##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-K



|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31,
2003



|  |                                                                                             
|- | --------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the transition period
from 
to

Commission File No. 333-110082



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AMERICAN CELLULAR CORPORATION

(Exact name of registrant as specified in its
charter)


|                                                                                           |  |                                                   
|------------------------------------------------------------------------------------------ |  | --------------------------------------------------
|Delaware(State or other jurisdiction of
    incorporation or organization)                 |  | 22-3043811(I.R.S. Employer
    Identification No.)
|14201 Wireless Way
    Oklahoma City, Oklahoma(Address of principal executive
    offices) |  | 73134(Zip Code)                                   

(405) 529-8500

(Registrants telephone number, including
area code)




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

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



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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. YesxNoo

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.x

Indicate
by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange
Act). YesoNox

As
of March 1, 2004 there were 50 shares of the
registrants $0.01 par value Class A common stock
outstanding, which are owned of record by Dobson JV Company and
300 shares of the registrants $0.01 par value Class B
common stock outstanding, which are owned of record by Dobson
Communications Corporation.

The
Registrant meets the conditions set forth in general
instructions I (1) (a) and (b) of the
Form 10-K and is therefore filing this form with the
reduced disclosure format.

Documents
incorporated by reference: None



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AMERICAN CELLULAR CORPORATION

ANNUAL REPORT ON FORM 10-K


FOR THE YEAR ENDED DECEMBER 31,
2003

TABLE OF CONTENTS

|                                    |  |                                                                                                                      |  |      |    |  |  | 
|----------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|Item                                |  |                                                                                                                      |  |     
|Number                              |  |                                                                                                                      |  | Page
|                                    |  |                                                                                                                      |  |     
|PART I                             
|                                   
|1                                   |  | Business                                                                                                             |  |      | 3  | 
|2                                   |  | Properties                                                                                                           |  |      | 18 | 
|3                                   |  | Legal Proceedings                                                                                                    |  |      | 18 | 
|4                                   |  | Submission of Matters to a
    Vote of Security Holders                                                              |  |      | 18 | 
|PART II                            
|                                   
|5                                   |  | Market for Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities |  |      | 19 | 
|6                                   |  | Selected Financial Data                                                                                              |  |      | 19 | 
|7                                   |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                            |  |      | 22 | 
|7A                                  |  | Quantitative and Qualitative
    Disclosures About Market Risk                                                       |  |      | 35 | 
|8                                   |  | Financial Statements and
    Supplementary Data                                                                      |  |      | 36 | 
|9                                   |  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure                             |  |      | 62 | 
|9A                                  |  | Controls and Procedures                                                                                              |  |      | 62 | 
|PART III                           
|                                   
|10                                  |  | Directors and Executive
    Officers of the Registrant                                                               |  |      | 63 | 
|11                                  |  | Executive Compensation                                                                                               |  |      | 63 | 
|12                                  |  | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters               |  |      | 63 | 
|13                                  |  | Certain Relationships and
    Related Transactions                                                                   |  |      | 63 | 
|14                                  |  | Principal Accountant Fees
    and Services                                                                           |  |      | 63 | 
|PART IV                            
|                                   
|15                                  |  | Exhibits, Financial
    Statement Schedules, and Reports on Form 8-K                                                 |  |      | 65 | 
|Rule 13a-14(a) Certification of CEO
|Rule 13a-14(a) Certification of CFO
|Section 1350 Certification of CEO  
|Section 1350 Certification of CFO  



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PART I




Item 1. Business

Explanatory Note: ACC Escrow Corp., which
was a wholly-owned, indirect subsidiary of Dobson Communications
Corporation, was formed on June 23, 2003 and commenced
operations on August 8, 2003. As more fully described
below, on August 19, 2003, ACC Escrow Corp. was merged into
American Cellular Corporation. For financial reporting purposes,
ACC Escrow Corp. is deemed to be the acquiring company.
Consequently, this annual report on Form 10-K presents
financial information for American Cellular for the period from
the formation of ACC Escrow Corp. through December 31,
2003. Unless the context otherwise requires, all references to
our, us and we refer to ACC
Escrow Corp. and American Cellular and its predecessors and
subsidiaries as a combined entity, except where it is clear that
such terms refer only to American Cellular without regard to its
combination with ACC Escrow Corp. References to
combined with respect to our results of operations
reflect the combination of American Cellulars results of
operations through August 18, 2003, with the results of
operation of American Cellular and ACC Escrow Corp. from
August 19, 2003 through December 31, 2003.

Overview

We are a rural and suburban provider of wireless
communications services in the United States. At
December 31, 2003, our wireless telephone systems covered a
total population of 5.0 million and we had approximately
709,200 subscribers with an aggregate market penetration of
14.2%. We provide wireless telephone service in portions of
Illinois, Kansas, Kentucky, Michigan, Minnesota, New York, Ohio,
Oklahoma, Pennsylvania, West Virginia and Wisconsin. We offer
digital voice and digital feature services to all of our covered
population through our existing Time Division Multiple Access,
or TDMA digital network. We are currently in the process of
updating our digital network to Global System for Mobile
Communications, or GSM, and General Packet Radio Service, or
GPRS, with an evolution towards Enhanced Data for GSM Evolution,
or EDGE, technology which will enable us to offer enhanced data
services to our subscribers and roaming partners in the future.
ACC Escrow Corp. was formed on June 23, 2003 and
commenced operations on August 8, 2003 when it issued
$900 million of its 10% senior notes due 2011, which
proceeds we used in our restructuring. On August 19, 2003,
ACC Escrow Corp. was merged into American Cellular
Corporation. For financial reporting purposes,
ACC Escrow Corp. is deemed to have acquired American
Cellular Corporation, and American Cellular Corporation is
deemed to be our predecessor company. We have included
information regarding our predecessor, American Cellular
Corporation, throughout this document.

To provide a more comparable basis for discussion
of our financial results and operations, we have combined
results of ACC Escrow Corp. for the period from
formation (June 23, 2003) through December 31, 2003,
together with the results from our predecessor company, American
Cellular Corporation, for the period from January 1, 2003
through August 18, 2003, to discuss 2003 on a combined
basis. For the combined year ended December 31, 2003, we
had total revenue of $451.3 million and net income of
$129.0 million. At December 31, 2003, we had
$912.9 million of indebtedness and stockholders
equity of $455.3 million.

Prior to August 19, 2003, American Cellular
was owned by joint venture which was equally owned by Dobson
Communications and AT&T Wireless Services, Inc. On
August 19, 2003, we restructured our indebtedness and
equity ownership. To effect this restructuring, ACC Escrow Corp.
was merged into American Cellular and we completed an exchange
offer for our existing 9.5% senior notes due 2009, which we
refer to as our existing notes. In the exchange offer, the
holders of $681.9 million of the $700 million
outstanding principal amount of our existing notes exchanged
those existing notes and received 43.9 million shares of
Dobson Communications Class A common stock,
681,900 shares of Dobson Communications Series F
convertible preferred stock having an aggregate liquidation
preference of $121.8 million and convertible into a maximum
of 13.9 million shares of Dobson Communications Class
A common stock, and $48.7 million in cash. In addition,
Dobson Communications issued an additional 4,301 shares of
its Series F convertible preferred stock and 276,848 shares
of its Class A common stock in payment of certain fees. We used
a portion of the proceeds from the sale of ACC Escrow
Corp.s 10% senior notes to fully repay our existing credit
facility. Upon consummation of the restructuring, we became an
indirect wholly-owned

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subsidiary of Dobson Communications. On
December 31, 2003, all of our subsidiaries, except ACC
Lease Co, Inc. and Alton CellTelCo Partnership, were merged into
us.


We focus on acquiring and operating a mix of
rural and suburban wireless systems because we believe these
wireless systems provide strong growth opportunities due to
lower penetration rates, higher subscriber growth rates and less
competition for subscribers than wireless systems located in
larger metropolitan areas.

Competitive Strengths

Strong Position in Attractive
Markets.We have significant market
share in our wireless markets. These markets have demonstrated
positive demographic growth trends, enjoy a higher population
density relative to many other rural and suburban markets and
generally have fewer competitors than metropolitan markets.
Also, our markets are attractive due to their proximity to major
metropolitan statistical areas, or MSAs, such as New York
City, Minneapolis-St. Paul, Pittsburgh, Cincinnati and
Louisville. This proximity, along with our long-term roaming
agreements, allows us to offer rate plans that include these
MSAs in our home area footprint, which makes
our rate plans more competitive. This proximity also enhances
our roaming revenue. Our markets have a relatively high density
of highway and other traffic corridors and strong tourist
activity due to seasonal activity. Substantially all of our
wireless licenses are 850 MHz licenses, which generally provide
the most cost effective platform for delivering service to the
end user in our suburban and rural markets. The 850 MHz
frequency requires fewer cell sites and less equipment than the
1900 MHz frequency to serve the rural and suburban markets in
which we operate.

High Quality of
Service.We believe we offer a high
quality of service to our subscribers through our digital
network and customer service capabilities. At December 31,
2003, over 90% of our customers subscribed to our digital TDMA
service plans, which provides a low level of blocked and dropped
calls during peak usage times. Our current deployment of a GSM/
GPRS/ EDGE network will enable us to offer enhanced data
capabilities to our customers and persons who roam on our
network. We support local customer service through retail
stores, a direct sales force, and regional customer service call
centers that offer 24-hour services. Moreover, the regional
presence of our call centers enhances our knowledge of local
markets, which improves our ability to provide customer service,
credit and collection and order activation. Our high quality
service and customer satisfaction have been demonstrated by our
low churn rates, which for the combined year ended
December 31, 2003 was 1.9%.

Localized Management of Distribution Channels.We distribute our products primarily
through a combination of retail outlets, a direct sales force
and independent dealers. Our local management teams have
day-to-day operating authority with the flexibility to respond
to individual market requirements. Their presence fosters a
sense of customer service and community spirit. Local management
designs marketing programs and tailors distinctive rate plans to
emphasize the quality, value and advantage of our services.

Long-Term Roaming Agreements.We maintain long-term roaming
relationships with operators of wireless systems in MSAs near
our wireless markets. These roaming agreements allow our
subscribers and the subscribers of our roaming partners to roam
on each others networks at favorable rates. In addition,
we deploy technology in our markets that is the same as that
selected by our roaming partners in the neighboring MSA. We
believe these long-term roaming agreements enable us to maximize
our roaming revenue and offer our subscribers a larger
home area footprint at an attractive price. Our two
most significant long-term roaming agreements are with AT&T
Wireless and Cingular.

Experienced Management Team.With more than 50 years of
telecommunications experience on a combined basis, our senior
management team, consisting of Everett R. Dobson, Douglas B.
Stephens and Bruce R. Knooihuizen, is extremely knowledgeable
and well regarded in the telecommunications industry.

Continued Relationship with Dobson
Communications.We believe that the
integration of our operations with Dobson Communications has
significant benefits. Our licensed areas, combined with those of
our parent, Dobson Communications, cover an estimated population
of more than 10.6 million, and together we served
approximately 1,552,100 subscribers at December 31, 2003.
This size and scale enables us to reduce

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our operating costs and receive technical,
network and operational efficiencies from Dobson
Communications existing corporate infrastructure.


Strategy

Our strategy is to capitalize on our competitive
strengths and further develop and operate rural and suburban
wireless systems. We have developed organizational, marketing
and operational programs designed to increase the number of our
subscribers, promote superior customer service, enhance roaming
revenue, control operating costs and improve the profitability
of our operations. We plan to attract additional subscribers and
increase our market penetration by leveraging the quality of our
local networks, roaming relationships, digital technologies,
local sales channels and diverse service offerings, which
include national, regional and local rate plans.

Operations

Markets and Systems

The following table sets forth information with
respect to our existing wireless markets. Information with
respect to populations in licensed areas is as of
December 31, 2003 and is based upon the Claritas 2000
Bureau of Census results, adjusted to exclude those portions of
our rural service areas, or RSAs, and MSAs not covered by our
licenses. Net population represents total population less
minority ownership interests in our licenses. Information with
respect to subscribers is as of December 31, 2003. We
determine market penetration by dividing the total number of
subscribers in each of our Federal Communications Commission, or
FCC, wireless licensed areas at the end of the period by the
estimated total population covered by the applicable wireless
license.

|                     |  |            |         |            |  |  |         | 
|-------------------- |  | ---------- | ------- | ---------- |  |  | ------- | 
|                     |  | Total      |         | Net       
|Markets:             |  | Population |         | Population
|                     |  |            |         |           
|Oklahoma/ Kansas PCS |  |            | 259,400 |            |  |  | 259,400 | 
|Alton, IL MSA        |  |            | 21,700  |            |  |  | 18,900  | 
|MI 1 RSA             |  |            | 202,700 |            |  |  | 202,700 | 
|Duluth MN MSA        |  |            | 243,800 |            |  |  | 243,800 | 
|MN 2 RSA             |  |            | 31,800  |            |  |  | 31,800  | 
|MN 3 RSA             |  |            | 58,400  |            |  |  | 58,400  | 
|MN 4 RSA             |  |            | 16,300  |            |  |  | 16,300  | 
|MN 5 RSA             |  |            | 214,700 |            |  |  | 214,700 | 
|MN 6 RSA             |  |            | 274,500 |            |  |  | 274,500 | 
|Eau Claire, WI MSA   |  |            | 148,300 |            |  |  | 145,300 | 
|Wausau WI, MSA       |  |            | 125,800 |            |  |  | 125,800 | 
|WI 1 RSA             |  |            | 118,000 |            |  |  | 118,000 | 
|WI 2 RSA             |  |            | 86,100  |            |  |  | 86,100  | 
|WI 3 RSA             |  |            | 142,900 |            |  |  | 142,900 | 
|WI 4 RSA             |  |            | 124,300 |            |  |  | 124,300 | 
|WI 5 RSA             |  |            | 83,900  |            |  |  | 83,900  | 
|WI 6 RSA             |  |            | 33,600  |            |  |  | 33,600  | 

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|                      |                                                |            |         |            |  |  |         |           | 
|--------------------- | ---------------------------------------------- | ---------- | ------- | ---------- |  |  | ------- | --------- | 
|                      |                                                | Total      |         | Net       
|Markets:              |                                                | Population |         | Population
|                      |                                                |            |         |           
|Orange County, NY MSA |                                                |            | 341,400 |            |  |  | 341,400 |          
|Poughkeepsie, NY MSA  |                                                |            | 280,200 |            |  |  | 280,200 |          
|NY 5 RSA              |                                                |            | 393,100 |            |  |  | 393,100 |          
|NY 6 RSA              |                                                |            | 111,300 |            |  |  | 111,300 |          
|OH 7 RSA              |                                                |            | 261,500 |            |  |  | 261,500 |          
|OH 10 RSA             |                                                |            | 62,300  |            |  |  | 62,300  |          
|KY 4 RSA              |                                                |            | 260,300 |            |  |  | 260,300 |          
|KY 5 RSA              |                                                |            | 164,400 |            |  |  | 164,400 |          
|KY 6 RSA              |                                                |            | 277,700 |            |  |  | 277,700 |          
|KY 8 RSA              |                                                |            | 124,500 |            |  |  | 124,500 |          
|PA 9 RSA              |                                                |            | 189,300 |            |  |  | 189,300 |          
|WV 2 RSA              |                                                |            | 76,600  |            |  |  | 76,600  |          
|WV 3 RSA              |                                                |            | 268,200 |            |  |  | 268,200 |          
|                      |                                                |            |         |            |  |  |         |          
|                      | Total  American Cellular markets
    combined |            |         | 4,997,000  |  |  |         | 4,991,200 | 
|                      |                                                |            |         |            |  |  |         |          
|                      | Total subscribers                              |            |         | 709,200    |  |  |         |           | 
|                      |                                                |            |         |            |  |  |         |          
|                      | Total penetration                              |            |         | 14.2%      |  |  |         |           | 
|                      |                                                |            |         |            |  |  |         |          

Service and Features

We solidify our commitment to our customers by
placing a high priority on offering the latest products,
services and competitive rate plans. We have completed the
deployment of a fully digital network and have introduced a
wireless Internet product in an on-going effort to consistently
deliver advanced services and technologies to our customers. We
attempt to maximize the choices available to our customers by
offering the latest lines of hand-held wireless phones from a
wide variety of manufacturers. We design our rate plans to fit
the specific needs of our customers, which we balance with our
on-going objective to increase profitability.

The following are key components of our service
offerings:

Wireless Calling.Our primary service offering is
wireless telephone service. We currently offer digital service
using the TDMA digital standard, in all of our wireless markets.
In addition, we offer various custom-calling features, including
voice mail, call forwarding, call waiting, three-way calling, no
answer transfer, caller ID, message waiting indicator, sleep
mode for longer battery life, voice activated dialing, and
mobile originated and mobile terminated short message service.
As of December 31, 2003, we had deployed GSM/ GPRS/ EDGE
network coverage in our New York markets and expect to deploy
this technology over our entire coverage area for both our own
subscribers and those of our roaming partners by the end of the
second quarter of 2004. The deployment of GSM/ GPRS/ EDGE
technology will allow us to provide more advanced wireless data
services, thereby giving our subscribers the ability to send and
receive pictures and video and to download games and music.

Digital Handsets.As
of December 31, 2003, over 90% of our subscribers utilized
digital technology. Our digital subscribers use dual-mode,
dual-band handsets. These handsets are compatible with analog
cellular, digital cellular and digital PCS service, allowing our
subscribers access to AT&T Wireless national
footprint, as well as the extensive coverage areas of our other
roaming wireless carriers, including Cingular Wireless.

Marketing

The following are key components of our marketing
strategy:

Branding.We offer
wireless service under the CELLULAR ONE® trademark. We
believe the national support offered by the Cellular One Group
has enhanced our advertising exposure. We also believe that we

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have obtained significant marketing benefits from
the high name recognition associated with this widely used
service mark.


We use the CELLULAR ONE® trademark pursuant
to licensing agreements with the Cellular One Group. We pay
licensing and advertising fees based upon the population of the
licensed areas. Our licensing agreements with the Cellular One
Group are for five-year terms expiring on various dates. These
agreements may be renewed at our option for three additional
five-year terms. From time-to-time, we may consider alternative
brand name strategies and service marks.

Advertising.Our
advertising strategy is focused on establishing a strong local
presence in each of our markets. We direct our media efforts at
the market level by advertising in local publications and
sponsoring local and regional events. We also use mass media
outlets such as television, radio, newspaper, magazine and
outdoor advertising, as well as direct marketing, to augment our
efforts at the community level.

We focus our marketing programs on attracting
subscribers whom we believe are likely to generate high monthly
revenue. We undertake extensive market research to identify and
design marketing programs to attract these subscribers and
tailor distinctive rate plans and roaming rates to emphasize the
quality, value and advantage of our wireless service. We market
our service offerings primarily through our direct sales force
and company-owned retail stores. We also market our service
offerings through a network of dealers, such as electronics
stores, car dealerships and department stores. In addition to
these traditional channels, our marketing team continuously
evaluates other, less traditional, methods of distributing our
services and products, such as direct mail programs.

Segmented Rate Plans.We offer our subscribers a diverse
array of rate plans, so that each subscriber can choose the plan
that best fits that subscribers expected calling needs.
Our offerings include our Clear Across AmericaTM
national rate plans, which use our network along with those of
AT&T Wireless and Cingular Wireless. We also offer regional
and local rate plans at a variety of pricing tiers. The majority
of our new digital subscribers are on our local rate plans,
which generally include only areas covered by our network as the
home area. Our rate plans generally combine a fixed
monthly access charge, a designated number of minutes-of-use,
per minute usage charges for minutes in excess of the included
amount and additional charges for certain custom-calling
features. Most of our plans include some features such as voice
mail, caller ID, call forwarding and call waiting. These plans
offer value to the customer while enhancing airtime usage and
revenue. In the future we will be focusing our offers to take
advantage of our GSM/ GPRS/ EDGE network that will be fully
deployed in 2004. Our focus on offering plans that best fit our
subscribers needs will remain our main objective.

Sales and Distribution

We sell and distribute our wireless services,
phones and accessories primarily through three distribution
channels; retail stores, direct sales and independent dealers.
For the combined year ended December 31, 2003, over 65% of
our gross subscriber additions were added through our retail
stores, while our direct sales force was responsible for almost
10% and our independent dealers added approximately 25%.

As of December 31, 2003, we had
approximately 90 retail stores and outlets, most of which are
fully equipped to handle customer service. Some of these stores
are also authorized warranty repair centers. Our stores and our
well-trained sales staff provide customer-friendly retail
environments through extended hours, and by offering a large
selection of products and services at convenient locations,
which are designed to make the sales process quick and easy for
the subscriber.

We train and compensate our sales force in a
manner designed to stress the importance of customer
satisfaction. We believe that our direct sales force is able to
select and screen new subscribers and select pricing plans that
realistically match subscriber needs. As a result, we believe
that our direct sales force reduces our marketing costs because
our subscriber retention rate is higher than when we use
independent dealers. As of December 31, 2003, there are
approximately 60 employees in our direct sales force.

As of December 31, 2003, we had
relationships with 160 independent dealers, or agents. Those
agents operate 200 retail outlets in our markets. These
agents allow us a third distribution channel by offering our

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services and equipment through retail outlets,
such as electronics stores, national retail chains and
independent contractors.


We have developed an after-sale telemarketing
program which we believe helps to reduce our churn rates and
enhance customer loyalty. This program, which is conducted by
our sales force and customer service personnel, includes
courtesy calls to our new customers and allows our sales staff
to check customer satisfaction and offer our customers
additional calling features.

Customer Service

Customer service is an essential element of our
marketing and operating philosophy. We attract new subscribers
and retain existing subscribers by providing high-quality
customer service. Our customers benefit from a local staff,
including an area manager, customer service field
representatives, technical and engineering staff, sales
representatives and installation and repair facilities. Local
offices and installation and repair facilities allow us to
better service our customers, schedule installations and make
repairs. As of December 31, 2003, our markets were serviced
by four regional call centers. The regional presence of these
call centers enhances our knowledge of the local markets, which
improves our ability to provide customer service, credit and
collection and order activation.

In addition, our customers are able to report
wireless telephone service or account problems 24-hours a day to
our customer service centers on a toll-free access number with
no airtime charge. We believe that our emphasis on customer
service affords us a competitive advantage over our larger
competitors. We frequently contact our subscribers in order to
evaluate and measure, on an ongoing basis, the quality and
competitiveness of our services.

Roaming

Roaming is an important service component for our
business. Accordingly, where possible, we attempt to arrange
roaming agreements that allow customers to roam at competitive
prices. We believe this increases usage on all wireless systems,
including our own. We operate many systems that are adjacent to
major metropolitan areas and include a high concentration of
expressway corridors. These systems tend to have a significant
amount of roaming activity.

Our two most significant roaming partners are
AT&T Wireless and Cingular Wireless, which accounted for
approximately 87% of our roaming traffic in 2003. We have
entered into long-term roaming agreements with both AT&T
Wireless and Cingular Wireless to provide their subscribers with
TDMA and GSM services when they roam in our markets. These
agreements also allow our subscribers to roam outside of our
service area on the networks of AT&T Wireless and Cingular
Wireless at rates we believe to be favorable.

AT&T Wireless

Our largest roaming partner is AT&T Wireless.
For the combined year ended December 31, 2003, AT&T
Wireless customers accounted for approximately 47% of our
roaming revenue, or approximately 13% of our total operating
revenue. In early 2004, Cingular Wireless announced its
intention to acquire AT&T Wireless. This acquisition of
AT&T Wireless by Cingular Wireless should not have a
material impact on the effectiveness of our roaming contracts
with each of AT&T Wireless and Cingular Wireless described
below.

The roaming agreement for TDMA expires in 2007.
Non-reciprocal rates for TDMA are set forth through the end of
the term of the agreement. The roaming agreement for GSM/ GPRS/
EDGE expires in 2008, subject to earlier termination under
certain circumstances, including the technical or commercial
impracticability of using a partys roaming network, the
occurrence of an unacceptable level of unauthorized use, or the
revocation or nonrenewal of a partys GSM license. For GSM/
GPRS/ EDGE the rates are fixed through June 30, 2006,
subject to modification in limited circumstances. The rates in
years 2007 and 2008 could decrease to a limited extent based on
the average revenue per minutes earned by AT&T Wireless from
its subscribers.

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Subject to certain exceptions, through
June 30, 2006, the agreements, AT&T Wireless and its
controlled affiliates will not expand its current GSM/ GPRS/
EDGE or TDMA footprint to directly or indirectly, engage in a
business that provides or resells, or grants a license that
facilitates or enables the provision or resale of,
facilities-based mobile wireless telecommunications services
using GSM/ GPRS/ EDGE or TDMA on any spectrum in any of our
markets. Subject to the provisions of the roaming agreements, we
may elect to extend the exclusivity period through June 30,
2008. AT&T Wireless current GSM/ GPRS/ EDGE footprint
overlaps with approximately 0.4 million of the population
in our licensed areas.

AT&T Wireless may engage in investments,
asset sales or other business combination transactions involving
markets overlapping with us if the overlap is less than 25% of
the total markets in the transaction (measured by population);
however, in such event, we will have the right to purchase from
AT&T Wireless and its affiliates, the markets
constituting the overlap.

AT&T Wireless has agreed that its customers,
when roaming in any of our markets, will seek TDMA or GSM/ GPRS/
EDGE roaming service from us prior to seeking such service from
another carrier so long as we are in compliance with the
construction, operational and other requirements under the
agreement.

AT&T Wireless may terminate the preferred GSM
roaming provider and limited exclusivity provisions of the
agreement if we cease to be in compliance with the construction,
operational and other requirements under the agreement, or if a
major competitor of AT&T Wireless acquires us.

Cingular Wireless

Our other significant roaming partner is Cingular
Wireless. For the combined year ended December 31, 2003,
Cingular Wireless customers accounted for approximately
28% of our roaming revenue, or approximately 8% of our total
operating revenue. Under our Cingular Wireless roaming
agreement, Cingular Wireless and we charge each other favorable
roaming rates for both usage of TDMA and GSM in our respective
markets. These rates have decreased over time through
December 16, 2003, when the rates reached a floor that made
them a fixed rate until December 31, 2008. Subject to
certain limitations, we are the preferred roaming partner for
GSM and TDMA services for substantially all of Cingular
Wireless customers that roam in our markets. Our roaming
agreement with Cingular Wireless requires that we maintain and
provide certain call features and related services to roaming
customers, such as call waiting, call forwarding, three-way
calling, caller ID and voice mail. This roaming agreement may be
terminated or suspended by either party if the FCC revokes a
license covering a material portion of either partys
markets, or if either party fails to control subscriber fraud,
fails to adhere to system technical requirements and upgrades or
breaches any of the material terms of the roaming agreement. The
roaming agreement expires on December 31, 2011.

North American Cellular Network

We are included in the North American Cellular
Network, or NACN, which is the largest wireless telephone
network system in the world linking wireless operators
throughout the United States and Canada and enabling customers
to use their wireless phones to place and receive calls in these
areas as easily as they do in their home areas. Through this
network, customers are able to receive calls automatically
without the use of complicated roaming codes as they roam in
more than 5,000 cities and towns in the United States and
Canada. In addition, the NACN enables special services such as
call forwarding and call waiting, to automatically follow
subscribers as they travel.

Billing System

In November 2002, we signed a five year contract
with Convergys Corporation for use of their billing and customer
care systems under a service bureau arrangement. During the last
half of 2003, we completed the conversion from our previous
billing vendor, Verisign Telecommunications Services, or VTS, to
the Convergys Atlys® billing and customer care systems
operating in a Convergys data center to support wireless voice
and data services as well as emerging technology offerings.
Consistent with the billing services previously offered by VTS,
Convergys provides billing for all our subscribers in all our
markets. Convergys handles all the

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administration and maintenance of the Atlys®
application and the associated infrastructure. Convergys and
their partners are responsible for the processing and printing
of all customer invoices.


Network Operations

Network Communications Equipment.Our network communications equipment
is provided by a variety of leading network suppliers, including
Nortel Networks and Ericsson.

Connection Agreements.Our wireless network connects to the
public switched telephone network system through local exchange
carriers. We have interconnection agreements with BellSouth, SBC
(Ameritech, Southwestern Bell), Verizon (Bell Atlantic, GTE),
Sprint, Qwest (US West) and other local exchange carriers within
our markets. The expiration dates of these agreements vary from
one to three years. Unless notice of termination is given by
either party, the agreements automatically renew for six months
to one year.

Network Operations.Our network operations are monitored
by regional network personnel, who provide monitoring on a
real-time basis for items including alarm monitoring, power
outages, tower lighting problems and traffic patterns.

Cell Sites and Transmission Towers.At December 31, 2003, we operated
752 cell sites, of which 211 were on towers owned by us.

System Development and Technology

System Development.We develop or build out our service
areas in response to projected subscriber demand and competitive
factors by adding voice circuits to existing cell sites and by
building new cell sites to increase capacity with an emphasis on
improving coverage for hand-held phones in high-traffic areas.
We develop projected subscriber service demand for each market
area on a cell-by-cell basis.

We expect our network expansion to enable us to
continue to add and retain subscribers, enhance subscriber use
of our systems, increase roaming traffic due to the large
geographic area covered by our network and further enhance the
overall efficiency of our systems. We believe that the increased
coverage and capacity will continue to have a positive impact on
market penetration and subscriber usage.

Digital Technology.Our TDMA digital technology divides
each channel into three voice circuits providing service to
three simultaneous users instead of using the same spectrum for
one analog voice circuit. Our digital services include digital
voice circuits, short messaging services, message waiting
indicator, increased battery life and caller ID services.

By the end of the second quarter of 2004, we
expect to complete the deployment of our GSM/ GPRS/ EDGE
network. With this enhanced data network, we will offer 28Kb to
36Kb GPRS data speeds and 100Kb to 120Kb EDGE data speeds to our
subscribers and to subscribers of our roaming partners. GSM/
GPRS/ EDGE is the network technology choice for our two largest
roaming partners, AT&T Wireless and Cingular Wireless.

Competition

We compete with one or more companies in all of
our markets throughout our regions. Within various markets,
these companies include AT&T Wireless, Alltel, Cingular
Wireless, Nextel, Rural Cellular, Sprint PCS, T-Mobile, US
Cellular and Verizon Wireless.

The telecommunications industry is experiencing
significant technological changes, as evidenced by the
increasing pace of improvements in the capacity and quality of
digital technology, shorter cycles for new products and
enhancements and changes in consumer preferences and
expectations. Accordingly, we expect competition in the wireless
telecommunications industry to be dynamic and intense as a
result of competitors and the development of new technologies,
products and services. Many of our competitors have been
operating for a number of years, operate nationwide systems,
currently serve a substantial subscriber base and have
significantly greater financial, personnel, technical,
marketing, sales and distribution resources than we do. In
addition, the FCC has required all wireless carriers to provide
for wireless number portability for their

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customers. Once number portability is fully
implemented, wireless customers will have the ability to change
wireless carriers and retain their wireless telephone numbers.
Number portability may result in an increase in churn throughout
the industry. Some competitors have begun to market enhanced
data services, such as single carrier radio transmission
technology, or 1XRTT. We are currently in the process of
upgrading our networks to GSM/ GPRS/ EDGE technology.


We compete against other facilities-based
cellular carriers, personal communications service, or PCS,
carriers and enhanced specialized mobile radio service, or ESMR,
carriers in each of our markets. We compete for customers based
principally upon price, the services and enhancements offered,
the quality of our system, customer service, system coverage and
capacity. This competition may increase to the extent that
licenses are transferred from smaller, stand-alone operators to
larger, better-capitalized and more experienced wireless
operators that may be able to offer consumers certain network
advantages.

In early 2004, Cingular Wireless announced its
intention to acquire AT&T Wireless. We expect a limited
impact from this transaction because of the terms of our
existing roaming agreements with Cingular Wireless and AT&T
Wireless. We are the preferred roaming provider to Cingular
Wireless and AT&T Wireless in substantially all of our TDMA
markets, and the preferred roaming provider to AT&T Wireless
in our GSM markets. Our GSM roaming agreement with Cingular
Wireless permits Cingular Wireless to prefer AT&T Wireless
over us in our GSM markets. While we expect to obtain some
benefits as a result of the acquisition of AT&T Wireless by
Cingular Wireless, we expect the acquisition will not result in
a material reduction of our roaming revenues beginning in 2005.

The FCC has created potential sources of new
competition by auctioning additional PCS licenses, as well as
licenses for wireless communications services, local multipoint
distribution service, 39 GHz service and 220 to 222 MHz
service. Further, the FCC has announced plans to auction
licenses in the 4.9 GHz, 24 GHz and 700 MHz bands
that may be usable for mobile services. The FCC has also
allocated an additional 90 MHz of spectrum (in the 1.7 GHz
and 2.1 GHz bands) for advanced wireless services, and
adopted service and auction rules for these bands. The FCC has
also initiated a number of rule making proceedings to allocate
additional spectrum to wireless use, much of which can be
licensed for commercial wireless purposes. In the future, we may
also compete more directly with traditional landline telephone
service providers.

We also face, to a lesser extent, competition
from mobile satellite service, or MSS, providers, as well as
from resellers of these services and wireless service. The FCC
has granted MSS providers the flexibility to deploy an ancillary
terrestrial component to their satellite services. This added
flexibility might enhance MSS providers ability to offer
more competitive mobile services.

Continuing technological advances in
telecommunications make it impossible to predict the extent of
future competition. However, due to the depth and breadth of the
competitive services offered by operators using these other
technologies, future competition from these operators could be
intense.

Regulation

The wireless telecommunications industry is
subject to extensive governmental regulation on the federal
level and to varying degrees on the state level. The enactment
of the Telecommunications Act of 1996 has had an impact on many
aspects of this regulation. In addition, this regulation
currently is the subject of administrative rulemakings and
judicial proceedings that are significant to us.

Federal Regulation

The licensing, construction, modification,
operation, ownership and acquisition of wireless telephone
systems are subject to regulations and policies adopted by the
FCC under the Communications Act of 1934, as amended (the
Communications Act). These regulations and policies govern,
among other things, applications for licenses to construct and
operate wireless communications systems, ownership of wireless
licenses and the transfer of control or assignment of such
licenses, and the ongoing technical and operational requirements
under which wireless licensees must operate.

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General Licensing Requirements

The FCC licenses cellular systems in accordance
with 734 geographically defined market areas comprised of
306 MSAs and 428 RSAs. In each market, the FCC
licenses two cellular systems operating on different 25 MHz
frequency blocks designated as Block A and Block B.
Apart from the different frequency blocks, there is no technical
difference between the two cellular systems and the operational
requirements imposed on each by the FCC are the same. Under FCC
rules, the authorized service area of a cellular provider in
each of its markets is referred to as the cellular geographic
service area. The cellular geographic service area may conform
exactly to the boundaries of the FCC-designated MSA or RSA, or
it may be smaller if a licensee has chosen not to provide
services to certain areas. A cellular licensee has the exclusive
right to expand its cellular geographic service area boundaries
within the licensees MSA or RSA for a period of five years
after grant of the licensees initial construction permit.
At the end of this five-year build-out period, however, other
entities may apply to serve portions of the MSA or RSA in areas
outside the licensees then-designated cellular geographic
service area. The five year build-out period has expired for all
of the cellular licenses we currently hold and the FCC has
granted several unserved area applications filed by
us and by other parties for the MSAs and RSAs in which we are a
licensee.

PCS licenses are awarded by the FCC for protected
geographic service areas called major trading areas, or MTAs,
and basic trading areas, or BTAs, which are defined by Rand
McNally & Company. Under this scheme, the United States and
its possessions and territories are divided into 493 BTAs,
all of which are included within 51 MTAs. Each PCS license
authorizes operation on one of six frequency blocks allocated
for broadband PCS. The FCC has allocated 120 MHz of radio
spectrum in the 1.9 GHz band for licensed broadband PCS.
The FCC divided the 120 MHz of spectrum into two
30 MHz blocks (A and B Blocks) licensed for each of
the 51 MTAs, one 30 MHz block (C Block) licensed
for each of the 493 BTAs, and three 10 MHz blocks (D,
E and F Blocks) licensed for each of the 493 BTAs, for
a total of more than 2,000 licenses.

The FCC has adopted construction benchmarks for
PCS licenses. All 30 MHz broadband PCS licensees must
construct facilities that offer coverage to one-third of the
population of their service area within five years, and
two-thirds of the population within ten years, of their initial
license grants. All 10 MHz and 15 MHz Block licensees
must provide service to 25% of the service area within five
years of their initial license, or make a showing of substantial
service. While the FCC has granted limited extensions and
waivers of these requirements, licensees that fail to meet the
coverage requirements may be subject to forfeiture of the
license. We are in compliance with the applicable construction
requirements that have arisen for the PCS licenses we currently
hold. We expect to meet all future construction requirements as
well.

The FCC generally grants cellular and PCS
licenses for terms of ten years that are renewable upon
application to the FCC. Near the conclusion of the license term,
we must file applications for renewal of licenses to obtain
authority to operate for an additional 10-year term. To date,
the FCC has renewed for a new ten-year term each of our licenses
for which a renewal application was required. The FCC may revoke
our licenses and may deny our license renewal applications for
cause after appropriate notice and hearing. The FCC will award a
renewal expectancy to us if we meet certain standards of past
performance. If we receive a renewal expectancy, it is very
likely that the FCC will renew our existing cellular and PCS
licenses so that they will not become subject to competing
applications. To receive a renewal expectancy, we must show that
we have provided substantial service during our past
license term, and have substantially complied with applicable
FCC rules and policies and the Communications Act. The FCC
defines substantial service as service which is
sound, favorable and substantially above a level of mediocre
service that might only minimally warrant renewal. If a licensee
does not receive a renewal expectancy, then the FCC will accept
competing applications for the license, subject to a comparative
hearing, and the FCC may award the license to another entity.

The FCC may deny applications for FCC authority,
and in extreme cases revoke licenses, if it finds that an entity
lacks the requisite character qualifications to be a
licensee. In making this determination, the FCC considers
whether an applicant or licensee has been the subject of adverse
findings in a judicial or administrative proceeding involving
felonies, the possession or sale of unlawful drugs, fraud,
antitrust

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violations or unfair competition, employment
discrimination, misrepresentations to the FCC or other
government agencies, or serious violations of the Communications
Act or FCC regulations. To our knowledge, there are no
activities and no judicial or administrative proceedings
involving either the licensees in which we hold a controlling
interest or us that would warrant such a finding by the FCC.


Cellular and PCS providers also must satisfy a
variety of FCC requirements relating to technical and reporting
matters. One requirement of cellular providers is the
coordination of proposed frequency usage with adjacent cellular
users, permittees and licensees in order to avoid interference
between adjacent systems. In addition, the height and power of
cellular base station transmitting facilities and the type of
signals they emit must fall within specified parameters. PCS
providers may not exceed a certain field strength limit at the
market boundary without the consent of the neighboring PCS
licensee. In a pending proceeding, the FCC is considering ways
of reducing interference caused to public safety radio licensees
in the 800 MHz band by enhanced specialized mobile radio, or
ESMR, services (such as those offered by Nextel) and, more
rarely, by cellular and other commercial mobile radio service,
or CMRS, carriers operating within licensed parameters. The
outcome of this proceeding could increase our costs if new
regulatory mandates are adopted, and could change ESMR spectrum
assignments and affect the ability of ESMR service providers to
compete with us.

In September 2002, the Commission adopted a
Report and Order that removed or significantly reduced the
impact of many outdated cellular rules, eliminated a number of
technical requirements and granted additional technical and
operational flexibility. Among the changes is a phase-out over a
five-year period of the requirement that all cellular carriers
provide analog service throughout their territory. These new
rule changes became effective on February 18, 2003, and have
enabled us to operate more efficiently and to utilize our
licensed spectrum more effectively in providing services that
meet our customers requirements. The phase-out of cellular
analog service is tied to accommodating the needs of the hearing
impaired and their ability to utilize hearing aids with digital
wireless phone service. In this regard, the FCC adopted another
Report and Order in August 2003 requiring digital wireless phone
manufacturers and providers of digital wireless services such as
ourselves to take steps to develop and offer digital wireless
handsets that are compatible with hearing aid devices. This
order will increase our costs by requiring us to train our sales
force on compatible digital handsets, comply with related
reporting requirements, and engage in outreach efforts, and may
increase the price of wireless handsets for consumers.

The FCC also regulates a number of other aspects
of the cellular business. Federal legislation enacted in 1993
requires the FCC to reduce the disparities in the regulatory
treatment of similar mobile services, such as cellular, PCS and
ESMR services. Under this regulatory structure, all of our
cellular and PCS licenses are classified as
(CMRS) licenses. As a CMRS provider, the FCC regulates us
as a common carrier. The FCC, however, has exempted cellular and
PCS offerings from some typical common carrier regulations, such
as tariff and interstate certification filings, thereby allowing
us to respond more quickly to our competition in the
marketplace. The 1993 federal legislation also preempted state
rate and entry regulation.

The FCC permits cellular, broadband PCS, paging
and ESMR licensees to offer fixed services on a co-primary basis
along with mobile services. This rule may facilitate the
provision of wireless local loop service, which involves the use
of wireless links to provide local telephone service by cellular
licensees, as well as broadband PCS and ESMR licensees, although
the extent of lawful state regulation of such wireless
local loop service is undetermined. While we do not
presently have a fixed service offering, our network is fully
capable of accommodating such a service. We continue to evaluate
our service offerings which may include a fixed service plan at
some point in the future.

Until April 4, 2005, the FCC prohibits a PCS
licensee from interfering with existing licensees that operate
certain fixed microwave systems within its license area. In an
effort to balance the competing interests of existing microwave
users and newly authorized PCS licensees, the FCC adopted a
transition plan to relocate such microwave operators to other
spectrum blocks and a cost sharing plan so that if the
relocation of an incumbent benefits more than one PCS licensee,
the benefiting PCS licensees will share the cost of the
relocation. The transition and cost sharing plans expire on
April 4, 2005, at which time remaining incumbents in the
PCS spectrum will be responsible for their costs to relocate to
alternate spectrum locations. We have completed all of our
relocation obligations (and related payments) for our PCS
markets.

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Ownership Restrictions

Pursuant to a Report and Order adopted on
November 8, 2001, while the FCC no longer restricts an
entitys ability to own interests in both cellular
frequency blocks in an MSA market (the so-called cellular cross
interest rule), the FCC continues to apply the cross interest
rule to ownership interests in RSAs. We have joined with three
other carriers to request reconsideration of the FCCs
decision to retain the cellular cross interest restriction with
respect to ownership interests in RSAs, as we believe the record
does not provide any support for distinguishing between
interests in RSAs and similar interests in MSAs. In a Notice of
Proposed Rulemaking released on October 6, 2003, the FCC
proposed rule changes to discontinue the cellular cross-interest
restriction where there are more than three competitors in a
particular RSA. The FCC is also seeking comment on whether it
should remove this restriction for all RSAs where the ownership
interest being transferred, assigned or acquired is not a
controlling interest.

Also pursuant to that Report and Order, as of
January 1, 2003, the FCC no longer enforces a particular
limit on the amount of CMRS spectrum in which an entity may hold
an attributable interest (formerly known as the spectrum
cap). The FCC now engages in a case-by case review of
transactions that would raise concerns similar to those that the
spectrum cap was designed to address. By eliminating a hard cap
in favor of the more flexible analysis, we believe the changes
adopted by the FCC in the November 8, 2001 Report and Order
could further increase the ability of wireless operators to
attract capital or to make investments in other wireless
operators.

The FCC may prohibit or impose conditions on
transfers of licenses. The Communications Act requires prior FCC
approval for substantive, non-pro forma transfers or assignments
to or from us of a controlling interest in any license or
construction permit, or of any rights thereunder. Although we
cannot ensure that the FCC will approve or act in a timely
fashion upon any future requests for approval of applications
that we file, we have no reason to believe that the FCC would
not approve or grant such requests or applications in due
course. Because an FCC license is necessary to lawfully provide
cellular or PCS service, if the FCC were to disapprove any such
filing our business plans would be adversely affected. In a
Report and Order released October 6, 2003, the FCC adopted
a streamlined transfer and assignment process that will be
instituted beginning April 5, 2004. Under this new process,
certain assignment or transfer of control applications may be
granted within a timeframe shorter than the current rules allow.

FCC rules restrict the voluntary assignments or
transfers of control of certain PCS licenses in the C and F
Blocks (the so-called Entrepreneurs Blocks),
which were awarded in auctions in which bidding was limited to
entities below a certain size and in which certain bidding
enhancements (i.e., bidding credits and installment payment
plans) were offered. We previously qualified for and presently
hold some Entrepreneurs Block licenses. During the first
five years of the license term (or until the licensee satisfies
the five-year construction benchmark), assignments or transfers
affecting control of such licenses are permitted only to
assignees or transferees that meet the eligibility criteria for
participation in the Entrepreneurs Block auction at the
time the application for assignment or transfer of control is
filed or, if the proposed assignee or transferee holds other
licenses for the C or F Block, met the same eligibility criteria
at the time of receipt of such licenses. The FCC also requires
that entrepreneurs make unjust enrichment
payments if they seek to transfer control of or assign an
Entrepreneurs Block license to an entity that does not
qualify for the same level of benefits. During the entire
ten-year initial license term, if a license is being paid for in
installments, the FCC will condition its approval of a transfer
or assignment on remittance of all unpaid principal and accrued
interest on the license if the proposed transferee or assignee
does not qualify for the installment payment plan. In addition,
during the first five years of the license term, an entrepreneur
seeking to transfer control of or assign a license must repay to
the government all or part of any bidding credit it benefited
from in the auction if the proposed transferee or assignee does
not qualify for the same level of bidding credit. These rules
could restrict our ability to assign or transfer control of our
Entrepreneurs Block licenses or acquire such licenses from
other entities.

The Communications Act includes provisions that
authorize the FCC to restrict the level of ownership that
foreign nationals or their representatives, a foreign government
or its representative or any corporation organized under the
laws of a foreign country may have in us. The law permits
indirect ownership of as much

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as 25 percent of our equity without the need
for any action by the FCC. If the FCC determines that the public
interest would be so served, it may revoke licenses or require
an ownership restructuring in the event that such ownership
exceeds the statutory 25 percent benchmark. The FCC
generally permits, however, additional indirect ownership in
excess of the statutory 25 percent benchmark where that
interest is to be held by an entity or entities from member
countries of the World Trade Organization. For investors from
countries that are not members of the World Trade Organization,
the FCC will determine whether the home country of the foreign
investor extends reciprocal treatment called equivalent
competitive opportunities to U.S. entities. If these
opportunities do not exist, the FCC may not permit investment
beyond the 25 percent benchmark. These restrictions could
adversely affect our ability to attract additional equity
financing. We have no knowledge that any foreign entity directly
or indirectly owns a significant percentage of our capital stock.


General Regulatory Obligations

The Communications Act and the FCCs rules
impose a number of requirements upon cellular and PCS licensees.
These requirements could increase our costs of doing business.

We are obligated to pay annual regulatory fees
and assessments to support the FCCs regulation of the
cellular and PCS industries, as well as fees necessary to
support federal universal service programs, number portability
regional database costs, centralized administration of telephone
numbering, telecommunications relay service for the
hearing-impaired and application filing fees.

The FCC has adopted requirements for cellular,
PCS and other CMRS providers to implement basic and enhanced
911, or E-911, services. These services provide state and local
emergency service providers with the ability to better identify
and locate callers using wireless services, including callers
using special devices for the hearing impaired. Our obligations
to implement these services occur in stages, and on a
market-by-market basis as emergency service providers request
the implementation of E-911 services within their locales. In
June 2002, the FCC extended the deadlines for meeting certain of
these 911 requirements  the Phase II
capabilities whereby emergency service providers receive the 911
callers geographic location  to March 1,
2003, at the earliest (the actual date for implementing this
capability in any given locale will be based on the readiness of
public safety agencies to participate in E-911 services). We are
currently constructing facilities to implement these
capabilities in several markets, although we cannot state at
this time whether we will be able to meet all of the
requirements imposed by the FCC, whether some additional relief
from these regulations will be required, or whether the FCC
would grant such relief if we request that it do so. The extent
to which we are required to deploy E-911 services will affect
our capital spending obligations. The FCC in 1999 amended its
rules to eliminate a requirement that carriers be compensated
for enhanced 911 costs and expand the circumstances under which
wireless carriers may be required to offer E-911 services.
Federal legislation enacted in 1999 may limit our liability for
uncompleted 911 calls to a degree commensurate with wireline
carriers in our markets.

Under certain circumstances, federal law also
requires cellular and PCS carriers to provide law enforcement
agencies with capacity to support lawful wiretaps and technical
capabilities for wiretaps. We obtained an interim waiver of
these requirements through the period that ended
November 19, 2003 for packet-mode services and requested an
additional two-year extension of this waiver through
November 19, 2005, and have obtained an interim waiver and
for certain other capabilities associated with voice services
through June 30,2004. Federal law also requires compliance
with wiretap-related record-keeping and personnel-related
obligations. Maintaining compliance with these wireless 911 and
law enforcement wiretap requirements may create additional
capital obligations for us to make necessary system upgrades.

Because the availability of telephone numbers is
dwindling, the FCC has changed the way that telephone numbers
generally are allocated through number pooling
rules. Number pooling is only mandatory at this point within the
wireline rate centers in which we have drawn numbers and which
are located in counties that are included in the Top 100
MSAs as defined by the FCCs rules. A number of our
markets may be partially or wholly contained within the Top 100
MSAs. We have expended capital preparing for number pooling in
these markets as well as preparing to support the roaming of
pooled numbers into our markets. The FCC also

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has authorized states to initiate limited
numbering administration to supplement federal requirements.
Some of the states in which we provide service have been so
authorized.


In addition, the FCC has ordered all carriers,
including wireless carriers, to adopt a method for providing
customers with telephone number portability, i.e., the ability
to keep their telephone numbers when they change
telecommunications carriers, either wireless to wireless or, in
some instances, wireline to wireless, and vice versa. Under the
local number portability rules, since November 24, 2003,
CMRS carriers serving areas located in one of the Top 100 MSAs
have been required to port their telephone numbers, provided
that they received a request by February 24, 2003 from
another carrier to do so. Outside of the Top 100 MSAs, CMRS
carriers that receive a request to allow end users to port their
telephone numbers must be capable of doing so within six months
after receiving the request or by May 24, 2004, whichever
is later. In addition, all CMRS carriers have been required
since November 24, 2003 to support roaming nationwide for
customers with ported or pooled numbers. These number
portability requirements have resulted in added capital
expenditures for us to make necessary system changes. We have
received number portability requests and have met the
November 24, 2003 deadline, and are planning to meet the
May 24, 2004 deadline, as applicable.

The FCC has adopted rules to govern customer
billing by CMRS providers and is considering whether to extend
billing rules currently applicable to landline carriers to CMRS
carriers. Adoption of some of the FCCs proposals could
increase the complexity and costs of our billing processes
and/or limit the manner in which we bill for services.

The FCC is required to implement policies that
mandate local exchange carriers to pay reciprocal compensation
for the exchange of traffic with other carriers, including CMRS
carriers such as us, at rates more closely related to cost. In a
rulemaking proceeding pertaining to interconnection between
local exchange carriers, or LECs, and CMRS providers such as us,
the FCC concluded that LECs are required to compensate CMRS
providers for the reasonable costs incurred by these providers
in terminating traffic that originates on LEC facilities, and
vice versa. The FCC is currently considering changes to LEC-CMRS
interconnection and other so-called intercarrier
compensation schemes, and the outcome of the proceeding
may affect the manner in which CMRS carriers are charged or
compensated for such traffic. In a Report and Order adopted on
February 20, 2003 and released in August 2003, the FCC
ruled that CMRS carriers such as ourselves cannot order
dedicated transport facilities and at unbundled
network element, or UNE, prices from LECs for connections from
our wireless base stations and switches to the LECs
telephone network. Furthermore, our ability to order transport
between LEC facilities on an unbundled basis at UNE prices is
limited by the extent to which alternative non-LEC transport
facilities are available over certain routes (which can
eliminate the LECs obligation to unbundle dedicated
transport on those routes).

The FCC has adopted rules that require interstate
communications carriers, including cellular and PCS carriers, to
make an equitable and non-discriminatory
contribution to a Universal Service Fund that reimburses
communications carriers that provide basic communications
services to users who receive services at subsidized rates. We
have made such payments, as the FCC has required. The FCC
initiated a rule making proceeding in which it solicited public
comment on ways of reforming both the manner by which it
assesses carrier contributions to the Universal Service Fund and
the way in which carriers may recover their costs from
customers. Effective April 1, 2003, the FCC prospectively
forbade carriers from recovering their administrative costs
associated with administering the universal service assessments
that carriers are required to pay. The FCCs new rules
require that carriers USF recovery charges to customers
may not exceed the assessment rate that the carrier pays times
the proportion of interstate telecommunications revenue on the
bill. We have complied with these new requirements. They have
had and will continue to have an impact on our ability to
recover our administrative costs for administering our
participation in the program.

Wireless carriers may be designated as
Eligible Telecommunications Carriers, or ETC, and
may receive universal service support for providing service to
consumers that use wireless service in high cost areas as their
only phone service, as well as to consumers in these areas who
also maintain wireline service. Other wireless carriers
operating in states where we operate have obtained or applied
for ETC status. Such other carriers receipt of universal
service support funds may affect our competitive status in a
particular market. We are currently applying for this
designation in certain states in which we provide wireless
service to qualifying

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high cost areas, and are contemplating whether
and where else to apply. If we are successful in obtaining ETC
status in the states in which we are applying and such payments
are thus made available to us, they would be an additional
source of revenue to us that could be used to support the
service we provide in the high cost areas.


Cellular and PCS carriers are exempt from the
obligation to provide equal access to interstate long distance
carriers. However, the FCC has the authority to impose rules to
require unblocked access through carrier identification codes or
800/888 numbers, so that cellular subscribers are not denied
access to the long distance carrier of their choosing, if the
FCC determines that the public interest so requires. Our
customers have access to alternative long distance carriers
using toll-free numbers.

There are restrictions on a telecommunications
carriers use of customer proprietary network information
without prior customer approval. FCC rules implementing these
restrictions have been revised. Given our current marketing
activities, these revised rules have limited potential to impose
upon us new costs, obligations or burdens.

Telecommunications carriers are required to make
their services accessible to persons with disabilities and the
FCCs rules implementing these requirements are in effect.
These rules generally require service providers to offer
equipment and services that are accessible to and usable by
persons with disabilities, if readily achievable, and to comply
with complaint/ grievance procedures for violations of these
provisions. These rules are largely untested and are subject to
interpretation through the FCCs complaint process. While
much of the focus of these rules is on the manufacture of
equipment, we could be subject to the imposition of costly new
requirements and, if found to have violated the rules, be
subject to fines as well.

The FCC has determined that interexchange (long
distance) service offerings of CMRS providers are subject to
rate averaging and rate integration requirements of the
Telecommunications Act. Rate averaging requires us to average
our intrastate long distance CMRS rates between rural and high
cost areas and urban areas. The FCC has delayed implementation
of the rate integration requirements with respect to wide area
rate plans pending further reconsideration of its rules, and has
delayed the requirement that CMRS carriers integrate their rates
among CMRS affiliates. Other aspects of the FCCs rules
have been vacated by the United States Court of Appeals for the
District of Columbia, and are subject to further consideration
by the FCC. There is a pending proceeding in which the FCC will
determine how integration requirements apply to CMRS offerings,
including single rate plans. To the extent that we offer
services subject to these requirements, our pricing flexibility
is reduced, and there is no assurance that the FCC will decline
to impose these requirements on us and/or across our various
CMRS affiliates.

State, Local and Other
Regulation

The Communications Act preempts state or local
regulation of the market entry of, or the rates charged by, any
CMRS provider, which include cellular telephone service and PCS
providers. The FCC denied the petitions of eight states to
continue their rate regulation authority, including authority
over cellular operators. As a practical matter, we are free to
establish rates and offer new products and service with a
minimum of regulatory requirements. The states in which we
operate maintain nominal oversight jurisdiction, primarily
focusing upon prior approval of acquisitions and transfers of
licenses and resolution of customer complaints. However, states
may continue to regulate other terms and conditions
of wireless service, and a number of state authorities have
initiated actions or investigations of various wireless carrier
practices. The outcome of these proceedings is uncertain and
could require us to change certain of our marketing practices
and ultimately increase state regulatory authority over the
wireless industry.

The location and construction of our cellular and
PCS transmitter towers and antennas are subject to FCC and
Federal Aviation Administration regulations and are subject to
federal, state and local environmental regulation, as well as
state or local zoning, land use and other regulation. Before we
can put a system into commercial operation, we must obtain all
necessary zoning and building permit approvals for the cell site
and microwave tower locations. The time needed to obtain zoning
approvals and requisite state permits varies from market to
market and state to state. Likewise, variations exist in local
zoning processes. Additionally, any proposed site must comply
with the FCCs environmental rules. If zoning approval or
requisite state permits

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cannot be obtained, or if environmental rules
make construction impossible or infeasible on a particular site,
our network design might be adversely affected, network design
costs could increase and the service provided to our customers
might be reduced.


We cannot ensure that any state or local
regulatory requirements currently applicable to our systems will
not be changed in the future or that regulatory requirements
will not be adopted in those states and localities, which
currently have none. Such changes could impose new obligations
on us that would adversely affect our operating results.

Future Regulation

From time to time, federal or state legislators
propose legislation that could affect us, either beneficially or
adversely. We cannot ensure that federal or state legislation
will not be enacted, or that regulations will not be adopted or
actions taken by the FCC or state regulatory authorities that
might adversely affect our business. Changes such as the
allocation by the FCC of radio spectrum for services that
compete with our business could adversely affect our operating
results.

Employees

Dobson Cellular Systems, a wholly-owned
subsidiary of Dobson Communications, provides all supervision,
design, construction and management for us under a management
agreement entered into in February 2000, that was amended and
restated in August 2003 as part of our reorganization. The
management services provided include administration, accounting,
billing, credit, collection, insurance, purchasing and clerical
services; operational, engineering, maintenance and construction
services; and marketing, sales and advertising services. To the
extent employees of Dobson Cellular Systems perform services for
us under the management agreement, we reimburse Dobson Cellular
Systems for the allocable cost of the service provided, which
for overhead is generally based on the relative size of our
populations or subscribers. Because of the services provided by
Dobson Cellular Systems under the management agreement, we have
no employees of our own.

The management agreement may be terminated:



| |   |                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | by either party in the event of the bankruptcy,
    insolvency, dissolution, winding up or liquidation of the other
    party;                                                                                                                                                                                                                 
|
| |  | by us upon a material breach by Dobson Cellular
    Systems, upon a failure by us to satisfy certain quality or
    financial performance standards established by Dobson
    Communications, and in the event of certain changes of control
    of Dobson Communications or transfers by Dobson Communications
    of its interests in us; and
|
| |  | by Dobson Cellular Systems upon a material breach
    by us.                                                                                                                                                                                                                                                                                   




Item 2. Properties

Our headquarters are in Oklahoma City, Oklahoma.
We utilize four of the six regional call centers operated by our
parent, Dobson Communications. Of the four regional call centers
we utilize, two are actually leased by us in our existing
wireless markets located in Duluth, Minnesota and LaGrangeville,
New York. In addition, our wireless operations leased
approximately 90 retail locations throughout our markets. We
review these leases from time to time and, in the future, may
lease or acquire new facilities as needed. We do not anticipate
encountering any material difficulties in meeting our future
needs for leased space.




Item 3. Legal Proceedings

We are not currently aware of any pending or
threatened litigation against us or our subsidiaries that could
have a material adverse effect on our financial condition,
results of operations or cash flows.




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

Information omitted in accordance with General
Instruction I (2)(c).

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##### Table of Contents






PART II






|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

There is no established trading market for our
common stock. As of March 1, 2004, Dobson JV Company and Dobson
Communications Corporation were the sole holders of record of
our common stock.

On August 19, 2003, in connection with our
acquisition and restructuring, we (together with Dobson
Communications) completed an exchange offer for our outstanding
9.5% senior subordinated notes due 2009. In that regard, holders
of $681.9 million of $700.0 million principal amount
outstanding of our existing notes tendered their notes and
received in exchange an aggregate of 300 shares of our
Class B common stock, which were contemporaneously assigned
by the tendering noteholders to Dobson Communications in
exchange for common stock and convertible preferred stock of
Dobson Communications. We also issued 50 shares of our
Class A common stock to Dobson JV Company, a wholly-owned
subsidiary of Dobson Communications, in conjunction with the
merger of ACC Escrow Corp. into American Cellular. The shares of
our Class A common stock and Class B common stock were
issued in a transaction exempt from the registration
requirements of Section 5 of the Securities Act pursuant to
the provisions of Section 4(2) and Regulation D
promulgated thereunder.




Item 6. Selected Financial Data

The following table sets forth certain of our
historical consolidated financial data and that of our
predecessor, American Cellular. We derived this consolidated
financial data as of December 31, 2003 and 2002, for the
period from formation (June 23, 2003) through
December 31, 2003, for the period from January 1, 2003
through August 18, 2003 and for the year ended
December 31, 2002 from the consolidated financial
statements included in Item 8, which have been audited by
KPMG LLP. We derived the consolidated financial data as of
December 31, 2001 and 2000 and for the year ended
December 31, 2001 and the period from February 25,
2000 through December 31, 2000 from the consolidated
financial statements audited by Arthur Andersen LLP. The
consolidated financial statements for these three periods were
reclassified as of December 31, 2001 to reflect our sale of
Tennessee 4 RSA as discontinued operations. We derived the
consolidated financial data for the year ended December 31,
1999 from the consolidated financial statements audited by
Ernst & Young LLP.

American Cellular, was formed on
February 26, 1998 and began operations on July 1,
1998, after it acquired PriCellular. On February 25, 2000,
American Cellular was acquired by an equally owned joint venture
between AT&T Wireless and Dobson Communications. On
June 23, 2003, a wholly-owned indirect subsidiary of Dobson
Communications, ACC Escrow Corp., was formed and began
operations on August 8, 2003. ACC Escrow Corp. was merged
into American Cellular on August 19, 2003, creating the
current, American Cellular. As a result, we became a
wholly-owned subsidiary of Dobson Communications. The
information set forth below should be read in conjunction with
Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations and our audited
consolidated financial statements and the related notes thereto
included in Item 8, Financial Statements and Supplementary
Data.

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##### Table of Contents



|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |         |          |         | 
|----------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------------------- | ------------------------ | ----------------------- | ------- | ------------ | --------- | ------------ | --------- | ------------ | ----------- | ------------ | ---------- | --------- | ---------- | -------- | ---------- | ------- | -------- | -------- | ---------- | ------- | ---- | ------- | -------- | ------- | 
|                                                                                    |                                                                                |                                                                 |                          |                        
|                                                                                    |                                                                                |                                                                 |                          | The Predecessor Company
|                                                                                    |                                                                                | Period from                                                     |                          |                        
|                                                                                    |                                                                                | formation                                                       |                          | Period from             |         |              |           | Period from  |           |             
|                                                                                    |                                                                                | (June 23,                                                       |                          | January 1,              |         |              |           | February 25, |           |             
|                                                                                    |                                                                                | 2003)                                                           |                          | 2003                    |         |              |           | 2000         |           |             
|                                                                                    |                                                                                | through                                                         |                          | through                 |         | Year Ended   |           | Year Ended   |           | through      |             | Year Ended  
|                                                                                    |                                                                                | December 31,                                                    |                          | August 18,              |         | December 31, |           | December 31, |           | December 31, |             | December 31,
|                                                                                    |                                                                                | 2003                                                            |                          | 2003                    |         | 2002         |           | 2001         |           | 2000         |             | 1999        
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |             
|                                                                                    |                                                                                |                                                                
|                                                                                    |                                                                                | ($ in thousands except per share data)                         
|Statement of Operations Data:                                                       |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | Total operating revenue                                                        |                                                                 | $                        | 162,623                 |         |              | $         | 288,726      |           |              | $           | 452,830      |            |           | $          | 417,243  |            |         | $        | 309,343  |            |         | $    | 325,821 |         
|                                                                                    | Operating expenses:                                                            |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |         |         
|                                                                                    |                                                                                | Cost of service (exclusive of items shown
    separately below) |                          |                         | 35,460  |              |           |              | 62,225    |              |             |              | 110,412    |           |            |          | 106,707    |         |          |          | 61,062     |         |      |         | 57,246   |        
|                                                                                    |                                                                                | Cost of equipment                                               |                          |                         | 15,104  |              |           |              | 23,618    |              |             |              | 34,206     |           |            |          | 37,182     |         |          |          | 26,769     |         |      |         | 19,356   |        
|                                                                                    |                                                                                | Selling, general and administrative                             |                          |                         | 52,227  |              |           |              | 75,615    |              |             |              | 127,914    |           |            |          | 117,406    |         |          |          | 75,349     |         |      |         | 74,428   |        
|                                                                                    |                                                                                | Impairment of goodwill                                          |                          |                         |        |              |           |              |          |              |             |              | 800,894    |           |            |          |           |         |          |          |           |         |      |         |         |        
|                                                                                    |                                                                                | Depreciation and amortization                                   |                          |                         | 28,647  |              |           |              | 43,591    |              |             |              | 66,746     |           |            |          | 182,637    |         |          |          | 147,257    |         |      |         | 97,217   |        
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    |                                                                                |                                                                 | Total operating expenses |                         |         | 131,438      |           |              |           | 205,049      |             |              |            | 1,140,172 |            |          |            | 443,932 |          |          |            | 310,437 |      |         |          | 248,247 | 
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | Operating income (loss)                                                        |                                                                 |                          | 31,185                  |         |              |           | 83,677       |           |              |             | (687,342     | )          |           |            | (26,689  | )          |         |          | (1,094   | )          |         |      | 77,574  |         
|                                                                                    |                                                                                | Interest expense                                                |                          |                         | (37,773 | )            |           |              | (78,136   | )            |             |              | (142,003   | )         |            |          | (165,457   | )       |          |          | (133,270   | )       |      |         | (106,888 | )      
|                                                                                    |                                                                                | Dividends on mandatorily redeemable preferred
    stock         |                          |                         |        |              |           |              | (703      | )            |             |              |           |           |            |          |           |         |          |          |           |         |      |         |         |        
|                                                                                    |                                                                                | Other (expense) income, net                                     |                          |                         | (426    | )            |           |              | (538      | )            |             |              | 1,387      |           |            |          | 3,723      |         |          |          | 537        |         |      |         | 4,918    |        
|                                                                                    |                                                                                | Income tax benefit (expense)                                    |                          |                         | 2,665   |              |           |              | (1,961    | )            |             |              | 14,383     |           |            |          | 52,199     |         |          |          | 33,242     |         |      |         | (5,418   | )      
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | (Loss) income from continuing operations                                       |                                                                 |                          | (4,349                  | )       |              |           | 2,339        |           |              |             | (813,575     | )          |           |            | (136,224 | )          |         |          | (100,585 | )          |         |      | (29,814 | )       
|                                                                                    | (Loss) income from discontinued operations, net
    of income taxes            |                                                                 |                          |                        |         |              |           |             |           |              |             | (654         | )          |           |            | (1,439   | )          |         |          | 1,342    |            |         |      |        |         
|                                                                                    | Gain from sale of discontinued operations, net of
    income taxes             |                                                                 |                          |                        |         |              |           |             |           |              |             | 13,472       |            |           |            |         |            |         |          |         |            |         |      |        |         
|                                                                                    | Cumulative effect of change in accounting
    principle, net of income taxes   |                                                                 |                          |                        |         |              |           |             |           |              |             | (281,640     | )          |           |            |         |            |         |          |         |            |         |      |        |         
|                                                                                    | Extraordinary gain, net                                                        |                                                                 |                          |                        |         |              |           | 131,009      |           |              |             |             |            |           |            |         |            |         |          |         |            |         |      |        |         
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | Net (loss) income                                                              |                                                                 |                          | (4,349                  | )       |              |           | 133,348      |           |              |             | (1,082,397   | )          |           |            | (137,663 | )          |         |          | (99,243  | )          |         |      | (29,814 | )       
|                                                                                    | Dividends on preferred stock                                                   |                                                                 |                          |                        |         |              |           | (2,546       | )         |              |             | (4,661       | )          |           |            | (2,139   | )          |         |          |         |            |         |      | (44,105 | )       
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | Net (loss) income applicable to common
    stockholder                         |                                                                 | $                        | (4,349                  | )       |              | $         | 130,802      |           |              | $           | (1,087,058   | )          |           | $          | (139,802 | )          |         | $        | (99,243  | )          |         | $    | (73,919 | )       
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|                                                                                    | Basic net (loss) income applicable to common
    stockholder per common share: |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |         |         
|                                                                                    |                                                                                | Continuing operations                                           |                          | $                       | (12,425 | )            |           | $            | 23,386    |              |             | $            | (8,135,750 | )         |            | $        | (1,362,235 | )       |          | $        | (1,005,857 | )       |      | $       | (111     | )      
|                                                                                    |                                                                                | Discontinued operations                                         |                          |                         |        |              |           |              |          |              |             |              | 128,182    |           |            |          | (14,393    | )       |          |          | 13,423     |         |      |         |         |        
|                                                                                    |                                                                                | Change in accounting principal                                  |                          |                         |        |              |           |              |          |              |             |              | (2,816,400 | )         |            |          |           |         |          |          |           |         |      |         |         |        
|                                                                                    |                                                                                | Extraordinary item                                              |                          |                         |        |              |           |              | 1,310,097 |              |             |              |           |           |            |          |           |         |          |          |           |         |      |         |         |        
|                                                                                    |                                                                                | Dividends on preferred stock                                    |                          |                         |        |              |           |              | (25,456   | )            |             |              | (46,612    | )         |            |          | (21,387    | )       |          |          |           |         |      |         | (163     | )      
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        
|Total basic net (loss) income applicable to
    common stockholder per common share |                                                                                | $                                                               | (12,425                  | )                       |         | $            | 1,308,027 |              |           | $            | (10,870,580 | )            |            | $         | (1,398,015 | )        |            | $       | (992,434 | )        |            | $       | (274 | )      
|                                                                                    |                                                                                |                                                                 |                          |                         |         |              |           |              |           |              |             |              |            |           |            |          |            |         |          |          |            |         |      |        

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|                    |                                        |                    |   |                         |  |      |   |           |   |      |   |           |  |  |   |           |  |  |   |           | 
|------------------- | -------------------------------------- | ------------------ | - | ----------------------- |  | ---- | - | --------- | - | ---- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                    |                                        |                    |   |                        
|                    |                                        |                    |   | The Predecessor Company
|                    |                                        |                    |   |                        
|                    |                                        |                   
|                    |                                        | As of December 31,
|                    |                                        |                   
|                    |                                        | 2003               |   | 2002                    |  | 2001 |   | 2000      |   | 1999
|                    |                                        |                    |   |                         |  |      |   |           |   |     
|                    |                                        |                   
|                    |                                        | ($ in thousands)  
|Balance Sheet Data: |                                        |                    |   |                         |  |      |   |           |   |      |   |           |  |  |   |           |  |  |   |          
|                    | Cash and cash equivalents              |                    | $ | 27, 505                 |  |      | $ | 15,866    |   |      | $ | 5,962     |  |  | $ | 14,881    |  |  | $ | 74,896    | 
|                    | Property, plant and equipment, net     |                    |   | 205,200                 |  |      |   | 185,935   |   |      |   | 203,168   |  |  |   | 184,655   |  |  |   | 173,425   | 
|                    | Intangibles, net                       |                    |   | 1,332,991               |  |      |   | 915,845   |   |      |   | 2,192,133 |  |  |   | 2,286,211 |  |  |   | 1,116,923 | 
|                    | Total assets                           |                    |   | 1,625,008               |  |      |   | 1,209,918 |   |      |   | 2,699,030 |  |  |   | 2,690,103 |  |  |   | 1,484,143 | 
|                    | Redeemable preferred stock             |                    |   |                        |  |      |   | 35,000    |   |      |   | 35,000    |  |  |   |          |  |  |   |          | 
|                    | Current portion of long-term debt      |                    |   |                        |  |      |   | 1,588,509 |   |      |   | 46,909    |  |  |   | 27,465    |  |  |   | 25,608    | 
|                    | Long term debt, net of current portion |                    |   | 912,851                 |  |      |   |          |   |      |   | 1,760,208 |  |  |   | 1,650,535 |  |  |   | 1,170,580 | 
|                    | Stockholders equity (deficit)         |                    |   | 455,299                 |  |      |   | (528,275  | ) |      |   | 544,563   |  |  |   | 665,757   |  |  |   | 233,555   | 

|                      |                                                   |                                             |   |                         |   |              |   |              |   |              |   |              |   |  |   |         |   |  |   |         |   |  |   |         |  
|--------------------- | ------------------------------------------------- | ------------------------------------------- | - | ----------------------- | - | ------------ | - | ------------ | - | ------------ | - | ------------ | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                      |                                                   |                                             |   |                        
|                      |                                                   |                                             |   | The Predecessor Company
|                      |                                                   | Period from                                 |   |                        
|                      |                                                   | formation                                   |   | Period from             |   |              |   | Period from  |   |             
|                      |                                                   | (June 23,                                   |   | January 1,              |   |              |   | February 25, |   |             
|                      |                                                   | 2003)                                       |   | 2003                    |   |              |   | 2000         |   |             
|                      |                                                   | through                                     |   | through                 |   | Year Ended   |   | Year Ended   |   | through      |   | Year Ended  
|                      |                                                   | December 31,                                |   | August 18,              |   | December 31, |   | December 31, |   | December 31, |   | December 31,
|                      |                                                   | 2003                                        |   | 2003                    |   | 2002         |   | 2001         |   | 2000         |   | 1999        
|                      |                                                   |                                             |   |                         |   |              |   |              |   |              |   |             
|                      |                                                   |                                            
|                      |                                                   | ($ in thousands except per subscriber data)
|Other Financial Data: |                                                   |                                             |   |                         |   |              |   |              |   |              |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Capital expenditures                              |                                             | $ | 41,410                  |   |              | $ | 35,951       |   |              | $ | 48,798       |   |  | $ | 74,850  |   |  | $ | 58,450  |   |  | $ | 50,462  |  
|Other Data:           |                                                   |                                             |   |                         |   |              |   |              |   |              |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Subscribers (at period end)                       |                                             |   | 709,200                 |   |              |   | 699,500      |   |              |   | 690,400      |   |  |   | 632,100 |   |  |   | 531,200 |   |  |   | 434,700 |  
|                      | Penetration (at period end)(1)                    |                                             |   | 14.2                    | % |              |   | 14.0         | % |              |   | 13.8         | % |  |   | 12.6    | % |  |   | 11.2    | % |  |   | 8.9     | %
|                      | Average monthly churn rate(2)                     |                                             |   | 1.9                     | % |              |   | 1.9          | % |              |   | 1.9          | % |  |   | 1.8     | % |  |   | 1.6     | % |  |   | 1.6     | %
|                      | Average monthly service revenue per subscriber(3) |                                             | $ | 39                      |   |              | $ | 39           |   |              | $ | 39           |   |  | $ | 39      |   |  | $ | 38      |   |  | $ | 39      |  



---



|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Determined by dividing our total ending
    subscribers for the period by the estimated total population
    covered by applicable FCC licenses.                                                                                
|   
|(2) | Churn means the number of subscriber
    cancellations per period as a percentage of the weighted average
    total number of subscribers during such period. Churn is
    calculated based on post-paid subscriber information.
|   
|(3) | Calculated and reported based on post-paid
    subscriber information and excludes roaming and equipment and
    other revenue.                                                                                                 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

The following discussion and analysis presents
factors, which we believe are relevant to an assessment and
understanding of our consolidated financial position and results
of operations. This financial and business analysis should be
read in conjunction with our consolidated financial statements
and the notes thereto included in Item 8. Also see
Item 6 for related financial information. Except where
expressly stated otherwise, the following discussion and
analysis relate to American Cellular prior to its merger with
ACC Escrow Corp. on August 19, 2003, and to ACC Escrow
Corp. and American Cellular following their merger. Wherever the
term predecessor or predecessor company
is used, it refers to American Cellular prior to its merger with
ACC Escrow Corp. Unless otherwise stated, the financial and
other data set forth below are provided on a combined basis, and
the terms we, us and our
refer to American Cellular prior to its merger with ACC Escrow
Corp., and to ACC Escrow Corp. and American Cellular on a
combined basis following their merger.

Overview

We provide rural and suburban wireless telephone
services in portions of Illinois, Kansas, Kentucky, Michigan,
Minnesota, New York, Ohio, Oklahoma, Pennsylvania, West Virginia
and Wisconsin. At December 31, 2003, our wireless systems
covered a population of 5.0 million and we had
approximately 709,200 subscribers.

ACC Escrow Corp. was formed on June 23,
2003, as a wholly-owned, indirect subsidiary of Dobson
Communications and began operations on August 8, 2003, when
it completed the sale of $900.0 million of 10% senior
notes, the proceeds of which were used in our restructuring.
Prior to August 19, 2003, we were owned by a joint venture
which was equally owned by Dobson Communications and AT&T
Wireless. On August 19, 2003, we restructured our
indebtedness and equity ownership. To effect this restructuring,
ACC Escrow Corp. was merged into us, and we completed an
exchange offer for our existing 9.5% senior notes due 2009,
which we refer to as our existing notes. In the exchange offer,
the holders of $681.9 million of the $700 million
outstanding principal amount of our existing notes exchanged
those existing notes and received 43.9 million shares of
Dobson Communications Class A common stock, 681,900
shares of Dobson Communications Series F convertible
preferred stock having an aggregate liquidation preference of
$121.8 million and convertible into a maximum of
13.9 million shares of Dobson Communications
Class A common stock, and $48.7 million in cash. In
addition, Dobson Communications issued an additional 4,301
shares of its Series F convertible preferred stock and
276,848 shares of its Class A common stock in payment of
certain fees. We used a portion of the proceeds from the sale of
ACC Escrow Corps 10% senior notes to fully repay our
existing credit facility. Upon consummation of the restructuring
on August 19, 2003, we became a wholly-owned subsidiary of
Dobson Communications. However, to provide a more comparable
basis for our Management Discussion and Analysis, we have
combined the actual results for the period from its formation
(June 23, 2003) through December 31, 2003, together
with the results of American Cellular for the period from
January 1, 2003 through August 18, 2003, for
comparison with the years ended December 31, 2002 and 2001.
We believe that the combined operating presentation is not
materially impacted by the change in basis as a result of the
August 19, 2003 acquisition. The primary changes are
reflected in intangible assets, goodwill, and shareholders
equity.

Subscribers

Our subscriber base contains three types of
subscribers; post-paid, reseller and pre-paid. At
December 31, 2003, post-paid subscribers accounted for
94.6% of our subscriber base. These subscribers pay a monthly
access fee for a wireless service plan that generally includes a
fixed amount of minutes and certain service features. In
addition to the monthly access fee, these subscribers are
typically billed in arrears for long-distance charges, roaming
charges and rate plan overages. Our reseller subscribers are
similar to our post-paid subscribers in that they pay monthly
fees to utilize our network and services. However, these
subscribers are billed by a third party (reseller), who has
effectively resold our service to the end user (subscriber). We
in turn bill the third party (reseller) for the monthly
usage of the end user (subscriber). At December 31, 2003,
the reseller base accounted for 3.9% of our total subscriber
base. Our pre-paid subscribers, which at

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December 31, 2003, accounted for 1.5% of our
subscriber base, are subscribers that pre-pay for an agreed upon
amount of usage.


Our average monthly revenue per subscriber,
discussed below under Revenue, and our total gross
additions are calculated and reported based only on post-paid
subscriber information. We have experienced a decline in our
post-paid gross additions as a result of increased competition
attributable to an accelerating pace of improvements in quality
of digital technology, and increased products offered to the
consumer. Many of our competitors already market enhanced data
services, such as 1XRTT. Currently, we are in the process of
upgrading our network to GSM/ GPRS/ EDGE and expect our gross
subscriber additions to increase during 2004, as a result of new
services that will be available with GSM/GPRS/EDGE technology.
Our post-paid gross subscriber additions were 163,700 for the
combined year ended December 31, 2003, compared to 198,400
post-paid gross subscriber additions for the year ended
December 31, 2002 and 201,900 for the year ended
December 31, 2001.

Revenue

Our operating revenue consists of service
revenue, roaming revenue, and equipment and other revenue.

We derive service revenue primarily by providing
wireless services to our subscribers. The wireless industry has
experienced declining average revenue per minute as competition
among wireless service providers has led to reductions in rates
for airtime. These declines have generally been offset by
significant increases in average minutes-of-use per subscriber.
As a result, our average monthly revenue per post-paid
subscriber has remained constant; amounting to $39 for the
combined year ended December 31, 2003, and for the years
ended December 31, 2002 and 2001. We believe there is an
opportunity in 2004 for our average monthly revenue per
post-paid subscriber to increase from current levels primarily
due to additional voice and data services available as a result
of our providing GSM/ GPRS/ EDGE technology.

We derive roaming revenue by providing service to
subscribers of other wireless providers when those subscribers
roam into our markets and use our systems to carry
their calls. Roaming revenues have traditionally had higher
margins than revenues from our subscribers. We achieve these
higher margins because we incur relatively lower incremental
costs related to network operations, billing, customer service
and collections in servicing roaming customers as compared to
our home subscribers. However, our roaming margins are declining
and are becoming more comparable to margins from our subscribers
due to increased market pressures and competition among wireless
providers, resulting in reduced rates in our new roaming
contracts and scheduled rate reductions in our existing roaming
contracts. Our roaming yield (roaming service revenue, which
includes airtime, toll charges and surcharges, divided by
roaming minutes-of-use) was $0.21 for the year ended
December 31, 2003, $0.27 for the year ended
December 31, 2002 and $0.38 for the year ended
December 31, 2001. We expect this yield to decline by
approximately 30% during 2004. Even though our roaming contracts
provide for decreasing rates over time, we believe these roaming
contracts are beneficial because they secure existing traffic
and provide opportunity for a continuing increase in traffic
volumes. Roaming revenue tends to be impacted by seasonality.
Historically, we have experienced higher roaming minutes-of-use
and related roaming revenue during the second and third quarters
of each year, as users tend to travel more and, therefore, use
their wireless phones more during the spring and summer months.

We include long-distance revenue in service and
roaming revenue. Equipment revenue is revenue from selling
wireless equipment to our subscribers. Equipment revenue is
recognized when the equipment is delivered to the customer. Our
ability to sell wireless equipment is independent of our ability
to offer wireless services to our customer; therefore, we
consider equipment sales a separate earnings process and account
for it accordingly.

Costs and Expenses

Our primary operating expense categories include
cost of service, cost of equipment, marketing and selling costs,
general and administrative costs and depreciation and
amortization.

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Our cost of service consists primarily of costs
to operate and maintain our facilities utilized in providing
service to customers and amounts paid to third-party wireless
providers for providing service to our subscribers when our
subscribers roam into their markets referred to as
roaming costs. As discussed above with regard to
service revenue, there is a continuing trend toward increasing
minutes-of-use per subscriber. This includes minutes used by our
subscribers when they roam into other providers markets.
Consistent with this trend, our roaming expense per minute has
declined. As a result, our cash cost per user has continued to
decline. Our cash cost per user was $21 for the combined year
ended December 31, 2003, was $22 for the year ended
December 31, 2002, and was $23 for the year ended
December 31, 2001. This decline in expense per minute has
helped offset the increased costs from growth in minutes-of-use
per subscriber.

Our cost of equipment represents the costs
associated with wireless equipment and accessories sold. We,
like other wireless providers, have continued the use of
discounts on phone equipment and free phone promotions for
phones sold to our customers, as competition between service
providers continues to intensify. As a result, we have incurred,
and expect to continue to incur, losses on equipment sales.
While we expect to continue these discounts and promotions, we
believe that these promotions will result in increased revenue
from increases in the number of wireless subscribers.

Our marketing and selling costs include
advertising, compensation paid to sales personnel and
independent dealers and all other costs to market and sell
wireless products and services, and certain costs related to
customer retention. We pay commissions to direct sales personnel
and independent dealers for new business generated.

Our general and administrative costs include all
infrastructure costs, including costs for customer support,
billing, collections, and corporate administration.

Our depreciation and amortization expense
represents the costs associated with the depreciation of our
fixed assets and the amortization of certain intangible assets.
Through December 31, 2001, these intangible assets
primarily consisted of wireless license acquisition costs,
goodwill and customer lists. However, with the implementation of
Statements of Financial Accounting Standards, or SFAS
No. 142, Goodwill and Other Intangible Assets,
we ceased the amortization of wireless license acquisition costs
and goodwill effective January 1, 2002. See Critical
Accounting Policies and Practices below for further
details.

Critical Accounting Policies and
Practices

It is necessary that we use estimates in the
presentation of our financial statements with respect to the
effect of matters that are inherently uncertain. Our use of
estimates and assumptions affects the reported amounts of
assets, liabilities, and the amount of revenue and expenses we
recognize for and during the reporting period.

Our general and administrative expenses and
certain other operating expenses include all infrastructure
costs, including costs for customer support, billing,
collections and corporate administration, all of which are
provided by our parent, Dobson Communications. We share
corporate and shared call center costs with Dobson
Communications, which costs are allocated primarily based on the
estimated subscribers and populations in our respective licensed
areas. If there is a change in this method used to allocate
shared costs among Dobson Communications and us, the change
could have a significant impact on our results of operations.

We depreciate our property, plant and equipment
and amortize our customer lists and certain other definite life
intangible assets over their useful lives. These useful lives
are based on our estimates of the period that the assets will
generate revenue. With the implementation of SFAS No. 142,
Goodwill and Other Intangible Assets, which requires
companies to cease the amortization of existing goodwill and
intangible assets with indefinite lives, we reassessed the
useful lives of our intangible assets. A significant portion of
our intangible assets is classified as Wireless license
acquisition costs, which represents our costs associated
with acquiring our FCC licenses. These licenses allow us to
provide wireless services by giving us the exclusive right to
utilize certain radio frequency spectrum. Although the FCC
licenses are issued for only a fixed time, generally ten years,
these licenses are renewed by the FCC on a routine basis and for
a nominal fee. In

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addition, we have determined that there are no
legal, regulatory, contractual, competitive, economic or other
factors that limit the useful life of these FCC licenses. As a
result, our wireless license acquisition costs are treated as
indefinite life intangible assets. Therefore, upon implementing
SFAS No. 142 in its entirety, we ceased the amortization of
both goodwill and wireless license acquisition costs and now
test for impairment of goodwill and wireless license acquisition
costs at least annually and only adjust the carrying amount of
these intangible assets upon an impairment of the goodwill or
wireless license acquisition costs. We also determine on an
annual basis whether facts and circumstances continue to support
an indefinite useful life.


This change in policy has and may continue to
have a significant impact on our results of operations and
financial position. For the year ended December 31, 2001, we
recorded $58.3 million of amortization expense related to
our goodwill and $34.5 million of amortization expense, net
of income tax benefit, related to our wireless license
acquisition costs. Without this amortization, our 2001 operating
results would have been:

|                                                               |  |                        |          |  
|-------------------------------------------------------------- |  | ---------------------- | -------- | -
|                                                               |  | 2001                  
|                                                               |  |                       
|                                                               |  | ($ in thousands except
|                                                               |  | per share data)       
|Net loss                                                       |  | $                      | (44,858  | )
|Net loss applicable to common stockholder                      |  |                        | (46,997  | )
|Net loss applicable to common stockholder per
    common share |  | $                      | (469,966 | )

As stated above, through December 31, 2001,
our accounting policy for impairment of long-lived assets was to
review the carrying value of our long-lived assets and certain
identifiable intangible assets whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. If such circumstances were deemed to exist, the
carrying value of the asset would be compared to the estimated
undiscounted future cash flows generated by the asset. Our
definite life assets will continue to be amortized over their
estimated useful lives and are subject to the same impairment
criteria. As a result of fully implementing SFAS No. 142 on
January 1, 2002, we now evaluate the carrying value of our
indefinite life intangible assets at least annually, using their
fair values. To complete this evaluation, we compare the
carrying amount of our wireless license acquisition costs to the
fair value of those assets. For purposes of this comparison, it
is our policy to aggregate our wireless license acquisition
costs. We determined the fair value of our wireless license
acquisition costs based on their estimated future discounted
cash flows. Based on the comparison, we concluded that the
carrying amount of our wireless license acquisition costs
exceeded their estimated fair value. As a result, we recorded a
charge in the first quarter of 2002, net of income tax benefit,
of $281.6 million to reflect the write-down of our wireless
license acquisition costs to their fair value. We then assessed
the carrying amount of our goodwill for possible impairment. For
goodwill, there is a two-step approach for assessing impairment.
The first step requires a comparison of our fair value to our
carrying amount, including goodwill. Our fair value is
determined based on estimated future discounted cash flows. Upon
implementation, it was determined that our estimated fair value
exceeded our carrying amount and thus, our goodwill was not
deemed to be impaired. Since our goodwill was not deemed to be
impaired as of January 1, 2002, the second step of the
impairment test, which is used to measure the amount of
impairment loss was not required to be completed upon
implementation of SFAS No. 142.

Based on factors and circumstances impacting us
and the business climate in which we operated as of
June 30, 2002, we determined that it was necessary to
re-evaluate the carrying value of our goodwill and indefinite
life intangible assets in accordance with SFAS No. 142. The
legal factors included the non-compliance with our total
leverage ratio covenant on our senior credit facility, which
gave our lenders the right to accelerate the repayment of the
entire amount outstanding under our senior credit facility. In
addition, our business climate was impacted due to the fact that
the rural wireless industry had continued to experience a
significant deterioration in public equity valuations during the
second quarter of 2002. As a result of the re-evaluation of our
wireless license acquisition costs and goodwill, we concluded
that the fair value of our wireless license acquisition costs,
as determined upon implementation of SFAS No. 142, had not
changed and deemed that there was no further impairment of these
assets. In performing the impairment test on our goodwill, we
concluded that the overall assumptions used in first quarter
2002 were still valid with the exception of the risk-based
discount factor and enterprise valuations. With the revised
assumptions at June 30,

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2002, we determined that our goodwill was
impaired and as a result, we recorded an impairment loss
totaling $377.0 million.


In addition, during fourth quarter 2002, we
continued to experience factors impacting our business
necessitated a re-evaluation. We continued to be out of
compliance with our total leverage ratio covenant of our senior
credit facility, which gave our lenders the right to accelerate
the repayment of the entire amount outstanding under our senior
credit facility. Based on these discussions and other factors,
including an increase in a risk-based discount factor, we
determined that our goodwill continued to be impaired based on
current enterprise valuations. Therefore, we recorded an
additional impairment loss of $423.9 million at
December 31, 2002, bringing our total impairment loss on
goodwill to $800.9 million for the year ended
December 31, 2002.

We believe it is necessary for an understanding
of our significant accounting policies to read the above in
conjunction with Note 2 of Item 8, Significant
Accounting Policies, of this Form 10-K. These other
significant accounting policies, while not involving the same
level of measurement uncertainties as those discussed above, are
nevertheless important to an understanding of our financial
statements. Policies related to revenue recognition, financial
instruments and business combinations require judgments on
complex matters that are often subject to multiple sources of
authoritative guidance. Certain of these matters are among
topics currently under re-examination by accounting standard
setters and regulators. Although no specific conclusions reached
by these standard setters appear likely to cause a material
change in our accounting policies, outcomes cannot be predicted
with confidence.

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##### Table of Contents



Results of Operations

Basis of Presentation

As previously explained, for the combined year
ended December 31, 2003, we have combined the results of
operations of our predecessor company, American Cellular
Corporation, for the period from January 1, 2003 through
August 18, 2003 and the results of operations of
ACC Escrow Corp. and American Cellular on a combined
basis for the period from formation (June 23, 2003) through
December 31, 2003. For comparison purposes, any reference
in this Managements Discussion and Analysis of
Financial Conditions and Results of Operations to the
period ended December 31, 2003 refers to the combined
period ended December 31, 2003. The following table sets
forth the components of our results of operations for the
periods indicated:

|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |          |           | 
|------------------------------------------------------ | ---------------------------------------------------------------------------- | ------------------------ | ------- | ----------------- | ------- | ----------------- | ------ | ----------------- | ------- | - | ------- | -------- | ------- | - | ---------- | -------- | --------- | 
|                                                       |                                                                              | For the period           |         | For the period    |         |                   |        |                  
|                                                       |                                                                              | from                     |         | from formation    |         |                   |        |                  
|                                                       |                                                                              | January 1, 2003          |         | (June 23, 2003)   |         | Combined          |        |                  
|                                                       |                                                                              | through                  |         | through           |         | Year Ended        |        | Year Ended       
|                                                       |                                                                              | August 18, 2003          |         | December 31, 2003 |         | December 31, 2003 |        | December 31, 2002
|                                                       |                                                                              |                          |         |                   |         |                   |        |                  
|                                                       |                                                                              |                         
|                                                       |                                                                              | ($ in thousands)        
|Operating revenue:                                     |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|                                                       | Service revenue                                                              |                          | $       | 195,787           |         |                   | $      | 117,002           |         |   | $       | 312,789  |         |   | $          | 302,144  |          
|                                                       | Roaming revenue                                                              |                          |         | 82,387            |         |                   |        | 39,948            |         |   |         | 122,335  |         |   |            | 135,148  |          
|                                                       | Equipment and other revenue                                                  |                          |         | 10,552            |         |                   |        | 5,673             |         |   |         | 16,225   |         |   |            | 15,538   |          
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|                                                       |                                                                              | Total operating revenue  |         |                   | 288,726 |                   |        |                   | 162,623 |   |         |          | 451,349 |   |            |          | 452,830   | 
|Operating expenses:                                    |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|                                                       | Cost of service (exclusive of items shown
    separately below)              |                          |         | 62,225            |         |                   |        | 35,460            |         |   |         | 97,685   |         |   |            | 110,412  |          
|                                                       | Cost of equipment                                                            |                          |         | 23,618            |         |                   |        | 15,104            |         |   |         | 38,722   |         |   |            | 34,206   |          
|Marketing and selling                                  |                                                                              |                          | 31,180  |                   |         |                   | 21,017 |                   |         |   | 52,197  |          |         |   | 57,623     |         
|General and administrative                             |                                                                              |                          | 44,435  |                   |         |                   | 31,210 |                   |         |   | 75,645  |          |         |   | 70,291     |         
|                                                       | Impairment of goodwill                                                       |                          |         |                  |         |                   |        |                  |         |   |         |         |         |   |            | 800,894  |          
|                                                       | Depreciation and amortization                                                |                          |         | 43,591            |         |                   |        | 28,647            |         |   |         | 72,238   |         |   |            | 66,746   |          
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|                                                       |                                                                              | Total operating expenses |         |                   | 205,049 |                   |        |                   | 131,438 |   |         |          | 336,487 |   |            |          | 1,140,172 | 
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|Operating income (loss)                                |                                                                              |                          | 83,677  |                   |         |                   | 31,185 |                   |         |   | 114,862 |          |         |   | (687,342   | )       
|                                                       | Interest expense                                                             |                          |         | (78,136           | )       |                   |        | (37,773           | )       |   |         | (115,909 | )       |   |            | (142,003 | )        
|                                                       | Dividends on mandatorily redeemable preferred
    stock                      |                          |         | (703              | )       |                   |        |                  |         |   |         | (703     | )       |   |            |         |          
|                                                       | Other (expense) income, net                                                  |                          |         | (538              | )       |                   |        | (426              | )       |   |         | (964     | )       |   |            | 1,387    |          
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|Income (loss) before income taxes                      |                                                                              |                          | 4,300   |                   |         |                   | (7,014 | )                 |         |   | (2,714  | )        |         |   | (827,958   | )       
|Income tax (expense) benefit                           |                                                                              |                          | (1,961  | )                 |         |                   | 2,665  |                   |         |   | 704     |          |         |   | 14,383     |         
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|Income (loss) from continuing operations               |                                                                              |                          | 2,339   |                   |         |                   | (4,349 | )                 |         |   | (2,010  | )        |         |   | (813,575   | )       
|                                                       | (Loss) from discontinued operations, net of
    income taxes                 |                          |         |                  |         |                   |        |                  |         |   |         |         |         |   |            | (654     | )        
|                                                       | Gain from sale of discontinued operations, net of
    income taxes           |                          |         |                  |         |                   |        |                  |         |   |         |         |         |   |            | 13,472   |          
|                                                       | Cumulative effect of change in accounting
    principle, net of income taxes |                          |         |                  |         |                   |        |                  |         |   |         |         |         |   |            | (281,640 | )        
|                                                       | Extraordinary gain, net                                                      |                          |         | 131,009           |         |                   |        |                  |         |   |         | 131,009  |         |   |            |         |          
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|Net income (loss)                                      |                                                                              |                          | 133,348 |                   |         |                   | (4,349 | )                 |         |   | 128,999 |          |         |   | (1,082,397 | )       
|Dividends on preferred stock                           |                                                                              |                          | (2,546  | )                 |         |                   |       |                   |         |   | (2,546  | )        |         |   | (4,661     | )       
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         
|Net income (loss) applicable to common
    stockholder |                                                                              | $                        | 130,802 |                   |         | $                 | (4,349 | )                 |         | $ | 126,453 |          |         | $ | (1,087,058 | )       
|                                                       |                                                                              |                          |         |                   |         |                   |        |                   |         |   |         |          |         |   |            |         

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Combined Year Ended December 31, 2003
Compared to the Year Ended December 31, 2002

In the text below, financial statement numbers
have been rounded; however, the percentage changes are based on
the actual financial statement numbers.

Operating revenue.For the year ended
December 31, 2003, our total operating revenue decreased
$1.5 million, or 0.3%, to $451.3 million from
$452.8 million for the year ended December 31, 2002.
The following table sets forth the components of our operating
revenue for the periods indicated:

|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |       |  
|--------------------------- | ----- | ----------------------- | ------- | ---------- |  | ------ | ---- | ---------- | - | - | ------- | ------- |  |  | ---- | ----- | -
|                            |       |                        
|                            |       | Year Ended December 31,
|                            |       |                        
|                            |       |                         |         |           
|                            |       | 2003                    |         | 2002      
|                            |       |                         |         |           
|                            |       | Amount                  |         | Percentage |  | Amount |      | Percentage
|                            |       |                         |         |            |  |        |      |           
|                            |       |                        
|                            |       | ($ in thousands)       
|Service revenue             |       | $                       | 312,789 |            |  |        | 69.3 | %          |   | $ | 302,144 |         |  |  | 66.7 | %    
|Roaming revenue             |       |                         | 122,335 |            |  |        | 27.1 | %          |   |   | 135,148 |         |  |  | 29.9 | %    
|Equipment and other revenue |       |                         | 16,225  |            |  |        | 3.6  | %          |   |   | 15,538  |         |  |  | 3.4  | %    
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      
|                            | Total |                         | $       | 451,349    |  |        |      | 100.0      | % |   | $       | 452,830 |  |  |      | 100.0 | %
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      

For the year ended December 31, 2003, our
service revenue increased $10.7 million, or 3.5%, to
$312.8 million from $302.1 million for the year ended
December 31, 2002. The increase was primarily attributable
to increased market penetration and subscriber usage. Our
average subscriber base increased 5.1% to 662,600 for 2003 from
630,700 during 2002.

For the year ended December 31, 2003, our
roaming revenue decreased $12.8 million, or 9.5%, to
$122.3 million from $135.1 million for the year ended
December 31, 2002. Our roaming revenue per minute-of-use
has decreased by 22.9% as contractual rates decreased during
2003, however it was partially offset by a 17.3% increase in
roaming minutes due to expanded coverage areas and increased
usage.

For the year ended December 31, 2003, our
equipment and other revenue increased $0.7 million, or
4.4%, to $16.2 million from $15.5 million for the year
ended December 31, 2002. This increase primarily resulted
from an increased amount of wireless equipment upgrades during
the year ended December 31, 2003 compared to 2002.

Cost of
Service.For the year ended
December 31, 2003, our total cost of service decreased
$12.7 million, or 11.5%, to $97.7 million from
$110.4 million for the year ended December 31, 2002.
The following table sets forth the components of our cost of
service for the periods indicated:

|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |       |  
|------------- | --------------------- | ----------------------- | ------ | ---------- |  | ------ | ---- | ---------- | - | - | ------ | ------- |  |  | ---- | ----- | -
|              |                       |                        
|              |                       | Year Ended December 31,
|              |                       |                        
|              |                       |                         |        |           
|              |                       | 2003                    |        | 2002      
|              |                       |                         |        |           
|              |                       | Amount                  |        | Percentage |  | Amount |      | Percentage
|              |                       |                         |        |            |  |        |      |           
|              |                       |                        
|              |                       | ($ in thousands)       
|Network costs |                       | $                       | 55,225 |            |  |        | 56.5 | %          |   | $ | 52,775 |         |  |  | 47.8 | %    
|Roaming costs |                       |                         | 42,460 |            |  |        | 43.5 | %          |   |   | 57,637 |         |  |  | 52.2 | %    
|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |      
|              | Total cost of service |                         | $      | 97,685     |  |        |      | 100.0      | % |   | $      | 110,412 |  |  |      | 100.0 | %
|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |      

For the year ended December 31, 2003, our
network costs, which are the costs incurred from operating our
wireless network and providing service to our customers,
increased $2.4 million, or 4.6%, to $55.2 million from
$52.8 million for the year ended December 31, 2002.
This increase primarily resulted from the increase in our
network capacity necessary to handle minute-of-use growth.

For the year ended December 31, 2003,
roaming costs decreased by $15.1 million, or 26.3%, to
$42.5 million from $57.6 million for the year ended
December 31, 2002. This decrease was the result of a 24.9%
decline in rates charged by those providers resulting from new
lower rate agreements, and a 1.9% decrease in the minutes used
by our customers on third-party wireless providers networks.

Cost of equipment.For the year ended
December 31, 2003, our cost of equipment increased
$4.5 million, or 13.2%, to $38.7 million during 2003
from $34.2 million in 2002. This increase resulted from a

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$7.6 million increase in retention cost due
to equipment upgrades for existing customers, offset by a
$3.1 million decrease in equipment sold to new subscribers
as a result of the decrease in our gross subscriber additions
during 2003 compared to 2002.


Marketing and selling costs.For the year ended
December 31, 2003, our marketing and selling costs
decreased by $5.4 million, or 9.4%, to $52.2 million from
$57.6 million for the year ended December 31, 2002,
due to a decrease in our gross subscriber additions during 2003
compared to 2002.

General and administrative costs.For the year ended
December 31, 2003, our general and administrative costs
increased $5.3 million, or 7.6%, to $75.6 million from
$70.3 million for the year ended December 31, 2002.
This increase is a result of increased infrastructure costs such
as customer service, billing, collections and administrative
costs as a result of the overall growth of our business. Our
overall monthly general and administrative costs per subscriber
remained constant at $9 for the years ended December 31,
2003 and 2002.

Impairment of
Goodwill.For the year
ended December 31, 2002, we recognized impairments of our
goodwill totaling $800.9 million. These impairments were a
result of our re-evaluation of our carrying values of goodwill
and indefinite life intangible assets in accordance with SFAS
No. 142, Goodwill and Other Intangible Assets.

Depreciation and amortization expense.For the year ended
December 31, 2003, our depreciation and amortization
expense increased $5.5 million, or 8.2%, to
$72.2 million from $66.7 million for 2002. This
increase is a result of additional depreciation on fixed assets
acquired during 2003 and 2002.

Interest expense.For the year ended
December 31, 2003, our interest expense decreased
$26.1 million, or 18.4%, to $115.9 million from $142.0
million for 2002. This decrease resulted primarily from the
reduction of our total debt and decreased variable interest
rates as a result of lower interest rates and the expiration of
our hedges.

Loss from continuing operations.For the year ended
December 31, 2003, our net loss from continuing operations
was $2.0 million. Our loss from continuing operations
decreased $811.6 million, from $813.6 million for the
year ended December 31, 2002. The decrease in our net loss
was primarily attributable to our $800.9 million impairment
of goodwill during 2002.

Loss from discontinued operations.For the year ended
December 31, 2002, we had a net loss from discontinued
operations of $0.7 million. This loss from discontinued
operations reflects our 2002 operating losses from Tennessee 4
RSA, which we sold to Verizon Wireless on February 8, 2002.

Gain from sale of discontinued
operations.For the year
ended December 31, 2002, we had a gain from sale of discontinued
operations of $13.5 million, net of tax. This gain reflects
our sale of our Tennessee 4 RSA market, which we sold to Verizon
Wireless on February 8, 2002.

Cumulative effect of change in accounting
principle.For the year
ended December 31, 2002, we recognized an impairment on our
wireless license acquisition costs of $281.6 million, net
of tax benefit, as a result of implementing SFAS No. 142
Goodwill and Other Intangible Assets.

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Year Ended December 31, 2002 Compared
to the Combined Year Ended December 31, 2001

Operating revenue.For the year ended
December 31, 2002, our total operating revenue increased
$35.6 million, or 8.5%, to $452.8 million from
$417.2 million for the comparable period in 2001. The
following table sets forth the components of our operating
revenue for the periods indicated:

|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |       |  
|--------------------------- | ----- | ----------------------- | ------- | ---------- |  | ------ | ---- | ---------- | - | - | ------- | ------- |  |  | ---- | ----- | -
|                            |       |                        
|                            |       | Year Ended December 31,
|                            |       |                        
|                            |       |                         |         |           
|                            |       | 2002                    |         | 2001      
|                            |       |                         |         |           
|                            |       | Amount                  |         | Percentage |  | Amount |      | Percentage
|                            |       |                         |         |            |  |        |      |           
|                            |       |                        
|                            |       | ($ in thousands)       
|Service revenue             |       | $                       | 302,144 |            |  |        | 66.7 | %          |   | $ | 266,507 |         |  |  | 63.9 | %    
|Roaming revenue             |       |                         | 135,148 |            |  |        | 29.9 | %          |   |   | 132,251 |         |  |  | 31.7 | %    
|Equipment and other revenue |       |                         | 15,538  |            |  |        | 3.4  | %          |   |   | 18,485  |         |  |  | 4.4  | %    
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      
|                            | Total |                         | $       | 452,830    |  |        |      | 100.0      | % |   | $       | 417,243 |  |  |      | 100.0 | %
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      

For the year ended December 31, 2002, our
service revenue increased $35.6 million, or 13.4%, to
$302.1 million from $266.5 million for the year ended
December 31, 2001. The increase was primarily attributable
to increased market penetration and subscriber usage. Our
average subscriber base increased 11.8% to 630,700 for 2002 from
564,000 during 2001. Even though we have experienced increased
competition and market pressure, our average monthly service
revenue per subscriber has remained constant at $39. This is a
result of our service revenue being positively impacted by
changes in the mix of digital and analog subscribers in our
subscriber base. Our digital subscribers tend to use more
minutes in a larger home area than our analog subscribers.

For the year ended December 31, 2002, our
roaming revenue increased $2.8 million, or 2.2%, to
$135.1 million from $132.3 million for the year ended
December 31, 2001. Roaming minutes have increased by 44.8%
from 2001 to 2002, however, our roaming revenue per
minute-of-use has decreased by 28.9%.

For the year ended December 31, 2002, our
equipment and other revenue decreased $3.0 million, or
15.9%, to $15.5 million from $18.5 million for the
year ended December 31, 2001. This was primarily a result
from a slow-down in the migration of existing subscribers from
analog to digital service and a decrease in total gross
subscriber additions during 2002 compared to 2001. We migrated
48,200 subscribers from analog to digital for the year ended
December 31, 2002, compared to 69,900 for the year ended
December 31, 2001.

Cost of
Service.For the year ended
December 31, 2002, our total cost of service increased
$3.7 million, or 3.5%, to $110.4 million from
$106.7 million for the comparable period in 2001. The
following table sets forth the components of our cost of service
for the periods indicated:

|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |       |  
|------------- | --------------------- | ----------------------- | ------ | ---------- |  | ------ | ---- | ---------- | - | - | ------ | ------- |  |  | ---- | ----- | -
|              |                       |                        
|              |                       | Year Ended December 31,
|              |                       |                        
|              |                       |                         |        |           
|              |                       | 2002                    |        | 2001      
|              |                       |                         |        |           
|              |                       | Amount                  |        | Percentage |  | Amount |      | Percentage
|              |                       |                         |        |            |  |        |      |           
|              |                       |                        
|              |                       | ($ in thousands)       
|Network costs |                       | $                       | 52,775 |            |  |        | 47.8 | %          |   | $ | 43,313 |         |  |  | 40.6 | %    
|Roaming costs |                       |                         | 57,637 |            |  |        | 52.2 | %          |   |   | 63,394 |         |  |  | 59.4 | %    
|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |      
|              | Total cost of service |                         | $      | 110,412    |  |        |      | 100.0      | % |   | $      | 106,707 |  |  |      | 100.0 | %
|              |                       |                         |        |            |  |        |      |            |   |   |        |         |  |  |      |      

For the year ended December 31, 2002, our
network costs, which are the costs incurred from operating our
wireless network and providing service to our customers,
increased $9.5 million, or 21.8%, to $52.8 million
from $43.3 million for the comparable period in 2001. This
increase was primarily the result of an approximate
$2.9 million increase in rent incurred from our cell site
leases as a result of the continued build-out of our network, an
approximate $3.2 million increase in cost of features
resulting from the cost to provide handset insurance to our
customers, and a $3.4 million increase in toll charges.
Toll charges have increased as a result of offering more
national and regional rate plans, which often have a certain
amount of free long-distance minutes included in the fixed
monthly access charge.

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For the year ended December 31, 2002,
roaming costs decreased by $5.8 million, or 9.1%, to
$57.6 million from $63.4 million for the same period
in 2001. This decrease was the result of a 25.0% decline in
rates charged by those providers resulting from new lower rate
agreements, offset by a 25.0% increase in the minutes used by
our customers on third-party wireless providers networks.

Cost of equipment.For the year ended
December 31, 2002, our cost of equipment decreased
$3.0 million, or 8.0%, to $34.2 million during 2002
from $37.2 million in 2001, resulting from decreases in the
volume of equipment sold due to the decrease in gross subscriber
additions and the decrease in the migration of subscribers from
analog to digital service.

Marketing and selling costs.For the year ended
December 31, 2002, our marketing and selling costs
increased slightly by $1.1 million, or 2.1%, to
$57.6 million from $56.5 million for the year ended
December 31, 2001, due to a slight increase in selling
costs primarily as a result of increased advertising related to
the introduction of a new line of rate plans in the second
quarter of 2002.

General and administrative costs.For the year ended
December 31, 2002, our general and administrative costs
increased $9.4 million, or 15.3%, to $70.3 million from
$60.9 million for the year ended December 31, 2001.
This increase is a result of increased infrastructure costs such
as customer service, billing, collections and administrative
costs as a result of the overall growth of our business. Our
overall monthly general and administrative costs per subscriber
remained constant at $9 for the years ended December 31,
2002 and 2001.

Impairment of
Goodwill.For the year
ended December 31, 2002, we recognized an impairment of our
goodwill totaling $800.9 million. This impairment was a
result of our re-evaluation of our carrying values of goodwill
and indefinite life intangible assets in accordance with SFAS
No. 142, Goodwill and Other Intangible Assets.

Depreciation and amortization expense.For the year ended
December 31, 2002, our depreciation and amortization
expense decreased $115.9 million, or 63.5%, to
$66.7 million from $182.6 million for 2001. The
decrease is a result of the implementation of SFAS No. 142,
Goodwill and other Intangible Assets, which required
companies to stop amortizing existing goodwill and intangible
assets with indefinite lives effective January 1, 2002.
Under this new rule we treat our wireless license acquisition
costs as indefinite life intangible assets. For the year ended
December 31, 2001, the aggregate amount of amortization
expense attributable to our goodwill was $58.3 million and
the aggregate amount of amortization expense attributable to our
wireless license acquisition costs was $57.5 million.

Interest expense.For the year ended
December 31, 2002, our interest expense decreased
$23.5 million, or 14.2%, to $142.0 million from $165.5
million for 2001. Of this decrease, $4.8 million resulted
from the expiration of our interest rate swap agreement in June
2002. The remaining decrease primarily resulted from an overall
decrease in our variable interest rates and the reduction of the
outstanding balance on our credit facility.

Loss from discontinued operations.For the year ended
December 31, 2002, we had a net loss from discontinued
operations of $0.7 million, compared to $1.4 million
for the year ended December 31, 2001. These losses from
discontinued operations reflect our losses from Tennessee 4 RSA,
which we sold to Verizon Wireless on February 8, 2002.

Gain from sale of discontinued
operations.For the year
ended December 31, 2002, we had a gain from sale of discontinued
operations of $13.5 million, net of tax. This gain reflects
our sale of our Tennessee 4 RSA market, which we sold to Verizon
Wireless on February 8, 2002.

Cumulative effect of change in accounting
principle.For the year
ended December 31, 2002, we recognized an impairment on our
wireless license acquisition costs of $281.6 million, net
of tax benefit, as a result of implementing SFAS No. 142
Goodwill and Other Intangible Assets.

Net loss.For
the year ended December 31, 2002, our net loss was $1.1
billion. Our net loss increased $944.7 million, from
$137.7 million for the year ended December 31, 2001.
The increase in our net loss was

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attributable to our impairment of goodwill and
the cumulative effect of change in accounting principle related
to the implementation of SFAS No. 142, both described above.


Dividends on preferred stock.For the year ended
December 31, 2002, our dividends on preferred stock
increased $2.6 million, or 117.9%, to $4.7 million
from $2.1 million. They are the result of the purchase of
35,000 shares of preferred stock with a liquidation value of
$1,000 per share, by Dobson Communications, on June 29,
2001.

Liquidity and Capital Resources

We have required, and will likely continue to
require, substantial capital to further develop, expand and
upgrade our wireless systems and those we may acquire. We plan
to finance our operations through cash flows from operating
activities, and if necessary, bank debt, which may not be
available to us in the future, the sale of debt securities and
infusions of equity capital from our parent company, Dobson
Communications. Dobson Communications is not obligated to
contribute equity capital or provide any other financing to our
subsidiaries or us.

Cash Flow Activities

At December 31, 2003, we had a working
capital deficit of $1.7 million, a ratio of current assets
to current liabilities of 1:1, and an unrestricted cash balance
of $27.5 million, which compares to a working capital
deficit of $1.6 billion, a ratio of current assets to current
liabilities of 0.06:1, and an unrestricted cash balance of
$15.9 million at December 31, 2002. Our long-term debt
of $1.59 billion at December 31, 2002, was included in
our current liabilities. Without treating this long-term debt as
current liabilities, we would have had working capital of
$31.2 million at December 31, 2002.

Our net cash provided by operating activities
totaled $87.3 million for the combined year ended
December 31, 2003 and $19.2 million for the year ended
December 31, 2002, while our net cash used in operating
activities was $9.9 million for the year ended December 31,
2001. Net cash provided by operating activities increased in
2003 compared to 2002, primarily due to an increase in operating
income and changes in our current assets and liabilities. Net
cash provided by operating activities increased
$29.1 million in 2002 compared to 2001, primarily due to
decreases in our deferred income taxes, offset by changes in our
current assets and liabilities.

Our net cash used in investing activities totaled
$45.2 million for the combined year ended December 31,
2003, while our net cash provided by investing activities was
$145.3 million for the year ended December 31, 2002,
and our net cash used in investing activities was
$55.8 million for the year ended December 31, 2001. We have
net cash provided by investing activities during 2002 as
compared to 2001 and 2003 as a result of the proceeds provided
from the sale of discontinued operations. Capital expenditures
were $77.4 million for the combined year ended
December 31, 2003, $48.8 million for the year ended
December 31, 2002 and $74.9 million for the year ended
December 31, 2001.

Net cash provided by financing activities was
$5.3 million for the combined year ended December 31,
2003, while our net cash used in financing activities was
$154.6 million for the year ended December 31, 2002,
and our net cash provided by financing activities was
$56.7 million for the year ended December 31, 2001.
Financing activities for the combined year ended
December 31, 2003 consisted primarily of the issuance of
$900.0 million of debt, maturities of restricted
investments of $33.3 million, offset by the related pay
down of $894.3 million on our credit facility, and
$18.8 million of deferred financing costs. Financing
activities for the year ended December 31, 2002 consisted
of repayments of long-term debt totaling $347.1 million,
primarily funded from proceeds from the sale of Tennessee 4 RSA,
which were offset by proceeds from long-term debt of
$127.8 million and maturities of restricted investments of
$66.5 million. Financing activity sources for the year
ended December 31, 2001 consisted of proceeds from
long-term debt of $233.0 million, proceeds from senior
subordinated notes of $693.0 million, proceeds from
issuance of preferred stock of $35.0 million, maturities of
restricted investments of $39.0 million and a capital
contribution of $16.4 million, which was offset by
repayments of long-term debt totaling $797.4 million,
purchase of restricted investments of $133.2 million and
deferred financing costs of $19.9 million.

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Capital Resources

Current Capital Resources

Senior Notes

During 2001, we sold, in two transactions,
$700.0 million principal amount of 9.5% senior subordinated
notes due 2009, at a discount of $6.9 million. The discount was
being amortized over the life of the notes. In August 2003, as
part of our restructuring, holders of $681.9 million
outstanding principal amount of these senior subordinated notes
received approximately $48.7 million in cash,
43.9 million shares of newly issued shares of our
Class A common stock, and 681,900 shares of a new series of
our convertible preferred stock, which has an aggregate
liquidation preference of approximately $121.8 million and
is convertible into a maximum of 13.9 million shares of our
Class A common stock. There remains outstanding
$18.1 million liquidation value of our 9.5% senior
subordinated notes.

On August 8, 2003, we and ACC Escrow Corp.,
a newly formed, wholly-owned, indirect subsidiary of Dobson
Communications, completed a private offering of
$900.0 million aggregate principle amount of 10% senior
notes due 2011. The senior notes were sold at par, are unsecured
and bear interest at an annual rate of 10.0%. The net proceeds
from the sale of the notes were used to (i) repay in full
all amounts owing under our bank credit facility and
(ii) pay a portion of the fees of our restructuring. The
notes rank pari passu in right of payment with any of our
existing and future indebtedness and are senior to all existing
and future subordinated indebtedness.

In connection with the closing of the sale of the
notes, we entered into an indenture dated August 8, 2003
with Bank of Oklahoma, National Association, as Trustee. The
indenture contains certain covenants including, but not limited
to, covenants that limit the ability of us and our restricted
subsidiaries to:



| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | incur indebtedness;                                                                              
|
| |  | incur or assume liens;                                                                           
|
| |  | make restricted payments;                                                                        
|
| |  | impose dividend or other payment restrictions
    affecting our restricted subsidiaries;         
|
| |  | issue and sell capital stock of our restricted
    subsidiaries;                                 
|
| |  | issue certain capital stock;                                                                     
|
| |  | issue guarantees of indebtedness;                                                                
|
| |  | enter into transactions with affiliates;                                                         
|
| |  | sell assets;                                                                                     
|
| |  | engage in unpermitted lines of business                                                          
|
| |  | enter into sale or leaseback transactions; and                                                   
|
| |  | make payments for the consent, waiver or
    amendment of any of the provisions of the indenture.

Terminated Capital Resources

Credit Facility

On February 25, 2000, we obtained a
$1.75 billion credit facility to retire existing debt and
complete our acquisition by a joint venture between Dobson
Communications and AT&T Wireless. This credit facility
included a $300.0 million revolving credit facility and
$1.45 billion of term loan facilities. This credit facility
was amended from time to time and paydowns of the amounts
outstanding occurred on several different occasions. The maximum
availability of the credit facility was limited by certain
restrictions, including certain financial ratios. As of
August 18, 2003, we had outstanding borrowings under the
credit facility of $864.3 million, with no additional
amounts available for future borrowings.

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Through September 2002, interest on the revolving
credit facility and the term loans was variable and was based on
a prime rate or a LIBOR formula. As a result the non-compliance
with a financial covenant contained in the credit facility,
beginning in October 2002, all borrowings under the credit
facility were only available based on prime rate. The weighted
average interest rate for the eight months ended August 2003 was
5.7%, and interest rates have ranged in total between 4.4% and
10.0% since inception. This credit facility was collateralized
by substantially all of our assets.

This credit facility included a requirement that
the total debt leverage ratio not exceed 7.50 to 1.00 in the
second quarter of 2003. At June 30, 2002 and continuing
through August 2003, we failed to comply with this covenant. The
lenders had the right, but not the obligation, to accelerate the
repayment of the entire amount outstanding under the credit
facility. Acceleration under the credit facility would have
allowed the holders of our senior subordinated notes to declare
the principal and interest of the senior subordinated notes
immediately due and payable. No such acceleration occurred. On
June 30, 2002 and continuing through August 2003, all of
our long-term debt was classified as current. Until such
non-compliance was resolved, there continued to be substantial
doubt about our predecessors ability to continue as a
going concern, as expressed in the independent auditors report
on our predecessors 2002 and 2001 financial statements.
Also as a result of such non-compliance, beginning in October
2002, all borrowings under its credit facility were available
based only on the prime rate, which increased the borrowing
cost. Upon consummation of our restructuring, as discussed in
Note 1, we repaid all amounts outstanding under this credit
facility.

Capital Commitments

We had capital expenditures of $77.4 million
during 2003. We have plans to spend approximately
$40 million to $55 million for capital expenditures in
2004. The majority of these planned expenditures will occur in
the first half of 2004 in relation to the build-out of our
GSM/GPRS/EDGE network. However, the amount and timing of capital
expenditures may vary depending on the rate at which we expand
and develop our wireless systems, new regulatory requirements,
whether we consummate additional acquisitions and whether we are
successful in reorganizing.

We have been obligated under an agreement to
purchase approximately $49.5 million of cell site and switching
equipment from Nortel Network Corp. prior to July 15, 2005.
As of December 31, 2003, we had fulfilled this contractual
obligation.

The table below sets forth all of our contractual
cash obligations, as of December 31, 2003:

|                             |                                    |                  |        |           |  |           |        |               |  |   |       |       |  |   |         |         | 
|---------------------------- | ---------------------------------- | ---------------- | ------ | --------- |  | --------- | ------ | ------------- |  | - | ----- | ----- |  | - | ------- | ------- | 
|Contractual Cash Obligations |                                    | Less than 1 year |        | 1-3 years |  | 4-5 years |        | After 5 years
|                             |                                    |                  |        |           |  |           |        |              
|                             |                                    |                 
|                             |                                    | ($ in thousands)
|Long-term debt               |                                    | $                |       |           |  | $         |       |               |  | $ |      |       |  | $ | 912,851 |        
|Operating leases             |                                    |                  | 12,093 |           |  |           | 18,093 |               |  |   | 7,995 |       |  |   | 6,284   |        
|                             |                                    |                  |        |           |  |           |        |               |  |   |       |       |  |   |         |        
|                             | Total contractual cash obligations |                  | $      | 12,093    |  |           | $      | 18,093        |  |   | $     | 7,995 |  |   | $       | 919,135 | 
|                             |                                    |                  |        |           |  |           |        |               |  |   |       |       |  |   |         |        

In addition, we are required to pay cash interest
payments on our 10% senior notes due 2011. Cash interest on our
10% senior notes will total $90.0 million annually through
maturity in 2011.

Forward-Looking Statements

The description of our plans set forth herein,
including planned capital expenditures and acquisitions, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. These plans involve a number of risks and uncertainties.
Important factors that could cause actual capital expenditures,
acquisition activity or our performance to differ materially
from the plans include, without limitation, our ability to
satisfy the financial covenants of our outstanding debt and
preferred stock instruments and to raise additional capital; our
ability to manage our rapid growth successfully and to compete
effectively in our wireless business against competitors with
greater financial, technical, marketing and other resources;
changes in end-user requirements and preferences; the
development of other technologies and products that may gain
more commercial acceptance than those of ours; and adverse
regulatory changes. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only
as of

34



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##### Table of Contents



the date hereof. We undertake no obligation to
update or revise these forward-looking statements to reflect
events or circumstances after the date hereof including, without
limitation, changes in our business strategy or planned capital
expenditures, or to reflect the occurrence of unanticipated
events.







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about
    Market Risk

Prior to October 2002, our primary market risk
related to changes in interest rates. Market risk is the
potential loss arising from adverse changes in market prices and
rates, including interest rates. We do not enter into
derivatives or other financial instruments for trading or
speculative purposes. The objective of our financial risk
management is to minimize the negative impact of interest rate
fluctuations on our earnings and equity. After September 2002,
all of our outstanding senior notes bore interest at fixed
rates. At December 31, 2003, we were not involved with any
derivatives or other financial instruments.

At December 31, 2003, we had long-term debt
outstanding of $912.9 million, all of which bears interest
at fixed rates. Prior to our acquisition by Dobson
Communication, our credit facility bore interest at floating
rates, which averaged 5.7% for the eight months ended
August 31, 2003. As of December 31, 2003, the credit
facilities have been paid in full.

35



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##### Table of Contents






Item 8. Financial Statements and
Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                                                                                                                                    |  |  |    | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|American Cellular Corporation and Subsidiaries
    (And the Predecessor Company)                                                                                                                                                                    |  |  |    | 
|Independent Auditors Report                                                                                                                                                                                                                        |  |  | 37 | 
|Independent Auditors Report (the
    Predecessor Company)                                                                                                                                                                                          |  |  | 38 | 
|Report of Independent Public Accountants (the
    Predecessor Company)                                                                                                                                                                              |  |  | 39 | 
|Consolidated balance sheets as of
    December 31, 2003 and 2002.                                                                                                                                                                                   |  |  | 40 | 
|Consolidated statements of operations from
    formation (June 23, 2003) through December 31, 2003,
    for the period from January 1, 2003 through August 18,
    2003 and for the years ended December 31, 2002 and 2001.                         |  |  | 41 | 
|Consolidated statements of stockholders
    equity (deficit) from formation (June 23, 2003)
    through December 31, 2003, for the period from
    January 1, 2003 through August 18, 2003 and for the
    years ended December 31, 2002 and 2001. |  |  | 42 | 
|Consolidated statements of cash flows from
    formation (June 23, 2003) through December 31, 2003,
    for the period from January 1, 2003 through August 18,
    2003 and for the years ended December 31, 2002 and 2001.                         |  |  | 43 | 
|Notes to consolidated financial statements                                                                                                                                                                                                          |  |  | 44 | 

INDEX TO SUPPLEMENTARY DATA

|                                                   |  |  |    | 
|-------------------------------------------------- |  |  | -- | 
|American Cellular Corporation and
    Subsidiaries |  |  |    | 
|Selected quarterly financial data                  |  |  | 61 | 

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INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of

American Cellular Corporation:


We have audited the accompanying consolidated
balance sheet of American Cellular Corporation and subsidiaries
(the Company) as of December 31, 2003 and the related
consolidated statements of operations, stockholders
equity, and cash flows for the period from June 23, 2003
(inception date) to December 31, 2003. These consolidated
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.

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

In our opinion, based on our audits, the
consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of American Cellular Corporation and subsidiaries as of
December 31, 2003 and the results of its operations and its
cash flows for period from June 23, 2003 (inception date)
to December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.



| |         
| | --------
| | KPMG LLP

Oklahoma City, Oklahoma

February 12, 2004


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INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of

American Cellular Corporation:


We have audited the accompanying consolidated
balance sheet of American Cellular Corporation and subsidiaries
(the Company) as of December 31, 2002 and the related
consolidated statements of operations, stockholders
equity, and cash flows for the period from January 1, 2003
to August 18, 2003 and for the year ended December 31,
2002 These consolidated financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits. The 2001 consolidated
financial statements of American Cellular Corporation as listed
in the accompanying index were audited by other auditors who
have ceased operations. Those auditors report, dated
March 22, 2002, on those consolidated financial statements
was unqualified and included an explanatory paragraph that
described the assumption that the Company would continue as a
going concern, the change in its method for accounting for
derivative instruments and hedging activities and the disposal
of long lived assets, discussed in Note 5, 2 and 3,
respectively, to the consolidated financial statements.

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

In our opinion, based on our audits, the
consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of American Cellular Corporation and subsidiaries as of
December 31, 2002 and the results of its operations and its
cash flows for period from January 1, 2003 to
August 18, 2003 and for the year ended December 31, 2002,
in conformity with accounting principles generally accepted in
the United States of America.

As described in Note 1 to the consolidated
financial statements, as of August 19, 2003, the Company
entered into a series of transactions that resulted in the
Company becoming a wholly-owned subsidiary of Dobson
Communications Corporation. The financial statements for the
periods prior to the reorganization transactions are prepared
using the Companys prior cost basis and have not been
adjusted to reflect the basis changes of the acquisition.

As discussed in Note 2 to the consolidated
financial statements as of January 1, 2002, the Company adopted
the provisions of Statement of Financial Accounting Standards
No. 142 related to the change in accounting for
identifiable intangibles with indefinite lives and for goodwill.
As discussed above, the financial statements of American
Cellular Corporation as of December 31, 2001, and for the year
ended were audited by other auditors who have ceased operations.
As described in Note 2, these financial statements have been
revised to include the transitional disclosures required by
Statement of Financial Accounting Standards (Statement)
No. 142, Goodwill and Other Intangible Assets, which was
adopted by American Cellular Corporation as of January 1,
2002. Our audit procedures with respect to the disclosures in
Note 2 with respect to 2001 included (a) agreeing the
previously reported net loss to the previously issued financial
statements and the adjustments to reported net loss representing
amortization expense (including any related tax effects)
recognized in those periods related to goodwill and intangible
assets that are no longer being amortized, to American Cellular
Corporations underlying records obtained from management
and (b) testing the mathematical accuracy of the
reconciliation of adjusted net loss to reported net loss
applicable to common stockholders, and the related net loss per
share amounts. In our opinion, the disclosures for 2001 and 2000
in Note 2 are appropriate. However, we were not engaged to
audit, review, or apply any procedures to the 2001 financial
statements of American Cellular Corporation other than with
respect to such disclosures and, accordingly, we do not express
an opinion or any other form of assurance on the 2001 financial
statements taken as a whole.



| |         
| | --------
| | KPMG LLP

Oklahoma City, Oklahoma

February 12, 2004


38



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##### Table of Contents



NOTE:

1. THIS REPORT IS A COPY OF A PREVIOUSLY
ISSUED REPORT.

2. THE PREDECESSOR AUDITOR HAS NOT
REISSUED THIS REPORT.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To the Board of Directors of

American Cellular Corporation:


We have audited the accompanying consolidated
balance sheets of American Cellular Corporation (a Delaware
corporation) and subsidiaries as of December 31, 2001 and 2000,
and the related consolidated statements of operations,
stockholders equity and cash flows for the year ended
December 31, 2001 and the period from February 25,
2000 through December 31, 2000. These consolidated
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated 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 American
Cellular Corporation and subsidiaries as of December 31,
2001 and 2000, and the results of their operations and their
cash flows for the year ended December 31, 2001 and the
period from February 25, 2000 through December 31, 2000, in
conformity with accounting principles generally accepted in the
United States.

The accompanying consolidated financial
statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 5 to the
consolidated financial statements, the Company could violate one
of the covenants of its bank debt agreement during 2002,
resulting in its lenders having the right to declare its
outstanding debt immediately due and payable, which raises
substantial doubt about its ability to continue as a going
concern. Managements plans in regard to these matters are
described in Note 5. The consolidated financial statements do
not include any adjustments that might result from the outcome
of this uncertainty.

As explained in Notes 2 and 3 to the consolidated
financial statements, respectively, effective January 1,
2001, the Company changed its method of accounting for
derivative instruments and hedging activities and the disposal
of long-lived assets.



| |                    
| | -------------------
| | ARTHUR ANDERSEN LLP

Oklahoma City, Oklahoma,

March 22, 2002


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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

|                                                                                                                                       |                                                          |      |             |                 |  |   |                |               |  
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---- | ----------- | --------------- |  | - | -------------- | ------------- | -
|                                                                                                                                       |                                                          |      |             | The Predecessor
|                                                                                                                                       |                                                          |      |             | Company        
|                                                                                                                                       |                                                          | 2003 |             | 2002           
|                                                                                                                                       |                                                          |      |             |                
|ASSETS                                                                                                                                
|CURRENT ASSETS:                                                                                                                        |                                                          |      |             |                 |  |   |                |              
|Cash and cash equivalents (Note 2)                                                                                                     |                                                          | $    | 27,505,267  |                 |  | $ | 15,865,547     |              
|Accounts receivable, net of allowance for
    doubtful accounts of $1,712,748 in 2003 and $977,723 in 2002.                            |                                                          |      | 35,415,003  |                 |  |   | 38,545,920     |              
|Restricted cash and investments (Note 2)                                                                                               |                                                          |      | 4,165,275   |                 |  |   | 38,206,378     |              
|Inventory (Note 2)                                                                                                                     |                                                          |      | 3,751,447   |                 |  |   | 4,327,769      |              
|Deferred tax assets                                                                                                                    |                                                          |      | 5,708,000   |                 |  |   | 2,151,000      |              
|Prepaid expenses                                                                                                                       |                                                          |      | 2,593,317   |                 |  |   | 3,102,085      |              
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total current assets                                     |      |             | 79,138,309      |  |   |                | 102,198,699   |  
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|PROPERTY, PLANT AND EQUIPMENT, net (Note 2)                                                                                            |                                                          |      | 205,199,700 |                 |  |   | 185,935,029    |              
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|OTHER ASSETS:                                                                                                                          |                                                          |      |             |                 |  |   |                |              
|Accounts receivable-affiliates                                                                                                         |                                                          |      | 7,059,367   |                 |  |   | 1,278,034      |              
|Restricted cash and investments (Note 2)                                                                                               |                                                          |      |            |                 |  |   | 4,122,232      |              
|Wireless license acquisition costs (Note 2)                                                                                            |                                                          |      | 669,168,796 |                 |  |   | 569,168,796    |              
|Goodwill (Note 2 and 5)                                                                                                                |                                                          |      | 570,525,432 |                 |  |   | 285,107,091    |              
|Deferred financing costs, net of accumulated
    amortization of $787,308 in 2003 and $14,629,268 in 2002 (Note 2)                     |                                                          |      | 18,043,316  |                 |  |   | 41,007,037     |              
|Customer list, net of accumulated amortization of
    $4,746,667 in 2003 and $27,437,873 in 2002 (Note 2)                              |                                                          |      | 75,253,333  |                 |  |   | 20,562,127     |              
|Other non-current assets                                                                                                               |                                                          |      | 619,706     |                 |  |   | 539,264        |              
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total other assets                                       |      |             | 1,340,669,950   |  |   |                | 921,784,581   |  
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total assets                                             |      | $           | 1,625,007,959   |  |   | $              | 1,209,918,309 |  
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|LIABILITIES AND STOCKHOLDERS
    EQUITY (DEFICIT)                                                                                    
|CURRENT LIABILITIES:                                                                                                                   |                                                          |      |             |                 |  |   |                |              
|Accounts payable                                                                                                                       |                                                          | $    | 17,933,533  |                 |  | $ | 35,865,934     |              
|Accrued expenses                                                                                                                       |                                                          |      | 10,864,285  |                 |  |   | 2,814,310      |              
|Accrued interest payable                                                                                                               |                                                          |      | 39,557,201  |                 |  |   | 14,499,071     |              
|Accrued dividends payable                                                                                                              |                                                          |      |            |                 |  |   | 6,799,945      |              
|Deferred revenue and customer deposits                                                                                                 |                                                          |      | 12,526,924  |                 |  |   | 11,014,222     |              
|Current portion of long-term debt                                                                                                      |                                                          |      |            |                 |  |   | 1,588,509,275  |              
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total current liabilities                                |      |             | 80,881,943      |  |   |                | 1,659,502,757 |  
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|OTHER LIABILITIES:                                                                                                                     |                                                          |      |             |                 |  |   |                |              
|Long-term debt (Note 4)                                                                                                                |                                                          |      | 912,850,706 |                 |  |   |               |              
|Deferred tax liabilities (Note 11)                                                                                                     |                                                          |      | 169,162,204 |                 |  |   | 43,690,897     |              
|Other non-current liabilities                                                                                                          |                                                          |      | 6,814,500   |                 |  |   |               |              
|Commitments (Note 7)                                                                                                                   |                                                          |      |             |                 |  |   |                |              
|Series A preferred stock (Note 8)                                                                                                      |                                                          |      |            |                 |  |   | 35,000,000     |              
|STOCKHOLDERS EQUITY (DEFICIT) (Note 9):                                                                                               |                                                          |      |             |                 |  |   |                |              
|Class A common stock, $.01 par value, 50
    shares authorized and issued in 2003; 3,000 shares authorized
    and 100 issued in 2002. |                                                          |      | 1           |                 |  |   | 1              |              
|Class B common stock, $.01 par value, 300
    shares authorized and issued                                                             |                                                          |      | 3           |                 |  |   |               |              
|Paid-in capital                                                                                                                        |                                                          |      | 474,547,248 |                 |  |   | 797,827,564    |              
|Retained deficit                                                                                                                       |                                                          |      | (19,248,646 | )               |  |   | (1,326,102,910 | )            
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total stockholders equity (deficit)                     |      |             | 455,298,606     |  |   |                | (528,275,345  | )
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              
|                                                                                                                                       | Total liabilities and stockholders equity
    (deficit) |      | $           | 1,625,007,959   |  |   | $              | 1,209,918,309 |  
|                                                                                                                                       |                                                          |      |             |                 |  |   |                |              

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

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |              |             | 
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ---------- | ----------------------- | ----------- | ------------ | ----------- | ----------------- | ----------- | - | -------------- | ------------ | ------------- | - | ------------ | ------------ | ----------- | 
|                                                                                    |                                                                                                                                   |                          |            |                        
|                                                                                    |                                                                                                                                   |                          |            | The Predecessor Company
|                                                                                    |                                                                                                                                   |                          |            |                        
|                                                                                    |                                                                                                                                   | For the period from      |            | For the period          |             |             
|                                                                                    |                                                                                                                                   | formation                |            | from                    |             | For the Year |             |                  
|                                                                                    |                                                                                                                                   | (June 23, 2003)          |            | January 1, 2003         |             | Ended        |             | For the Year     
|                                                                                    |                                                                                                                                   | through                  |            | to                      |             | December 31, |             | Ended            
|                                                                                    |                                                                                                                                   | December 31, 2003        |            | August 18, 2003         |             | 2002         |             | December 31, 2001
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                  
|OPERATING REVENUE:                                                                  |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    | Service revenue                                                                                                                   |                          | $          | 117,002,650             |             |              | $           | 195,787,153       |             |   | $              | 302,144,063  |               |   | $            | 266,507,216  |            
|                                                                                    | Roaming revenue                                                                                                                   |                          |            | 39,948,198              |             |              |             | 82,387,324        |             |   |                | 135,147,615  |               |   |              | 132,250,992  |            
|                                                                                    | Equipment and other revenue                                                                                                       |                          |            | 5,672,780               |             |              |             | 10,552,294        |             |   |                | 15,537,979   |               |   |              | 18,484,430   |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    |                                                                                                                                   | Total operating revenue  |            |                         | 162,623,628 |              |             |                   | 288,726,771 |   |                |              | 452,829,657   |   |              |              | 417,242,638 | 
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|OPERATING EXPENSES:                                                                 |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    | Cost of service (exclusive of items shown
    separately below)                                                                   |                          |            | 35,459,944              |             |              |             | 62,225,347        |             |   |                | 110,412,273  |               |   |              | 106,706,736  |            
|                                                                                    | Cost of equipment                                                                                                                 |                          |            | 15,104,107              |             |              |             | 23,618,299        |             |   |                | 34,205,796   |               |   |              | 37,182,246   |            
|                                                                                    | Marketing and selling                                                                                                             |                          |            | 21,016,906              |             |              |             | 31,180,136        |             |   |                | 57,623,167   |               |   |              | 56,462,163   |            
|                                                                                    | General and administrative                                                                                                        |                          |            | 31,210,131              |             |              |             | 44,434,982        |             |   |                | 70,290,928   |               |   |              | 60,944,109   |            
|                                                                                    | Impairment of goodwill (Note 5)                                                                                                   |                          |            |                        |             |              |             |                  |             |   |                | 800,893,860  |               |   |              |             |            
|                                                                                    | Depreciation and amortization                                                                                                     |                          |            | 28,647,386              |             |              |             | 43,590,974        |             |   |                | 66,745,545   |               |   |              | 182,636,954  |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    |                                                                                                                                   | Total operating expenses |            |                         | 131,438,474 |              |             |                   | 205,049,738 |   |                |              | 1,140,171,569 |   |              |              | 443,932,208 | 
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|OPERATING INCOME (EXPENSE)                                                          |                                                                                                                                   |                          | 31,185,154 |                         |             |              | 83,677,033  |                   |             |   | (687,341,912   | )            |               |   | (26,689,570  | )           
|OTHER (EXPENSE) INCOME:                                                             |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    | Interest expense                                                                                                                  |                          |            | (37,773,497             | )           |              |             | (78,136,350       | )           |   |                | (142,003,848 | )             |   |              | (165,456,826 | )          
|                                                                                    | Dividends on mandatorily redeemable preferred
    stock                                                                           |                          |            |                        |             |              |             | (703,442          | )           |   |                |             |               |   |              |             |            
|                                                                                    | Other (expense) income, net                                                                                                       |                          |            | (425,599                | )           |              |             | (538,070          | )           |   |                | 1,387,501    |               |   |              | 3,723,072    |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|(LOSS) INCOME BEFORE INCOME TAXES                                                   |                                                                                                                                   |                          | (7,013,942 | )                       |             |              | 4,299,171   |                   |             |   | (827,958,259   | )            |               |   | (188,423,324 | )           
|                                                                                    | Income tax benefit (expense)                                                                                                      |                          |            | 2,665,296               |             |              |             | (1,960,532        | )           |   |                | 14,383,305   |               |   |              | 52,199,794   |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|(LOSS) INCOME FROM CONTINUING OPERATIONS                                            |                                                                                                                                   |                          | (4,348,646 | )                       |             |              | 2,338,639   |                   |             |   | (813,574,954   | )            |               |   | (136,223,530 | )           
|DISCONTINUED OPERATIONS: (Note 3)                                                   |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    | Loss from discontinued operations, net of income
    tax benefit (expense) of $435,838 in 2002 and $(1,188,394)
    in 2001.      |                          |            |                        |             |              |             |                  |             |   |                | (653,909     | )             |   |              | (1,439,293   | )          
|                                                                                    | Gain from sale of discontinued operations, net of
    income tax expense of $50,282,976 for the year ended
    December 31, 2002. |                          |            |                        |             |              |             |                  |             |   |                | 13,472,110   |               |   |              |             |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|(LOSS) INCOME BEFORE CUMULATIVE EFFECT OF
    CHANGE IN ACCOUNTING PRINCIPLE        |                                                                                                                                   |                          | (4,348,646 | )                       |             |              | 2,338,639   |                   |             |   | (800,756,753   | )            |               |   | (137,662,823 | )           
|                                                                                    | Cumulative effect of change in accounting
    principle, net of income tax benefit of $187,760,000
    (Note 2)                   |                          |            |                        |             |              |             |                  |             |   |                | (281,640,000 | )             |   |              |             |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|(LOSS) INCOME BEFORE EXTRAORDINARY GAIN                                             |                                                                                                                                   |                          | (4,348,646 | )                       |             |              | 2,338,639   |                   |             |   | (1,082,396,753 | )            |               |   | (137,662,823 | )           
|                                                                                    | Extraordinary gain, net of income tax expense of
    $80,296,256 (Note 4)                                                         |                          |            |                        |             |              |             | 131,009,680       |             |   |                |             |               |   |              |             |            
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|NET (LOSS) INCOME                                                                   |                                                                                                                                   |                          | (4,348,646 | )                       |             |              | 133,348,319 |                   |             |   | (1,082,396,753 | )            |               |   | (137,662,823 | )           
|DIVIDENDS ON PREFERRED STOCK                                                        |                                                                                                                                   |                          |           |                         |             |              | (2,545,617  | )                 |             |   | (4,661,236     | )            |               |   | (2,138,710   | )           
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|NET (LOSS) INCOME APPLICABLE TO COMMON
    STOCKHOLDER                              |                                                                                                                                   | $                        | (4,348,646 | )                       |             | $            | 130,802,702 |                   |             | $ | (1,087,057,989 | )            |               | $ | (139,801,533 | )           
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|BASIC NET (LOSS) INCOME APPLICABLE TO COMMON
    STOCKHOLDER PER COMMON SHARE:      |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|                                                                                    | Continuing operations                                                                                                             |                          |            | (12,425                 | )           |              |             | 23,386            |             |   |                | (8,135,750   | )             |   |              | (1,362,235   | )          
|                                                                                    | Discontinued operations                                                                                                           |                          |            |                        |             |              |             |                  |             |   |                | 128,182      |               |   |              | (14,393      | )          
|                                                                                    | Cumulative effect of change in accounting
    principle                                                                           |                          |            |                        |             |              |             |                  |             |   |                | (2,816,400   | )             |   |              |             |            
|                                                                                    | Extraordinary gain                                                                                                                |                          |            |                        |             |              |             | 1,310,097         |             |   |                |             |               |   |              |             |            
|                                                                                    | Dividends on preferred stock                                                                                                      |                          |            |                        |             |              |             | (25,456           | )           |   |                | (46,612      | )             |   |              | (21,387      | )          
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|TOTAL BASIC NET (LOSS) INCOME APPLICABLE TO
    COMMON STOCKHOLDER PER COMMON SHARE |                                                                                                                                   | $                        | (12,425    | )                       |             | $            | 1,308,027   |                   |             | $ | (10,870,580    | )            |               | $ | (1,398,015   | )           
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             
|BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                    |                                                                                                                                   |                          | 350        |                         |             |              | 100         |                   |             |   | 100            |              |               |   | 100          |             
|                                                                                    |                                                                                                                                   |                          |            |                         |             |              |             |                   |             |   |                |              |               |   |              |             

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

41



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT)

The Predecessor Company

|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |                |             |  
|------------------ | ------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | - | ------------------------------ | ----------- | ------- | --- | ----------- | - | ------------- | - | ------------- | - | ---------------- | ----------- | ---------- | - | - | -------------- | -------------- | - | - | ----------- | ---------- | ----------- | - | ------------ | -------------- | ----------- | -
|                   |                                                                           |                                                                                 |   |                               
|                   |                                                                           |                                                                                 |   | Stockholders Equity (Deficit)
|                   |                                                                           |                                                                                 |   |                               
|                   |                                                                           |                                                                                 |   |                                |             |        
|                   |                                                                           |                                                                                 |   | Class A                        |             |         |     | Accumulated |   |              
|                   |                                                                           |                                                                                 |   | Common Stock                   |             |         |     | Other       |   | Total        
|                   |                                                                           | Comprehensive                                                                   |   |                                |             | Paid in |     | Retained    |   | Comprehensive |   | Stockholders
|                   |                                                                           | Income (Loss)                                                                   |   | Shares                         |             | Amount  |     | Capital     |   | Deficit       |   | Loss          |   | Equity (Deficit)
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                 
|DECEMBER 31, 2000. |                                                                           |                                                                                 |   |                                |             |         | 100 |             |   | $             | 1 |               |   | $                | 764,999,999 |            |   | $ | (99,243,388    | )              |   | $ |            |            |             | $ | 665,756,612  |               
|                   | Net loss                                                                  |                                                                                 | $ | (137,662,823                   | )           |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | (137,662,823   | ) |   |             |           |             |   |              | (137,662,823   | )          
|                   | Other comprehensive loss 
    SFAS 133 transition adjustment, net of tax |                                                                                 |   | (9,510,365                     | )           |         |     |            |   |               |   |              |   |                  |             |           |   |   |                |               |   |   |             | (9,510,365 | )           |   |              | (9,510,365     | )          
|                   |                                                                           | SFAS 133 transition adjustment reclassified into
    earnings, net of tax       |   |                                | 9,510,365   |         |     |             |  |               |   |               |  |                  |             |            |  |   |                |                |  |   |             |            | 9,510,365   |   |              |                | 9,510,365   |  
|                   |                                                                           | Change in fair value of hedge transactions, net
    of tax                      |   |                                | (14,219,250 | )       |     |             |  |               |   |               |  |                  |             |            |  |   |                |                |  |   |             |            | (14,219,250 | ) |              |                | (14,219,250 | )
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|                   | Total comprehensive loss                                                  |                                                                                 | $ | (151,882,073                   | )           |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |                |            
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|                   | Capital contribution                                                      |                                                                                 |   |                                |             |         |     |            |   |               |   |              |   |                  |             | 32,827,565 |   |   |                |               |   |   |             |           |             |   |              | 32,827,565     |            
|                   | Preferred stock dividends                                                 |                                                                                 |   |                                |             |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | (2,138,710     | ) |   |             |           |             |   |              | (2,138,710     | )          
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|DECEMBER 31, 2001. |                                                                           |                                                                                 |   |                                |             |         | 100 |             |   |               | 1 |               |   |                  | 797,827,564 |            |   |   | (239,044,921   | )              |   |   | (14,219,250 | )          |             |   | 544,563,394  |               
|                   | Net loss                                                                  |                                                                                 | $ | (1,082,396,753                 | )           |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | (1,082,396,753 | ) |   |             |           |             |   |              | (1,082,396,753 | )          
|                   |                                                                           | Amounts related to hedge transitions reclassified
    into earnings, net of tax |   |                                | 12,595,376  |         |     |             |  |               |   |               |  |                  |             |            |  |   |                |                |  |   |             |            | 12,595,376  |   |              |                | 12,595,376  |  
|                   |                                                                           | Ineffective hedge transition reclassified into
    earnings, net of tax         |   |                                | 643,751     |         |     |             |  |               |   |               |  |                  |             |            |  |   |                |                |  |   |             |            | 643,751     |   |              |                | 643,751     |  
|                   |                                                                           | Change in fair value of hedge transactions, net
    of tax                      |   |                                | 980,123     |         |     |             |  |               |   |               |  |                  |             |            |  |   |                |                |  |   |             |            | 980,123     |   |              |                | 980,123     |  
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|                   | Total comprehensive loss                                                  |                                                                                 | $ | (1,068,177,503                 | )           |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |                |            
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|                   | Preferred stock dividends                                                 |                                                                                 |   |                                |             |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | (4,661,236     | ) |   |             |           |             |   |              | (4,661,236     | )          
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|DECEMBER 31, 2002. |                                                                           |                                                                                 |   |                                |             |         | 100 |             |   |               | 1 |               |   |                  | 797,827,564 |            |   |   | (1,326,102,910 | )              |   |   |            |            |             |   | (528,275,345 | )             
|                   | Net income                                                                |                                                                                 | $ | 133,348,319                    |             |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | 133,348,319    |   |   |             |           |             |   |              | 133,348,319    |            
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|                   | Preferred stock dividends                                                 |                                                                                 |   |                                |             |         |     |            |   |               |   |              |   |                  |             |           |   |   |                | (2,545,617     | ) |   |             |           |             |   |              | (2,545,617     | )          
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               
|AUGUST 18, 2003.   |                                                                           |                                                                                 |   |                                |             |         | 100 |             |   | $             | 1 |               |   | $                | 797,827,564 |            |   | $ | (1,195,300,208 | )              |   | $ |            |            |             | $ | (397,472,643 | )             
|                   |                                                                           |                                                                                 |   |                                |             |         |     |             |   |               |   |               |   |                  |             |            |   |   |                |                |   |   |             |            |             |   |              |               

American Cellular Corporation

|                          |                                       |                      |    |              |  |         |   |          |  |               |     |         |  |        |   |   |  |   |             |             |  |   |             |             |   |   |             |             |  
|------------------------- | ------------------------------------- | -------------------- | -- | ------------ |  | ------- | - | -------- |  | ------------- | --- | ------- |  | ------ | - | - |  | - | ----------- | ----------- |  | - | ----------- | ----------- | - | - | ----------- | ----------- | -
|                          |                                       |                     
|                          |                                       | Stockholders Equity
|                          |                                       |                     
|                          |                                       |                      |    |              |  |        
|                          |                                       | Class A              |    | Class B      |  |        
|                          |                                       | Common Stock         |    | Common Stock |  |         |   | Total   
|                          |                                       |                      |    |              |  | Paid in |   | Retained |  | Stockholders
|                          |                                       | Shares               |    | Amount       |  | Shares  |   | Amount   |  | Capital       |     | Deficit |  | Equity
|                          |                                       |                      |    |              |  |         |   |          |  |               |     |         |  |       
|FORMATION (JUNE 23, 2003) |                                       |                      |   |              |  | $       |  |          |  |               |    |         |  | $      |  |   |  | $ |            |             |  | $ |            |             |   | $ |            |            
|                          | Capital contribution from acquisition |                      |    | 50           |  |         |   | 1        |  |               |     | 300     |  |        |   | 3 |  |   |             | 474,547,248 |  |   |             |            |   |   |             | 474,547,252 |  
|                          | Dividend to parent                    |                      |    |             |  |         |   |         |  |               |     |        |  |        |   |  |  |   |             |            |  |   |             | (14,900,000 | ) |   |             | (14,900,000 | )
|                          | Net loss                              |                      |    |             |  |         |   |         |  |               |     |        |  |        |   |  |  |   |             |            |  |   |             | (4,348,646  | ) |   |             | (4,348,646  | )
|                          |                                       |                      |    |              |  |         |   |          |  |               |     |         |  |        |   |   |  |   |             |             |  |   |             |             |   |   |             |            
|DECEMBER 31, 2003.        |                                       |                      | 50 |              |  | $       | 1 |          |  |               | 300 |         |  | $      | 3 |   |  | $ | 474,547,248 |             |  | $ | (19,248,646 | )           |   | $ | 455,298,606 |            
|                          |                                       |                      |    |              |  |         |   |          |  |               |     |         |  |        |   |   |  |   |             |             |  |   |             |             |   |   |             |            

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

42



---



##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |              |             |             |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------------------- | ----------------------- | ---------- | ----------------- | ---------- | ----------------- | ---------- | ----------- | ---------- | ------------ | ----------- | ------------ | ---------- | ------------ | ----------- | ----------- | -
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                        
|                                                                            |                                                                                                                                       |                                                                  |                                                         | The Predecessor Company
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                        
|                                                                            |                                                                                                                                       | For the period from                                              |                                                         | For the period          |            |                  
|                                                                            |                                                                                                                                       | formation                                                        |                                                         | from                    |            |                  
|                                                                            |                                                                                                                                       | (June 23, 2003)                                                  |                                                         | January 1, 2003         |            | For the Year      |            | For the Year     
|                                                                            |                                                                                                                                       | through                                                          |                                                         | to                      |            | Ended             |            | Ended            
|                                                                            |                                                                                                                                       | December 31, 2003                                                |                                                         | August 18, 2003         |            | December 31, 2002 |            | December 31, 2001
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            | Net (loss) income from continuing operations                                                                                          |                                                                  | $                                                       | (4,348,646              | )          |                   | $          | 2,338,639         |            |             | $          | (813,574,954 | )           |              | $          | (136,223,530 | )          
|                                                                            | Adjustments to reconcile net (loss) income
    from continuing operations to net cash provided by (used in)
    operating activities |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |              |            
|                                                                            |                                                                                                                                       | Depreciation and amortization                                    |                                                         |                         | 28,647,386 |                   |            |                   | 43,590,974 |             |            |              | 66,745,545  |              |            |              | 182,636,954 |            
|                                                                            |                                                                                                                                       | Amortization of bond premium and financing costs                 |                                                         |                         | 1,074,940  |                   |            |                   | 4,074,039  |             |            |              | 6,700,267   |              |            |              | 5,718,138   |            
|                                                                            |                                                                                                                                       | Deferred income taxes, net                                       |                                                         |                         | (2,363,671 | )                 |            |                   | 1,418,796  |             |            |              | (15,766,622 | )            |            |              | (58,021,420 | )          
|                                                                            |                                                                                                                                       | Noncash mandatorily redeemable preferred stock                   |                                                         |                         |           |                   |            |                   | 703,442    |             |            |              |            |              |            |              |            |            
|                                                                            |                                                                                                                                       | Cash used in operating activities of discontinued
    operations |                                                         |                         |           |                   |            |                   |           |             |            |              | (7,175,022  | )            |            |              |            |            
|                                                                            |                                                                                                                                       | Loss on ineffective hedge transaction                            |                                                         |                         |           |                   |            |                   |           |             |            |              | 1,072,919   |              |            |              |            |            
|                                                                            |                                                                                                                                       | Impairment of goodwill                                           |                                                         |                         |           |                   |            |                   |           |             |            |              | 800,893,860 |              |            |              |            |            
|                                                                            |                                                                                                                                       | Loss on disposition on assets, net                               |                                                         |                         |           |                   |            |                   |           |             |            |              | 18,463      |              |            |              | 481,208     |            
|                                                                            | Changes in current assets and liabilities                                                                                            |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |              |            
|                                                                            |                                                                                                                                       | Accounts receivable                                              |                                                         |                         | 11,002,840 |                   |            |                   | (6,052,315 | )           |            |              | 5,002,838   |              |            |              | 2,660,505   |            
|                                                                            |                                                                                                                                       | Inventory                                                        |                                                         |                         | (342,624   | )                 |            |                   | 913,720    |             |            |              | 3,685,826   |              |            |              | 182,739     |            
|                                                                            |                                                                                                                                       | Interest receivable                                              |                                                         |                         |           |                   |            |                   | 814,090    |             |            |              |            |              |            |              |            |            
|                                                                            |                                                                                                                                       | Prepaid expenses and other                                       |                                                         |                         | 865,755    |                   |            |                   | (551,559   | )           |            |              | 1,662,299   |              |            |              | (3,334,691  | )          
|                                                                            |                                                                                                                                       | Accounts payable                                                 |                                                         |                         | (6,111,848 | )                 |            |                   | (6,524,719 | )           |            |              | (3,145,151  | )            |            |              | (11,036,387 | )          
|                                                                            |                                                                                                                                       | Accrued expenses                                                 |                                                         |                         | 18,760,741 |                   |            |                   | (1,667,172 | )           |            |              | (26,145,000 | )            |            |              | 4,782,503   |            
|                                                                            |                                                                                                                                       | Deferred revenue and customer deposits                           |                                                         |                         | 1,274,951  |                   |            |                   | (168,108   | )           |            |              | (730,939    | )            |            |              | 2,297,022   |            
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            |                                                                                                                                       |                                                                  | Net cash provided by (used in) operating
    activities |                         |            | 48,459,824        |            |                   |            | 38,889,827  |            |              |             | 19,244,329   |            |              |             | (9,856,959  | )
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            | Capital expenditures                                                                                                                  |                                                                  |                                                         | (41,410,297             | )          |                   |            | (35,951,078       | )          |             |            | (48,798,472  | )           |              |            | (74,850,030  | )          
|                                                                            | Cash acquired from acquisition of American
    Cellular                                                                               |                                                                  |                                                         | 35,819,121              |            |                   |            |                  |            |             |            |             |             |              |            |             |            
|                                                                            | Change in receivable/payable-affiliates                                                                                               |                                                                  |                                                         | (17,422,076             | )          |                   |            | 9,738,668         |            |             |            | (1,278,034   | )           |              |            |             |            
|                                                                            | Proceeds from sale of assets                                                                                                          |                                                                  |                                                         |                        |            |                   |            | 14,409            |            |             |            |             |             |              |            |             |            
|                                                                            | Proceeds from sale of PCS licenses                                                                                                    |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | 5,000,000    |            
|                                                                            | Net proceeds from sale of discontinued operations                                                                                     |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            | 194,427,958  |             |              |            |             |            
|                                                                            | Receipt of funds held in escrow for contingencies
    on sold assets                                                                  |                                                                  |                                                         |                        |            |                   |            | 4,112,154         |            |             |            |             |             |              |            |             |            
|                                                                            | Change in receivable from discontinued operations                                                                                     |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | 11,454,868   |            
|                                                                            | Other investing activities                                                                                                            |                                                                  |                                                         |                        |            |                   |            | (80,431           | )          |             |            | 955,852      |             |              |            | 2,623,869    |            
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            |                                                                                                                                       |                                                                  | Net cash (used in) provided by investing
    activities |                         |            | (23,013,252       | )          |                   |            | (22,166,278 | )          |              |             | 145,307,304  |            |              |             | (55,771,293 | )
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            | Proceeds from long-term debt                                                                                                          |                                                                  |                                                         | 900,000,000             |            |                   |            |                  |            |             |            | 127,800,000  |             |              |            | 233,000,000  |            
|                                                                            | Repayments of long-term debt                                                                                                          |                                                                  |                                                         | (864,294,281            | )          |                   |            | (30,019,975       | )          |             |            | (347,131,227 | )           |              |            | (797,395,544 | )          
|                                                                            | Proceeds from senior subordinated notes                                                                                               |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | 693,020,500  |            
|                                                                            | Dividend to Parent                                                                                                                    |                                                                  |                                                         | (14,900,000             | )          |                   |            |                  |            |             |            |             |             |              |            |             |            
|                                                                            | Investment from Dobson Communications                                                                                                 |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | 35,000,000   |            
|                                                                            | Deferred financing costs                                                                                                              |                                                                  |                                                         | (18,830,624             | )          |                   |            |                  |            |             |            | (1,817,007   | )           |              |            | (19,920,432  | )          
|                                                                            | Repayments to affiliate for capital expenditures                                                                                      |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | (9,193,025   | )          
|                                                                            | Capital contribution                                                                                                                  |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | 16,413,782   |            
|                                                                            | Maturities of restricted investments                                                                                                  |                                                                  |                                                         | 83,600                  |            |                   |            | 33,250,000        |            |             |            | 66,500,000   |             |              |            | 38,976,389   |            
|                                                                            | Purchase of restricted investments                                                                                                    |                                                                  |                                                         |                        |            |                   |            |                  |            |             |            |             |             |              |            | (133,191,937 | )          
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            |                                                                                                                                       |                                                                  | Net cash provided by (used in) financing
    activities |                         |            | 2,058,695         |            |                   |            | 3,230,025   |            |              |             | (154,648,234 | )          |              |             | 56,709,733  |  
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                    |                                                                                                                                       |                                                                  | 27,505,267                                              |                         |            |                   | 19,953,574 |                   |            |             | 9,903,399  |              |             |              | (8,918,519 | )           
|CASH AND CASH EQUIVALENTS, beginning of period                              |                                                                                                                                       |                                                                  |                                                        |                         |            |                   | 15,865,547 |                   |            |             | 5,962,148  |              |             |              | 14,880,667 |             
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|CASH AND CASH EQUIVALENTS, end of period                                    |                                                                                                                                       | $                                                                | 27,505,267                                              |                         |            | $                 | 35,819,121 |                   |            | $           | 15,865,547 |              |             | $            | 5,962,148  |             
|                                                                            |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                          |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|Cash paid for                                                              |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            | Interest, net of amounts capitalized                                                                                                  |                                                                  | $                                                       | 7,460,123               |            |                   | $          | 58,981,927        |            |             | $          | 153,476,700  |             |              | $          | 154,662,660  |            
|                                                                            | Income taxes                                                                                                                          |                                                                  | $                                                       | 142,991                 |            |                   | $          | 689,581           |            |             | $          | 3,572,175    |             |              | $          | 1,965,633    |            
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                                                                                       |                                                                  |                                                         |                         |            |                   |            |                   |            |             |            |              |             |              |            |             
|                                                                            | Capital contribution of PCS licenses and certain
    other assets                                                                     |                                                                  | $                                                       |                        |            |                   | $          |                  |            |             | $          |             |             |              | $          | 16,413,783   |            
|                                                                            | Transfer of assets from affiliates                                                                                                    |                                                                  | $                                                       |                        |            |                   | $          | 227,453           |            |             | $          |             |             |              | $          |             |            

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

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

The following Notes relate to both American
Cellular (the Company) and the Predecessor Company
of American Cellular (the Predecessor Company). The
Predecessor Company was owned by a 50/50 joint venture
between AT&T Wireless and Dobson Communications, however, on
August 19, 2003, American Cellular was reorganized and
became a wholly-owned subsidiary of Dobson Communications, as
described below.

1. ORGANIZATION:

ACC Escrow Corp, a wholly-owned, indirect
subsidiary of Dobson Communications Corporation, was formed on
June 23, 2003, and began operations on August 8, 2003,
when it completed the sale of $900.0 million senior
subordinated notes, the proceeds of which were used in the
Companys restructuring. On August 19, 2003, ACC
Escrow Corp. was merged into the Company, when the Company
completed an exchange offer for its existing 9.5% senior
subordinated notes due 2009 (the existing notes).
This exchange offer resulted in the restructuring of the
Companys indebtedness and equity ownership. As part of the
restructuring, holders of $681.9 million of the
$700.0 million of notes tendered their notes. In exchange
for the tendered notes, the old noteholders received from Dobson
Communications 43.9 million shares of its Class A
common stock, 681,900 shares of its convertible preferred
stock with an aggregate liquidation preference of
$121.8 million, convertible into a maximum of
13.9 million shares of Dobson Communications
Class A common stock, and $48.7 million in cash. In
addition, Dobson Communications issued an additional
4,301 shares of its Series F convertible preferred
stock and 276,848 shares of its Class A common stock in
payment of certain fees. Upon consummation of the restructuring,
on August 19, 2003, the Company became a wholly-owned
subsidiary of Dobson Communications. However, as stated above,
to provide a more comparable view of the Companys
consolidated financial statements, the Company has provided its
consolidated financial statements and notes for the period from
formation (June 23, 2003) through December 31, 2003,
along with the consolidated financial statements and notes of
the Predecessor Company. The Company is a provider of rural and
suburban wireless telephone services in portions of Illinois,
Kansas, Kentucky, Michigan, Minnesota, New York, Ohio,
Oklahoma, Pennsylvania, West Virginia and Wisconsin.

American Cellular Corporation, the predecessor
company, was originally formed on February 26, 1998, to
acquire the operations of PriCellular Corporation. On
February 25, 2000, American Cellular Corporation and its
subsidiaries were acquired by ACC Acquisition LLC (the
Joint Venture), an equally owned joint venture between
Dobson Communications and AT&T Wireless.

Capital Resources and Growth

On August 8, 2003, the Company and ACC
Escrow Corp., a newly formed, wholly-owned, indirect subsidiary
of Dobson Communications, completed a private offering of
$900 million aggregate principal amount of 10% senior notes
due 2011. The proceeds were used to pay down the Predecessor
Companys debt. The Predecessor Company had substantial
indebtedness and debt service requirements and was subject to
significant financial restrictions and limitations. At June 30,
2002 and continuing through August 18, 2003, the
Predecessor Company was unable to satisfy all of the covenants
under the credit facility. The Predecessor Company was unable to
borrow under the credit facility to fund its ongoing operations,
planned capital expenditures or other permissible uses.

The Companys ability to manage future
growth will depend upon its ability to monitor operations,
control costs and maintain effective quality controls, all of
which will result in higher operating expenses. Any failure to
expand these areas and to implement and improve its systems,
procedures and controls in an efficient manner at a pace
consistent with the growth of the Companys business could
have a material adverse effect on the Companys business,
financial condition and results of operations.

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2. SIGNIFICANT ACCOUNTING
POLICIES:

Principles of Consolidation

The consolidated financial statements of the
Company and the Predecessor Company include the accounts of all
subsidiaries. For financial reporting purposes, the Company and
the Predecessor Company report 100% of revenue and expenses for
the markets for which they provide wireless services.
Significant intercompany accounts and transactions have been
eliminated.

Business Segment

The Company and the Predecessor Company operate
in one business segment pursuant to SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information.

Cash and Cash Equivalents

Cash and cash equivalents of $27.5 million
at December 31, 2003 and $15.9 million at December 31,
2002 consist of cash and short-term investments with original
maturities of three months or less.

Restricted Cash and Investments

Restricted cash and investments totaled
$4.2 million at December 31, 2003 and
$42.3 million at December 31, 2002, of which
$4.2 million at December 31, 2003 and
$8.2 million at December 31, 2002 consisted of an
escrow to cover any future contingencies related to the
Predecessor Companys sale of Tennessee 4 RSA to Verizon
Wireless during February 2002. In addition, $34.1 million
at December 31, 2002, was for interest pledge deposits held
in escrow for the senior subordinated notes. The interest pledge
deposits include the initial deposit of $133.2 million for
the $700.0 million senior subordinated notes, net of
interest earned and interest payments issued to bondholders. As
a result of having no further contingencies related to the
Verizon Wireless transaction, the Predecessor Company received
$4.1 million of the escrow reserve during February 2003 and
the Company received the remaining $4.2 million during
February 2004.

Allowance for Doubtful Accounts

Allowance for doubtful accounts of
$1.7 million at December 31, 2003 and
$1.0 million at December 31, 2002 are based on a
percentage of aging receivables. The Company and the Predecessor
Company review the allowance for doubtful accounts monthly by
evaluating balances for collectibility.

Inventory

The Company values its inventory using the
weighted average costing method of accounting.

Property, Plant and Equipment

Property, plant and equipment are recorded at
cost. Newly constructed wireless systems are added to property,
plant and equipment at cost, which includes contracted services,
direct labor, materials and overhead. Existing property, plant
and equipment purchased through acquisitions is recorded at its
fair value at the date of the purchase. Repairs, minor
replacements and maintenance are charged to operations as
incurred. The provisions for depreciation are provided using the
straight-line method based on the estimated useful lives of the
various classes of depreciable property. Depreciation expense
totaling $22.7 million was recorded for the period from
formation (June 23, 2003) through December 31, 2003,
$37.5 million was recorded for the period

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


from January 1, 2003 through August 18,
2003, $57.0 million was recorded for the year ended
December 31, 2002 and $57.3 million was recorded for
the year ended December 31, 2001.

Listed below are the major classes of property,
plant and equipment, their estimated useful lives, in years, and
their balances as of December 31, 2003 and 2002:

|                                            |                                    |        |      |                  |  |                  |         |         |  |   |          |         | 
|------------------------------------------- | ---------------------------------- | ------ | ---- | ---------------- |  | ---------------- | ------- | ------- |  | - | -------- | ------- | 
|                                            |                                    |        |      |                  |  | The Predecessor 
|                                            |                                    |        |      |                  |  | Company         
|                                            |                                    | Useful |      |                  |  |                 
|                                            |                                    | Life   |      | 2003             |  | 2002            
|                                            |                                    |        |      |                  |  |                 
|                                            |                                    |        |      | ($ in thousands) |  | ($ in thousands)
|Wireless systems and equipment              |                                    |        | 3-10 |                  |  | $                | 194,932 |         |  | $ | 299,259  |        
|Buildings and improvements                  |                                    |        | 5-40 |                  |  |                  | 12,001  |         |  |   | 20,466   |        
|Vehicles, aircraft and other work equipment |                                    |        | 3-10 |                  |  |                  | 144     |         |  |   | 1,624    |        
|Furniture and office equipment              |                                    |        | 5-10 |                  |  |                  | 5,977   |         |  |   | 16,122   |        
|Plant under construction                    |                                    |        |      |                  |  |                  | 13,849  |         |  |   | 8,490    |        
|Land                                        |                                    |        |      |                  |  |                  | 1,046   |         |  |   | 1,046    |        
|                                            |                                    |        |      |                  |  |                  |         |         |  |   |          |        
|                                            | Property, plant and equipment      |        |      |                  |  |                  |         | 227,949 |  |   |          | 347,007 | 
|Accumulated depreciation                    |                                    |        |      |                  |  |                  | (22,749 | )       |  |   | (161,072 | )      
|                                            |                                    |        |      |                  |  |                  |         |         |  |   |          |        
|                                            | Property, plant and equipment, net |        |      |                  |  |                  | $       | 205,200 |  |   | $        | 185,935 | 
|                                            |                                    |        |      |                  |  |                  |         |         |  |   |          |        

Impairment of Long-Lived Assets

The Company and the Predecessor Company evaluate
the carrying value of their indefinite life intangible assets in
accordance with SFAS No. 142, Goodwill and Other
Intangible Assets, which requires the Company to evaluate
the carrying value using its fair values, at least annually. To
complete this evaluation, the Company and the Predecessor
Company perform a comparison of the carrying amount of their
wireless license acquisition costs to the fair value of those
assets. For purposes of this comparison, it is the Company and
the Predecessor Companys policy to aggregate their
wireless license acquisition costs. The Company and the
Predecessor Company determine the fair value of their wireless
license acquisition costs based on their estimated future
discounted cash flows. For goodwill, there is a two-step
approach for assessing impairment. The first step requires a
comparison of the fair value of the entity to its carrying
amount, including goodwill. If the estimated fair value exceeds
its carrying amount, then the goodwill is not deemed to be
impaired. If the estimated fair value does not exceed its
carrying value, the second step of the impairment test is
performed, which measures the amount of impairment loss. The
Predecessor Company identified impairment relating to its
indefinite life intangible assets during 2002. See
Recently Issued Accounting Pronouncements below for
further details.

The Company continues to account for the
impairment of its definite life assets by comparing the carrying
value of the assets to the estimated undiscounted future cash
flows generated by those assets whenever an event or
circumstance indicates that the carrying value may not be
recoverable. If the carrying value of the asset exceeds the
estimated undiscounted future cash flows, then the company would
impair the carrying value for the excess amount above the fair
value.

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


Wireless License Acquisition Costs

Wireless license acquisition costs consist of
amounts paid to acquire FCC licenses to provide wireless
services. In accordance with SFAS No. 142, the Company and
the Predecessor Company test for the impairment of indefinite
life intangible assets at least annually and will only adjust
the carrying amount of these intangible assets upon an
impairment of the indefinite life intangible assets.

Goodwill

In accordance with SFAS No. 142, the Company
and the Predecessor Company test for the impairment of goodwill
at least annually and will only adjust the carrying amount of
goodwill upon an impairment of the goodwill.

Deferred Financing Costs

Deferred financing costs consist primarily of
fees incurred to secure long-term debt. Deferred financing costs
are being amortized over the eight-year term of the debt and
recorded as interest expense. Interest expense related to the
amortization of these costs of $0.8 million was recorded in
the period from formation (June 23, 2003) through
December 31, 2003, $3.7 million from January 1,
2003 through August 18, 2003, $6.0 million in 2002 and
$5.2 million in 2001. Based on the current expected term of
the Companys long-term debt, the estimated amortization of
deferred financing costs would be approximately
$2.4 million per year until the costs are fully amortized
in 2011.

Customer List

Customer list consists of amounts paid to acquire
wireless customer lists. Customer list acquisition costs are
being amortized on a straight-line basis over five years.
Amortization expense of $5.9 million was recorded in the
period from formation (June 23, 2003) through
December 31, 2003, $6.1 million from January 1,
2003 through August 18, 2003, $9.8 million was in
2002, and $9.6 million in 2001. Based on the remaining life
of the Companys customer list, the remaining balance of
$75.3 million will be amortized over the next five years at
approximately $16.0 million per year.

Derivative Instruments and Hedging
Activities

The Company and the Predecessor Company account
for derivatives and hedging activities in accordance with SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activity, which require the Company and the
Predecessor Company to record an asset or liability and a
transition adjustment, net of income tax benefit, to other
comprehensive income or loss for its derivative contracts. All
derivatives are recognized on the balance sheet at their fair
value. All of the Predecessor Companys derivatives that
qualify for hedge accounting treatment are cash flow
hedges. The Predecessor Company designates its cash flow hedge
derivatives as such on the date the derivative contract is
entered into. The Company and the Predecessor Company formally
document all relationships between hedging instruments and
hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transaction. The Company
also assesses, both at the hedges inception and on an
ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in cash
flows of hedged items.

The Predecessor Companys accumulated other
comprehensive loss, net of income tax benefit, was
$14.2 million as of December 31, 2001. As a result of
the expiration of the Predecessor Companys interest rate
swap agreement on June 4, 2002, there is no balance at
December 31, 2003 and 2002. During 2003 and

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


2001, there were no gains or losses reclassified
into earnings as a result of the discontinuance of hedge
accounting treatment for any of the Companys derivatives.
See Note 4 for further discussion of hedge accounting.

By using derivative instruments to hedge
exposures to changes in commodity prices and exchange rates, the
Company and the Predecessor Company expose themselves to credit
risk and market risk. Credit risk is the failure of the
counterparty to perform under the terms of the derivative
contract. To mitigate this risk, the hedging instruments are
usually placed with counterparties that the Company and the
Predecessor Company believe are minimal credit risks. It is the
Company and the Predecessor Companys policy to only enter
into derivative contracts with investment grade rated
counterparties deemed by management to be competent and
competitive market makers.

Revenue Recognition

The Company and the Predecessor Company recognize
service revenue over the period it is earned. The cost of
providing service is recognized as incurred. Airtime and toll
revenue are billed in arrears. The Company and the Predecessor
Company accrued estimated unbilled revenue for services provided
of $2.5 million as of December 31, 2003 and
$3.0 million as of December 31, 2002, which is
included in accounts receivable in the accompanying consolidated
balance sheets. Monthly access charges are billed in advance and
are reflected as deferred revenue on the accompanying
consolidated balance sheets. Equipment revenue is recognized
when the equipment is delivered to the customer. Subscriber
acquisition costs (primarily commissions and losses on equipment
sales) are expensed as incurred.

Advertising Costs

Advertising costs are expensed as incurred and
are included as marketing and selling expenses in the
accompanying consolidated statements of operations.

Income Taxes

The Company is included in a consolidated income
tax return with its parent, Dobson Communications, while the
Predecessor Company filed its own consolidated income tax
return. Income taxes are allocated among the various entities
included in the consolidated tax return, as agreed, based on the
ratio of each entitys taxable income (loss) to
consolidated taxable income (loss). For financial reporting
purposes, the Company calculates its provision for income taxes
on a stand-alone basis. Deferred income taxes reflect the
estimated future tax effects of differences between financial
statement and tax bases of assets and liabilities at year-end.
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.

Disposal of Long-Lived Assets

The Company and the Predecessor Company account
for the disposal of long-lived assets in accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The discontinued operations, described
in Note 3, are reflected in the financial statements as
Loss from Discontinued Operations.

48



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)

Earnings Per Share

Basic earnings per common share is computed by
the weighted average number of shares of common stock
outstanding during the year. There were no potentially dilutive
securities outstanding during 2003, 2002 and 2001.

Use of Estimates

The preparation of these consolidated financial
statements in conformity with accounting principles generally
accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes.
Significant items subject to such estimates and assumptions
include the carrying amount of property, plant and equipment;
valuation allowances for receivables and inventories; assets and
obligations related to employee benefits; and obligations
related to acquired and sold properties. Actual results could
differ from those estimates.

Significant Concentrations

In connection with providing wireless services to
customers of other wireless carriers, the Company has
contractual agreements with those carriers, which provide for
agreed-upon billing rates between the parties. The percent of
the Companys roaming revenue earned from two wireless
carriers was 76% for the combined year ended December 31,
2003, 67% for the year ended December 31, 2002 and 51% for
the year ended December 31, 2001.

Reclassifications

Certain reclassifications have been made to the
previously presented 2002 and 2001 balances to conform them to
the current presentation.

Recently Issued Accounting
Pronouncements

In July 2001, the FASB issued SFAS No. 141,
Business Combinations and No. 142,
Goodwill and Other Intangible Assets. These
standards prohibit the application of the pooling-of-interests
method of accounting for business combinations effective
June 30, 2001 and require companies to cease the
amortization of existing goodwill and intangible assets with
indefinite lives effective January 1, 2002. As a result of
the adoption of SFAS No. 142, the Predecessor Company
reassessed the useful lives of it intangible assets. A
significant portion of its intangible assets is classified as
Wireless license acquisition costs, which represents
the Predecessor Companys costs associated with acquiring
its FCC licenses. These licenses allow the Company and the
Predecessor Company to provide wireless services by giving the
Company and the Predecessor Company the exclusive right to
utilize certain radio frequency spectrum. Although the FCC
licenses are issued for only a fixed time, generally ten years,
these licenses are renewed by the FCC on a routine basis and for
a nominal fee. In addition, the Company and the Predecessor
Company have determined that there are no legal, regulatory,
contractual, competitive, economic or other factors that limit
the useful life of these FCC licenses. As a result, the Company
and the Predecessor Companys wireless license acquisition
costs are treated as indefinite life intangible assets.
Therefore, upon implementing SFAS No. 142 in its entirety
on January 1, 2002, the Predecessor Company ceased the
amortization of both goodwill and wireless license acquisition
costs and the Company now tests for impairment of goodwill and
wireless license acquisition costs at least annually and only
adjusts the carrying amount of these intangible assets upon an
impairment of the goodwill or wireless license acquisition costs.

49



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)

The Company also determines on an annual basis
whether facts and circumstances continue to support an
indefinite useful life. For the year ended December 31,
2001, the Predecessor Company recorded $58.3 million of
amortization expense related to its goodwill and
$34.5 million of amortization expense, net of income tax
benefit, related to its wireless license acquisition costs.
Without this amortization, the Predecessor Companys 2001
operating results would have been:

|                                                               |  |                        |          |  
|-------------------------------------------------------------- |  | ---------------------- | -------- | -
|                                                               |  | The Predecessor       
|                                                               |  | Company               
|                                                               |  |                       
|                                                               |  | 2001                  
|                                                               |  |                       
|                                                               |  | ($ in thousands except
|                                                               |  | per share data)       
|Net loss                                                       |  | $                      | (44,858  | )
|Net loss applicable to common stockholder                      |  |                        | (46,997  | )
|Net loss applicable to common stockholder per
    common share |  | $                      | (469,966 | )

In accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, the Predecessor
Companys policy was to review the carrying value of
long-lived assets and certain identifiable intangibles whenever
events or changes in circumstances indicate that the carrying
value may not be recoverable. If such circumstances were deemed
to exist, the carrying value of the asset would be compared to
the estimated undiscounted future cash flows generated by the
asset. The Companys definite life assets continue to be
amortized over their estimated useful lives and subject to the
same impairment criteria. As a result of fully implementing SFAS
No. 142 on January 1, 2002, the Company and the
Predecessor Company are required to evaluate the carrying value
of its indefinite life intangible assets using their fair
values, at least annually. If the carrying amount of the
intangible asset exceeds its fair value, an impairment loss
shall be recognized in an amount equal to that excess.

Upon implementation of SFAS No. 142 on
January 1, 2002, the Predecessor Company first performed a
comparison of the carrying amount of its wireless license
acquisition costs to the fair value of those assets. For
purposes of this comparison, it was the Predecessor
Companys policy and continues to be the Companys
policy to aggregate its wireless license acquisition costs. The
Predecessor Company determined the fair value of its wireless
license acquisition costs based on their estimated future
discounted cash flows. Based on the comparison, the Predecessor
Company determined that the carrying amount of its wireless
license acquisition costs exceeded their estimated fair value.
As a result, the Predecessor Company recorded a charge in the
first quarter of 2002, net of income tax benefit, of
$281.6 million to reflect the write-down of its wireless
license acquisition costs to their fair value. The Predecessor
Company then assessed the carrying amount of its goodwill for
possible impairment. For goodwill, there is a two-step approach
for assessing impairment. The first step requires a comparison
of the fair value of an entity to its carrying amount, including
goodwill. The Predecessor Companys fair value was
determined based on estimated future discounted cash flows. It
was determined that the estimated fair value of the Predecessor
Company exceeded its carrying amount and thus, its goodwill was
not deemed to be impaired. Since the Predecessor Companys
goodwill was not deemed to be impaired as of January 1,
2002, the second step of the impairment test, which is used to
measure the amount of impairment loss was not required to be
completed upon implementation of SFAS No. 142. See
Note 5 below.

In October 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This statement replaces SFAS
No. 121. However, it maintains the fundamental provisions
of SFAS No. 121 for recognition and measurement of the
impairment of long-lived assets to be held and used and for
measurement of long-lived assets to be disposed of by sale. This
statement applies to all long-lived

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)

assets, including discontinued operations, and
replaces the provisions of Accounting Principles Board, or APB,
Opinion No. 30, Reporting the Results of Operations
 Reporting the Effects of Disposal of a Segment of a
Business, for the disposal of segments of a business. This
statement requires that those long-lived assets be measured at
the lower of carrying amount or fair value less cost to sell.
During the fourth quarter 2001, the Predecessor Company entered
into a definitive agreement to sell Tennessee 4 RSA. As a result
of this sale, the Predecessor Company elected to early adopt
this standard during the fourth quarter 2001, effective
January 1, 2001 to properly reflect the operations, assets
and liabilities of Tennessee 4 RSA as discontinued operations in
the consolidated financial statements. Tennessee 4 RSA was sold
to Verizon Wireless on February 8, 2002 and proceeds were
used to pay down long-term debt.

In May, 2003, the FASB issued SFAS No. 150
Accounting for Certain Financial Instruments with
Characteristics of Liabilities and Equity. This statement
was effective for interim periods beginning after June 15,
2003 and required that mandatorily redeemable preferred stock be
classified as a liability and any related accretion of discount
and accrual of dividends be charged to an entitys
statement of operations. Prior to June 15, 2003, the
charges related to the mandatorily redeemable preferred stock
were not reflected in net (loss) income, but were reflected
in determining net (loss) income applicable to common
stockholder. At August 18, 2003, the carrying value of the
Predecessor Companys mandatorily redeemable preferred
stock was $35.0 million. The related dividends that would have
been reflected as interest expense were $2.5 million for
the six months ended June 30, 2003. Subsequent to the
adoption of SFAS No. 150 for the period from July 1,
2003 through August 18, 2003, the Predecessor Company has
reflected $0.7 million of its accrued dividends to its net
(loss) income. Since formation, the Company has not had any
mandatorily redeemable preferred stock outstanding.

The FASBs Emerging Issues Task Force issued
EITF 00-21: Accounting for Revenue Arrangements with
Multiple Deliverables, to address certain revenue
recognition issues. The guidance provided from EITF 00-21
addresses both the timing and classification in accounting for
different earnings processes. The Company has adopted
EITF 00-21 with no material impact on its financial
condition or operations.

3. DISCONTINUED OPERATIONS:

On February 8, 2002, the Predecessor Company
completed the sale of Tennessee 4 RSA for a total purchase
price of $202.0 million to Verizon Wireless. Proceeds from
this transaction were primarily used to pay down bank debt. The
Tennessee 4 RSA covered a total population of approximately
290,800 and had a subscriber base of approximately 24,900. As a
result of this sale, the results of operations for Tennessee 4
RSA during the periods presented are included in the Predecessor
Companys consolidated financial statements as discontinued
operations.

The consolidated financial statements have been
restated for all periods presented to reflect the Tennessee 4
RSA operations as discontinued operations. The net loss from
discontinued operations was

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



3. DISCONTINUED OPERATIONS:
(Continued)


classified on the consolidated statement of
operations as (Loss) income from discontinued
operations. Summarized results of discontinued operations
are as follows:

|                                  |  |                         |        |              |  |   |        |  
|--------------------------------- |  | ----------------------- | ------ | ------------ |  | - | ------ | -
|                                  |  |                        
|                                  |  | The Predecessor Company
|                                  |  |                        
|                                  |  | 2002                    |        | 2001        
|                                  |  |                         |        |             
|                                  |  | For the Period from     |        | For the     
|                                  |  | January 1, 2002         |        | Year Ended  
|                                  |  | through                 |        | December 31,
|                                  |  | Disposition             |        | 2001        
|                                  |  |                         |        |             
|                                  |  |                        
|                                  |  | ($ in thousands)       
|Operating revenue                 |  | $                       | 2,319  |              |  | $ | 30,976 |  
|Loss before income taxes          |  |                         | (1,090 | )            |  |   | (251   | )
|Income tax benefit (expense)      |  |                         | 436    |              |  |   | (1,188 | )
|Loss from discontinued operations |  |                         | (654   | )            |  |   | (1,439 | )

The long-term debt of the Predecessor Company was
at the consolidated level, and was not reflected by each
individual market. Thus, the Predecessor Company had allocated a
portion of interest expense to the discontinued operations based
on Tennessee 4 RSAs pro rata population coverage, to
properly reflect the interest that was incurred to finance the
Tennessee 4 RSA operations. The interest expense allocated
to these operations was $1.0 million for the period from
January 1, 2002 through disposition (February 8, 2002)
and $9.6 million for the year ended December 31, 2001.

The Predecessor Company completed the sale of
Tennessee 4 RSA on February 8, 2002, and recorded operating
losses totaling $0.7 million incurred through
February 8, 2002, and the related gain on the sale totaling
$13.5 million, net of tax expense.

4. LONG-TERM DEBT:

The Company and the Predecessor Companys
long-term debt as of December 31, 2003 and 2002, consisted
of the following:

|                               |                      |                  |         |                  |  |   |           |           | 
|------------------------------ | -------------------- | ---------------- | ------- | ---------------- |  | - | --------- | --------- | 
|                               |                      |                  |         | The Predecessor 
|                               |                      |                  |         | Company         
|                               |                      |                  |         |                 
|                               |                      | 2003             |         | 2002            
|                               |                      |                  |         |                 
|                               |                      | ($ in thousands) |         | ($ in thousands)
|Credit facility                |                      | $                |        |                  |  | $ | 894,273   |          
|9.5% Senior Subordinated Notes |                      |                  | 12,851  |                  |  |   | 694,236   |          
|10.0% Senior Notes             |                      |                  | 900,000 |                  |  |   |          |          
|                               |                      |                  |         |                  |  |   |           |          
|                               | Total debt           |                  |         | 912,851          |  |   |           | 1,588,509 | 
|Less-current maturities        |                      |                  |        |                  |  |   | 1,588,509 |          
|                               |                      |                  |         |                  |  |   |           |          
|                               | Total long-term debt |                  | $       | 912,851          |  |   | $         |          | 
|                               |                      |                  |         |                  |  |   |           |          

The Companys Senior
Notes

On August 8, 2003, ACC Escrow Corp.
completed the sale of $900.0 million aggregate principal
amount of 10% senior subordinated notes due 2011. The notes were
issued at par and bear interest at an annual rate of 10.0%.
Interest on the notes is payable semi-annually in arrears on
February 1 and August 1, commencing February 1,
2004. The Company may, at its option, redeem, with a premium
that begins at 110% and declines

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



4. LONG-TERM DEBT: (Continued)


to 100%, for some or all of the notes at any time
on or after August 1, 2007. Prior to August 1, 2006,
the Company may, at its option, use the proceeds of certain
equity offerings to redeem at a premium of 110%, a portion of
the outstanding notes as long as at least $600.0 million in
aggregate principal amounts of the notes remain outstanding
immediately after the redemption. The indenture imposes a number
of restrictive covenants that, among other things, limit the
Companys ability to incur additional indebtedness, make
restricted payments, sell assets, create or incur liens, places
restrictions on distributions and other payments, merge or
consolidate with or transfer substantial assets to another
entity, engage in transactions with related persons or engage in
any business other than permitted businesses.

Scheduled Future Payments

The Companys long-term debt does not begin
to come due until 2008.

The Predecessor Companys Senior
Subordinated Notes and Credit Facility

On February 25, 2000, the Predecessor
Company obtained a $1.75 billion credit facility to retire
existing debt and complete the acquisition of the Predecessor
Company by the Joint Venture. This credit facility included a
$300.0 million revolving credit facility and
$1.45 billion of term loan facilities. On March 2,
2001, the Predecessor Company and its lenders agreed to an
amendment to the credit facility. This amendment became
effective on March 14, 2001, when the Predecessor Company
permanently repaid $200.0 million of the term loans. The
Predecessor Company used proceeds from the issuance of its
$450.0 million senior subordinated notes due 2009, to
reduce the credit facility to $1.55 billion. On
May 31, 2001, the Predecessor Company and its lenders
agreed to a second amendment to the credit facility. This
amendment became effective on June 4, 2001, when the
Predecessor Company permanently repaid $201.3 million of
the term notes under the credit facility with proceeds from the
issuance of an additional $250.0 million senior
subordinated notes due 2009, which reduced the credit facility
to $1.34 billion. On September 27, 2001, the
Predecessor Company and its lenders agreed to a third amendment
of the credit facility, which modified certain financial
covenants (as described below). In addition to the Predecessor
Companys financial covenants, the Predecessor Company was
required to make prepayments of proceeds received from
significant asset sales, new borrowings and a portion of excess
cash flow. Therefore, when the Predecessor Company completed the
sale of Tennessee 4 RSA to Verizon Wireless for a total purchase
price of $202.0 million during February 2002, the
Predecessor Company permanently prepaid approximately
$190.0 million of its credit facility. The maximum
availability of the credit facility was limited by restrictions,
such as certain financial ratios. As of August 18, 2003,
the Predecessor Company had outstanding borrowings under the
credit facility of $864.3 million, with no additional
amounts available for future borrowings.

The Predecessor Companys credit facility
imposed a number of restrictive covenants that, among other
things, limited the Predecessor Companys ability to incur
additional indebtedness, create liens and pay dividends. In
addition, the Predecessor Company was required to maintain
certain financial ratios, including, but not limited to:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | a ratio of senior indebtedness to operating cash
    flow of 5.75 to 1 at August, 2003, decreasing over time to 2.50
    to 1;
|
| |  | a ratio of total indebtedness to operating cash
    flow of 7.50 to 1 at August, 2003, decreasing over time to 4.00
    to 1; 
|
| |  | a ratio of operating cash flow to debt service
    requirements of 1.20 to 1 at August, 2003, and thereafter;                 

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



4. LONG-TERM DEBT: (Continued)




| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | a ratio of operating cash flow to interest
    expense requirement of 1.80 to 1 at August, 2003, increasing
    over time to 2.50 to 1; and   
|
| |  | a ratio of operating cash flow minus capital
    expenditures to the sum of debt service requirements and cash
    distributions of 1.00 to 1.

Through September 2002, interest on the revolving
credit facility and the term loans was variable and was based on
a prime rate or a LIBOR formula. As a result of the Predecessor
Companys non-compliance with a financial covenant
contained in the credit facility, beginning in October 2002, all
borrowings under the credit facility were only available based
on prime rate. The weighted average interest rate for the eight
months ended August 2003 was 5.7%, and interest rates have
ranged in total between 4.4% and 10.0% since inception. This
credit facility was collateralized by substantially all of the
assets of the Predecessor Company.

The Predecessor Companys credit facility
included a financial covenant requiring the Predecessor Company
to not exceed a total debt leverage ratio of 7.50 to 1.00 in the
second quarter of 2003. At June 30, 2002 and continuing
through August 2003, the Predecessor Company failed to comply
with this covenant. The lenders had the right, but not the
obligation, to accelerate the repayment of the entire amount
outstanding under the credit facility. Acceleration under the
credit facility would have allowed the holders of the senior
subordinated notes to declare the principal and interest of the
senior subordinated notes immediately due and payable. The
Predecessor Company would have then been required to either
refinance the debt or repay the amounts due. No such
acceleration occurred. On June 30, 2002 and continuing
through August 2003, the Predecessor Company classified all of
its long-term debt as current. Until such non-compliance was
resolved, there continued to be substantial doubt about the
Predecessor Companys ability to continue as a going
concern, as expressed in the independent auditors reports
on the Predecessor Companys 2002 and 2001 financial
statements. Also as a result of the Predecessor Companys
non-compliance, beginning in October 2002, all borrowings under
its credit facility were only available based on prime rate,
which increased the Predecessor Companys borrowing rate.
Upon consummation of the restructuring, as discussed in
Note 1, the Predecessor Company repaid all amounts
outstanding under this credit facility.

As a result of acquiring $681.9 million of
the $700.0 million of senior subordinated notes for a value
totaling $470.6 million, the Predecessor Company recognized
an extraordinary gain of $131.0 million, net of tax for the
period from July 1, 2003 through August 18, 2003.

During 2001, the Predecessor Company sold, in two
transactions, $700.0 million senior subordinated notes due 2009.
These notes were sold at a discount of $6.9 million. These
notes bear interest at an annual rate of 9.5%. The discount will
be amortized over the life of the notes. As described above
$681.9 million of the $700.0 million senior
subordinated notes have been retired. As disclosed above, the
credit facility and substantially all of the senior subordinated
notes have been retired as a part of the restructuring plan.

Restricted cash and investments totaling
$34.1 million as of December 31, 2002, consisted of
the remaining balance of interest pledge deposits for the senior
subordinated notes. The interest pledge deposits included the
initial deposit of $133.2 million for the
$700.0 million senior subordinated notes, net of interest
earned and payments issued to bondholders.

Interest Rate Hedges

Through September 2002, the Predecessor Company
paid interest on its bank credit facility at a variable factor,
based on LIBOR or prime rate. As a result of the Predecessor
Companys non-compliance, beginning in October 2002, all
borrowings under its credit facility were only available based
on prime rate. The

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



4. LONG-TERM DEBT: (Continued)


Company, from time-to-time, may enter into
derivative contracts to reduce exposure against rising interest
rates.

The Company and the Predecessor Company account
for derivative and hedging activities in accordance with SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activity. Therefore, the Predecessor Company began
recording a liability and a transition adjustment, net of income
tax benefit, to other comprehensive loss during 2001 in
connection with these derivative contracts. The Predecessor
Companys accumulated other comprehensive loss, net of
income tax benefit, was $14.2 million as of
December 31, 2001. As a result of the expiration of the
Predecessor Companys interest rate swap agreement on
June 4, 2002, there is no balance at December 31, 2002
or 2003.

In accordance with SFAS No. 133, the Company
and the Predecessor Company periodically assesses the
effectiveness of their hedge transactions. During February 2002,
the Predecessor Company used a portion of the proceeds from the
sale of the Tennessee 4 RSA to pay down bank debt. As a result,
the Predecessor Company determined that one of its hedge
transactions totaling $125.0 million was ineffective, thus,
reducing the total derivative contracts to $900.0 million.
The Predecessor Company recorded a loss of $1.1 million
representing the fair value of this transaction for the year
ended December 31, 2002, which is reflected in other income
in the accompanying statement of operations.

5. GOODWILL IMPAIRMENT:

Based on factors and circumstances impacting the
Predecessor Company and the business climate in which it
operates, as of June 30, 2002, the Predecessor Company
determined that it was necessary to re-evaluate the carrying
value of its goodwill and indefinite life intangible assets in
accordance with SFAS No. 142. The legal factors include the
non-compliance with the Predecessor Companys total
leverage ratio covenant in its senior credit facility, which
gave the Predecessor Companys lenders the right to
accelerate the repayment of the entire amount outstanding under
the credit facility. In addition, the Predecessor Companys
business climate was impacted due to the fact that the rural
wireless industry had continued to experience a significant
deterioration in public equity valuations during the second
quarter of 2002. As a result of the re-evaluation of the
Predecessor Companys wireless license acquisition costs
and goodwill, the Predecessor Company concluded that the fair
value of its wireless license acquisition costs, as determined
upon implementation of SFAS No. 142, had not changed and
deemed that there was no further impairment of these assets. In
performing the impairment test on its goodwill, the Predecessor
Company concluded that the overall assumptions used in first
quarter 2002 were still valid with the exception of the
risk-based discount factor and enterprise valuations. With the
revised assumptions at June 30, 2002, the Predecessor
Company determined that its carrying value of its goodwill
exceeded its fair value. In accordance with SFAS 142, the
Predecessor Company proceeded with determining the implied fair
value of its goodwill and based on a comparison of the implied
fair value of its goodwill to its carrying amount, the
Predecessor Company recorded an impairment loss totaling
$377.0 million.

In addition, during fourth quarter 2002, the
Predecessor Company continued to have factors impacting its
business for which a re-evaluation was necessary. The
Predecessor Company continued to not be in compliance with its
total leverage ratio covenant on its senior credit facility,
which had given its lenders the right to accelerate the
repayment of the entire amount outstanding under its senior
credit facility. Based on these discussions and other factors,
including an increase in a risk-based discount factor, the
Predecessor Company determined that its goodwill continued to be
impaired based on current enterprise valuations. Therefore, the
Predecessor Company recorded an additional impairment loss of
$423.9 million at Decem-

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. GOODWILL IMPAIRMENT:
(Continued)


ber 31, 2002, bringing its total impairment
loss on goodwill to $800.9 million for the year ended
December 31, 2002.

6. ACQUISITION BY DOBSON
COMMUNICATIONS:

On August 19, 2003, as described above, the
Company was a party to the restructuring of the Companys
indebtedness and equity ownership. Upon consummation of the
restructuring, the Company became a wholly-owned, subsidiary of
Dobson Communications.

The purchase price of the Company by Dobson
Communications and the allocation of the acquired assets and
assumed liabilities for the Company are as follows:

|                                                              |                                                                  |                                               |   |       |         | 
|------------------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------- | - | ----- | ------- | 
|                                                              |                                                                  | ($ in million, except share price)           
|                                                              |                                                                  |                                              
|Calculation and preliminary allocation of
    purchase price: |                                                                  |                                               |   |      
|                                                              | Share of Dobson common stock issue                               |                                               |   | 44.2  |        
|                                                              | Dobson stock price at acquisition                                |                                               | $ | 6.84  |        
|                                                              |                                                                  |                                               |   |      
|                                                              | Fair value of common stock issued                                |                                               | $ | 302.0 |        
|                                                              | Plus Fair value of Dobson convertible preferred
    stock issued |                                               |   | 122.5 |        
|                                                              | Plus cash paid to the Companys noteholders                      |                                               |   | 50.0  |        
|                                                              |                                                                  |                                               |   |      
|                                                              |                                                                  | Total purchase price                          |   |       | 474.5   | 
|Plus fair value of liabilities assumed by Dobson:             |                                                                  |                                               |   |      
|                                                              | Current liabilities                                              |                                               |   | 74.8  |        
|                                                              | Long-term debt                                                   |                                               |   | 912.6 |        
|                                                              | Other non-current liabilities                                    |                                               |   | 1.8   |        
|                                                              | Deferred income taxes                                            |                                               |   | 168.0 |        
|                                                              |                                                                  |                                               |   |      
|                                                              |                                                                  | Total purchase price plus liabilities assumed |   | $     | 1,631.7 | 
|                                                              |                                                                  |                                               |   |      
|Plus fair value of assets acquired by Dobson:                 |                                                                  |                                               |   |      
|                                                              | Current assets                                                   |                                               |   | 104.8 |        
|                                                              | Property, plant and equipment                                    |                                               |   | 186.5 |        
|                                                              | Wireless licenses                                                |                                               |   | 669.2 |        
|                                                              | Customer lists                                                   |                                               |   | 81.1  |        
|                                                              | Deferred financing costs                                         |                                               |   | 19.0  |        
|                                                              | Other non-current assets                                         |                                               |   | 0.6   |        
|                                                              | Goodwill (none deductible for income taxes)                      |                                               |   | 570.5 |        
|                                                              |                                                                  |                                               |   |      
|                                                              |                                                                  | Total fair value of assets acquired           |   | $     | 1,631.7 | 
|                                                              |                                                                  |                                               |   |      

The Companys remaining equity interest was
acquired by Dobson Communications to continue the combined
strategy of owning rural and suburban wireless telecommunication
service areas. Dobson Communications previously managed the
operations of the Company under an arrangement with its joint
venture partner.

Prior to the restructuring, the Company had net
operating loss, or NOL, carryforwards of approximately
$320.0 million. The restructuring transactions resulted in
the reduction of those NOL carryforwards by approximately
$200.0 million. After the restructuring, approximately
$120.0 million of NOL carryforwards remained available to
the Company. However, the restructuring also resulted in an
ownership change within the meaning of the Internal Revenue Code
Section 382 and the regulations thereunder. This ownership
change, limits the amount of previously generated NOL
carryforwards that the Company can utilize to offset

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



6. ACQUISITION BY DOBSON COMMUNICATIONS:
(Continued)


future taxable income. The Company has reviewed
the need for a valuation allowance against these NOL
carryforwards. Based on a review of taxable income, history and
trends, forecasted taxable income, expiration of carryforwards
and limitations on the annual use of the carryforwards, the
Company has not provided a valuation allowance for the NOL
carryforwards because management believes that it is more likely
than not that all of the NOL carryforwards of the Company will
be realized prior to their expiration.

7. LEASES, COMMITMENTS AND
CONTINGENCIES:

Leases

The Company and the Predecessor Company has
numerous operating leases; these leases are primarily for their
retail stores, cell site towers and their locations, and
vehicles. Future minimum lease payments required under these
operating leases having an initial or remaining noncancellable
lease term in excess of one year at December 31, 2003, are
as follows:

|                    |  |                  |        | 
|------------------- |  | ---------------- | ------ | 
|                    |  | ($ in thousands)
|                    |  |                 
|2004                |  | $                | 12,093 | 
|2005                |  |                  | 10,168 | 
|2006                |  |                  | 7,925  | 
|2007                |  |                  | 4,862  | 
|2008                |  |                  | 3,133  | 
|2009 and thereafter |  |                  | 6,284  | 

Lease expense under the above leases was
$5.7 million for the period from formation (June 23,
2003) through December 31, 2003, $9.4 million for the
period from January 1, 2003 through August 18, 2003,
$14.2 million for December 31, 2002 and
$11.0 million for the year ended December 31, 2001.

Commitments

The Company and the Predecessor Company were
parties to an equipment supply agreement with Nortel Networks
Inc., in which the Company and the Predecessor Company had
agreed to purchase approximately $49.5 million of cell site
and switching equipment between November 16, 2001 and
July 15, 2005. As of December 31, 2003, the Company
has fulfilled this contractual commitment.

Contingencies

The Company is party to various other legal
actions arising in the normal course of business. None of the
actions are believed by management to involve amounts that would
be material to the Companys consolidated financial
position, results of operation, or liquidity.

8. REDEEMABLE PREFERRED STOCK:

On June 29, 2001, the Predecessor Company
received $35.0 million from one of its principal owners,
Dobson Communications, from its purchase of 35,000 shares of the
Predecessor Companys Series A preferred stock. The
Predecessor Company had 350,000 authorized shares of its
Series A preferred stock, which had a par value of $0.01
per share and was mandatorily redeemable on June 29, 2011
for $1,000 per share, plus accrued and unpaid dividends. Each
share of Series A preferred stock was entitled to 12%
cumulative annual dividends on the liquidation preference of
$1,000 per share, subject to certain adjustments. Dividends
accrued

57



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



8. REDEEMABLE PREFERRED STOCK:
(Continued)


but were not payable until the fifth anniversary
of the issuance. At December 31, 2002, the Predecessor
Company had $6.8 million in accrued dividends relating to
its Series A preferred stock. Shareholders of the
Series A preferred stock had no voting rights. As a result
of the Companys acquisition by Dobson Communication on
August 19, 2003, these shares of preferred stock were
cancelled.

9. STOCKHOLDERS
(DEFICIT) EQUITY:

On August 19, 2003, the Company received a
$474.5 million capital contribution from its parent company
Dobson Communications. This contribution consisted of cash,
preferred stock and common stock. See Note 6.

The Predecessor Companys prior capital
structure at December 31, 2002, consisted of 100 shares of
Class A common stock, with paid-in capital of $797.8
million and a retained deficit of $1.3 billion. The Class A
common shares were cancelled upon the Companys
August 19, 2003 acquisition by Dobson Communications.

10. EMPLOYEE BENEFIT PLANS:

Since May 2000, all employees are employed
by the Companys parent, Dobson Communications. Dobson
Communications maintains a 401(k) plan (the Plan) in
which substantially all employees of Dobson Communications are
eligible to participate. The Plan requires Dobson Communications
to match 100% of employees contributions up to 4% of their
salary. Contributions to the Plan charged to the Companys
operations were $0.4 million for the combined year ended
December 31, 2003, $0.3 million for the year ended
December 31, 2002 and $0.6 million for the year ended
December 31, 2001, and were recorded as general and
administrative expenses in the accompanying statements of
operations.

11. TAXES:

The benefit for income taxes for the period from
formation (June 23, 2003) through December 31, 2003,
from January 1, 2003 through August 18, 2003 and the
years ended December 31, 2002 and 2001 was as follows:

|                                          |                                    |                   |        |                         |   |              |       |              |  |   |         |         |   |   |         |         |  
|----------------------------------------- | ---------------------------------- | ----------------- | ------ | ----------------------- | - | ------------ | ----- | ------------ |  | - | ------- | ------- | - | - | ------- | ------- | -
|                                          |                                    |                   |        |                        
|                                          |                                    |                   |        | The Predecessor Company
|                                          |                                    |                   |        |                        
|                                          |                                    | For the period    |        | For the period          |   |             
|                                          |                                    | from formation    |        | from                    |   |             
|                                          |                                    | (June 23, 2003)   |        | January 1, 2003         |   | Year Ended   |       | Year Ended  
|                                          |                                    | through           |        | through                 |   | December 31, |       | December 31,
|                                          |                                    | December 31, 2003 |        | August 18, 2003         |   | 2002         |       | 2001        
|                                          |                                    |                   |        |                         |   |              |       |             
|                                          |                                    |                  
|                                          |                                    | ($ in thousands) 
|Federal income taxes deferred            |                                    | $                 | (2,385 | )                       |   | $            | 1,667 |              |  | $ | (12,226 | )       |   | $ | (44,370 | )      
|State income taxes (current and deferred) |                                    |                   | (280   | )                       |   |              | 294   |              |  |   | (2,157  | )       |   |   | (7,830  | )      
|                                          |                                    |                   |        |                         |   |              |       |              |  |   |         |         |   |   |         |        
|                                          | Total income tax (benefit) expense |                   | $      | (2,665                  | ) |              | $     | 1,961        |  |   | $       | (14,383 | ) |   | $       | (52,200 | )
|                                          |                                    |                   |        |                         |   |              |       |              |  |   |         |         |   |   |         |        

58



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



11. TAXES: (Continued)


The benefits for income taxes for the period from
formation (June 23, 2003) through December 31, 2003,
from January 1, 2003 through August 18, 2003 and the
years ended December 31, 2002 and 2001 differ from amounts
computed at the statutory rate as follows:

|                                                              |  |                   |        |                         |  |                   |       |                   |  |   |          |   |  |   |         |  
|------------------------------------------------------------- |  | ----------------- | ------ | ----------------------- |  | ----------------- | ----- | ----------------- |  | - | -------- | - |  | - | ------- | -
|                                                              |  |                   |        |                        
|                                                              |  |                   |        | The Predecessor Company
|                                                              |  | For the period    |        |                        
|                                                              |  | from formation    |        | For the period          |  |                  
|                                                              |  | (June 23, 2003)   |        | from January 1,         |  |                  
|                                                              |  | through           |        | 2003 through            |  | Year Ended        |       | Year Ended       
|                                                              |  | December 31, 2003 |        | August 18, 2003         |  | December 31, 2002 |       | December 31, 2001
|                                                              |  |                   |        |                         |  |                   |       |                  
|                                                              |  | ($ in thousands)  |        |                         |  |                   |       |                  
|Income taxes at statutory rate                                |  | $                 | (2,385 | )                       |  | $                 | 1,461 |                   |  | $ | (281,506 | ) |  | $ | (64,064 | )
|State income taxes, net of Federal income tax
    effect      |  |                   | (280   | )                       |  |                   | 258   |                   |  |   | (49,677  | ) |  |   | (11,305 | )
|Goodwill amortization, for which no benefit is
    recognized |  |                   |       |                         |  |                   |      |                   |  |   | 316,737  |   |  |   | 23,326  |  
|Other, net                                                    |  |                   |       |                         |  |                   | 242   |                   |  |   | 63       |   |  |   | (157    | )
|                                                              |  |                   |        |                         |  |                   |       |                   |  |   |          |   |  |   |         |  
|                                                              |  | $                 | (2,665 | )                       |  | $                 | 1,961 |                   |  | $ | (14,383  | ) |  | $ | (52,200 | )
|                                                              |  |                   |        |                         |  |                   |       |                   |  |   |          |   |  |   |         |  

The tax effects of the temporary differences
which gave rise to deferred tax assets and liabilities at
December 31, 2003 and 2002, were as follows:

|                                  |                                            |                                              |                                         |                         |          |          |   |          |         |         |  
|--------------------------------- | ------------------------------------------ | -------------------------------------------- | --------------------------------------- | ----------------------- | -------- | -------- | - | -------- | ------- | ------- | -
|                                  |                                            |                                              |                                         | The Predecessor Company
|                                  |                                            | December 31, 2003                            |                                         | December 31, 2002      
|                                  |                                            |                                              |                                         |                        
|                                  |                                            | ($ in thousands)                             |                                         | ($ in thousands)       
|Current deferred income taxes:    |                                            |                                              |                                         |                         |          |          |   |         
|                                  | Allowance for doubtful accounts receivable |                                              | $                                       | 651                     |          |          | $ | 391      |        
|                                  | Accrued liabilities                        |                                              |                                         | 5,057                   |          |          |   | 1,760    |        
|                                  |                                            |                                              |                                         |                         |          |          |   |         
|                                  |                                            | Net current deferred income tax asset        |                                         |                         | 5,708    |          |   |          | 2,151   |        
|                                  |                                            |                                              |                                         |                         |          |          |   |         
|Noncurrent deferred income taxes: |                                            |                                              |                                         |                         |          |          |   |         
|                                  | Fixed assets                               |                                              |                                         | (31,056                 | )        |          |   | (29,560  | )      
|                                  | Intangible assets                          |                                              |                                         | (204,438                | )        |          |   | (141,673 | )      
|                                  | Tax credits and carryforwards              |                                              |                                         | 66,332                  |          |          |   | 127,542  |        
|                                  |                                            |                                              |                                         |                         |          |          |   |         
|                                  |                                            | Net noncurrent deferred income tax liability |                                         |                         | (169,162 | )        |   |          | (43,691 | )      
|                                  |                                            |                                              |                                         |                         |          |          |   |         
|                                  |                                            |                                              | Total net deferred income tax liability |                         | $        | (163,454 | ) |          | $       | (41,540 | )
|                                  |                                            |                                              |                                         |                         |          |          |   |         

At December 31, 2003, the Company had NOL
carryforwards of approximately $175.0 million, which may be
utilized to reduce future Federal income taxes payable. These
NOL carryforwards begin to expire in 2019. Due to the
Companys acquisition by Dobson Communications, the NOL
carryforwards are subject to limitation under I.R.C. section
382. The Company expects the annual limitation under I.R.C.
section 382 to be $100.0 million.

The Company periodically reviews the need for a
valuation allowance against deferred tax assets and recognizes
these assets. Based on a review of taxable income, history and
trends, forecasted taxable income

59



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


(AND THE PREDECESSOR COMPANY)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



11. TAXES: (Continued)


and expiration of carryforwards, the Company has
not provided a valuation allowance for certain of its NOL
carryforwards.



|    |                            
|--- | ---------------------------
|12. | RELATED PARTY TRANSACTIONS:

In addition to the transactions described in
notes 6 and 8, the Company had a receivable totaling
$7.1 million at December 31, 2003, and
$1.3 million at December 31, 2002, due from related
parties. The amounts represent expenditures and expense
allocations made by Dobson Communications on behalf of the
Company.

Dobson Communications, the Companys parent,
provides certain services to the Company. Certain costs incurred
by Dobson Communications are shared-costs of the Company and
Dobson Communications. These shared costs are allocated between
the Company and Dobson Communications primarily based on each
Companys pro rata population coverage and subscribers.
Shared costs allocated to the Company from Dobson Communications
were $8.4 million for the period form formation
(June 23, 2003) through December 31, 2003,
$12.3 million for the period from January 1, 2003
through August 18, 2003, $17.1 million for the year
ended December 31, 2002, $10.6 million for the year
ended December 31, 2001. In addition, the Company
reimbursed Dobson Communications for other expenses incurred by
them on the Companys behalf, which represents actual
compensation costs related to those Dobson Communications
employees that perform job functions that are exclusively
attributable to the Companys operations, totaling
$15.7 million for the period from formation (June 23,
2003) through December 31, 2003, $26.5 million from
January 1, 2003 through August 18, 2003,
$42.9 million for the year ended December 31, 2002 and
$40.4 million for the year ended December 31, 2001.



|    |                                     
|--- | ------------------------------------
|13. | FAIR VALUE OF FINANCIAL INSTRUMENTS:

Unless otherwise noted, the carrying value of the
Company and the Predecessor Companys financial instruments
approximates fair value. The Company and the Predecessor Company
estimate the fair value of its long-term debt based on quoted
market prices for publicly traded debt or on the present value
of the cash flow stream utilizing the current rates available to
the Company and the Predecessor Company for debt with similar
terms and remaining maturation.

Indicated below are the carrying amounts and
estimated fair values of the Company and the Predecessor
Companys financial instruments as of December 31:

|                                |  |                  |         |            |  |                 |         |            |  |   |         |  |  |   |         | 
|------------------------------- |  | ---------------- | ------- | ---------- |  | --------------- | ------- | ---------- |  | - | ------- |  |  | - | ------- | 
|                                |  |                  |         |            |  |                
|                                |  |                  |         |            |  | The Predecessor
|                                |  |                  |         |            |  | Company        
|                                |  |                  |         |            |  |                
|                                |  |                  |         |           
|                                |  | 2003             |         | 2002      
|                                |  |                  |         |           
|                                |  | Carrying         |         |            |  | Carrying        |         |           
|                                |  | Amount           |         | Fair Value |  | Amount          |         | Fair Value
|                                |  |                  |         |            |  |                 |         |           
|                                |  |                  |         |            |  |                
|                                |  | ($ in thousands) |         |            |  |                
|Restricted cash and investments |  | $                | 4,165   |            |  | $               | 4,165   |            |  | $ | 42,329  |  |  | $ | 42,329  | 
|Credit facility                 |  |                  |        |            |  |                 |        |            |  |   | 894,273 |  |  |   | 894,273 | 
|9.5% ACC Senior Notes           |  |                  | 12,851  |            |  |                 | 13,044  |            |  |   | 694,236 |  |  |   | 131,905 | 
|10.0% ACC Senior Notes          |  |                  | 900,000 |            |  |                 | 999,000 |            |  |   |        |  |  |   |        | 

60



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##### Table of Contents



Supplementary Data



| |                                                  
| | -------------------------------------------------
| | Selected Quarterly Financial Data
    (unaudited)

American Cellular Corporation and
Subsidiaries

|                                                       |  |  |      |                                        |  |               |        |  |  |   |         |  
|------------------------------------------------------ |  |  | ---- | -------------------------------------- |  | ------------- | ------ |  |  | - | ------- | -
|                                                       |  |  |      | For the period from                    |  |              
|                                                       |  |  |      | formation                              |  | Quarter Ended
|                                                       |  |  |      | (June 23, 2003) through                |  |              
|                                                       |  |  |      | September 30,                          |  | December 31, 
|                                                       |  |  |      |                                        |  |              
|                                                       |  |  |      |                                       
|                                                       |  |  |      | ($ in thousands except per share data)
|Operating revenue                                      |  |  | 2003 |                                        |  | $             | 55,163 |  |  | $ | 107,461 |  
|Operating income                                       |  |  | 2003 |                                        |  | $             | 14,765 |  |  | $ | 16,420  |  
|Net income (loss)                                      |  |  | 2003 |                                        |  | $             | 656    |  |  | $ | (5,005  | )
|Net income (loss) applicable to common
    stockholder |  |  | 2003 |                                        |  | $             | 656    |  |  | $ | (5,005  | )
|Net income (loss) per average common share             |  |  | 2003 |                                        |  | $             | 1,875  |  |  | $ | (14,300 | )



American Cellular Corporation and Subsidiaries
(The Predecessor Company)


|                                                       |  |  |      |                                        |  |              |            |                 |  |               |            |              |  |   |           |  |  |   |         |  |  |   |            |  
|------------------------------------------------------ |  |  | ---- | -------------------------------------- |  | ------------ | ---------- | --------------- |  | ------------- | ---------- | ------------ |  | - | --------- |  |  | - | ------- |  |  | - | ---------- | -
|                                                       |  |  |      |                                        |  |              |            | For the period  |  |               |            |             
|                                                       |  |  |      |                                        |  | from         |            |                
|                                                       |  |  |      | Quarter Ended                          |  | July 1, 2003 |            | Quarter Ended  
|                                                       |  |  |      |                                        |  | through      |            |                
|                                                       |  |  |      | March 31,                              |  | June 30,     |            | August 18, 2003 |  | September 30, |            | December 31,
|                                                       |  |  |      |                                        |  |              |            |                 |  |               |            |             
|                                                       |  |  |      |                                       
|                                                       |  |  |      | ($ in thousands except per share data)
|Operating revenue                                      |  |  | 2003 |                                        |  | $            | 106,490    |                 |  | $             | 116,937    |              |  | $ | 65,300    |  |  |   |        |  |  |   |           |  
|                                                       |  |  | 2002 |                                        |  | $            | 99,883     |                 |  | $             | 115,810    |              |  |   |          |  |  | $ | 124,202 |  |  | $ | 112,935    |  
|Operating income (loss)                                |  |  | 2003 |                                        |  | $            | 26,923     |                 |  | $             | 35,633     |              |  | $ | 21,121    |  |  |   |        |  |  |   |           |  
|                                                       |  |  | 2002 |                                        |  | $            | 18,824     |                 |  | $             | (346,699   | )            |  |   |          |  |  | $ | 36,379  |  |  | $ | (395,847   | )
|Net (loss) income                                      |  |  | 2003 |                                        |  | $            | (2,406     | )               |  | $             | 2,103      |              |  | $ | 133,651   |  |  |   |        |  |  |   |           |  
|                                                       |  |  | 2002 |                                        |  | $            | (282,153   | )               |  | $             | (381,616   | )            |  |   |          |  |  | $ | 4,280   |  |  | $ | (422,908   | )
|Net (loss) income applicable to common
    stockholder |  |  | 2003 |                                        |  | $            | (3,660     | )               |  | $             | 811        |              |  | $ | 133,651   |  |  |   |        |  |  |   |           |  
|                                                       |  |  | 2002 |                                        |  | $            | (283,267   | )               |  | $             | (382,764   | )            |  |   |          |  |  | $ | 3,098   |  |  | $ | (424,125   | )
|Net (loss) income per average common share             |  |  | 2003 |                                        |  | $            | (36,601    | )               |  | $             | 8,115      |              |  | $ | 1,336,513 |  |  |   |        |  |  |   |           |  
|                                                       |  |  | 2002 |                                        |  | $            | (2,832,672 | )               |  | $             | (3,827,636 | )            |  |   |          |  |  | $ | 30,980  |  |  | $ | (4,241,253 | )

61



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##### Table of Contents








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

During 2002, we changed our accounting firm.
Information regarding our engagement of KPMG is included in our
current report on Form 8-K filed on June 27, 2002.






|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

As of the end of the period covered by this
report, an evaluation was carried out under the supervision and
with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934) as required by
Rule 13a-15(b). Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the
design and operation of these disclosure controls and procedures
were effective.

62



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##### Table of Contents






PART III






|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

Information omitted in accordance with General
Instruction I (2) (c).






|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Information omitted in accordance with General
Instruction I (2) (c).






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

Information omitted in accordance with General
Instruction I (2) (c).






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

Information omitted in accordance with General
Instruction I (2) (c).






|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services

We are a wholly-owned subsidiary of Dobson
Communications and Dobson Communications incurs all accounting
fees and services on our behalf. All general and administrative
costs, are allocated to us by Dobson Communications based on the
estimated subscribers and populations in our respective licensed
areas. Therefore, the following fees represent our estimate of
Dobson Communications allocation of accounting fees and
services for the fiscal years ended December 31, 2003 and 2002
by KPMG LLP, our principal accounting firm for external auditing.

|                   |                |                  |     |      |  |   |     |     | 
|------------------ | -------------- | ---------------- | --- | ---- |  | - | --- | --- | 
|                   |                |                 
|                   |                | Year Ended      
|                   |                | December 31,    
|                   |                |                 
|                   |                | 2003             |     | 2002
|                   |                |                  |     |     
|                   |                |                 
|                   |                | ($ in thousands)
|Audit Fees         |                | $                | 284 |      |  | $ | 129 |    
|Audit-Related Fees |                |                  |    |      |  |   |    |    
|                   |                |                  |     |      |  |   |     |    
|                   | Total Fees (a) |                  | $   | 284  |  |   | $   | 129 | 
|                   |                |                  |     |      |  |   |     |    



---



|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(a) | All fees have been approved by the audit
    committee of Dobson Communications.

Auditor Fees Pre-Approval Policy

In November 2002, the audit committee of Dobson
Communications adopted a formal policy concerning approval of
audit and non-audit services. The policy requires pre-approval
of all audit and non-audit services to be provided to Dobson
Communications and its subsidiaries, including us; provided
that, the Dobson Communications Audit Committee may establish
guidelines for (i) the delegation of authority for
pre-approval to a single member of the Committee and/ or
(ii) establishing a de minimis exception in accordance with
applicable laws and regulations.

The Dobson Communications Audit Committee
has established guidelines for the retention of the independent
auditor for any allowed non-audit service. Under the policy, the
following non-audit services may not be performed by our auditor
contemporaneously with audit services:



| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Bookkeeping or other services related to
    the accounting records or financial statements of Dobson
    Communications and its subsidiaries, including us;
|
| | 2. Financial information systems design and
    implementation;                                                                                                
|
| | 3. Appraisal or valuation services, fairness
    opinions, or contribution-in-kind reports;                                                                    

63



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##### Table of Contents





| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | 4. Actuarial services;                                                                                 
|
| | 5. Internal audit outsourcing services;                                                                
|
| | 6. Management functions or human resources;                                                            
|
| | 7. Broker or dealer, investment advisor, or
    investment banking services;                           
|
| | 8. Legal services and expert services
    unrelated to the audit; and                                  
|
| | 9. Any other service that the audit
    committee of Dobson Communications determines is impermissible.

64



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##### Table of Contents






PART IV




Item 15. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K

(a)(1) The following financial statements of
American Cellular Corporation are included in Item 8:



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | American Cellular Corporation and
    Subsidiaries(And The Predecessor
    Company)                        
| | Independent Auditors Report                                                                               
| | Independent Auditors Report (the
    Predecessor Company)                                                 
| | Report of Independent Public Accountants (the
    Predecessor Company)                                     
| | Consolidated balance sheets as of
    December 31, 2003 and 2002.                                          
| | Consolidated statements of operations from
    formation (June 23, 2003) through December 31, 2003,
    for
| | the period from
    January 1, 2003 through August 18, 2003 and for the
    years ended December 31,       
| | 2002 and 2001.                                                                                             
| | Consolidated statements of stockholders
    equity (deficit) from formation (June 23, 2003) through       
| | December 31,
    2003, for the period from January 1, 2003 through
    August 18, 2003 and for the years   
| | ended
    December 31, 2002 and 2001.                                                                      
| | Consolidated statements of cash flows from
    formation (June 23, 2003) through December 31, 2003,
    for
| | the period from
    January 1, 2003 through August 18, 2003 and for the
    years ended December 31,       
| | 2002 and 2001.                                                                                             
| | Notes to consolidated financial statements.                                                                

All schedules have been omitted since the
required information is not present, or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial
statements or notes thereto.

65



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##### Table of Contents



(3) Exhibits

|        |       |             |  |                                                                                                                                                                                                                           |  |  |             | 
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |       |             |  | Method of                                                                                                                                                                                                                
|Numbers |       | Description |  | Filing                                                                                                                                                                                                                   
|        |       |             |  |                                                                                                                                                                                                                          
|        | 3.1   |             |  | Fourth Restated Certificate of Incorporation of
    American Cellular Corporation                                                                                                                                         |  |  | (1)[3.1]    | 
|        | 3.2   |             |  | Amended and Restated Bylaws of Registrant                                                                                                                                                                                 |  |  | (1)[3.2]    | 
|        | 3.3   |             |  | Certificate of Incorporation of ACC Lease Co.,
    Inc.                                                                                                                                                                   |  |  | (7)[3.3]    | 
|        | 3.4   |             |  | ByLaws of ACC Lease Co., Inc.                                                                                                                                                                                             |  |  | (7)[3.4]    | 
|        | 4.1   |             |  | Indenture dated March 14, 2001 between
    American Cellular Corporation and United States Trust Company of
    New York                                                                                                  |  |  | (1)[4.2]    | 
|        | 4.1.  | 1           |  | First Supplemental Indenture dated
    August 19, 2003 between ACC Acquisition LLC, American
    Cellular Corporation, its guaranteeing subsidiaries and Bank of
    Oklahoma, National Association                       |  |  | (7)[4.1.1]  | 
|        | 4.2   |             |  | Indenture dated August 8, 2003 between ACC
    Escrow Corp. and Bank of Oklahoma, National Association                                                                                                                    |  |  | (7)[4.2]    | 
|        | 4.3   |             |  | Registration Rights Agreement dated
    August 8, 2003 between ACC Escrow Corp., American Cellular
    Corp. and certain guarantors and Bear, Stearns & Co., Inc.
    and Morgan Stanley & Co. Incorporated               |  |  | (7)[4.3]    | 
|        | 10.1  |             |  | License Agreement, dated September 23, 1998,
    by and between H.O. Software, Inc. and American Cellular
    Corporation, as amended, modified or otherwise supplemented from
    time to time                           |  |  | (3)[10.1]   | 
|        | 10.2  |             |  | Purchase and License Agreement between Nortel
    Networks, Inc. and Dobson Communications Corporation dated
    November 16, 2001                                                                                        |  |  | (3)[10.2]   | 
|        | 10.2. | 1           |  | Amendment No. 1 to Purchase and License
    Agreement between Nortel Networks, Inc. and Dobson
    Communications Corporation dated August 5, 2002                                                                        |  |  | (4)[10.2.1] | 
|        | 10.4  |             |  | Asset Purchase Agreement dated October 30,
    2001 by and between ACC of Tennessee LLC, and Cellco
    Partnership, a Delaware general partnership, d/b/a Verizon
    Wireless                                           |  |  | (2)[10.7]   | 
|        | 10.5  |             |  | InterCarrier Multi-Standard Roaming Agreement
    effective as of January 25, 2002, between Cingular
    Wireless, LLC and Dobson Cellular Systems, Inc. and its
    Affiliates, including American Cellular Corporation  |  |  |             | 
|        | 10.6  |             |  | Master Services Agreement between American
    Cellular Corporation and Convergys Information Management Group
    Inc. dated December 1, 2002                                                                            |  |  | (5)[10.9]   | 
|        | 10.7  |             |  | Roaming Agreement for GSM/ GPRS from AT&T
    Wireless Services, Inc. and American Cellular Corporation dated
    July 11, 2003                                                                                           |  |  | (6)[10.10]  | 
|        | 10.8  |             |  | GSM/ GPRS/ EDGE Operating Agreement between
    AT&T Wireless Services, Inc. and American Cellular
    Corporation dated July 11, 2003                                                                                    |  |  | (6)[10.11]  | 
|        | 10.9  |             |  | Second Amended and Restated TDMA Operating
    Agreement between AT&T Wireless Services, Inc. on behalf of
    itself and its affiliates and American Cellular Corporation on
    behalf of itself and its affiliates     |  |  | (6)[10.12]  | 
|        | 10.10 |             |  | Agreement and Plan of Merger by and between ACC
    Escrow Corp. and American Cellular Corporation dated
    August 8, 2003                                                                                               |  |  | (7)[10.13]  | 
|        | 10.11 |             |  | Management Agreement dated August 19, 2003
    by and between Dobson Cellular Systems, Inc. and American
    Cellular Corporation                                                                                         |  |  | (7)[10.14]  | 
|        | 10.12 |             |  | Tax Allocation Agreement dated August 19,
    2003 by and between Dobson Communications Corporation and
    American Cellular Corporation                                                                                 |  |  | (7)[10.15]  | 
|        | 10.13 |             |  | Purchase Agreement dated July 25, 2003 by
    and among ACC Escrow Corp., American Cellular Corporation and
    certain guaranteeing subsidiaries and Bear, Stearns & Co.,
    Inc. and Morgan Stanley & Co. Incorporated |  |  | (7)[10.16]  | 
|        | 31.1  |             |  | Rule 13a-14 (a) Certification by our
    Chairman and Chief Executive Officer                                                                                                                                             |  |  | (8)         | 
|        | 31.2  |             |  | Rule 13a-14 (a) Certification by our
    Chief Financial Officer                                                                                                                                                          |  |  | (8)         | 

66



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##### Table of Contents



|        |      |             |  |                                                                             |  |  |     | 
|------- | ---- | ----------- |  | --------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |      |             |  | Method of                                                                  
|Numbers |      | Description |  | Filing                                                                     
|        |      |             |  |                                                                            
|        | 32.1 |             |  | Section 1350 Certification by our Chairman
    and Chief Executive Officer. |  |  | (8) | 
|        | 32.2 |             |  | Section 1350 Certification by our Chief
    Financial Officer.              |  |  | (8) | 



---



|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Confidential treatment has been requested for a
    portion of this document.                                                                                                                                
|   
|(1) | Filed as an exhibit to the Registrants
    Registration Statement on Form S-4 (registration
    No. 333-59322), as the exhibit number indicated in brackets
    and incorporated by reference herein.       
|   
|(2) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|   
|(3) | Filed as an exhibit to the Registrants
    Annual Report on Form 10-K for the year ended
    December 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.       
|   
|(4) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2002, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|   
|(5) | Filed as an exhibit to the Registrants
    current report on Form 8-K on December 12, 2002, as
    the exhibit number indicated in brackets and incorporated by
    reference herein.                       
|   
|(6) | Filed as an exhibit to the Registrants
    current report on Form 8-K on July 28, 2003, as the
    exhibit number indicated in brackets and incorporated by
    reference herein.                           
|   
|(7) | Filed as an exhibit to the Registrants
    Registration Statement on Form S-4 (no. 333-110082) as
    the exhibit number indicated in brackets and incorporated by
    reference herein.                    
|   
|(8) | Filed herewith.                                                                                                                                                                                              

(b) Reports on Form 8-K

None

67



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this amended report to be signed on its behalf
by the undersigned, thereunto duly authorized this 15th day of
March 2004.



| |                              
| | -----------------------------
| | AMERICAN CELLULAR CORPORATION



| |    |                      
| | -- | ---------------------
| | By | /s/ EVERETT R. DOBSON

| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| |                                                                                                                  
| | Everett R. Dobson                                                                                                
| | Chairman of the Board, President, Chief
    Executive 
     Officer and Director(Principal
    Executive Officer)

Pursuant to the requirements of the Securities
Exchange Act of 1934, this amended report has been signed below
by the following persons on behalf of the registrant and in
capacities on March 15, 2004.

|                                               |  |                                                                                                             
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------
|Signatures                                     |  | Title                                                                                                       
|                                               |  |                                                                                                             
|/s/ EVERETT R. DOBSONEverett R. Dobson         |  | Chairman of the Board, President,
    Chief Executive Officer and Director
    (Principal Executive Officer)
|                                              
|/s/ BRUCE R. KNOOIHUIZENBruce R. Knooihuizen   |  | Executive Vice President and Chief Financial
    Officer
    (Principal Financial Officer)                  
|                                              
|/s/ TRENT LEFORCETrent LeForce                 |  | Controller and Assistant Secretary
    (Principal Accounting Officer)                                       
|                                              
|/s/ STEPHEN T. DOBSONStephen T. Dobson         |  | Secretary and Director                                                                                      
|                                              
|/s/ MARK S. FEIGHNERMark S. Feighner           |  | Director                                                                                                    
|                                              
|/s/ FRED J. HALLFred J. Hall                   |  | Director                                                                                                    
|                                              
|/s/ JUSTIN L. JASCHKEJustin L. Jaschke         |  | Director                                                                                                    
|                                              
|/s/ ALBERT H. PHARIS, JR.Albert H. Pharis, Jr. |  | Director                                                                                                    
|                                              
|/s/ ROBERT A. SCHRIESHEIMRobert A. Schriesheim |  | Director                                                                                                    

Supplemental Information to be Furnished With
Reports Filed Pursuant to Section 15(d) of the Act by
Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.

We have not sent, and do not intend to send, an
annual report to security holders covering our last fiscal year,
nor have we sent a proxy statement, form of proxy or other proxy
soliciting material to our security holders with respect to any
annual meeting of security holders.

68



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##### Table of Contents



INDEX TO EXHIBITS

|        |        |             |  |                                                                                                                                                                                                                          |  |  |             | 
|------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                               
|Numbers |        | Description |  | Filing                                                                                                                                                                                                                  
|        |        |             |  |                                                                                                                                                                                                                         
|        | 3.1    |             |  | Fourth Restated Certificate of Incorporation of
    American Cellular Corporation                                                                                                                                        |  |  | (1)[3.1]    | 
|        | 3.2    |             |  | Amended and Restated Bylaws of Registrant                                                                                                                                                                                |  |  | (1)[3.2]    | 
|        | 3.3    |             |  | Certificate of Incorporation of ACC Lease Co.,
    Inc.                                                                                                                                                                  |  |  | (7)[3.3]    | 
|        | 3.4    |             |  | ByLaws of ACC Lease Co., Inc.                                                                                                                                                                                            |  |  | (7)[3.4]    | 
|        | 4.1    |             |  | Indenture dated March 14, 2001 between
    American Cellular Corporation and United States Trust Company of
    New York                                                                                                 |  |  | (1)[4.2]    | 
|        | 4.1.1  |             |  | First Supplemental Indenture dated
    August 19, 2003 between ACC Acquisition LLC, American
    Cellular Corporation, its guaranteeing subsidiaries and Bank of
    Oklahoma, National Association                      |  |  | (7)[4.1.1]  | 
|        | 4.2    |             |  | Indenture dated August 8, 2003 between ACC
    Escrow Corp. and Bank of Oklahoma, National Association                                                                                                                   |  |  | (7)[4.2]    | 
|        | 4.3    |             |  | Registration Rights Agreement dated
    August 8, 2003 between ACC Escrow Corp., American Cellular
    Corp. and certain guarantors and Bear, Stearns & Co., Inc.
    and Morgan Stanley & Co. Incorporated              |  |  | (7)[4.3]    | 
|        | 10.1   |             |  | License Agreement, dated September 23, 1998,
    by and between H.O. Software, Inc. and American Cellular
    Corporation, as amended, modified or otherwise supplemented from
    time to time                          |  |  | (3)[10.1]   | 
|        | 10.2   |             |  | Purchase and License Agreement between Nortel
    Networks, Inc. and Dobson Communications Corporation dated
    November 16, 2001                                                                                       |  |  | (3)[10.2]   | 
|        | 10.2.1 |             |  | Amendment No. 1 to Purchase and License
    Agreement between Nortel Networks, Inc. and Dobson
    Communications Corporation dated August 5, 2002                                                                       |  |  | (4)[10.2.1] | 
|        | 10.4   |             |  | Asset Purchase Agreement dated October 30,
    2001 by and between ACC of Tennessee LLC, and Cellco
    Partnership, a Delaware general partnership, d/b/a Verizon
    Wireless                                          |  |  | (2)[10.7]   | 
|        | 10.5   |             |  | InterCarrier Multi-Standard Roaming Agreement
    effective as of January 25, 2002, between Cingular
    Wireless, LLC and Dobson Cellular Systems, Inc. and its
    Affiliates, including American Cellular Corporation |  |  |             | 
|        | 10.6   |             |  | Master Services Agreement between American
    Cellular Corporation and Convergys Information Management Group
    Inc. dated December 1, 2002                                                                           |  |  | (5)[10.9]   | 
|        | 10.7   |             |  | Roaming Agreement for GSM/ GPRS from AT&T
    Wireless Services, Inc. and American Cellular Corporation dated
    July 11, 2003                                                                                          |  |  | (6)[10.10]  | 
|        | 10.8   |             |  | GSM/ GPRS/ EDGE Operating Agreement between
    AT&T Wireless Services, Inc. and American Cellular
    Corporation dated July 11, 2003                                                                                   |  |  | (6)[10.11]  | 



---



##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                           |  |  |            | 
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------- | 
|Exhibit |       |             |  | Method of                                                                                                                                                                                                                
|Numbers |       | Description |  | Filing                                                                                                                                                                                                                   
|        |       |             |  |                                                                                                                                                                                                                          
|        | 10.9  |             |  | Second Amended and Restated TDMA Operating
    Agreement between AT&T Wireless Services, Inc. on behalf of
    itself and its affiliates and American Cellular Corporation on
    behalf of itself and its affiliates     |  |  | (6)[10.12] | 
|        | 10.10 |             |  | Agreement and Plan of Merger by and between ACC
    Escrow Corp. and American Cellular Corporation dated
    August 8, 2003                                                                                               |  |  | (7)[10.13] | 
|        | 10.11 |             |  | Management Agreement dated August 19, 2003
    by and between Dobson Cellular Systems, Inc. and American
    Cellular Corporation                                                                                         |  |  | (7)[10.14] | 
|        | 10.12 |             |  | Tax Allocation Agreement dated August 19,
    2003 by and between Dobson Communications Corporation and
    American Cellular Corporation                                                                                 |  |  | (7)[10.15] | 
|        | 10.13 |             |  | Purchase Agreement dated July 25, 2003 by
    and among ACC Escrow Corp., American Cellular Corporation and
    certain guaranteeing subsidiaries and Bear, Stearns & Co.,
    Inc. and Morgan Stanley & Co. Incorporated |  |  | (7)[10.16] | 
|        | 31.1  |             |  | Rule 13a-14 (a) Certification by our
    Chairman and Chief Executive Officer                                                                                                                                             |  |  | (8)        | 
|        | 31.2  |             |  | Rule 13a-14 (a) Certification by our
    Chief Financial Officer                                                                                                                                                          |  |  | (8)        | 
|        | 32.1  |             |  | Section 1350 Certification by our Chairman
    and Chief Executive Officer.                                                                                                                                               |  |  | (8)        | 
|        | 32.2  |             |  | Section 1350 Certification by our Chief
    Financial Officer.                                                                                                                                                            |  |  | (8)        | 



---



|  |                                                                              
|- | -----------------------------------------------------------------------------
|* | Confidential treatment has been requested for a
    portion of this document.



|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Filed as an exhibit to the Registrants
    Registration Statement on Form S-4 (registration
    No. 333-59322), as the exhibit number indicated in brackets
    and incorporated by reference herein.       
|   
|(2) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|   
|(3) | Filed as an exhibit to the Registrants
    Annual Report on Form 10-K for the year ended
    December 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.       
|   
|(4) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2002, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|   
|(5) | Filed as an exhibit to the Registrants
    current report on Form 8-K on December 12, 2002, as
    the exhibit number indicated in brackets and incorporated by
    reference herein.                       
|   
|(6) | Filed as an exhibit to the Registrants
    current report on Form 8-K on July 28, 2003, as the
    exhibit number indicated in brackets and incorporated by
    reference herein.                           
|   
|(7) | Filed as an exhibit to the Registrants
    Registration Statement on Form S-4 (no. 333-110082) as the
    exhibit number indicated in brackets and incorporated by
    reference herein.                    
|   
|(8) | Filed herewith.