The purchase
      price in excess of the Partnership's share of net assets is $71.5
      million and is being amortized over 40 years. The financial information
      of Metroplex at December 31, 1995, 1994 and 1993 and for the years ended
      December 31, 1995 and 1994 and for the four-month period from September 1,
      1993 (inception) to December 31, 1993 are shown below:

<TABLE>
<CAPTION>
                                          1995            1994          1993
                                                   (in thousands)
<S>                                   <C>             <C>           <C>
           Current assets             $ 31,000        $ 52,279      $ 35,816
           Noncurrent assets           145,253         125,900        94,176
                                      --------        --------      --------
              Total assets            $176,253        $178,179      $129,992
                                      ========        ========      ========

           Current liabilities        $ 34,888        $ 39,596      $ 24,564
                                      --------        --------      --------
              Total liabilities       $ 34,888        $ 39,596      $ 24,564
                                      ========        ========      ========

           Total equity               $141,365        $138,583      $105,428
                                      ========        ========      ========

           Revenue                    $210,445        $173,718      $ 49,715
                                      ========        ========      ========

           Net income                 $ 77,782        $ 58,156      $ 14,384
                                      ========        ========      ========
</TABLE>




                                   Continued

                                      S-11 
<PAGE>   44
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

6.    TRANSACTIONS WITH RELATED PARTIES:

      The Partnership and its affiliated companies have entered into several
      transactions and agreements related to their respective businesses. The
      following represents the material transactions between the Partnership and
      its affiliated companies.

         DUE FROM AFFILIATES:

         Included in the amount due from affiliates at December 31, 1995 and
         1994 is $0 and $2,959,000, respectively, which is due from AT&TWS. This
         amount is due on demand and no interest is charged on the amount.

         Included in the amount due from affiliates at December 31, 1995 is
         $206,000 which is due from ATI.

         TECHNICAL, ADMINISTRATIVE AND MARKETING SERVICES:

         The Partnership entered into a service agreement (the Agreement) with
         AT&TWS to provide certain services to CSC and KCC markets. The costs
         charged pursuant to the Agreement are generally determined using an
         allocation method. Substantially all of the services under the
         Agreements were terminated during 1994, and CMT Partners began
         providing these services to its affiliated markets.

         CELLULAR EQUIPMENT PURCHASES:

         The Partnership purchased cellular electronic equipment from AT&T Corp.
         comprising approximately 2% of total capital expenditures for the
         period from September 19, 1994 through December 31, 1994. For the year
         ended December 31, 1995, purchases of cellular electronic equipment
         from AT&T Corp. were approximately 15% of total capital expenditures.

         LONG DISTANCE:

         Prior to September 1, 1993, CSC, and KCC served as providers for its
         customers' InterLATA long distance services. Effective with the
         formation of CMT Partners on September 1, 1993, CSC, KCC, and two
         interexchange carriers (Interexchange Carriers), both of which are
         wholly owned subsidiaries of AT&TWS, entered into Agreements under
         which the Interexchange Carriers provide InterLATA long distance
         services for CSC and KCC customers. CMT Partners may have been subject
         to certain restrictions regarding the provision of InterLATA services
         pursuant to the Modified Final Judgment and the AT&T Corp. consent
         decree. Such restrictions were superseded by the Telecommunications Act
         of 1996.

         CSC and KCC provide billing and collection functions on behalf of the
         Interexchange Carriers at $.42 per customer account. The Interexchange
         Carriers are responsible for the wholesale cost of the InterLATA long
         distance services and any other expense incurred by the Interexchange
         Carriers in operating their business.



                                   Continued

                                     S-12
<PAGE>   45
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

6.    TRANSACTIONS WITH RELATED PARTIES, continued:

         INTERCONNECTION:

         BACTC contracted with Pacific Bell, an affiliate of ATI during 1993 and
         for the first three months of 1994, for interconnection services
         essential to the operation of its cellular network. The costs pursuant
         to this contract accounted for 4% and 7% of the total operating costs
         for the four-month period ended December 31, 1993 and for the first
         three months of 1994, respectively.

7.    EMPLOYEE CONTRIBUTION AND PROFIT SHARING PLAN:

      Employees of CMT Partners and its subsidiaries participate in a
      contributory profit-sharing plan referred to as the Cellular One Section
      401(k) and Profit Sharing Plan (the Plan), formerly known as the Bay Area
      Cellular Telephone Company 401(k) and Profit Sharing Plan, which qualifies
      as a cash or deferred arrangement under Section 401(k) of the Internal
      Revenue Code. Upon formation of CMT Partners, employees of the markets
      contributed by AT&TWS may elect to participate in the Plan at any time.
      Otherwise, these employees may maintain their contributions in AT&TWS's
      401 (k) plan.

      The Plan allows participating employees to elect to contribute up to 15%
      of their monthly salaries, to a maximum of $9,240 annually for 1995 and
      1994 and $8,994 annually for 1993. The Plan sponsor, CMT Partners,
      contributes to the Plan, on behalf of each participating employee, an
      amount equal to 50% of the employee's contribution, not to exceed 5% of
      the participant's salary. Contributions are invested in six different
      funds. Under the 401(k) Plan, participants are at all times fully vested.
      Under the profit sharing plan, CMT Partners contributes a discretionary
      percentage of each eligible employee's salary. Employees vest in the
      profit sharing plan over five years. CMT Partners recorded a payable and
      related expense of 5% of eligible salaries. CMT Partners contributed
      $2,164,064, $2,023,757 and $398,000 to the 401(k) and profit sharing plan
      for 1995 and 1994 and the four-month period ended December 31, 1993,
      respectively.



                                   Continued



                                     S-13
<PAGE>   46
                                  CMT PARTNERS
                         NOTES TO FINANCIAL STATEMENTS

8.    COMMITMENTS AND CONTINGENCIES:

         LEASE COMMITMENTS:

         Future minimum payments required under operating leases and agreements
         that have an initial or remaining noncancelable lease term in excess of
         one year at December 31, 1995 are summarized below:
<TABLE>
<CAPTION>

                       YEAR ENDING DECEMBER 31       (in thousands)
                       -----------------------
<S>                                                  <C>
                                1996                    $ 9,175
                                1997                      8,288
                                1998                      7,010
                                1999                      3,689
                                2000                      2,898
                             Thereafter                   5,064
                                                        -------
                                                        $36,124
                                                        =======
</TABLE>

         Rental expense for operating leases was $9,244,000, $7,562,000, and
         $2,047,000 for 1995 and 1994, and for the four-month period ended
         December 31, 1993.

         LITIGATION:

         The Partnership is a party to certain litigation in the ordinary course
         of business and is also a party to routine filings with the FCC, state
         regulatory authorities and other proceedings which management believes
         are immaterial to the Partnership.

9.    LINE OF CREDIT:

      On July 15, 1994, the Partnership entered into a Revolving Line of
      Credit Note (the line of credit) with Wells Fargo Bank. The line of credit
      allows for borrowings up to $10,000,000 of which no borrowings were
      outstanding at December 31, 1994. The terms of the line of credit provide
      that interest on all advances will accrue at the lesser of a variable rate
      equal to the Prime Rate or .90% above the LIBOR rate. The line of credit
      agreement expired June 15, 1995.



                                       S-14
<PAGE>   47
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of CMT Partners:

Our report on the consolidated financial statements of CMT Partners is included
as an exhibit to the AirTouch Communications, Inc. (ATI) Form 10-K. In
connection with our audit of such financial statements, we have audited the
related financial statement schedule listed in the index as an exhibit of ATI
Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

/s/ Coopers & Lybrand L.L.P.

San Francisco, California
February 1, 1996

                                     S-15
<PAGE>   48
                                  CMT PARTNERS

         SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                             (dollars in thousands)


<TABLE>
<CAPTION>

                                           BALANCE AT      CHARGED TO                       BALANCE AT
                                          BEGINNING OF      COST AND                          END OF
                                             PERIOD         EXPENSES     DEDUCTIONS (a)       PERIOD
                                          ------------     ----------    --------------     ----------
<S>                                       <C>              <C>           <C>                <C>
Year ended December 31, 1995:
    Allowance for doubtful accounts          $3,228         $19,378      $16,917              $5,689

Year ended December 31, 1994:
    Allowance for doubtful accounts          $1,576         $ 8,107      $ 6,455              $3,228

For the four-month period from
  September 1, 1993 (inception) to
  December 31, 1993:
    Allowance for doubtful accounts          $1,583         $   792      $   799              $1,576

</TABLE>

--------------------

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



                                     S-16
<PAGE>   49




                           MANNESMANN MOBILFUNK GMBH


                               Table of Contents






Independent Auditors' Report


Balance Sheets as of December 31, 1995 and 1994

Statements of Income (Loss) for the Years ended December 31, 1995, 1994 and 1993

Statements of Capital Subscribers' Equity for the Years ended December 31,
1995, 1994 and 1993


Statements of Cash Flows for the Years ended December 31, 1995, 1994 and 1993


Notes to Financial Statements

                                     S-17
<PAGE>   50
                          Independent Auditors' Report



The Board of Directors and Capital Subscribers
Mannesmann Mobilfunk GmbH


We have audited the accompanying balance sheets of Mannesmann Mobilfunk GmbH as
of December 31, 1995 and 1994, and the related statements of income, capital
subscribers' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995. 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 generally accepted German auditing
standards which, in all material respects, are similar to 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 financial position of Mannesmann Mobilfunk GmbH at
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1995, in
conformity with accounting principles generally accepted in the United States.

As discussed in notes 1 and 7 to the financial statements, the Company changed
its method of accounting for income taxes in 1995 to adopt the consensus reached
by the Emerging Issues Task Force of the Financial Accounting Standards Board in
Issue No. 95-10.



Dusseldorf, Germany, February 23, 1996



KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft







/s/ Scheffler                           /s/ Haas
Wirtschaftsprufer                       Wirtschaftsprufer


                                     S-18
<PAGE>   51
                           MANNESMANN MOBILFUNK GMBH
                                 Balance Sheets
                           December 31, 1995 and 1994
                                 (In thousands)
<TABLE>
<CAPTION>
                     Assets                                      1995           1995           1994
                     ------                                      ----           ----           ----
                                                         U.S. Dollars       Deutsch-       Deutsch-
                                                             (Note 1)          marks          marks
<S>                                                      <C>            <C>               <C>      
Current assets:                                                                                    
   Cash and cash equivalents (note 3)                        $ 37,557   DM    54,007         30,548
   Accounts receivable,                                                                            
      less allowance for doubtful accounts of                                                      
      DM 27,660 in 1995 and DM 18,215  in 1994                288,099        414,286        269,882
   Due from affiliated companies (notes 4 and 7)               37,292         53,626         13,897
   Inventories of affiliated products, parts                                                       
      and related supplies (note 5)                            25,337         36,435         23,008
   Prepaid expenses                                            15,122         21,745         14,875
   Other current assets                                         6,909          9,935          5,794
   Deferred tax asset (note 7)                                 73,364        105,498             --
                                                           ----------      ---------      ---------
             Total current assets                             483,680        695,532        358,004
                                                           ----------      ---------      ---------
Property, plant and equipment (notes 4 and 6):
   Telecommunications equipment                             1,925,663      2,769,103      2,289,931
   Equipment in course of construction                         37,703         54,217         49,602
   Other equipment                                             77,568        111,543         88,813
                                                           ----------      ---------      ---------
                                                            2,040,934      2,934,863      2,428,346
   Less accumulated depreciation                              566,252        814,270        544,313
                                                           ----------      ---------      ---------
             Net property, plant, and equipment             1,474,682      2,120,593      1,884,033
                                                                                                   
Other assets, at cost, less accumulated amortization                                               
   of DM 39,389 in 1995 and DM 67,509 in 1994                  32,149         46,230         61,424
Deferred tax asset (note 7)                                        --             --         88,580
Due from affiliated company (notes 4 and 7)                        --             --        122,283
                                                           ----------      ---------      ---------
                                                           $1,990,511   DM 2,862,355      2,514,324
                                                           ==========      =========      =========
</TABLE>


See accompanying notes to financial statements.

                                     S-19
<PAGE>   52
                           MANNESMANN MOBILFUNK GMBH
                           Balance Sheets (Continued)
                           December 31, 1995 and 1994
                                 (In thousands)

<TABLE>
<CAPTION>
   Liabilities and Capital Subscribers' Equity         1995           1995           1994
   ------------------------------------------          ----           ----           ----
                                               U.S. Dollars       Deutsch-       Deutsch-
                                                   (Note 1)          marks          marks
<S>                                            <C>            <C>               <C>
Current liabilities:
   Due to banks                                   $   94,228  DM   135,500         72,021 
   Accounts payable                                  241,163       346,794        310,371 
   Accrued expenses                                   38,700        55,650         36,238 
   Due to affiliated companies (note 4)              168,338       242,070          6,921 
                                                  ----------     ---------      --------- 
            Total current liabilities                542,429       780,014        425,551
                                                                                         
                                                                                         
Long-term debt (note 11)                                  --            --        720,000
Long-term debt due to affiliated company
     (notes 4 and 11)                                 69,541       100,000             --
Pension liabilities (note 8)                           6,132         8,818          7,098
Other non-current liabilities                          8,029        11,545          7,450
Deferred income taxes (note 7)                       181,810       261,443             --
                                                  ----------     ---------      --------- 
            Total liabilities                        807,941     1,161,820      1,160,089
                                                  ----------     ---------      --------- 
                                                                                         
Commitments (note 12)                                                                    
                                                                                          
Capital subscribers' equity:                                                              
   Subscribed capital (note 9)                       281,641       405,000        405,000 
   Additional capital                                844,924     1,215,000      1,215,000 
                                                  ----------     ---------      --------- 
                                                   1,126,565     1,620,000      1,620,000
   Retained earnings (deficit)                        56,005        80,535       (265,775)
                                                  ----------     ---------      ---------                 
            Total capital subscribers' equity      1,182,570     1,700,535      1,354,225 
                                                  ----------     ---------      --------- 
                                                                                          
                                                  $1,990,511  DM 2,862,355      2,514,324 
                                                  ==========     =========      ========= 
</TABLE>
                                                                      



See accompanying notes to financial statements.

                                     S-20
<PAGE>   53
                            MANNESMANN MOBILFUNK GMBH
                           Statements of Income (Loss)
                  Years ended December 31, 1995, 1994 and 1993
                                 (In thousands)

<TABLE>
<CAPTION>
                                                1995         1995       1994       1993
                                            -----------  ---------  ---------   --------
                                            U.S.Dollars   Deutsch-   Deutsch-   Deutsch-
                                              (Note 1)      marks       marks      marks
<S>                                         <C>          <C>        <C>         <C>

Net revenues                                 $1,888,846  2,716,160  1,744,165    901,201
                                             ----------  ---------  ---------   --------
Operating costs and expenses:
  Cost of services and products,including
    DM 3,318, DM 5,924 and DM 2,583
    with related parties in 1995, 1994
    and 1993, respectively (note 4)             641,934    923,101    697,764    474,077

  Selling, general and administrative
    expenses, including DM 74,354, DM
    56,548 and DM 46,302 with related
    parties in 1995, 1994 and 1993,
    respectively (note 4)                       561,414    807,314    510,904    403,134

Depreciation and amortization                   212,288    305,270    309,139    206,229
                                             ----------  ---------  ---------   --------

  Operating income (loss)                       473,210    680,475    226,358   (182,239)

Other income (expense):
  Interest income                                2,229       3,205      2,851      6,587
  Interest expense (note 6)                    (23,216)    (33,384)   (40,584)    (9,969)
  Other, net                                    11,077      15,929      3,256      1,294
                                             ----------  ---------  ---------   --------
                                                (9,910)    (14,250)   (34,477)    (2,088)

  Income (loss) before income taxes and
    cumulative effect of change in
    accounting principle                       463,300     666,225    191,881   (184,327)

Income tax (expense) benefit (note 7)         (266,490)   (383,212)   (84,889)    66,728
                                             ---------   ---------  ---------   --------
  Income (loss) before cumulative effect of
    change in accounting principle             196,810     283,013    106,992   (117,599)

Cumulative effect at January 1, 1995, of
  change in accounting for income taxes
  (note 7)                                      44,018      63,297         --         --
                                             ---------   ---------  ---------   --------
    Net income (loss)                        $ 240,828  DM 346,310    106,992   (117,599)
                                             =========   =========  =========   ========
Pro forma net income (loss) assuming the
  new change in accounting for income
  taxes had been applied retroactively       $ 196,810  DM 283,013     81,511    (84,742)
                                             =========   =========  =========   ========
</TABLE>


 See accompanying notes to financial statements.

                                     S-21
<PAGE>   54
                            MANNESMANN MOBILFUNK GMBH
                    Statements of Capital Subscribers' Equity
                  Years ended December 31, 1995, 1994 and 1993
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                        Retained         Capital 
                                         Subscribed     Additional         Unpaid       Earnings    Subscribers'
                                            Capital        Capital        Capital      (Deficit)          Equity
                                            -------        -------        -------      ---------          ------
<S>                                      <C>            <C>              <C>           <C>          <C>
Balances at
December 31, 1992                      DM  405,000      1,215,000       (285,000)      (255,168)      1,079,832

Net loss                                          -              -              -       (117,599)       (117,599)

Payment of unpaid capital                         -              -        285,000              -         285,000
                                           --------      ---------       --------       --------       ---------
Balances at
December 31, 1993                           405,000      1,215,000              -       (372,767)      1,247,233

Net income                                        -              -              -        106,992         106,992
                                           --------      ---------       --------       --------       ---------
Balances at
December 31, 1994                           405,000      1,215,000              -       (265,775)      1,354,225

Net income                                        -              -              -        346,310         346,310
                                           --------      ---------       --------       --------       ---------
Balances at
  December 31,
  1995                                  DM  405,000      1,215,000              -         80,535       1,700,535
                                           ========      =========       ========       ========       =========

Balances at
  December 31, 1995
  (U.S. Dollars)                           $281,641        844,924              -         56,005       1,182,570
  (Note 1)                                 ========      =========       ========       ========       =========
</TABLE>


See accompanying notes to financial statements.

                                     S-22
<PAGE>   55
                            MANNESMANN MOBILFUNK GMBH
                            Statements of Cash Flows
                  Years ended December 31, 1995, 1994 and 1993
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                1995              1995          1994          1993 
                                                                ----              ----          ----          ----
                                                        U.S. Dollars          Deutsch-      Deutsch-      Deutsch-
                                                            (Note 1)             marks         marks         marks
<S>                                                     <C>               <C>               <C>           <C>
Cash flows from operating activities:
   Net income (loss)                                        $240,828      DM   346,310       106,992      (117,599)
   Adjustments to reconcile net income (loss)
      to net cash provided by (used in) operating
      activities:
         Cumulative effect of change in
            accounting principle                             (44,018)          (63,297)           --            --
         Income tax expense (benefit)                        266,490           383,212        84,889       (66,728)
         Depreciation and amortization                       212,288           305,270       309,139       207,520
         Allowance for doubtful accounts                       6,711             9,651         7,991         7,884
         (Gain) loss on sale of equipment                        723             1,039         6,150         2,664
         Provision for pension costs                           1,249             1,796         1,383         1,092
         Provision for other costs                             2,848             4,095         3,100         2,000
         Changes in operating assets and liabilities
            Accounts receivable                             (106,989)         (153,849)     (111,137)     (119,071)
            Due from affiliated companies                      4,982             7,164         1,680        13,570
            Inventories                                       (9,337)          (13,427)       (3,708)      (10,371)
            Prepaid expenses                                  (4,777)           (6,870)       (4,079)       (5,621)
            Other current assets                              (3,023)           (4,347)       (3,966)       (1,281)
            Accounts payable                                  25,329            36,423       (12,262)       52,139
            Accrued expenses                                  13,499            19,412        27,056         1,722
            Due to affiliated companies                       (1,042)           (1,499)       (8,355)        1,898
            Pension liabilities                                  (53)              (76)         (541)          183
                                                           ---------          --------      --------      --------
Net cash provided by (used in) operating activities          605,708           871,007       404,332       (29,998)
                                                           ---------          --------      --------      --------

Cash flows from investing activities:
   Proceeds from sale of equipment and other assets           10,750            15,458        10,538         6,734
   Capital expenditures,
      including interest capitalized                        (377,573)         (542,949)     (689,178)     (811,009)
   Increase in other assets                                     (128)             (184)         (365)         (272)
                                                           ---------          --------      --------      --------
Net cash used in investing activities                       (366,951)         (527,675)     (679,005)     (804,547)
                                                           ---------          --------      --------      --------

Cash flows from financing activities:
   Proceeds from contributed capital                              --                --            --       285,000
   Proceeds from issuance of long-term debt                       --                --       280,000       440,000
   Proceeds from a loan by an affiliated company              69,541           100,000            --            --
   Increase in due to affiliated company                     164,567           236,648            --            --
   Increase (decrease) in due to banks                        44,144            63,479        (5,627)       77,648
   Repayment of long-term debt                              (500,695)         (720,000)           --            --
                                                           ---------          --------      --------      --------
Net cash (used for) provided by financing activities        (222,443)         (319,873)      274,373       802,648
                                                           ---------          --------      --------      --------

Net increase (decrease) in cash and
   cash equivalents                                           16,314            23,459          (300)      (31,897)
Cash and cash equivalents at beginning of year                21,243            30,548        30,848        62,745
                                                           ---------          --------      --------      --------
Cash and cash equivalents at end of year                   $  37,557      DM    54,007        30,548        30,848
                                                           =========          ========      ========      ========
</TABLE>



See accompanying notes to financial statements.

                                     S-23
<PAGE>   56
                            MANNESMANN MOBILFUNK GMBH
                          Notes to Financial Statements
                  Years ended December 31, 1995, 1994 and 1993
                   (All amounts in thousands of Deutschmarks)




(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



     (a)  DESCRIPTION OF BUSINESS

          Mannesmann Mobilfunk GmbH was incorporated on September 11, 1989. At
          December 31, 1995 Mannesmann AG, held a controlling interest of
          65.23%, and AirTouch Communications, Inc. held an interest of 34.77%.

          The Company's primary business is the construction, manufacture and
          operation of a private mobile cellular network ("D2") within Germany.
          It is conducted under a licence agreement with the Federal Postal and
          Telecommunications Ministry expiring at the end of 2009.

          Commercial activities commenced in mid 1992 and by the end of 1995 the
          Company had about 1,450,000 subscribers.



     (b)  BASIS OF PRESENTATION

          In order to conform with accounting principles generally accepted in
          the United States, certain adjustments are reflected in the financial
          statements which are not recorded in the German books of account.
          These adjustments relate primarily to capitalization of own payroll
          and related costs associated with the design and construction of
          telecommunications equipment, depreciation and amortization, and
          accounting for income taxes.



     (c)  CASH AND CASH EQUIVALENTS

          The Company considers all highly liquid monetary instruments with
          original maturities of three months or less to be cash equivalents.



     (d)  INVENTORIES

          Inventories are stated at the lower of average cost or market.

                                     S-24
<PAGE>   57
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements



     (e)  PROPERTY, PLANT AND EQUIPMENT

          Property, plant and equipment are stated at cost. Depreciation is
          calculated on both the straight-line and declining balance methods
          over the estimated useful lives of the assets as follows :

<TABLE>
<CAPTION>

            Classification                   Useful lives           Method 
<S>                                          <C>            <C>     <C>
            Telecommunications equipment:                                                      
              D2 infrastructure center             10       10%     straight-line
              Switching locations                  15       6.67%   straight-line
              Base station equipment- poles        10       30%     declining balance
                               - components        20       5%      straight-line 
              Transmission and message                                    
                switching technology               10       10%     straight-line              
                                                                                               
            Other equipment:                                                                   
              Data processing equipment             4       30%     declining balance          
              Office equipment                     10       30%     declining balance          
              Measuring instruments                 5       30%     declining balance
              Vehicles                              5       30%     declining balance          
</TABLE> 
                                                              
          To the extent permissible under tax laws, systematic depreciation is
          computed according to the declining balance method at a rate of up to
          30%. Wherever straight-line depreciation results in higher charges,
          this method is used. For telecommunication equipment generally the
          straight-line method is used.

          Certain equipment installed at third party locations for rental
          periods less than the above useful lives are depreciated over the
          corresponding terms of the agreements.

     (f)  OTHER ASSETS

          Other assets are stated at cost. They consist mainly of computer
          software, patents, rights and concessions which are being amortized
          over periods ranging from three to eight years on a straight-line
          basis.

     (g)  INCOME TAXES

          Income taxes are recognized during the year in which transactions
          enter into the determination of financial statement income. Deferred
          tax assets and liabilities are recognized for the future tax
          consequences attributable to differences between the financial
          statement carrying amounts of existing assets and liabilities and
          their respective tax bases and operating loss and tax credit
          carryforwards. Deferred tax assets and liabilities are measured using
          enacted tax rates expected to apply to taxable income in the years in
          which those temporary differences are expected to be recovered or
          settled. The effect on deferred tax assets and liabilities of a change
          in tax rates is recognized in income in the period that includes the
          enactment date.

          In July 1995, the Emerging Issues Task Force of the Financial
          Accounting Standards Board reached a consensus in Issue No. 95-10 that
          addresses the accounting for tax benefits of future tax credits,
          arising from the difference between the German corporate tax rate of
          45% applicable to undistributed profits and 30% applicable to
          distributed income, that will be realized when the previously taxed
          income is distributed. The Task Force concluded that the tax benefits
          of the tax credits should be recognized as a reduction of income tax
          expense in the period the tax credits are included in the enterprise's
          tax return and that the enterprise should measure the tax effects of
          temporary differences using the tax rate for undistributed income.

          Prior to 1995, the Company applied a combined net income tax rate,
          which reflected the lower corporate tax rate, to its income and loss
          before income taxes on the basis that profits would be

                                     S-25
<PAGE>   58
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements


          distributed in the future in accordance with the dividend policy
          agreed by the capital subscribers. This approach resulted in a lower
          net deferred tax asset being reported than otherwise would have been
          the case had the higher corporate tax rate been applied, due to the
          recognized benefits of primarily the net operating loss carry forwards
          incurred by the Company during its development phase.

          Effective January 1, 1995, the Company adopted the consensus reached
          in Issue No. 95-10 and has reported the cumulative effect of that
          change in the method of accounting for income taxes in the 1995
          statement of income.

     (h)  PENSION PLANS

          The Company has defined benefit plans limited to its management group
          and a small minority of its employees transferred with continuing
          pension rights from other Mannesmann AG group companies. The benefits
          are based on years of service and recent compensation. The accumulated
          benefit obligation is determined based on annual actuarial
          calculations and recorded as a liability in the balance sheet with a
          corresponding charge to income. The liability is not funded but
          represented by the Company's assets.

     (i)  FINANCIAL STATEMENT TRANSLATION

          The financial statements are expressed in Deutschmarks and, solely for
          the convenience of the reader, have been translated into United States
          dollars at the rate of DM 1.438 to U.S. $1, the Reuters year-end
          closing rate quotation (New York time - U.S.A.) on December 29, 1995.

     (j)  ESTIMATES

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial statements and the reported amounts of revenues
          and expenses during the reporting period. Actual results could differ
          from those estimates.


(2)  CHANGE IN ACCOUNTING ESTIMATE

     The Company recently completed a review of the estimated useful lives of
     its cellular telecommunications equipment. As a result, the Company
     extended the estimated useful lives of its transmission and message
     switching technology from eight to ten years. The change was made to
     reflect more accurately the estimated period that such assets will remain
     in service and was effective January 1, 1995. The new ten year depreciation
     period is consistent with current industry standards. The change increased
     net income for the year ended December 31, 1995 by DM 29,724 (net of
     deferred income taxes of DM 40,247).


(3)  CASH AND CASH EQUIVALENTS

     This caption includes cash equivalents representing time deposits for
     amounts maturing within periods of between one day and three months. The
     balances at December 31, 1995 and 1994 are DM 20,000 and DM 24,000
     respectively.

     The carrying amount of cash and cash equivalents approximates fair value
     because of the short maturity of the investments.

                                     S-26
<PAGE>   59
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements



(4)  RELATED PARTY TRANSACTIONS

     The Company has significant business transactions with its main capital
     subscribers, Mannesmann AG and AirTouch Communications, Inc. and their
     respective group companies. Such transactions are normally concluded within
     a range of terms similar to those made with non-related parties.

     The significant balances and transactions with these related parties are
     shown separately in the balance sheet and statement of income (loss). In
     addition, purchases of property, plant and equipment from related parties
     during the years stated are shown below:

<TABLE>
<CAPTION>
                                                  1995    1994    1993
                                                  ----    ----    ----
<S>                                         <C>         <C>     <C>
         Purchases included under property
           plant and equipment              DM   6,878  15,174  30,050
</TABLE>


     The amount shown as due to affiliated companies at December 31, 1995
     includes interest bearing balances due to Mannesmann AG. At year end DM
     36,648 is payable under an intercompany current account arrangement on
     which interest is fixed monthly in advance on the basis of FIBOR plus 0.5%
     for payable balances and minus 2% for receivable balances. Also outstanding
     at year-end is a one year loan of DM 200,000 at a fixed rate of interest of
     5.13133% repayable on June 28, 1996.

     The fair value of the current account facility at December 31, 1995, is
     considered to approximate the carrying amount as the interest rate was
     fixed on the basis of the year-end closing quotation plus an arm's length
     margin.

     The fair value of the loan on December 31, 1995 is estimated to be DM
     200,857 compared to the carrying amount of DM 200,000, since the year end
     rate of interest of 4.275% (FIBOR of 3.9% plus 0.375%) is lower than the
     fixed rate of 5.13133% applicable until repayment in mid 1996.


(5)  INVENTORIES

     This caption includes stocks of affiliated products, parts and related
     supplies. The balances at December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                                     1995    1994    
                                                     ----    ----    
<S>                                            <C>          <C>      
       Mobile telephones                       DM   20,370  12,253   
       Spare parts                                   9,094   7,734   
       Subscriber identification module cards        6,721   2,383   
       Other trade goods                               250     638   
                                                    ------  ------   
                                               DM   36,435  23,008   
                                                    ======  ======   
</TABLE>


(6)  INTEREST COST

     The Company commenced capitalization of interest cost during 1993
     commensurate with the drawdown of its credit facility, subsequently
     replaced in 1995 by financing from Mannesmann AG, for continuing expansion
     of the infrastructure for its private mobile cellular network. The
     following is a summary of interest cost incurred and subject to
     capitalization during 1995, 1994 and 1993:

                                     S-27
<PAGE>   60
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements

<TABLE>
<CAPTION>
                                              1995    1994    1993     
                                              ----    ----    ----     
<S>                                     <C>          <C>     <C>       
                                                                    
       Interest cost capitalized        DM    2,470   4,092   2,980    
       Interest cost charged to income       33,384  40,584   9,969    
                                             ------  ------  ------    
                                        DM   35,854  44,676  12,949    
                                             ======  ======  ======    
</TABLE>




     Interest capitalized has been included in the telecommunications equipment
     component of property, plant and equipment.

     The Company paid interest of DM 43,147, DM 48,213 and DM 2,301 in 1995,
     1994 and 1993 respectively.


(7)  INCOME TAXES

     As discussed in note 1, the Company adopted the consensus reached in Issue
     No. 95-10 of the Emerging Issues Task Force as of January 1, 1995. The
     cumulative effect of this change in accounting for income taxes of DM
     63,297 was determined as of January 1, 1995 and has been reported
     separately in the statement of income for the year ended December 31, 1995.
     As a result of applying this change, the income from continuing operations
     for the year ended December 31, 1995 was decreased by DM 88,474.

     Total income taxes for the years ended December 31, 1995, 1994 and 1993
     were allocated as follows:

<TABLE>
<CAPTION>
                                                            1995      1994    1993    
                                                            ----      ----    ---- 
<S>                                               <C>              <C>       <C>   
        Income (loss) from continuing operations  DM    (383,212)  (84,889)  66,728
        Cumulative effect of change in                                             
          accounting for income taxes                     63,297       --       -- 
                                                        --------   -------   ------
                                                  DM    (319,915)  (84,889)  66,728
                                                        ========   =======   ======
</TABLE>



     Income tax (expense) benefit attributable to income (loss) from continuing
     operations for the years ended December 31, 1995, 1994 and 1993, relating
     solely to deferred income taxes, consists of various types of taxes as
     follows:

<TABLE>
<CAPTION>
                                                  1995      1994     1993
                                                  ----      ----     ----
<S>                                      <C>              <C>       <C>
       German trade tax                  DM   (117,922)  (33,963)  32,626
       German corporate tax                   (246,769)  (47,376)  21,735
       German solidarity surcharge tax         (18,521)   (3,550)  12,367
                                              --------   -------   ------
                                         DM   (383,212)  (84,889)  66,728
                                              ========   =======   ======
</TABLE>

                                     S-28
<PAGE>   61
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements



     The respective rates for the above types of taxes and their application for
     the years ended December 31, 1995, 1994 and 1993 are analyzed as follows:

<TABLE>
<CAPTION>
                                                          1995      1994       1993  
                                                          ----      ----       ----
<S>                                                     <C>       <C>        <C>     
     Income before income taxes                          100.0%    100.0%     100.0% 
                                                                                     
       German trade tax gross rate of 17.7% for                                      
          1995, 1994 and 1993 applied to                                             
          income before income taxes                     (17.7%)   (17.7%)    (17.7%)
                                                        ------    ------     ------  
                                                          82.3%     82.3%      82.3% 
       German corporate tax gross rate of 45% for                                    
          1995 and 30% for 1994 and 1993                                             
          applied to income after German trade tax,                                  
          a net rate of 37.04% for 1995 and 24.69%                                   
          for 1994 and 1993                             (37.04%)  (24.69%)   (24.69%)
                                                        ------    ------     ------  
                                                                                     
                                                         45.26%    57.61%     57.61% 
                                                                                     
       German solidarity surcharge tax gross rate of                                 
          7.5%, announced in 1993 effective 1995,                                    
          applied to German corporate tax net rate of                                
          37.04% for 1995, a net rate of 2.78% and                                   
          24.69% for 1994 and 1993, a net rate of 1.85%  (2.78%)   (1.85%)    (1.85%)
                                                        ------    ------     ------  
       Income after income taxes                         42.48%    55.76%     55.76% 
                                                        ------    ------     ------  
                                                                                     
       German trade tax net rate                         17.70%    17.70%     17.70% 
       German corporate tax net rate                     37.04%    24.69%     24.69% 
       German solidarity surcharge tax net rate           2.78%     1.85%      1.85% 
                                                        ------    ------     ------  
       Combined German income tax rate                   57.52%    44.24%     44.24% 
                                                        ======    ======     ======  
</TABLE>


     As noted above, the impact of applying a change in accounting for income
     taxes using the higher German corporate tax gross rate of 45% in 1995 has
     resulted in the combined income tax rate increasing to 57.52% in 1995 from
     44.24% in 1994 and 1993.

     Income tax (expense) benefit attributable to income (loss) from continuing
     operations was DM (383,212), DM (84,889) and DM 66,728 for the years ended
     December 31, 1995, 1994 and 1993 respectively, and differed from the amount
     computed by applying the above combined German income tax rate of 57.52%
     for 1995 and 44.24% for 1994 and 1993 to pretax income (loss) from
     continuing operations as a result of the following:

<TABLE>
<CAPTION>
                                                                1995      1994      1993
                                                                ----      ----      ----
<S>                                                         <C>           <C>        <C>
   Computed "expected" tax (expense) benefit                DM (383,212)  (84,889)   81,546

   Adjustments to deferred tax assets and
     liabilities for enacted changes in tax laws
     from 47.3% to 44.24% with the effect of
     reducing the combined German income tax rate                    --        --   (14,818)
                                                               --------   -------    ------
                                                            DM (383,212)  (84,889)   66,728
                                                               ========   =======    ======
</TABLE>

                                     S-29
<PAGE>   62
                            MANNESMANN MOBILFUNK GMBH
                          Notes to Financial Statements



     The significant components of the deferred income tax (expense) benefits
     attributable to the income (loss) from continuing operations for the years
     ended December 31, 1995, 1994 and 1993 are as follows:

<TABLE>
<CAPTION>
                                                                          1995      1994      1993 
                                                                          ----      ----      ---- 
<S>                                                                   <C>        <C>        <C>    
           Tax effect of the German fiscal basis                                                   
             income (loss) from continuing operations                 (244,994)  (89,833)   97,017 
                                                                                                   
           Tax effect of the temporary differences attributable                                    
             to items expensed for tax purposes but capitalized                                    
             as property, plant and equipment and partly                                           
             depreciated for reporting purposes                          1,037     4,062   (16,353)
                                                                                                   
           Tax effect of temporary difference attributable                                         
             to a loan commitment fee expensed for tax                                             
             purposes but deferred as other assets and partly                                      
             amortized in 1994 and 1993, but fully amortized                                       
             in 1995 upon extinguishment of debt for                                               
             reporting purposes                                          3,440       882       882 
                                                                                                   
           Tax effect of the temporary difference attributable                                     
             to the change in accounting estimate to extend                                        
             the depreciating period of certain property,                                          
             plant and equipment for reporting purposes                (40,247)       --        -- 
                                                                                                   
           Tax effect of temporary difference attributable                                         
             to the application of special accelerated depreciation                                
             to property, plant and equipment acquired in 1991                                     
             through 1993 in the former East Germany for                                           
             tax purposes                                             (102,448)       --        -- 
                                                                                                   
           Adjustments to deferred tax assets and liabilities                                      
             for enacted changes in tax laws and rates                      --        --   (14,818)
                                                                      --------   -------    ------ 
             Net tax (expense) benefit                                (383,212)  (84,889)   66,728 
                                                                      ========   =======    ====== 
</TABLE>


     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities at
     December 31,1995 and 1994 are presented below:

<TABLE>
<CAPTION>
                                                                           1995       1994 
                                                                           ----       ---- 
<S>                                                               <C>              <C>     
     Deferred tax assets:                                                                  
                                                                                           
        Net operating loss carryforwards                          DM    152,391    305,638 
                                                                                           
        Less amount due from affiliated company for realization                            
          of the benefit of net operating loss carryforwards                               
          for German trade tax purposes                                 (46,893)  (122,283)
                                                                        -------   -------- 
                                                                                           
             Total deferred tax assets                            DM    105,498    183,355 
                                                                        =======    =======
</TABLE>

                                     S-30
<PAGE>   63
                           MANNESMANN MOBILFUNK GMBH
                         Notes to Financial Statements
<TABLE>
<CAPTION>
                                                                           1995       1994     
                                                                           ----       ---- 
<S>                                                                <C>             <C>     
     Deferred tax liabilities:                                                             
                                                                                           
       Property, plant and equipment due to differences                                    
          in capitalization and related depreciation                   (261,443)   (92,129)
       Loan commitment fee                                                   --     (2,646)
                                                                       --------    ------- 
                                                                                           
             Total deferred tax liabilities                        DM  (261,443)   (94,775)
                                                                       --------    ------- 
                                                                                           
     Classified as follows:                                                                
                                                                                           
             Deferred tax asset (gross), current                   DM   105,498         -- 
                                                                       ========  ========= 
             Deferred tax asset (net), non-current                 DM        --     88,580 
                                                                       ========  ========= 
             Deferred tax liability (gross), non-current           DM  (261,443)        -- 
                                                                       ========  ========= 
</TABLE>

     The amount due from affiliated company and the deferred tax asset (gross)
     are reclassified as current in 1995, because the net operating loss
     carryforward is virtually certain to be fully utilized in 1996. In 1994,
     the timing of the realization of such assets was determined to be beyond
     one year and accordingly they were classified as non-current.

     No valuation allowance for the deferred tax asset at December 31, 1995 and
     1994 has been recognized. The net operating loss carryforward, amounting to
     DM 264,936 at December 31, 1995 is available indefinitely.

     Due to its controlling interest of more than 50%, Mannesmann AG has
     included the income (loss) from continuing operations of the Company for
     German trade tax purposes in its consolidated tax return under an agreement
     common to all its majority owned subsidiaries within the German fiscal
     jurisdiction. Under this agreement Mannesmann AG charges or credits the
     Company for the German trade tax payable or receivable arising from the
     income (loss) from continuing operations. At the gross rate of 17.7% for
     German trade tax applicable to each of the years ended December 31, 1995,
     1994 and 1993, the respective balances with Mannesmann AG of DM 46,893, DM
     122,283 and DM 158,224, representing the realization of the benefits of net
     operating loss carryforwards, are shown under the balance sheet caption as
     an amount due from affiliated company. This group arrangement is not
     applicable to German corporate tax and, from 1995, to German solidarity
     surcharge tax, which is assessed on an individual legal entity basis
     without the benefit of group relief.


(8)  PENSION PLANS

     The Company has two defined benefit pension plans. The first covers all of
     its 75 member management group (1994 - 80 members and 1993 - 73 members).
     The second covers only 38 of its employee group (1994 - 40 employees
     and 1993 - 45 employees) representing those employees transferred with
     continuing pension rights from other Mannesmann AG group companies.
     Beginning January 1, 1995 approximately 1,900 of the remaining employees
     are covered by a defined contribution plan funded externally with an
     insurance company. The remaining employees totalling about 900 at the end
     of 1995 (about 2,400 and 2,100 at the end of 1994 and 1993 respectively)
     are not presently covered by such plans. All personnel are covered by a
     German state pension scheme under a defined contribution plan funded
     equally by the employer and the employee.

                                     S-31
<PAGE>   64
                            MANNESMANN MOBILFUNK GMBH
                          Notes to Financial Statements



     The pension liabilities shown in the balance sheet result directly from
     independent actuarial calculations based on the situation of the two
     defined benefit plans at the end of each year in accordance with German tax
     and commercial rules. Due to the relatively insignificant amount of such
     pension liabilities given the small number of employees covered, together
     with the short periods of prior service, the Company considers that any
     potential adjustment or additional disclosures, that would be required had
     Statement of Financial Accounting Standards No 87, Employers' Accounting
     for Pensions, been applied, would not be material.

     As noted above, the pension liabilities shown in the balance sheet
     represent the actuarial present value of accumulated benefit obligations.
     Projected benefit obligations and increases in compensation levels are not
     considered. The pension liabilities under these plans are not funded but
     considered to be represented by the Company's assets.

     The pension costs charged to income for 1995, 1994 and 1993 are DM 3,389,
     DM 1,383 and DM 1,076 respectively.

     The discount rate assumed in the actuarial valuations for each of the years
     ended December 31, 1995, 1994 and 1993 is 6%.


(9)  SUBSCRIBED CAPITAL

     Subscribed capital is represented by whole sum subscription amounts on a
     proportional basis to the various investing parties. The respective amounts
     of proportional subscriptions directly reflect the percentage of respective
     ownership and related voting and dividend rights.


(10) RESTRICTIONS ON RETAINED EARNINGS

     The payment of dividends from retained earnings is restricted to the extent
     of available retained earnings per the German books of account. At December
     31, 1995 there is an accumulated deficit of DM 264,936 per the German books
     of account.


(11) LONG-TERM DEBT

     During 1995 the Company extinguished its debt under its unsecured credit
     facility negotiated with a banking consortium and replaced it with
     financing from its affiliated company, Mannesmann AG. The unamortized
     portion of the loan commitment fee of DM 5,980 relating to the former
     credit facility was charged to income in 1995.

     Long-term debt at December 31, 1995 and 1994 consists of the following:

<TABLE>
<CAPTION>
                                                                             1995     1994
                                                                          -------  -------
<S>                                                                   <C>          <C>
     Due to affiliated company, payable on June 30, 1997 at a fixed                       
       rate of interest of 5.675%                                         100,000       -- 
     Various drawings and related tranches at variable rates                              
       of interest between 5.9% and 7.4%, under a flexible                                
       repayment schedule with final maturity exercisable
       between June 30, 1995 and December 30, 2001                             --  720,000
                                                                          -------  ------- 
          Total long-term debt                                        DM  100,000  720,000
                                                                          =======  =======
</TABLE>

                                     S-32
<PAGE>   65
                            MANNESMANN MOBILFUNK GMBH
                          Notes to Financial Statements



     The fair value of the long-term debt at December 31, 1995 is estimated to
     be DM 102,100 compared to the carrying amount of DM 100,000 since the year
     end rate of interest of 4.275% (FIBOR of 3.9% plus 0.375%) is lower than
     the fixed rate of 5.675% applicable until repayment in mid 1997.


(12) COMMITMENTS

     The Company is obligated under various noncancelable operating leases,
     primarily of a long-term nature, for the main administrative building, base
     stations and sales offices. The rental expense charged to income during
     1995, 1994 and 1993 was DM 65,922, DM 51,769 and DM 40,739, respectively.

     Future minimum lease payments under noncancelable leases (with initial or
     remaining lease terms in excess of one year) are:

<TABLE>
<CAPTION>

<S>                                                     <C>   
         Year ending December 31:                                   
                  1996                                        32,967
                  1997                                        34,020
                  1998                                        21,325
                  1999                                        21,160
                  2000                                        20,635
                  2001 and beyond                             36,492
                                                             -------
                    Total minimum lease payments        DM   166,599
                                                             =======
</TABLE>

                                     S-33
<PAGE>   66









                    Audited Consolidated Financial Statements

                             New Par (A Partnership)

                  Years ended December 31, 1995, 1994 and 1993
                      with Report of Independent Auditors

                                     S-34
<PAGE>   67
                             New Par (A Partnership)

                          Audited Financial Statements

                  Years ended December 31, 1995, 1994, and 1993

                                   Contents


Report of Independent Auditors ..........................................  S-36

Audited Consolidated Financial Statements

Consolidated Balance Sheets .............................................  S-37
Consolidated Statements of Income .......................................  S-38
Consolidated Statement of Partners' Capital .............................  S-39
Consolidated Statements of Cash Flows ...................................  S-40
Notes to Consolidated Financial Statements ..............................  S-41
Schedule II -- Valuation and Qualifying Accounts ........................  S-53

                                     S-35
<PAGE>   68
                         Report of Independent Auditors


The Partnership Committee
New Par

We have audited the accompanying consolidated balance sheets of New Par as of
December 31, 1995 and 1994, and the related consolidated statements of income,
partners' capital and cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the accompanying financial statement
schedule (Schedule II--Valuation and Qualifying Accounts). These financial
statements and schedule are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New Par
at December 31, 1995 and 1994, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.


/s/  ERNST & YOUNG LLP

February 16, 1996

                                     S-36
<PAGE>   69
                             NEW PAR (A PARTNERSHIP)

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                            DECEMBER 31      
                                                         1995           1994
                                                   -----------------------------
<S>                                                <C>              <C>
Assets
Current assets:
  Cash and cash equivalents                        $   30,703,000   $ 33,461,000
  Accounts receivable--trade, less allowance for                                
    doubtful accounts of $8,188,000 (1995) and                                  
    $5,265,000 (1994)                                  92,753,000     65,799,000
  Financing receivables, net                           22,293,000     20,774,000
  Due from affiliates                                      15,000         14,000
  Telephone equipment inventory                        13,427,000     16,142,000
  Prepaid expenses and other current assets             3,385,000      2,796,000
                                                   -----------------------------
Total current assets                                  162,576,000    138,986,000

Property, plant and equipment, net                    463,877,000    352,218,000
License acquisition costs, net                        413,149,000    356,034,000
Other assets, net of accumulated amortization of                                
  $8,955,000 (1995) and $6,437,000 (1994)              32,609,000     27,741,000                              
                                                   -----------------------------
Total assets                                       $1,072,211,000   $874,979,000
                                                   =============================
Liabilities and partners' capital                                               
Current liabilities:                                                            
  Accounts payable                                 $   29,858,000   $ 25,482,000
  Accrued expenses                                     23,520,000     17,603,000
  Distribution payable to partners                     28,748,000     26,133,000
  Due to affiliates                                     1,774,000      1,226,000
  Property and other taxes payable                     12,900,000     15,790,000
  Commissions payable                                  14,861,000     14,207,000
  Deferred revenue                                     13,373,000     13,968,000
                                                   -----------------------------
Total current liabilities                             125,034,000    114,409,000

Other liabilities                                       3,905,000        593,000
Commitments and contingent liabilities                                          
Minority interests                                      1,486,000        556,000
Partners' capital                                     941,786,000    759,421,000
                                                   -----------------------------
Total liabilities and partners' capital            $1,072,211,000   $874,979,000
                                                   =============================
</TABLE>
                                                      
See accompanying notes.

                                        S-37
<PAGE>   70
                             NEW PAR (A PARTNERSHIP)

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                        Year ended December 31
                                                   1995          1994           1993 
                                               -----------------------------------------
<S>                                            <C>           <C>            <C>
Revenues
Cellular service                               $673,872,000  $498,077,000   $390,181,000
Telephone equipment sales, rental and other      85,181,000    80,861,000     45,668,000
                                               -----------------------------------------
                                                759,053,000   578,938,000    435,849,000
Costs and expenses                                                                       
Cost of telephone equipment sold                 74,343,000    61,986,000     28,037,000
Operating expenses                              146,593,000   106,544,000     85,575,000
Selling, general and administrative expenses    252,360,000   211,182,000    148,248,000
Restructuring charges                                     -             -        648,000
Depreciation expense                             59,092,000    45,648,000     39,796,000
Amortization expense                             14,165,000    13,491,000     12,950,000
Depreciation of rental telephones                13,193,000    22,525,000     28,496,000
                                               -----------------------------------------
                                                559,746,000   461,376,000    343,750,000
                                               -----------------------------------------
Operating income                                199,307,000   117,562,000     92,099,000

Other income (expense):                                                                  
  Interest and other income                       6,286,000     2,367,000      1,100,000
  Interest expense                                  (62,000)      (95,000)      (124,000)
                                               -----------------------------------------
Income before provision for income taxes and   
  minority interests                            205,531,000   119,834,000     93,075,000
Provision for income taxes                       (4,269,000)   (4,424,000)      (522,000)
                                               -----------------------------------------
Income before minority interests                201,262,000   115,410,000     92,553,000
Minority interests                                 (930,000)     (534,000)             -
                                               -----------------------------------------
Net income                                     $200,332,000  $114,876,000   $ 92,553,000
                                               =========================================
</TABLE>


See accompanying notes.

                                     S-38
<PAGE>   71
                             NEW PAR (A PARTNERSHIP)

                   CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
                                         AirTouch         CCI
                                           Group         Group         Total
                                       ----------------------------------------
<S>                                    <C>           <C>           <C>
Balance, December 31, 1992             $363,661,500  $251,728,500  $615,390,000
Capital contributions                            --    29,714,000    29,714,000
Distribution payable                    (17,832,000)  (17,832,000)  (35,664,000)
Net income for the year ended
  December 31, 1993                      46,276,500    46,276,500    92,553,000
                                       ----------------------------------------
Balance, December 31, 1993              392,106,000   309,887,000   701,993,000

Distribution payable                    (28,724,000)  (28,724,000)  (57,448,000)
Net income for the year ended
  December 31, 1994                      57,438,000    57,438,000   114,876,000
                                       ----------------------------------------
Balance, December 31, 1994              420,820,000   338,601,000   759,421,000

Capital contributions                    33,000,000    33,000,000    66,000,000
Distribution payable                    (41,983,500)  (41,983,500)  (83,967,000)
Net income for the year ended
  December 31, 1995                     100,166,000   100,166,000   200,332,000
                                       ----------------------------------------
Balance, December 31, 1995             $512,002,500  $429,783,500  $941,786,000
                                       ========================================
</TABLE>


See accompanying notes.


                                     S-39
<PAGE>   72
                             NEW PAR (A PARTNERSHIP)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Year ended December 31
                                                                           1995           1994           1993
                                                                      -------------------------------------------
<S>                                                                   <C>            <C>            <C>
OPERATING ACTIVITIES
Net income                                                            $ 200,332,000  $ 114,876,000  $  92,553,000
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation and amortization                                      86,450,000     81,664,000     81,242,000
      Provision for losses on accounts and financing receivables         12,104,000     17,236,000     16,877,000
      Loss on sale of property, plant and equipment                       5,732,000      5,433,000      3,534,000
      Provision for rental telephone losses                                 163,000        142,000      4,426,000
      Deferred compensation                                                 401,000        171,000             --
      Minority interests                                                    930,000        534,000             --
      Change in operating assets and liabilities:
           Accounts receivable                                          (36,918,000)   (30,336,000)   (24,533,000)
           Financing receivables, including noncurrent                   (3,665,000)   (27,669,000)    (6,338,000)
           Due from affiliates                                               (1,000)        35,000         58,000
           Telephone equipment inventory                                  2,744,000     (7,993,000)        76,000
           Prepaid expenses and other current assets                       (583,000)      (930,000)       (41,000)
           Other assets                                                  (5,789,000)    (4,026,000)    (4,278,000)
           Accounts payable                                              (2,054,000)     8,448,000      4,460,000
           Accrued expenses                                               4,677,000      3,697,000     (3,703,000)
           Due to affiliates                                                548,000       (587,000)       556,000
           Property and other taxes payable                              (2,890,000)     4,835,000       (645,000)
           Commissions payable                                              654,000      4,886,000      2,422,000
           Deferred revenues                                               (595,000)     2,902,000      2,180,000
           Other liabilities                                              3,483,000        422,000             --
                                                                      -------------------------------------------
Net cash provided by operating activities                               265,723,000    173,740,000    168,846,000


INVESTING ACTIVITIES
Purchase of property, plant and equipment                              (178,672,000)  (123,376,000)  (104,288,000)
Proceeds from sale of property, plant and equipment                         623,000        649,000      1,035,000
Purchase of cellular license interests                                  (75,080,000)      (100,000)       (27,000)
                                                                      -------------------------------------------
Net cash (used in) investing activities                                (253,129,000)  (122,827,000)  (103,280,000)


FINANCING ACTIVITIES 
Capital distributions                                                   (81,352,000)   (54,297,000)   (35,000,000)
Capital contributions                                                    66,000,000             --             --
                                                                      -------------------------------------------
Net cash (used in) financing activities                                 (15,352,000)   (54,297,000)   (35,000,000)
                                                                      -------------------------------------------

Increase (decrease) in cash and cash equivalents                         (2,758,000)    (3,384,000)    30,566,000
Cash and cash equivalents at beginning of period                         33,461,000     36,845,000      6,279,000
                                                                      -------------------------------------------
Cash and cash equivalents at end of period                            $  30,703,000  $  33,461,000  $  36,845,000
                                                                      ===========================================

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period for interest                           $     144,000  $      63,000  $      76,000
   Income taxes paid                                                  $   2,585,000  $   3,889,000  $     944,000

Supplemental Disclosures of Noncash Investing Activities:
   Cellular license interests contributed by Cellular
      Communications, Inc.                                            $          --  $          --  $  28,207,000
   Purchases of property, plant and equipment included in
      current liabilities                                             $  16,281,000  $   9,491,000  $  10,800,000
Supplemental Disclosures of Noncash Financing Activities:
   Distribution payable to partners                                   $  28,748,000  $  26,133,000  $  22,982,000
</TABLE>


See accompanying notes.

                                     S-40
<PAGE>   73
                             New Par (A Partnership)

                   Notes to Consolidated Financial Statements

                           December 31, 1995 and 1994


1. ORGANIZATION

New Par owns and operates cellular telephone systems primarily in Michigan and
Ohio, and in portions of Indiana and Kentucky. New Par's principal line of
business is the provision of cellular telephone service. New Par also sells,
installs and repairs cellular telephones and accessories, resells paging service
and sells pagers and accessories.

New Par was formed on August 1, 1991 pursuant to the Amended and Restated
Agreement and Plan of Merger and Joint Venture Organization dated as of December
14, 1990 between AirTouch Communications, Inc. ("AirTouch") (formerly PacTel
Corporation), Cellular Communications, Inc. ("CCI"), CCI Newco, Inc. and CCI
Newco Sub, Inc. (the "Merger Agreement"). New Par is a Delaware general
partnership equally owned by AirTouch and CCI through the following
wholly-owned, indirect corporate subsidiaries:
<TABLE>
<CAPTION>
                                                                    Percentage
                                                                   Ownership of
GENERAL PARTNERS                                                      New Par
----------------                                                   ------------
<S>                                                                <C>
THE AIRTOUCH GROUP
AirTouch Cellular of Michigan                                          27.74%
AirTouch Cellular of Ohio                                              18.18
AirTouch Cellular of Saginaw, Inc.                                      2.64
AirTouch Cellular of Lima, Inc.                                         1.44
                                                                   ------------
                                                                       50.00
THE CCI GROUP
Cellular Communications of Cleveland, Inc.                             12.52
Cellular Communications of Cincinnati, Inc.                            11.22
Cellular Communications of Columbus, Inc.                               7.94
Cellular Communications of Dayton, Inc.                                 5.19
Cellular Communications of Akron, Inc.                                  4.14
Cellular Communications of Canton, Inc.                                 2.29
Cellular Communications of Hamilton, Inc.                               1.98
Lorain/Elyria Cellular Telephone Company                                1.86
E&J Mobile Radio Service, Inc.                                           .97
Cellular Communications of Mansfield, Inc.                               .87
Midwest Mobilephone of Cincinnati, Inc.                                  .81
Star-Cel, Inc.                                                           .21
                                                                   ------------
                                                                       50.00
                                                                   ------------
                                                                      100.00%
                                                                   ============
</TABLE>


                                     S-41
<PAGE>   74
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



1. ORGANIZATION (CONTINUED)

In 1996, AirTouch Cellular of Ohio, AirTouch Cellular of Saginaw, Inc. and
AirTouch Cellular of Lima, Inc. were merged into AirTouch Cellular Of Michigan.

Each wholly-owned, indirect corporate subsidiary of AirTouch and CCI initially
contributed to New Par its interests in the General Partnerships (see below).
The initial contributions were accounted for at the net book value of the assets
and liabilities of the General Partnerships. Each of these partnerships, among
other assets, holds a license or licenses from the Federal Communications
Commission ("FCC") and state authorities to operate cellular telephone systems
in Cellular Geographic Service Areas as listed below. New Par owns 100% of the
partnership interests in each partnership, except as noted.


         GENERAL PARTNERSHIP                                  SERVICE AREA     
----------------------------------------                 -----------------------
                                                                                
Detroit Cellular Telephone Company                       Detroit, MI            
Northern Ohio Cellular Telephone Company                 Cleveland, OH          
                                                         Lorain/Elyria, OH      
                                                         Mansfield, OH          
                                                         Ashtabula, OH          
Southern Ohio Telephone Company                          Cincinnati, OH         
                                                         Clinton, OH            
Columbus Cellular Telephone Company                      Columbus, OH           
                                                         Mercer, OH             
                                                         Morrow, OH             
Dayton Cellular Telephone Company                        Dayton, OH             
Toledo Cellular Telephone Company                        Toledo, OH             
                                                         Lima, OH               
Grand Rapids Cellular Telephone Company                  Grand Rapids, MI       
Akron Cellular Telephone Company                         Akron, OH              
Flint Cellular Telephone Company                         Flint, MI              
                                                         Saginaw, MI            
Lansing Cellular Telephone Company                       Lansing, MI            
Canton Cellular Telephone Company                        Canton, OH             
Hamilton Cellular Telephone Company                      Hamilton/Middletown, OH
Springfield Cellular Telephone Company                   Springfield, OH        
Muskegon Cellular Partnership (a)                        Muskegon, MI           



                                     S-42
<PAGE>   75
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



1. ORGANIZATION (CONTINUED)

(a)  New Par is a 38.91% general partner in the Muskegon partnership. AirTouch
     Cellular of Michigan is a 40.5% general partner. The remaining 20.59%
     interests are owned by unaffiliated entities.

Each of the above General Partnerships owns 100% of the FCC license in the
Service Area, except for Hamilton/Middletown and Springfield in which the
applicable partnership owns 99.6% and 89.23% of the FCC license, respectively.

New Par owns 100% of Cellular One Sales and Service Company, which operates New
Par's sales and service center business.

2. SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

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

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of New Par, its
wholly-owned partnerships, and partnerships in which New Par's interest is
greater than 50%. Significant intercompany accounts and transactions have been
eliminated in consolidation.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash, deposits in interest-bearing accounts
and short term highly liquid investments purchased with a maturity of three
months or less.

TELEPHONE EQUIPMENT INVENTORY

Telephone equipment inventory, which consists of telephones and accessories, is
stated at the lower of cost (first-in, first-out method) or market.


                                     S-43
<PAGE>   76
                            New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LONG-LIVED ASSETS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover the assets' carrying amount. New Par adopted Statement No. 121 in 1995,
which had no significant impact on the consolidated results of operations and
financial position.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost. Depreciation is computed by the
straight-line method over the estimated useful lives of the assets. Estimated
useful lives are as follows: building - 25 years, operating plant and equipment
- 7 to 25 years, rental telephones - 3 years and office furniture, computer and
other equipment - 3 to 5 years.

LICENSE ACQUISITION COSTS

Deferred cellular license costs include costs incurred to design cellular
telephone systems for specific geographic areas, select and acquire sites to
place equipment for such systems, demographic and traffic pattern studies, legal
and organization costs, and costs incurred in connection with the preparation
and filing of FCC license applications. These costs are amortized by the
straight-line method from the commencement of operations over the life of the
Partnership's initial license period (ten years).

In connection with the purchase of license interests, the excess of purchase
price paid over the fair market value of tangible assets acquired is amortized
by the straight-line method over 40 years.

OTHER ASSETS

Other assets includes deferred consulting, legal and interconnection costs,
prepaid rent and the long-term portion of financing receivables. The deferred
costs are amortized on a straight-line basis over 3, 5 and 15 years. Prepaid
rent is charged to expense on a straight-line basis over the life of the various
leases.

                                     S-44
<PAGE>   77
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

Service revenue is recognized at the time the cellular service is rendered.
Telephone equipment sales are recorded when the equipment is shipped to the
customer. Telephone rental revenue is billed and recognized on a monthly basis.

INCOME TAXES

No provision has been made for federal income taxes since such taxes, if any,
are the responsibility of the individual partners. Provision has been made for
state and local income taxes assessed on partnership income which is a liability
of the Partnership.

ALLOCATION OF INCOME

Pursuant to the New Par Partnership Agreement, income is allocated to the
General Partners in proportion to their respective percentage ownership of New
Par.

FAIR VALUE OF FINANCIAL INSTRUMENTS

New Par's financial instruments consist primarily of cash and cash equivalents,
accounts receivable, financing receivables, due from affiliates, accounts
payable, accrued expenses, distribution payable to partners, due to affiliates,
property and other taxes payable, and commissions payable. The terms and short
term nature of these assets and liabilities result in their carrying value
approximating fair value.

RECLASSIFICATIONS

Certain of the 1994 amounts have been reclassified to conform to the 1995
presentation.


                                     S-45
<PAGE>   78
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



3. LICENSE ACQUISITION COSTS

License acquisition costs consist of the following:

<TABLE>
<CAPTION>
                                                          DECEMBER 31
                                                     1995              1994
                                                 ------------------------------
<S>                                              <C>               <C>
Deferred cellular license costs                  $  3,418,000      $  3,418,000
Excess of purchase price paid over the fair
  market value of tangible assets acquired        499,699,000       430,938,000
                                                 ------------------------------
                                                  503,117,000       434,356,000
Accumulated amortization                           89,968,000        78,322,000
                                                 ------------------------------
                                                 $413,149,000      $356,034,000
                                                 ==============================
</TABLE>

In July 1995, New Par acquired the operating and cellular system assets of the
Ohio 6 Rural Service Area for $75,080,000 including expenses. The AirTouch Group
and the CCI Group each contributed $33,000,000 in connection with this
acquisition. The acquisition has been accounted for as a purchase and,
accordingly, the net assets and results of operations of the Ohio 6 RSA have
been included in the consolidated financial statements from the date of
acquisition. The excess of the purchase price paid over the fair market value of
the tangible assets acquired of $68,761,000 has been classified as license
acquisition costs.

The unaudited pro forma consolidated results of operations for the years ended
December 31, 1995 and 1994 assuming this acquisition occurred as of January 1,
1994, are as follows:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31
                                                        1995           1994
                                                    ---------------------------
<S>                                                 <C>            <C>

Total revenues                                      $761,619,000   $582,321,000
Net income                                           202,596,000    115,923,000
</TABLE>

In 1994, New Par wrote-off $152,000 of fully amortized costs and paid $100,000
in connection with its interim operating authority from the FCC for two Ohio
Rural Service Areas.


                                     S-46
<PAGE>   79
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



3. LICENSE ACQUISITION COSTS (CONTINUED)

In August 1991, a subsidiary of CCI ("CCI RSA") acquired the Mercer, Ohio FCC
license. This license was contributed to one of the General Partnerships in
accordance with the New Par Partnership Agreement. The contribution was
initially recorded at CCI RSA's cost through December 31, 1991 of $1,315,000.
During 1993, CCI RSA incurred an additional $19,575,000 upon the receipt of a
favorable determination with respect to certain FCC matters. The additional cost
was recorded as a contribution in 1993.

In 1993, a subsidiary of CCI contributed the Ashtabula, Ohio FCC license and the
related assets and liabilities to one of the General Partnerships in accordance
with the New Par Partnership Agreement. The contribution was recorded at
$10,139,000, of which $8,632,000 was for the FCC license and $1,507,000 was for
other assets, net of liabilities.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31
                                                       1995             1994
                                                   -----------------------------
<S>                                                <C>              <C>
Land                                               $ 11,249,000     $ 10,062,000
Building                                             14,325,000       13,721,000
Operating plant and equipment                       521,033,000      394,903,000
Rental telephones                                    60,572,000       85,008,000
Office furniture, computer and other equipment      105,358,000       79,654,000
Construction-in-progress                             31,137,000       14,207,000
                                                   -----------------------------
                                                    743,674,000      597,555,000
Allowance for depreciation                          279,602,000      244,935,000
Allowance for unreturned rental telephones              195,000          402,000
                                                   -----------------------------
                                                   $463,877,000     $352,218,000
                                                   =============================
</TABLE>


5. FINANCING RECEIVABLES

New Par provides financing for the purchase of cellular telephones by its
customers in the form of noninterest bearing, 12 and 24 month installment
contracts. Financing receivables are recorded net of a discount which is
calculated based on an imputed interest rate of prime plus 1% at inception. The
effective interest rate as of December 31, 1995 and 1994 was 9.5%.

                                     S-47
<PAGE>   80
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



5. FINANCING RECEIVABLES (CONTINUED)

Financing receivables consists of the following:

<TABLE>
<CAPTION>
                                                             December 31
                                                          1995          1994    
                                                       -------------------------
<S>                                                    <C>           <C>
Financing receivables                                  $25,410,000   $22,110,000
Less:  unamortized discount                              2,220,000       621,000
Less:  allowance for doubtful accounts                     897,000       715,000
                                                       -------------------------
Total current                                           22,293,000    20,774,000

Financing receivables                                   15,071,000    13,139,000
Less:  unamortized discount                              1,058,000       621,000
Less:  allowance for doubtful accounts                     532,000       631,000
                                                       -------------------------
Total noncurrent                                        13,481,000    11,887,000
                                                       -------------------------
                                                       $35,774,000   $32,661,000
                                                       =========================
</TABLE>

6. RELATED PARTY TRANSACTIONS

Due from affiliates consists of the following:

<TABLE>
<CAPTION>
                                                                December 31
                                                             1995          1994
                                                           ---------------------
<S>                                                        <C>           <C>
CCI and subsidiaries                                       $ 6,000       $    --
CCPR Services, Inc.                                          4,000         8,000
Cellular Communications International, Inc.                     --         3,000
International CableTel Incorporated                          5,000         3,000
                                                           ---------------------
                                                           $15,000       $14,000
                                                           =====================
</TABLE>

Due to affiliates consists of the following:

<TABLE>
<CAPTION>
                                                               December 31           
                                                           1995          1994
                                                        ------------------------
<S>                                                    <C>              <C>
AirTouch and affiliates                                 $1,660,000      $851,000
CCI and subsidiaries                                            --       184,000
OCOM Corporation                                           114,000       191,000
                                                        ------------------------
                                                        $1,774,000    $1,226,000
                                                        ========================
</TABLE>                                                


                                     S-48
<PAGE>   81
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



6. RELATED PARTY TRANSACTIONS (CONTINUED)

Pursuant to the New Par Partnership Agreement, the CCI Group is responsible for
appointing and employing New Par's chief executive officer and half of the next
level executives and the AirTouch Group is responsible for appointing and
employing the other half of the next level executives. For the year ended
December 31, 1995, New Par was charged $1,231,000 and $1,205,000 for payroll and
benefits by AirTouch affiliates and CCI, respectively, of which $232,000 and
$2,204,000 are included in operating expenses and selling, general and
administrative expenses, respectively. For the year ended December 31, 1994, New
Par was charged $1,215,000 and $1,099,000 for payroll and benefits by AirTouch
affiliates and CCI, respectively, of which $228,000 and $2,086,000 are included
in operating expenses and selling, general and administrative expenses,
respectively. For the year ended December 31, 1993, New Par was charged $779,000
and $816,000 for payroll and benefits by AirTouch affiliates and CCI,
respectively, of which $176,000 and $1,419,000 are included in operating
expenses and selling, general and administrative expenses, respectively.

In connection with the Merger Agreement, CCI distributed its wholly-owned
subsidiary OCOM Corporation ("OCOM") to its shareholders on July 31, 1991. OCOM
owns the long distance and microwave operations formerly owned by the
partnerships that CCI contributed to New Par. Most of CCI's officers and
directors are officers and directors of OCOM. New Par provides billing and
collection services to OCOM for the long distance telephone service OCOM sells
to certain of New Par's subscribers. OCOM operates the microwave transmission
service between the cell sites and switches contributed by CCI. For the years
ended December 31, 1995, 1994 and 1993, OCOM charged New Par $3,985,000,
$4,273,000, and $4,043,000, respectively, for microwave transmission services
which is included in operating expenses.


                                     S-49
<PAGE>   82
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



7. LEASES

Leases for office space, sales and service centers and cell sites extend through
2039. Total rent expense for the years ended December 31, 1995, 1994 and 1993
under operating leases was $7,541,000, $6,786,000 and $5,608,000, respectively.

Future minimum lease payments under noncancellable operating leases as of
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
    Year ending December 31:
    <S>                                           <C>
      1996                                        $ 7,215,000
      1997                                          6,554,000
      1998                                          5,983,000
      1999                                          5,361,000
      2000                                          4,734,000
      Thereafter                                   32,776,000
                                                  -----------
                                                  $62,623,000
                                                  ===========
</TABLE>

8. DEFERRED COMPENSATION

In 1994, New Par granted stock appreciation rights to executives and certain
employees entitling them to receive cash in an amount equivalent to any excess
of the market value of a stated number of shares of AirTouch and CCI stock over
a stated grant price. The rights were granted at $24 per share for the AirTouch
shares and $44 per share for the CCI shares. The rights vest based on the
increase in the market value over the grant price. Vested rights may be
exercised for cash after August 6, 1996.

As of December 31, 1995, rights based on 154,000 shares of AirTouch and 154,000
shares of CCI were outstanding. Based on the December 31, 1995 market value of
AirTouch and CCI shares, the cash value of the rights in August 1996 would be
$760,000. New Par recognized $449,000 and $171,000 of compensation expense in
1995 and 1994, respectively, related to the stock appreciation rights.


                                     S-50
<PAGE>   83
                             New Par (A Partnership)

             Notes to Consolidated Financial Statements (continued)



9. PENSION PLAN

New Par has a defined contribution plan covering all employees who have
completed six months of service and worked over 500 hours. New Par's matching
and discretionary contributions are determined annually. Participants can make
salary deferral contributions of 1% to 16% of annual compensation not to exceed
the maximum allowed by law. New Par's expense for the years ended December 31,
1995, 1994 and 1993 was $4,988,000, $3,352,000 and $3,186,000, respectively.

10. COMMITMENTS AND CONTINGENT LIABILITIES

As of December 31, 1995, New Par had purchase commitments of approximately
$52,696,000 primarily for operating equipment, computer equipment and cellular
telephones and accessories.

In June 1995, New Par extended through May 1996 a one year $5,000,000 unsecured
revolving credit agreement with a bank for working capital and any other proper
business purpose. New Par did not obtain funds under this agreement during 1995.
The terms of the agreement include a commitment fee of .25% per annum.

There are various legal proceedings pending against New Par in the ordinary
course of business. Management believes the aggregate liabilities, if any,
arising from such proceedings would not have a material adverse effect on New
Par's consolidated financial position.

11. AIRTOUCH AND CCI RELATIONSHIP

In December 1995, a subsidiary of CCI, Cellular Communications of Ohio, Inc.,
(the parent of the CCI Group) entered into a loan agreement which places certain
restrictions on New Par. These restrictions are as follows: (i) New Par's
indebtedness must be non-recourse to its partners, and (ii) New Par may not have
indebtedness outstanding that exceeds an aggregate of $20,000,000 at any one
time.



                                     S-51
<PAGE>   84
                                                                                
                             New Par (A Partnership)
                                                                                
             Notes to Consolidated Financial Statements (continued)




11. AIRTOUCH AND CCI RELATIONSHIP (CONTINUED)

Pursuant to the Merger Agreement, at specified times from August 1996 through
January 1998, AirTouch has the right to buy the shares of CCI it does not own at
an appraised value, subject to certain adjustments. If AirTouch does not
exercise this right, it will determine whether New Par should be dissolved or
AirTouch's interest in New Par and CCI should be sold as a whole. Upon such
determination, CCI must promptly commence a process to sell CCI, although in
lieu of any sales to a third party, CCI may purchase AirTouch's CCI shares and,
in certain circumstances, its interest in New Par at their appraised values. Any
decision by CCI to buy out AirTouch or any irrevocable election by CCI not to
effect a sale pursuant to the above sale process would require the approval of
CCI stockholders. In the event that either CCI or CCI's interest in New Par is
sold to a third party for less than the appraised value of CCI's interest in New
Par, AirTouch may be required to pay a "make-whole" amount, subject to certain
downward adjustments, to the other CCI stockholders.

12. PARTNERS' CAPITAL

New Par is required to make cash distributions of a portion of estimated federal
taxable income on a quarterly basis, subject to the amount of cash available
including cash borrowable by New Par. Such distributions shall be made to the
partners in proportion to their respective ownership percentages. As of December
31, 1995 and 1994, there was approximately $28,748,000 and $26,133,000,
respectively, payable to the partners for the estimated federal taxable income
distribution. During 1995, 1994 and 1993, New Par distributed $81,352,000,
$54,297,000 and $35,000,000, respectively, pursuant to this requirement. New Par
must also distribute the amount, if any, that exceeds 120% of the amount
required for estimated federal income tax distributions, plus cash reasonably
contemplated as being necessary for the cash payment of New Par's operating
expenses (net of receipts), debt service, contingencies, budgeted capital
expenditures and working capital requirements within 45 days after each quarter.
Such distributions are to be made to the partners in proportion to their
respective ownership percentages.




                                     S-52
<PAGE>   85

                            New Par (A Partnership)

                Schedule II - Valuation and Qualifying Accounts


<TABLE>
<CAPTION>
         COL. A                   COL. B                COL. C                  COL. D              COL. E
------------------------------------------------------------------------------------------------------------
                                                       Additions
                                                ------------------------
                                                                Charged
                                Balance at      Charged to      to Other                          Balance at
                                Beginning        Costs and      Accounts        Deductions          End of
       Description              of Period        Expenses       Describe         Describe           Period
------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>              <C>         <C>                  <C>
Year ended December 31, 1995:
Allowance for doubtful
 accounts receivable            $5,265,000      $11,552,000      $   --      $ (8,629,000)(1)     $8,188,000
                                ===========================================================================
Allowance for doubtful
 financing receivables          $1,346,000      $   552,000      $   --      $   (469,000)(2)     $1,429,000
                                ============================================================================
Allowance for unreturned
 rental telephones              $  402,000      $   163,000      $   --      $   (370,000)(2)     $  195,000
                                ============================================================================


Year ended December 31, 1994:
Allowance for doubtful
 accounts receivable            $4,382,000      $15,890,000      $   --      $(15,007,000)(2)     $5,265,000
                                ============================================================================
Allowance for doubtful
 financing receivables          $       --      $ 1,346,000      $   --      $         --         $1,346,000
                                ============================================================================
Allowance for unreturned
 rental telephones              $2,248,000      $   142,000      $   --      $ (1,988,000)(2)     $  402,000
                                ============================================================================

Year ended December 31, 1993:
Allowance for doubtful
 accounts receivable            $4,431,000      $16,877,000      $   --      $(16,926,000)(2)     $4,382,000
                                ============================================================================
Allowance for unreturned
 rental telephones              $  701,000      $ 4,426,000      $   --      $ (2,879,000)(2)     $2,248,000
                                ============================================================================
</TABLE>

(1)  Uncollectible accounts written off, net of recoveries and $13,000
     allowance for doubtful accounts as of acquisition date of the Ohio 6 Rural
     Service Area assets acquired.

(2)  Uncollectible accounts written off, net of recoveries.



                                      S-53

<PAGE>   86
                                        EXHIBIT INDEX

    Exhibits identified in parentheses below, on file with the Commission, are
incorporated by reference as exhibits hereto.

       EXHIBIT
       NUMBER                          DESCRIPTION
       -------                         -----------

         3.1      Certificate of Incorporation of the Company, as filed with the
                  Secretary of State of the State of Delaware on September 19,
                  1994 (Exhibit 3.i to the Company's Form 8-K - Date of Report:
                  December 15, 1994, File No. 1-12342)

         3.2      Designation, Preferences and Rights of Series A Participating
                  Preferred Stock of the Company, as filed with the Secretary of
                  State of the State of Delaware on December 15, 1994 (Exhibit
                  3.2 to the Company's Form 8-B, File No. 1-12342, filed January
                  27, 1995)

         3.3      Amended By-laws of the Company as of February 8, 1996

         4.1      Form of Common Stock certificate (Exhibit 4.1 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1994, File No. 1-12342))

         4.2      Rights Agreement between the Company and The Bank of New York,
                  Rights Agent, dated as of September 19, 1994 (Exhibit 4 to the
                  Company's Current Report on Form 8-K - Date of Report:
                  December 15, 1994, File No. 1-12342)

         10.1     Joint Venture Agreement between Mannesmann Kienzle GmbH,
                  Pacific Telesis Netherlands B.V., Cable and Wireless plc, DG
                  Bank Deutsch Genossenschaftsbank and Lyonnaise des Eaux SA
                  dated June 30, 1989 (Exhibit 10.43 to the Company's
                  Registration Statement on Form S-1, Registration No. 33-68012,
                  filed August 27, 1993)

         10.2     Amended and Restated Plan of Merger and Joint Venture
                  Organization by and among the Company, CCI, CCI Newco, Inc.
                  and CCI Newco Sub, Inc. dated as of December 14, 1990 (Exhibit
                  1 to the Company's Statement on Schedule 13D filed on February
                  18, 1992, File No. 1-12342)

         10.3     Termination Agreement by and among Pacific Telesis Group, the
                  Company, CCI and Cellular Communications of Ohio, Inc. dated
                  December 11, 1992 (Exhibit 5 to Amendment No. 28 to the
                  Company's Statement on Schedule 13D filed on December 12,
                  1992, File No. 1-12342)

         10.4     Separation Agreement by and between the Company and Pacific
                  Telesis Group, dated as of October 7, 1993 (Exhibit 10.1 to
                  the Company's Registration Statement on Form S-1, Registration
                  No. 33-68012, filed August 27, 1993)

         10.5     Amendment No. 1 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated November 2, 1993 (Exhibit
                  10.2 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1993, File No. 1-12342)

         10.6     Amendment No. 2 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated as of March 25, 1994 (Exhibit
                  10.6 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1994, File No. 1-12342)

         10.7     Amendment No. 3 to Separation Agreement between the Company
                  and Pacific Telesis Group, dated as of April 1, 1994 (Exhibit
                  10.7 to the Company's Annual Report on Form 10-K for the
                  period ended December 31, 1994, File No. 1-12342)

         10.8     Amendment No. 4 to Separation Agreement between the Company
                  and Pacific Telesis Group dated as of March 21, 1995

         10.9     Agreement on Retirement and Relocation Benefits between Mr.
                  Christensen and the Company, dated as of March 31, 1994
                  (Exhibit 10.10 to the Company's Annual Report on Form 10-K for
                  the period ended December 31, 1994, File No. 1-12342)



<PAGE>   87
         10.10    Amended and Restated Joint Venture Organization Agreement
                  dated as of September 30, 1995 between the Company and U S
                  WEST Inc. (Exhibit 2.1 to the Company's Quarterly Report on
                  Form 10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.11    Amended and Restated Agreement of Limited Partnership of WMC
                  Partners, L.P. dated as of September 30, 1995 by and between
                  the Company and U S WEST Inc. (Exhibit 10.1 to the Company's
                  Quarterly Report on Form 10-Q for the period ended September
                  30, 1995, File No. 1-12342)

         10.12    Amended and Restated Agreement of Limited Partnership of PCS
                  Nucleus, L. P. dated as of September 30, 1995 by and between
                  the Company and U S WEST Inc. (Exhibit 10.2 to the Company's
                  Quarterly Report on Form 10-Q for the period ended September
                  30, 1995, File No. 1-12342)

         10.13    Amended and Restated Investment Agreement dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.3 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342) 

         10.14    Amended and Restated Agreement of Exchange dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.4 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.15    Amended and Restated Trust Agreement of Exchange dated as of
                  September 30, 1995 by and between the Company and U S WEST
                  Inc. (Exhibit 10.5 to the Company's Quarterly Report on Form
                  10-Q for the period ended September 30, 1995, File No.
                  1-12342)

         10.16    Agreement of Limited Partnership dated as of October 20, 1994
                  between CELLCO Partnership and WMC Partners, L.P. (Exhibit
                  10.1 to the Company's Form 8-K - Date of Report: October 20,
                  1994, File No. 1-12342) 

         10.17    Agreement of Limited Partnership dated as of October 20, 1994
                  of PCS PrimeCo, L.P. (Exhibit 10.2 to the Company's Form 8-K -
                  Date of Report: October 20, 1994, File No. 1-12342)
                  

         10.18    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications, Inc. and Bell Atlantic Corporation
                  (Exhibit 10.3 to the Company's Form 8-K - Date of Report:
                  October 20, 1994, File No. 1-12342) 

         10.19    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications and NYNEX Corporation (Exhibit 10.4 to
                  the Company's Form 8-K - Date of Report: October 20, 1994,
                  File No. 1-12342) 

         10.20    Standstill Agreement dated as of October 20, 1994 between
                  AirTouch Communications and CELLCO Partnership (Exhibit 10.5
                  to the Company's Form 8-K - Date of Report: October 20, 1994,
                  File No. 1-12342) 

         10.21    Credit Agreement between the Company, Bank of America National
                  Trust and Savings Association and The Other Financial
                  Institutions Party Thereto dated July 20, 1995 (Exhibit 10 to
                  the Company's Quarterly Report on Form 10-Q for the period
                  ended June 30, 1995, File No. 1-12342)

         10.22    Amended and Restated Partnership Agreement dated as of
                  September 1, 1993 by and between Members of the PacTel Group
                  and Members of the McCaw Group (Exhibit 28(a) to McCaw
                  Cellular Communications, Inc. Current Report on Form 8-K for
                  the period ended October 1, 1991, File No. 0-16051)

         10.23    Representative Employment Agreement for Messrs. Ginn, Cox,
                  Sarin and Gyani and Mrs. Gill (Exhibit 10.22 to the Company's
                  Annual Report on Form 10-K for the period ended December 31,
                  1994, File No. 1-12342) 

         10.24    Representative Employment Agreement for other officers of the
                  Company (Exhibit 10.23 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1994) 

         10.25    Form of Indemnity Agreement between the Company and each of
                  its directors and certain officers (Exhibit 10.24 to the
                  Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342) 

         10.26    Trust Agreement No. 1 for AirTouch Communications, Inc.
                  Supplemental Executive Pension Plan Benefits (Exhibit 10.25 to
                  the Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342) 


<PAGE>   88
         10.27    AirTouch Communications, Inc. Deferred Compensation Plan
                  (Exhibit 10.26 to the Company's Form 10-K for the period
                  ended December 31, 1994, File No. 1-12342)

         10.28    AirTouch Communications, Inc. Deferred Compensation Plan for
                  Nonemployee Directors (Exhibit 10.10 to the Company's Annual
                  Report on Form 10-K for the period ended December 31, 1993,
                  File No. 1-12342)

         10.29    AirTouch Communications, Inc. Supplemental Executive Pension
                  Plan (Exhibit 10.12 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1993, File No. 1-12342)

         10.30    AirTouch Communications, Inc. Executive Life Insurance Plan
                  (Exhibit 10.13 to the Company's Annual Report on Form 10-K for
                  the period ended December 31, 1993, File No. 1-12342)
        

         10.31    AirTouch Communications, Inc. Executive Long-Term Disability
                  Plan (Exhibit 10.14 to the Company's Annual Report on Form
                  10-K for the period ended December 31, 1994, File No. 1-12342)

         10.32    Description of the Company's Business Travel Accident
                  Insurance for Non-Employee Directors (Exhibit 10.31 to the
                  Company's Annual Report on Form 10-K for the period ended
                  December 31, 1994, File No. 1-12342)

         10.33    AirTouch Communications, Inc. 1993 Long Term Stock Incentive
                  Plan Amended and Restated as of December 15, 1994

         10.34    Description of the Executive Financial Counseling Program

         13       1995 Annual Report to Security Holders - Financial Section

         21       Subsidiaries of the Registrant

         23.1     Consent of Price Waterhouse LLP

         23.2     Consent of Coopers & Lybrand LLP

         23.3     Consent of Ernst & Young LLP

         23.4     Consent of KPMG Deutsche Treuhand-Gesellschaft

         23.5     Consent of Coopers & Lybrand LLP - Re: CMT Partners

         23.6     Consent of Ernst & Young LLP - Re: New Par

         24       Power of Attorney

         27       Financial Data Schedule

         99.1     The Company's Current Report on Form 8-K: Date of Report: June
                  30, 1995, File No. 1-12342

         99.2     Coopers & Lybrand LLP Report of Independent Accountants on the
                  Company's consolidated financial statements for each of the
                  two years in the period ended December 31, 1994


         99.3     Annual Report on Form 11-K for the AirTouch Communications,
                  Inc. Retirement Plan for the year 1995 (To be filed as an
                  amendment hereto within 180 days of the end of the period
                  covered by this report)

         99.4     Cellular Communications, Inc. financial statements for each of
                  the three years in the period ended December 31, 1995
                  (Cellular Communications, Inc. Annual Report on Form 10-K for
                  the period ended December 31, 1995, Item 8 and Item 14(a) and
                  (d), File No. 1-10789)