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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,
2001



|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|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. 333-59322 and
333-63454



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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

As of
March 22, 2002, there were 100 shares of
registrants $.01 par value Class A Common Stock
outstanding, which are owned of record by ACC Acquisition LLC,
which is equally and beneficially owned by Dobson Communications
Corporation and AT&T Wireless.

Documents
incorporated by reference: None



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TABLE OF CONTENTS



|                                                   |                                                                                                      |  |  |  |  |  |  | 
|-------------------------------------------------- | ---------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|                                                   | Item 1. Business                                                                                    
|                                                   | Item 2. Properties                                                                                  
|                                                   | Item 3. Legal Proceedings                                                                           
|                                                   | Item 4. Submission of Matters to a Vote of Security Holders                                         
|PART II                                           
|                                                   | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                       
|                                                   | Item 6. Selected Financial Data                                                                     
|                                                   | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations       
|                                                   | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                                 
|                                                   | Item 8. Financial Statements and Supplementary Data                                                 
|                                                   | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Matters
|PART III                                          
|                                                   | Item 10. Directors and Executive Officers of the Registrant                                         
|                                                   | Item 11. Executive Compensation                                                                     
|                                                   | Item 12. Security Ownership of Certain Beneficial Owners and Management                             
|                                                   | Item 13. Certain Relationships and Related Transactions                                             
|PART IV                                           
|                                                   | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                           
|REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS          
|SIGNATURES                                        
|EX-3.1.1 Amend to 4th Restated Certificate of Inc.
|EX-3.1.2 Cert of Designation - Series A Pref Stock
|EX-10.4.3 3rd Amendment to Credit Agreement       
|EX-10.5 License Agreement, dated 10/8/01          
|EX-10.6 Purchase and License Agreement - 11/16/01 
|EX-10.13 InterCarrier Multi-Standard Roaming Agmnt
|Letter Regarding Arthur Andersen LLP              



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##### Table of Contents



AMERICAN CELLULAR CORPORATION

ANNUAL REPORT ON FORM 10-K


FOR THE YEAR ENDED DECEMBER 31,
2001

TABLE OF CONTENTS

|         |    |  |  |                                                                                               |  |  |    | 
|-------- | -- |  |  | --------------------------------------------------------------------------------------------- |  |  | -- | 
|Item     |    |  |  |                                                                                              
|Number   |    |  |  | Page                                                                                         
|         |    |  |  |                                                                                              
|PART I  
|        
|         | 1  |  |  | Business                                                                                      |  |  | 3  | 
|         | 2  |  |  | Properties                                                                                    |  |  | 17 | 
|         | 3  |  |  | Legal Proceedings                                                                             |  |  | 17 | 
|         | 4  |  |  | Submission of Matters to a Vote of Security
	Holders                                          |  |  | 17 | 
|PART II 
|        
|         | 5  |  |  | Market for Registrants Common Equity and
	Related Stockholder Matters                        |  |  | 18 | 
|         | 6  |  |  | Selected Financial Data                                                                       |  |  | 18 | 
|         | 7  |  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations        |  |  | 20 | 
|         | 7A |  |  | Quantitative and Qualitative Disclosures About
	Market Risk                                   |  |  | 28 | 
|         | 8  |  |  | Financial Statements and Supplementary Data                                                   |  |  | 30 | 
|         | 9  |  |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure Matters |  |  | 60 | 
|PART III
|        
|         | 10 |  |  | Directors and Executive Officers of the Registrant                                            |  |  | 60 | 
|         | 11 |  |  | Executive Compensation                                                                        |  |  | 61 | 
|         | 12 |  |  | Security Ownership of Certain Beneficial Owners
	and Management                               |  |  | 61 | 
|         | 13 |  |  | Certain Relationships and Related Transactions                                                |  |  | 61 | 
|PART IV 
|        
|         | 14 |  |  | Exhibits, Financial Statement Schedules, and
	Reports on Form 8-K                             |  |  | 65 | 

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PART I




Item 1. Business

Overview

We are one of the largest rural and suburban
providers of wireless communications services in the United
States. At December 31, 2001, our wireless telephone
systems covered a total population of approximately
5.0 million and we had approximately 632,100 subscribers
with an aggregate market penetration of approximately 12.6%. We
provide wireless telephone service in portions of Illinois,
Kansas, Kentucky, Michigan, Minnesota, New York, Ohio, Oklahoma,
Pennsylvania, West Virginia and Wisconsin. On October 30,
2001, two of our wholly-owned, indirect subsidiaries entered
into a definitive agreement with Verizon Wireless to sell our
Tennessee 4 RSA market for a total purchase price of
$202.0 million. As a result of this agreement, the results
of operations for Tennessee 4 RSA during the years
presented are included as discontinued operations in our
consolidated financial statements. This sale was completed on
February 8, 2002.

On February 25, 2000, we were acquired by a
joint venture equally owned by AT&T Wireless and Dobson
Communications. Our operations are managed by Dobson
Communications and are integrated with Dobson
Communications wireless operations. We market our products
and services under the nationally recognized CELLULAR ONE®
brand name and benefit from its national advertising campaign.

We have long-term roaming agreements with
AT&T Wireless and Cingular Wireless, each of whom have
designated us as a preferred roaming partner for their
subscribers who roam into our markets, as well as other major
wireless providers, which allow our subscribers to benefit from
coast-to-coast wireless coverage. Our markets have high roaming
activity due, in part, to their greater than average
concentration of expressway corridors and their proximity to
densely populated urban areas, including New York City,
Minneapolis-St. Paul, Pittsburgh, Cincinnati and Louisville.

We have upgraded our entire network to digital
time division multiple access (TDMA) technology and
we now offer digital voice and digital feature service,
including voice mail, e-mail, caller ID, call waiting, 2-way
short-messaging services (SMS) and wireless Internet
access. At December 31, 2001, approximately 73% of our
subscribers utilize digital service and use tri-mode, dual-band
handsets. We believe subscribers utilizing digital technology
generate network efficiencies, greater roaming opportunities,
higher average revenue per user (ARPU) and lower
churn rates.

We believe that owning and operating a mix of
rural and suburban wireless systems provides strong growth
opportunities because we believe these systems currently have
lower penetration rates, higher subscriber growth rates, a
higher proportion of roaming revenues and less competition for
subscribers than wireless systems located in larger metropolitan
areas. We focus on acquiring and operating underdeveloped
wireless systems that are adjacent to major metropolitan areas,
which include a high concentration of expressway corridors and
roaming activity. For the year ended December 31, 2001, on
a consolidated basis, we had total revenues of
$417.2 million and a net loss applicable to common
stockholders of $139.8 million. At December 31, 2001,
we had approximately $1.8 billion of indebtedness and
stockholders equity of approximately $544.6 million.
We expect to incur significant additional indebtedness to fund
our capital needs in the future as we continue to acquire,
develop and construct our wireless systems and grow our
subscriber base.

Strategy

We have developed organizational, marketing and
operational programs designed to increase the number of our
subscribers, promote superior customer service, control
subscriber acquisition costs and enhance operating cash flow in
our markets.

Our strategy is to capitalize on our competitive
strengths and further develop and operate rural and suburban
wireless systems.

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Competitive Strengths

Strong Current Market Position.We have significant market share in
virtually all of our wireless markets. We distinguish ourselves
from our competition by emphasizing digital technology, customer
care and a commitment to the local community. We plan to attract
additional subscribers by leveraging our strategic
relationships, digital technologies, local sales channels and
diverse service offerings, including national, regional and
local rate plans.

Attractive Markets.Our markets are attractive for
providing wireless communications services due, in part, to
their proximity to markets operated by AT&T Wireless and
major metropolitan areas such as New York City,
Minneapolis-St. Paul, Pittsburgh, Cincinnati and
Louisville. Our markets have a relatively high density of
highway and other traffic corridors and strong tourist activity
due to seasonal attractions. Additionally, our markets have
demonstrated positive demographic growth trends and generally
maintain a high population density relative to other rural
service providers.

Advanced Digital Technology.Our fully digital network uses TDMA
technology, making our network compatible with AT&T
Wireless network and other TDMA networks. This technology
allows us to offer enhanced features and services relative to
standard analog cellular service, including Internet service,
extended battery life, integrated voicemail, paging, fax and
e-mail delivery, enhanced voice privacy and short-messaging
capability. We believe our extensive digital network deployment
provides us with a competitive advantage in many of our markets.

Strategic Roaming Relationships.We have long-term roaming agreements
with many of our major roaming partners including AT&T
Wireless and Cingular Wireless. These roaming agreements have
terms ranging from two to twenty years. We believe our strategic
roaming relationships will continue to be beneficial as the
growth in roaming minutes in our markets continues.

Aggressively Market and Promote Our Wireless
Services in Our Local Markets.Our
marketing objective is to continue our service quality, local
sales presence and commitment to the community. Our sales
efforts are conducted primarily through our retail outlets, our
direct sales force and our independent agents. 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. In addition, we believe that our marketing and customer
service functions are more effective when tailored to the local
market population.

Use Highly Targeted Sales Efforts.We seek to attract subscribers who we
believe are likely to generate high monthly revenues and low
churn rates. Local management conducts market research to
identify and design marketing programs to attract these
subscribers and tailor distinctive rate plans to emphasize the
quality, value and advantage of our services.

Provide Superior Customer Service.We intend to maintain a high level of
customer satisfaction through a variety of techniques, including
the maintenance of 24-hour customer service call centers. We
support local customer service through our direct sales force,
our retail stores and regional customer service centers. 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.

Experienced Management Team.Dobson Communications management
team is responsible for our day-to-day operations. With over
50 years of telecommunications experience on a combined
basis, Dobson Communications senior management team,
consisting of Everett R. Dobson, Doug Stephens and Bruce
Knooihuizen, is extremely knowledgeable and well regarded in the
telecommunications industry. Since 1993, including our
acquisition, Dobson Communications has acquired licenses
covering a combined population of more than 10.7 million.

AT&T Wireless Relationship.We believe that our relationship with
AT&T Wireless, one of our owners, provides us with
significant strategic benefits. We are the preferred provider of
wireless service to AT&T Wireless subscribers who roam
into our markets. Through our long-term roaming agreement with
AT&T Wireless, we offer our subscribers national and
regional rate plans which access AT&T Wireless
coast-to-

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coast footprint. We believe these plans
differentiate us from our competition in many of our markets.
AT&T Wireless also has generally agreed to use commercially
reasonable efforts to assist us in obtaining discounts from its
vendors for the purchase of subscriber or infrastructure
equipment.


Integration with Dobson Communications.We believe that the integration of our
operations with Dobson Communications has significant benefits.
Our licensed areas, combined with those of Dobson
Communications, cover an estimated population of more than
11.4 million, and together we served more than
1.3 million subscribers at December 31, 2001. This
size and scale enable us to reduce our operating costs and
receive certain technical, network and operational functions
from Dobson Communications existing corporate
infrastructure.

Operations

Markets and Systems

The following table sets forth information with
respect to our existing markets and the estimated population in
our licensed areas as of December 31, 2001. Net population
represents total population less minority ownership interests in
our licenses. Information with respect to subscribers is
managements estimate as of December 31, 2001. We
determine market penetration by dividing total subscribers in
each of our FCC wireless licensed areas at the end of the period
by the estimated total population covered by the applicable
wireless license or authorization.

|                     |                                          |            |  |            |           |  |  |         |           | 
|-------------------- | ---------------------------------------- | ---------- |  | ---------- | --------- |  |  | ------- | --------- | 
|                     |                                          | Total      |  | Net       
|Markets:             |                                          | Population |  | Population
|                     |                                          |            |  |           
|Central Region       |                                          |            |  |            |           |  |  |        
|                     | Northeast Oklahoma/ Southeast Kansas PCS |            |  | 259,400    |           |  |  | 259,400 |          
|                     |                                          |            |  |            |           |  |  |        
|                     |                                          | Total      |  |            | 259,400   |  |  |         | 259,400   | 
|                     |                                          |            |  |            |           |  |  |        
|Upper Midwest Region |                                          |            |  |            |           |  |  |        
|                     | Alton, IL MSA                            |            |  | 21,700     |           |  |  | 18,900  |          
|                     | MI 1 RSA                                 |            |  | 202,700    |           |  |  | 202,700 |          
|                     | Duluth MN MSA                            |            |  | 243,800    |           |  |  | 243,800 |          
|                     | MN 2A 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    |           |  |  | 123,300 |          
|                     | 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  |          
|                     |                                          |            |  |            |           |  |  |        
|                     |                                          | Total      |  |            | 1,926,800 |  |  |         | 1,918,500 | 
|                     |                                          |            |  |            |           |  |  |        

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|               |                      |            |                                             |            |           |           |  |         |           |           | 
|-------------- | -------------------- | ---------- | ------------------------------------------- | ---------- | --------- | --------- |  | ------- | --------- | --------- | 
|               |                      | Total      |                                             | Net       
|Markets:       |                      | Population |                                             | Population
|               |                      |            |                                             |           
|Eastern Region |                      |            |                                             |            |           |           |  |        
|               | Orange County NY MSA |            |                                             | 341,400    |           |           |  | 341,400 |          
|               | Poughkeepsie NY MSA  |            |                                             | 280,200    |           |           |  | 269,000 |          
|               | 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      |                                             |            | 2,810,800 |           |  |         | 2,799,600 |          
|               |                      |            |                                             |            |           |           |  |        
|               |                      |            | Total  American Cellular regions
	combined |            |           | 4,997,000 |  |         |           | 4,977,500 | 
|               |                      |            |                                             |            |           |           |  |        
|               |                      |            | Total subscribers                           |            |           | 623,100   |  |         |           |           | 
|               |                      |            |                                             |            |           |           |  |        
|               |                      |            | Total penetration                           |            |           | 12.6%     |  |         |           |           | 
|               |                      |            |                                             |            |           |           |  |        

Service and Features

We develop and deploy some of the most advanced
wireless products and services. From a fully digital network to
the introduction of a wireless Internet product, we strive to
consistently deliver cutting-edge services and technologies to
our customer base. We attempt to maximize the choices available
to our customers through offering the latest line of hand-held
wireless phones from a wide-variety of manufacturers. We design
our rate plans to fit the specific needs of our customers. In an
effort to meet the needs of our customers, we specially tailor
business plans to nation-wide no-roaming. We offer no-toll plans
to unlimited local calling plans branded as Breeze. In addition,
we focus on the development of plans that maximize our profit
margin. We balance the needs of the customer with our on-going
objective to increase profitability. We solidify our commitment
to our customer base through the high priority we place on
deploying the latest products, services and competitive rate
plans.

The following are key components of our service
offering:

Wireless Calling.Our primary service offering is
wireless telephone service. We offer digital service in all of
our markets using the TDMA digital standard, as well as analog
service 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, voice activated dialing,
and mobile originated and mobile terminated short message
service.

Voice Privacy and Call Security.Digital technology is inherently more
secure than analog technologies. This security provides
increased voice privacy and enhanced fraud protection for our
customers.

Data and Internet Services.We currently offer wireless data
service and access to the Internet on some digital handsets,
which we have deployed in certain of our cellular markets using
our Cellular Digital Packet Data (CDPD) network.
This product offers unlimited access to our wireless Internet
portal for a monthly fee. We also provide two-way
short-messaging services in some of our markets.

Tri-Mode Handsets.As of December 31, 2001,
approximately 73% of our subscribers use a tri-mode, dual-band
handset. 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 partners, including Cingular Wireless.

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Marketing

The following are key components of our marketing
strategy:

Branding.We offer
wireless service under the CELLULAR ONE® brand name. We
believe the national advertising campaign conducted by the
Cellular One Group has enhanced our advertising exposure at a
lower cost than could have been achieved alone. We also believe
that we have obtained significant marketing benefits from the
high name recognition associated with this widely used service
mark.

We use the CELLULAR ONE® brand name pursuant
to licensing agreements with Cellular One Group. We pay
licensing and advertising fees based upon the population of the
licensed areas. The licensing agreements require us to provide
high-quality wireless telephone service to our customers and to
maintain a certain minimum overall customer satisfaction rating
in surveys commissioned by the Cellular One Group. The licensing
agreements, which we have entered into, 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.In
addition to the national advertising campaign conducted by the
Cellular One Group, 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.

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 Talk USA national rate plan, similar
to AT&T Wireless Digital One-Rate plan, regional rate
plans and local rate plans at a variety of pricing tiers. The
majority of our digital subscribers are on our regional rate
plans. 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 digital 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. Local management conducts market research to identify
and design rate plans to emphasize the quality, value and
advantage of our wireless communications services.

We are able to offer national and regional rate
plans as a result of our roaming agreements with AT&T
Wireless and Cingular Wireless. Competing rate plans often limit
flat rate usage to the competitors own networks. This
allows us to differentiate our product offering from our
competitors in many of our markets and to offer customers
pricing plans, which are designed to be both flexible and
economical.

Sales and Distribution

Our sales and distribution strategy is to use a
variety of distribution channels to maximize our penetration
within our service area, while reducing overall customer
acquisition costs. These channels include company retail stores,
a direct sales force and independent agents. Our retail stores
offer a full line of wireless products and services. As of
December 31, 2001, we operated approximately 85 retail
locations, which ranged from small sales kiosks in malls to
large retail stores. Some of the stores are also authorized
repair centers. Our direct sales force is composed of
approximately 100 salespeople who focus primarily on small and
medium-sized businesses located within our licensed territory.
As of December 31, 2001, we had approximately 175
independent agents who distribute our products, many of whom do
so on an exclusive basis. These agents include national
retailers such as Radio Shack, Best Buy, Wal-Mart and Staples,
as well as local retail establishments.

Customer Care

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 a market manager, customer service representatives,
technical and engineering

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staff, sales representatives and installation and
repair facilities. Each service region has its own
customer-related functions such as credit evaluation, customer
activations, account adjustments and rate plan changes. Local
offices and installation and repair facilities allow us to
better service our customers, schedule installations and make
repairs. As of December 31, 2001, our markets were serviced
by four regional call centers, which, in aggregate, employed
approximately 300 customer care representatives. 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.


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 focus on systems that are adjacent to
major metropolitan areas and include a high concentration of
expressway corridors, which tend to have a significant amount of
roaming activity. Our principal roaming partners include
AT&T Wireless and Cingular Wireless.

Our most significant roaming partner is AT&T
Wireless. For the year ended December 31, 2001, AT&T
Wireless customers accounted for approximately 43% of
our roaming revenue or approximately 14% of our total
operating revenue. Under our roaming agreement with AT&T
Wireless, we and AT&T Wireless charge each other favorable
roaming rates for each of our respective markets. This rate will
decrease over time. The agreement provides for the maintenance
by us of certain call features and related services to roaming
customers, such as call waiting, call forwarding, three-way
calling, caller ID and voice mail. The roaming agreement may be
terminated or suspended by either party if the FCC revokes a
license covering a material portion of our or AT&T
Wirelesss markets, either party fails to control
subscriber fraud, either party fails to adhere to system
technical requirements and upgrades or either party breaches any
of the material terms of the roaming agreement. The agreement
expires in January 2003 although the rate provision extends
until June 2004.

We are included in the North American Cellular
Network (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

H.O. Systems, Inc. provides the billing function
for all of our wireless operations. Proprietary software
furnished by H.O. Systems serves all functions of billing
for corporate and retail locations. All administrative and
customer maintenance functions are handled in-house. H.O.
Systems prints and processes all of our customer invoices. We
use software that complements this billing system, allowing the
use of credit, collection and switch interfaces.

Network Operations

Network Communications Equipment.Our network communications equipment
is provided by a variety of leading network suppliers, including
Nortel Networks. We often aggregate our orders for network
equipment with those of Dobson Communications to provide
additional equipment discounts.

Connection Agreements.Our wireless network connects to the
public switched telephone network system through local exchange
carriers. We have entered into connection agreements with
BellSouth, Southwestern Bell, Ameritech, Verizon and other local
exchange carriers within our markets.

Long Distance Connection.We have executed a wholesale long
distance agreement with AT&T Wireless to provide long
distance services.

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Roaming Arrangements.Our agreements with other wireless
operators, including AT&T Wireless, allow us to offer our
subscribers service in virtually all wireless service areas
throughout the United States.

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.

Technology

We have deployed TDMA digital technology for the
digital voice and features of our wireless network. TDMA
technology allows for:



| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The use of advanced tri-mode handsets, which
	permit roaming in both cellular and PCS (1900 MHz) service
	areas, including both analog and digital technologies;
|
| |  | Enhanced services and features, such as
	short-messaging, extended battery life and added call
	security; and                                                   
|
| |  | Network equipment, which can improve network
	coverage and capacity with low incremental capital investment.                                                    

During the second half of 2002, we intend to
overlay selected markets with the Global System for Mobile
Communications (GSM) voice network. This network
will also support the General Packet Radio Service
(GPRS) 2.5G data technology. With this data
network, we expect to be able to offer 40Kb to 60Kb individual
data speeds to subscribers and roamers. We plan to complete a
full GSM/GPRS overlay by the end of 2003. GSM/GPRS is the 2.5G
technology choice of both AT&T Wireless and Cingular
Wireless.

Competition

We compete with various companies in each of our
markets. The following table lists the principal competitors in
each of our regions:

|                     |  |                                                                                                                               
|-------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Regions              |  | Principal Competitors                                                                                                         
|                     |  |                                                                                                                               
|East Region          |  | Alltel
	Bluegrass Cellular
	Cingular Wireless
	Nextel
	Ramcell
	Sprint PCS
	SunCom
	US Cellular
	Verizon Wireless
	VoiceStream
|Upper Midwest Region |  | CellComm
	Centurytel Wireless
	Midwest Wireless
	Rural Cellular
	Sprint PCS
	Thumb Cellular
	Verizon Wireless
	VoiceStream    
|Central Region       |  | Alltel
	Cingular Wireless
	Sprint PCS
	US Cellular
	VoiceStream                                                               

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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. Some
competitors may market other services, such as long distance,
landline local exchange and internet access service, with their
wireless telecommunication service offerings.

We compete against other facilities-based
cellular carriers, PCS carriers and 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.

AT&T Wireless, Cingular Wireless, Verizon
Wireless, Nextel Communications, Sprint PCS, and VoiceStream
operate substantially nationwide networks. If any of our roaming
partners, including AT&T Wireless, were to build out
personal communications service networks in our markets to
provide their customers with wireless service, this would reduce
our roaming revenues. Any increased competition from personal
communications service providers in rural markets covered by our
systems could also have the effect of further reducing the
roaming rates we could charge. Subject to certain conditions,
AT&T Wireless has agreed not to build out personal
communications service networks using TDMA or analog technology
in any of the markets currently served by us until
February 25, 2005.

We also face, to a lesser extent, competition
from mobile satellite service providers, as well as from
resellers of these services and wireless service. In the future,
we may also compete more directly with traditional landline
telephone service providers. The FCC has created potential
sources of new competition by auctioning additional personal
communications service 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 recently initiated
a rule making proceeding to allocate approximately 200 MHz
of additional spectrum to wireless use, much of which can be
licensed for commercial wireless purposes. Continuing
technological advances in telecommunications make it impossible
to predict the extent of future competition. However, due to the
depth and breadth of these competitive services offered by
operators using these other technologies, future competition
from these operators could be intense.

Discontinued Operations

On October 30, 2001, two of our
wholly-owned, indirect subsidiaries entered into a definitive
agreement with Verizon Wireless to sell Tennessee 4 RSA for a
total purchase price of $202.0 million. The
Tennessee 4 RSA covers a total population of approximately
290,800 and has a subscriber base of approximately 24,900, which
are not included in our December 31, 2001 reported amounts.
As a result of this agreement, the results of operations for
Tennessee 4 RSA during the years presented are included as
discontinued operations in our consolidated financial
statements. This sale was completed on February 8, 2002.

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.

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Federal Regulation

The licensing, construction, modification,
operation, ownership and acquisition of wireless telephone
systems are subject to regulations and policies of the FCC under
the Communications Act of 1934, as amended. The FCC has
promulgated rules and regulations governing, among other things,
applications to construct and operate wireless communications
systems, applications to transfer control of or assign wireless
licenses and technical and operational standards for the
operation of wireless systems (such as maximum power and antenna
height).

The FCC licenses cellular systems in accordance
with 734 geographically defined market areas comprised of 306
Metropolitan Statistical Areas, or MSAs and 428 Rural Service
Areas, or 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 with the
boundaries of the FCC designated MSA or RSA, 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 most
licensees and the FCC has granted several unserved
area applications filed by parties other than the original
MSA or RSA licensee.

The FCC has in the past restricted an
entitys ability to own interests in both cellular
frequency blocks in a market (the so-called cellular cross
interest rule) and further restricted the amount of commercial
mobile radio service (CMRS) spectrum in which an
entity may hold an attributable interest (the so-called spectrum
cap rule). On November 8, 2001, the FCC adopted a Report
and Order in which it (1) repealed the cellular cross
interest restriction as applied to ownership interests in MSAs,
but retained the rule as applied to ownership interests in RSAs;
and (2) increased the amount of attributable CMRS spectrum
that may be held to 55 MHz throughout all MSAs and RSAs.
The FCC will sunset the CMRS spectrum cap rule by eliminating it
effective January 1, 2003. Starting January 1, 2003,
the FCC will engage in a case-by case review of transactions
that would raise concerns similar to those that the spectrum cap
was designed to address. The transition period prior to
January 1, 2003 is intended to provide the FCC and
transacting parties an opportunity to prepare for the
case-by-case approach. The changes adopted by the FCC in the
November 8, 2001 Report and Order could further increase
our ability to attract capital or to make investments in other
wireless operators.

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. 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. These regulatory payment obligations
increase our costs of doing business.

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 any rights thereunder. Although we
cannot assure you 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

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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.


The FCC also regulates a number of other aspects
of the cellular business. For example, the FCC regulates
cellular resale practices and currently also applies such
cellular resale requirements to A and B Block (and
A/B Block controlled) broadband PCS and enhanced
specialized mobile radio licensees. These cellular, PCS and
enhanced specialized mobile radio providers may not restrict any
customers resale of their services or unreasonably
discriminate against resellers of their services. All resale
obligations for cellular, broadband PCS and enhanced specialized
mobile radio operators are currently scheduled to terminate on
November 24, 2002. Moreover, federal legislation enacted in
1993 requires the FCC to reduce the disparities in the
regulatory treatment of similar mobile services, such as
cellular services, PCS and enhanced specialized mobile radio
services. Under this regulatory structure, all of our cellular
and PCS licenses are classified as CMRS. As a CMRS provider, the
FCC regulates us as a common carrier. The FCC, however, has
exempted cellular and PCS services 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, and preempted state rate and
entry regulation.

The FCC has also adopted requirements for
cellular and other CMRS providers to implement basic and
enhanced 911 services. These services provide 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 several stages, and on a market-by-market
basis. We and virtually all other CMRS providers have requested
that the FCC extend the deadlines for meeting these 911
requirements. Our request remains pending, during which time the
FCC will not enforce these requirements. The extent to which the
FCC grants our requested relief 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 enhanced 911 services. Federal legislation
enacted in 1999 may limit our liability relative to incomplete
911 calls to a degree commensurate with wireline carriers in our
markets. Under certain circumstance, federal law also requires
cellular and PCS carriers to provide law enforcement agencies
with capacity to support lawful wiretaps and technical
capabilities for wiretaps beginning June 30, 2000 for voice
services and November 19, 2001 for packet-mode services,
and to comply 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
changes.

In addition, the FCC regulates the ancillary
service offerings that cellular and PCS licensees can provide
and permits cellular, broadband PCS, paging and enhanced
specialized mobile radio 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
enhanced specialized mobile radio licensees, although the extent
of lawful state regulation of such wireless local
loop service is undetermined. In this regard, the FCC has
also adopted telephone number portability rules for local
exchange carriers, as well as cellular, PCS and enhanced
specialized mobile radio licensees that could facilitate the
development of local exchange competition, including wireless
local loop service. The number portability rules generally
require cellular, PCS and enhanced specialized mobile radio
licensees, to have the capability to deliver calls from their
systems to ported numbers effective December 31, 1998 and
offer number portability in a manner that supports roaming to
ported numbers by November 24, 2002. These requirements may
result in added capital expenditures for us to make necessary
system changes, although we currently have no plans for any such
expenditures.

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 each of our licenses for which a renewal
application was required for a new ten-year term. 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

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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.


A PCS system operates under a protected
geographic service area license granted by the FCC for either a
major trading area, or MTA, or a basic trading area, or BTA, on
one of six frequency blocks allocated for broadband PCS. The FCC
has divided the United States and its possessions and
territories into PCS markets based upon Rand McNallys 493
BTAs, all of which are included in the 51 MTAs. The FCC has
allocated 120 MHz of radio spectrum in the 2 GHz band
for licensed broadband PCS. The FCC divided the 120 MHz of
spectrum into six individual blocks, 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 standards 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.

FCC rules restrict the voluntary assignments or
transfers of control of certain C and F Block licenses
awarded to small businesses with bidding
enhancements in the C Block and F Block auctions.
During the first five years of the license term, assignments or
transfers affecting control are permitted only to assignees or
transferees that meet the eligibility criteria for participation
in the entrepreneur 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
C Block and F Block, met the same eligibility criteria
at the time of receipt of such licenses, or to any qualified
entity only if the original licensee has met the applicable
five-year construction requirement for the license. Any
transfers or assignments by licensees that qualified for
installment payments during the entire ten-year initial license
terms are subject to unjust enrichment penalties;
i.e., acceleration of any installment payment plans should
the assignee or transferee not qualify for the same benefits.
Any transfers or assignments by licensees that qualified for
bidding credits during the first five years of the license term
are subject to unjust enrichment penalties; i.e., forfeiture of
any bidding credit based upon the amount of time the initial
license has been held should the assignee or transferee not
qualify for these same benefits. In the case of the C and
F Block licenses, the FCC will conduct random audits to
ensure that licensees are in compliance with the FCCs
eligibility rules. Violations of the Communications Act or the
FCCs rules could result in license revocations,
forfeitures or fines.

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. To
secure a sufficient amount of unencumbered spectrum to operate
our PCS systems efficiently and with adequate population
coverage, we may need to relocate many of these incumbent
licensees, at our expense, to other frequencies or to reimburse
other previously-licensed PCS licensees for expenses they have
incurred in relocating incumbent licensees that we might
otherwise have been required to relocate. In an effort to
balance the competing interests of existing microwave users and
newly authorized PCS licensees, the FCC has 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. This
transition plan allows most microwave users to operate on the
PCS spectrum for a one-year voluntary negotiation period and an
additional one-year mandatory negotiation period. For public
safety entities dedicating a majority of their system
communications for police, fire or emergency medical services
operations, the voluntary negotiation period is three years,
with an additional two-year mandatory negotiation

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period. After the voluntary and mandatory
negotiation periods expire, the microwave user continues to hold
primary status until April 4, 2005, but may be
involuntarily relocated, albeit at the PCS licensees
expense. Parties unable to reach agreement within these time
periods may refer the matter to the FCC for resolution, but the
incumbent microwave user is permitted to continue its operations
until final FCC resolution of the matter. 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
not yet determined the extent, if any, of expenses we may need
to incur for the relocation of microwave incumbents in order to
provide PCS services using our PCS licenses. We also cannot be
sure that any transitions will occur in a timely fashion that
will allow us to meet our marketing and operating objectives.


The FCC has also 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
limit the manner in which we bill for services.

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 the 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 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, or us in which we hold a
controlling interest that would warrant such a finding by
the FCC.

If foreign nationals or their representatives, a
foreign government or its representative or any corporation
organized under the laws of a foreign country own of record or
vote greater than 25 percent of our equity and the FCC
determines that the public interest would be so served, it may
revoke our cellular licenses or require an ownership
restructuring. The FCC will generally permit 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.

The Telecommunications Act of 1996, which made
significant changes to the Communications Act, requires state
public utilities commissions and/or the FCC to implement
policies that mandate reciprocal compensation between local
exchange carriers, a category that will, for these purposes,
include cellular carriers, for interconnection services at rates
more closely related to cost. In a rulemaking proceeding
pertaining to interconnection between local exchange carriers
and CMRS providers such as us, the FCC concluded that local
exchange carriers are required to compensate CMRS providers for
the reasonable costs incurred by these providers in terminating
traffic that originates on local exchange carrier facilities,
and vice versa. Consistent with this ruling, the FCC has
determined that local exchange carriers may not charge a CMRS
provider or other carrier for terminating local exchange
carrier-originated traffic and that local exchange carriers may
not charge CMRS providers for number activation and usage fees.
Depending on further FCC disposition of these issues, we may or
may not be successful in securing refunds, future relief or
both, with respect to charges for termination of local exchange
carrier-originated local traffic. If the FCC ultimately resolves
these issues in favor of CMRS providers, then we will pursue
relief through settlement negotiations, administrative complaint
procedures or both. If these issues are ultimately decided in
favor of the local exchange carriers, we likely would be
required to pay all past due contested charges and may also be
assessed interest and late charges for the withheld amounts.
These requirements could in the future have a material effect on
us. The FCC is currently considering changes to local exchange
carrier-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 for such traffic.

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The Telecommunications Act requires, and the FCC
has adopted, rules that require interstate communications
carriers, including cellular 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. We may also seek to qualify for payments from
these federal and state programs in high cost areas where we
provide wireless communications services, although we are not
certain of the extent to which such payments will be available
to cellular carriers. If such payments are made available to us,
they would be an additional source of revenue to us that could
be used to subsidize service we provide in the high cost areas.
The FCC recently initiated a rule making proceeding in which it
solicits 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. Reforms adopted in this proceeding may have an impact
on carriers operating expenses and on their ability to
recover universal service contributions from customers.

The Telecommunications Act also eases the
restrictions on the provision of interexchange telephone
services by wireless carriers affiliated with regional Bell
operating companies. Regional Bell operating company-affiliated
wireless carriers have interpreted the legislation to permit
immediate provision of in-region long distance call delivery for
their cellular customers, thus presenting an additional source
of competition to us.

Additionally, the Telecommunications Act
specifically exempts all cellular carriers from the obligation
to provide equal access to interstate long distance carriers.
However, the Telecommunications Act gives the FCC 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. We currently provide dial
around equal access to all of our customers.

The Telecommunications Act also imposes
restrictions on a telecommunications carriers use of
customer proprietary network information without prior customer
approval. FCC rules implementing these restrictions are being
revised but have the potential to impose upon us new costly
obligations and impose burdens on our current marketing
activities. The FCCs rules implementing the
Telecommunications Acts customer proprietary network
information provisions were vacated by the United States Court
of Appeals for the Tenth Circuit on First Amendment grounds and
the Supreme Court declined to review the Tenth Circuits
decision. The FCC has sought public comment on whether to modify
its rules to address the courts concerns, and imposition
of rules similar to those vacated by the court could impose
additional costs on us and inhibit our marketing efforts.

The Telecommunications Act also requires
telecommunications carriers 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, carriers such as us
could, if found to have violated the rules, be subject to fines
and/or the imposition of costly new requirements. As a related
matter, the FCC has proposed requiring wireless handsets to be
compatible with hearing aids, which may increase the price of
handsets for customers.

In addition, the FCC has adopted rules to promote
the conservation of numbering resources and is considering
additional rules in this area. These rules require wireless
carriers to participate in number pooling (whereby phone numbers
are allocated in blocks of 1,000 rather than 10,000) when they
have implemented number portability capabilities, and imposed
additional administrative, monitoring and number reclamation
obligations on all carriers (currently required by
November 24, 2002), including wireless carriers. These
efforts may affect wireless service providers by imposing
additional costs or limiting access to numbering resources. The
FCC also has authorized states to initiate limited numbering
administration to supplement federal requirements including a
number of states in which we provide service.

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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 high cost and
urban costs. 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.

The overall impact of the Telecommunications Act
on our business is unclear and will likely remain so for the
foreseeable future. For example, limitations on local zoning
requirements imposed by the Telecommunications Act may
facilitate the construction of new cell sites and related
facilities. However, these restrictions on zoning authority may
provide only limited assistance to cellular carriers. On the
other hand, other provisions of the new statute relating to
interconnection, telephone number portability, universal
service, equal access, use of customer proprietary network
information and resale could subject us to additional costs and
increased competition.

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. The FCC has also
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 limit the manner in which
we bill for services.

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 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 assure you 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 assure you 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

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##### Table of Contents



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

We have no employees. Our operations are entirely
managed by Dobson Communications pursuant to our management
agreement with Dobson Communications.




Item 2. Properties

As of December 31, 2001, we own or lease
three regional call centers located in Duluth, Minnesota,
Wausau, Wisconsin and LaGrangeville, New York. In addition, our
wireless operations leased approximately 85 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
threatening 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

Not applicable

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##### Table of Contents






PART II




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

There is no established trading market for our
common stock. As of March 22, 2002, ACC Acquisition LLC was
the sole holder of record of our common stock.

On March 14, 2001, we sold
$450.0 million principal amount of our Senior Subordinated
Notes at a discount of $3.3 million. In addition, on
June 4, 2001, we sold $250.0 million principal amount
of our Senior Subordinated Notes at a discount of
$3.6 million. Both sets of notes mature on October 15,
2009 and carry an annual interest rate of 9.5%. In addition,
both sets of notes have been registered under the Securities Act
of 1933.




Item 6. Selected Financial
Data

The following table sets forth certain of our
historical consolidated financial data and that of our
predecessor, PriCellular. We derived our 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 our
consolidated financial statements included in Item 8, which
have been audited by Arthur Andersen LLP. Our consolidated
financial statements for these two periods have been restated to
reflect our sale of Tennessee 4 as discontinued operations. We
derived the consolidated financial data for the year ended
December 31, 1999 (also included in Item 8) and the
period from February 26, 1998 through December 31,
1998 from our consolidated financial statements audited by
Ernst & Young LLP. We derived the consolidated
financial data of our predecessor, PriCellular, for the six
months ended June 30, 1998 and the year ended
December 31, 1997 from our predecessors consolidated
financial statements audited by Ernst & Young LLP.

Our predecessor, PriCellular, was formed on
February 21, 1990. We were formed on February 26, 1998
and acquired PriCellular, for accounting purposes, on
June 25, 1998. Between February 26, 1998 and
June 25, 1998, we did not conduct any business. As a
result, our statement of operations data for the period from
February 26, 1998 through December 31, 1998 only
includes actual operations for the six-month period from
July 1, 1998 through December 31, 1998. On
February 25, 2000, we were acquired by AT&T Wireless
and Dobson Communications. You should read the information set
forth below 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.

|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |         |         |         | 
|----------------------------- | ----------------------- | --------------------------------------------------------- | ------------------------ | ------------------------- | -------- | ------------ | - | ----------------- | -------- | ---------- | - | ------------ | -------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------ | - | ------- | ------- | ------- | 
|                              |                         |                                                           |                          |                          
|                              |                         | American Cellular                                         |                          | PriCellular              
|                              |                         |                                                           |                          | (the predecessor company)
|                              |                         |                                                           |                          | Period from               |          |              |   | Period from       |          |           
|                              |                         |                                                           |                          | February 25, 2000         |          |              |   | February 26, 1998 |          | Six Months |   |             
|                              |                         | Year Ended                                                |                          | through                   |          | Year Ended   |   | through           |          | Ended      |   | Year Ended  
|                              |                         | December 31,                                              |                          | December 31,              |          | December 31, |   | December 31,      |          | June 30,   |   | December 31,
|                              |                         | 2001                                                      |                          | 2000                      |          | 1999         |   | 1998              |          | 1998       |   | 1997        
|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |             
|                              |                         |                                                          
|                              |                         | ($ in thousands except per share and per subscriber data)
|Statement of Operations Data: |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |        
|                              | Total operating revenue |                                                           | $                        | 417,243                   |          |              | $ | 309,343           |          |            | $ | 325,821      |          |         | $ | 137,487 |         |         | $ | 108,670 |         |        | $ | 181,000 |        
|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |        
|                              | Operating expenses:     |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |         |        
|                              |                         | Cost of service                                           |                          |                           | 106,707  |              |   |                   | 61,062   |            |   |              | 57,246   |         |   |         | 25,995  |         |   |         | 20,911  |        |   |         | 48,691  |        
|                              |                         | Cost of equipment                                         |                          |                           | 37,182   |              |   |                   | 26,769   |            |   |              | 19,356   |         |   |         | 7,271   |         |   |         | 5,365   |        |   |         | 12,841  |        
|                              |                         | Selling, general and administrative                       |                          |                           | 117,406  |              |   |                   | 75,349   |            |   |              | 74,428   |         |   |         | 37,625  |         |   |         | 30,230  |        |   |         | 53,485  |        
|                              |                         | Depreciation and amortization                             |                          |                           | 182,637  |              |   |                   | 147,257  |            |   |              | 97,217   |         |   |         | 45,569  |         |   |         | 17,553  |        |   |         | 28,759  |        
|                              |                         | Non-recurring charges                                     |                          |                           |         |              |   |                   |         |            |   |              |         |         |   |         | 4,355   |         |   |         | 4,889   |        |   |         |        |        
|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |        
|                              |                         |                                                           | Total operating expenses |                           |          | 443,932      |   |                   |          | 310,437    |   |              |          | 248,247 |   |         |         | 120,815 |   |         |         | 78,948 |   |         |         | 143,776 | 
|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |        
|                              | Operating (loss) income |                                                           |                          | (26,689                   | )        |              |   | (1,094            | )        |            |   | 77,574       |          |         |   | 16,672  |         |         |   | 29,722  |         |        |   | 37,224  |        
|                              |                         | Interest expense                                          |                          |                           | (165,457 | )            |   |                   | (133,270 | )          |   |              | (106,888 | )       |   |         | (61,477 | )       |   |         | (38,955 | )      |   |         | (67,392 | )      
|                              |                         | Other income, net                                         |                          |                           | 3,723    |              |   |                   | 537      |            |   |              | 4,918    |         |   |         | 4,936   |         |   |         | 2,947   |        |   |         | 16,537  |        
|                              |                         | Income tax benefit (provision)                            |                          |                           | 52,199   |              |   |                   | 33,242   |            |   |              | (5,418   | )       |   |         | (530    | )       |   |         |        |        |   |         |        |        
|                              |                         |                                                           |                          |                           |          |              |   |                   |          |            |   |              |          |         |   |         |         |         |   |         |         |        |   |        

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|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |         |  
|--------------------- | ---------------------------------------------------------------- | --------------------------------------------------------- | - | ------------------------- | - | ------------ | - | ----------------- | - | ---------- | - | ------------ | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                      |                                                                  |                                                           |   |                          
|                      |                                                                  | American Cellular                                         |   | PriCellular              
|                      |                                                                  |                                                           |   | (the predecessor company)
|                      |                                                                  |                                                           |   | Period from               |   |              |   | Period from       |   |           
|                      |                                                                  |                                                           |   | February 25, 2000         |   |              |   | February 26, 1998 |   | Six Months |   |             
|                      |                                                                  | Year Ended                                                |   | through                   |   | Year Ended   |   | through           |   | Ended      |   | Year Ended  
|                      |                                                                  | December 31,                                              |   | December 31,              |   | December 31, |   | December 31,      |   | June 30,   |   | December 31,
|                      |                                                                  | 2001                                                      |   | 2000                      |   | 1999         |   | 1998              |   | 1998       |   | 1997        
|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |             
|                      |                                                                  |                                                          
|                      |                                                                  | ($ in thousands except per share and per subscriber data)
|                      | Loss from continuing operations                                  |                                                           |   | (136,224                  | ) |              |   | (100,585          | ) |            |   | (29,814      | ) |  |   | (40,399 | ) |  |   | (6,286  | ) |  |   | (13,631 | )
|                      | (Loss) income from discontinued operations, net
	of income taxes |                                                           |   | (1,439                    | ) |              |   | 1,342             |   |            |   |             |   |  |   |        |   |  |   |        |   |  |   |        |  
|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Net loss                                                         |                                                           |   | (137,663                  | ) |              |   | (99,243           | ) |            |   | (29,814      | ) |  |   | (40,399 | ) |  |   | (6,286  | ) |  |   | (13,631 | )
|                      | Dividends on preferred stock                                     |                                                           |   | (2,139                    | ) |              |   |                  |   |            |   | (44,105      | ) |  |   | (21,375 | ) |  |   | (3,357  | ) |  |   | (6,540  | )
|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Net loss applicable to common stockholder                        |                                                           | $ | (139,802                  | ) |              | $ | (99,243           | ) |            | $ | (73,919      | ) |  | $ | (61,774 | ) |  | $ | (9,643  | ) |  | $ | (20,171 | )
|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Net loss applicable to common stockholder per
	common share      |                                                           | $ | (1,398,015.33             | ) |              | $ | (992,433.88       | ) |            | $ | (274.40      | ) |  | $ | (229.31 | ) |  | $ | (0.28   | ) |  | $ | (0.55   | )
|                      |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|Other Financial Data: |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Capital expenditures                                             |                                                           | $ | 74,850                    |   |              | $ | 58,450            |   |            | $ | 50,462       |   |  | $ | 24,260  |   |  | $ | 20,517  |   |  | $ | 25,717  |  
|Other Data:           |                                                                  |                                                           |   |                           |   |              |   |                   |   |            |   |              |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Subscribers (at period end)                                      |                                                           |   | 632,100                   |   |              |   | 531,200           |   |            |   | 434,700      |   |  |   | 334,500 |   |  |   | 286,000 |   |  |   | 243,700 |  
|                      | Penetration (at period end)(1)                                   |                                                           |   | 12.6                      | % |              |   | 11.2              | % |            |   | 8.9          | % |  |   | 6.8     | % |  |   | 5.9     | % |  |   | 5.3     | %
|                      | Average monthly churn rate(2)                                    |                                                           |   | 1.8                       | % |              |   | 1.6               | % |            |   | 1.6          | % |  |   | 1.8     | % |  |   | 1.4     | % |  |   | 1.8     | %
|                      | Average monthly service revenue per subscriber(3)                |                                                           | $ | 38                        |   |              | $ | 38                |   |            | $ | 39           |   |  | $ | 40      |   |  | $ | 40      |   |  | $ | 40      |  

|                    |                                        |                    |   |           |  |      |   |           |  |      |   |           |  |  |   |           |  |  |   |         | 
|------------------- | -------------------------------------- | ------------------ | - | --------- |  | ---- | - | --------- |  | ---- | - | --------- |  |  | - | --------- |  |  | - | ------- | 
|                    |                                        |                   
|                    |                                        | As of December 31,
|                    |                                        |                   
|                    |                                        | 2001               |   | 2000      |  | 1999 |   | 1998      |  | 1997
|                    |                                        |                    |   |           |  |      |   |           |  |     
|                    |                                        |                   
|                    |                                        | ($ in thousands)  
|Balance Sheet Data: |                                        |                    |   |           |  |      |   |           |  |      |   |           |  |  |   |           |  |  |   |        
|                    | Cash and cash equivalents              |                    | $ | 5,962     |  |      | $ | 14,881    |  |      | $ | 74,896    |  |  | $ | 34,015    |  |  | $ | 61,357  | 
|                    | Net fixed assets                       |                    |   | 203,168   |  |      |   | 184,655   |  |      |   | 173,425   |  |  |   | 159,792   |  |  |   | 104,854 | 
|                    | Total assets                           |                    |   | 2,691,439 |  |      |   | 2,690,103 |  |      |   | 1,484,143 |  |  |   | 1,517,600 |  |  |   | 747,656 | 
|                    | Redeemable preferred stock             |                    |   | 37,139    |  |      |   |          |  |      |   |          |  |  |   |          |  |  |   |        | 
|                    | Long term debt, net of current portion |                    |   | 1,760,208 |  |      |   | 1,650,535 |  |      |   | 1,170,580 |  |  |   | 1,195,971 |  |  |   | 568,323 | 
|                    | Stockholders equity                   |                    |   | 554,563   |  |      |   | 665,757   |  |      |   | 233,555   |  |  |   | 263,369   |  |  |   | 134,180 | 



---



|    |                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(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 subscribers during such period.
|   
|(3) | 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.

Overview

Our predecessor, PriCellular, was formed on
February 21, 1990. We were formed on February 26, 1998
and acquired PriCellular, for accounting purposes, on
June 25, 1998. On February 25, 2000, we were acquired
by AT&T Wireless and Dobson Communications. 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, 2001, our wireless systems covered a
population of approximately 5.0 million and we had
approximately 632,100 subscribers.

Discontinued Operations

On October 30, 2001, two of our
wholly-owned, indirect subsidiaries entered into a definitive
agreement to sell Tennessee 4 RSA to Verizon Wireless for a
total purchase price of $202.0 million. The
Tennessee 4 RSA covers a population of approximately
290,800 and has a subscriber base of approximately 24,900, which
are not included in our December 31, 2001 reported amounts.
As a result of this agreement, the results of operations for
Tennessee 4 during the years presented are included as
discontinued operations in our consolidated financial
statements. The sale was completed on February 8, 2002, and
we used the proceeds primarily to pay down our bank debt.

Revenue

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

We primarily derive service revenue by providing
wireless services to our subscribers. The industry has
experienced declining average revenue per minute as competition
among wireless service providers has led to reductions in rates
for airtime. The per minute yield on our service revenue
(service revenue divided by subscriber minutes of use) was $.22,
$.30 and $.34 per minute for the year ended December 31,
2001, the combined year 2000 and the year ended 1999,
respectively. These declines have been generally offset by
significant increases in average minutes of use per subscriber.
We believe that the industry trend toward increasing minutes of
use per subscriber will continue to offset declining revenues
per minute of use due to the continued popularity of single rate
calling plans and the enhanced service capacity of recently
developed digital networks.

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 accounted for 31.7%, 36.8% and 40.3% of our
operating revenue for the year ended December 31, 2001, the
combined year 2000 and the year ended 1999, respectively.
Roaming revenues typically yield higher average per minute rates
and 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, even though
roaming revenue yields have offered higher margins than revenue
from our subscribers, the yields are declining and are becoming
more comparable to yields from our subscribers due to increased
market pressures and competition between wireless providers. Our
roaming yield (roaming revenue, which includes airtime, toll
charges and surcharges, divided by roaming minutes of use) was
$.38, $.55 and $.71 per minute for the year ended
December 31, 2001, the combined year 2000 and the year
ended 1999, respectively. We believe that the trend of
increasing roaming minutes will continue to at least partially
offset declining roaming yields. Roaming revenue tends to be
impacted by seasonality. We typically have higher 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.

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We include long-distance revenue in service and
roaming revenue. Equipment revenue is revenue from selling
wireless equipment to our subscribers.

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.

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. 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. This decline in expense per
minute has helped offset the increased expense from growth in
minutes-of-use per subscriber.

Our cost of equipment represents the cost
associated with telephone equipment and accessories sold to
customers. In recent years, we and other wireless providers have
increased the use of discounts on phone equipment and free phone
promotions, as competition between service providers has
intensified. As a result, we have incurred, and expect to
continue to incur, losses on equipment sales, which have
resulted in increased marketing and selling costs per gross
additional subscriber. 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 agents and all other costs to market and sell
wireless products and services and costs related to customer
retention. We pay commissions to direct sales personnel and
independent agents for new business generated.

Our general and administrative costs include all
infrastructure costs, including costs for customer support,
billing, collections, and corporate administration. One of our
principal owners, Dobson Communications provides management and
certain other services to us in accordance with a management
agreement. We share corporate and shared call center costs
incurred by Dobson Communications and us primarily based on the
estimated populations in our respective licensed areas and
subscribers.

Our depreciation and amortization expense
represents the costs associated with the depreciation of our
fixed assets and the amortization of our intangible assets,
primarily wireless license acquisition costs and customer lists.

Critical Accounting Policies and
Practices

We must necessarily 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 revenues 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. One of our principal
owners, Dobson Communications, provides management and certain
other services to us in accordance with a management agreement.
We share corporate and shared call center costs with Dobson
Communications based primarily on the estimated subscribers and
populations in our respective licensed areas. If there were a
change in the method used to allocate shared costs among us and
Dobson Communications, the change could have a significant
impact on our results of operations.

We amortize and depreciate our property, plant
and equipment, goodwill, wireless licenses, customer lists and
certain other long-lived assets over their useful lives. These
useful lives are based on our estimates of the period that the
assets will generate revenue. We review our intangible assets
for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. With the

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implementation of Statements of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets, which requires companies to stop
amortizing existing goodwill and intangible assets with
indefinite lives, we would treat our wireless licenses as
indefinite life intangibles. As a result, effective
January 1, 2002, we will no longer amortize goodwill and
wireless licenses. Instead, we will continue to test our
goodwill and wireless licenses for impairment at least annually.
This change in policy will have a significant impact to our
results of operations and financial position. During 2001, the
aggregate amount of amortization expense, net of income tax,
attributable to our goodwill and wireless licenses was
approximately $58.3 million and approximately
$34.5 million, respectively. Through December 31,
2001, our accounting policy was to evaluate the carrying value
of our intangible assets based on our undiscounted cash flows.
However, as a result of implementing SFAS 142, we are now
required to evaluate the carrying value of our indefinite life
intangibles using their fair values. Upon implementation of this
new pronouncement, we expect to record charges, net of income
tax, of approximately $282 million to reflect the
write-down of our wireless license acquisition costs to their
fair values.


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.

Results of Operations

Basis of Presentation

The combined year ended December 31, 2000
results of operations combine the results of operations for the
period from January 1, 2000 through February 24, 2000
(the period prior to our acquisition by AT&T Wireless and
Dobson Communications) and the results of operations for the
period from February 25, 2000 through December 31,
2000 (the period subsequent to our acquisition by AT&T
Wireless and Dobson Communications). 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, 2000 refers to the
combined period ended December 31, 2000.

The following table sets forth the components of
our results of operations for the periods indicated:

|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |          |        |         | 
|------------------------------------------ | ------------------------------ | ----------------------------- | ------------------------ | --------------- | ------- | ------------ | ------ | ------------ | ------ | ------------ | -------- | -------- | ------- | ------- | -------- | -------- | ------- | ------- | ------- | -------- | ------ | ------- | 
|                                           |                                |                               |                          | January 1, 2000 |         | February 25, |        | Combined     |        |             
|                                           |                                | Year Ended                    |                          | through         |         | 2000 through |        | Year Ended   |        | Year Ended  
|                                           |                                | December 31,                  |                          | February 24,    |         | December 31, |        | December 31, |        | December 31,
|                                           |                                | 2001                          |                          | 2000            |         | 2000         |        | 2000         |        | 1999        
|                                           |                                |                               |                          |                 |         |              |        |              |        |             
|Operating revenue:                         |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|                                           | Service revenue                |                               | $                        | 266,507         |         |              | $      | 31,189       |        |              | $        | 181,275  |         |         | $        | 212,464  |         |         | $       | 176,323  |       
|                                           | Roaming revenue                |                               |                          | 132,251         |         |              |        | 21,005       |        |              |          | 113,108  |         |         |          | 134,113  |         |         |         | 131,174  |       
|                                           | Equipment and other revenue    |                               |                          | 18,485          |         |              |        | 2,469        |        |              |          | 14,960   |         |         |          | 17,429   |         |         |         | 18,324   |       
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|                                           |                                |                               | Total operating revenue  |                 |         | 417,243      |        |              |        | 54,663       |          |          |         | 309,343 |          |          |         | 364,006 |         |          |        | 325,821 | 
|Operating expenses:                        |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|                                           |                                | Cost of service               |                          |                 | 106,707 |              |        |              | 10,165 |              |          |          | 61,062  |         |          |          | 71,227  |         |         |          | 57,246 |        
|                                           |                                | Cost of equipment             |                          |                 | 37,182  |              |        |              | 3,510  |              |          |          | 26,769  |         |          |          | 30,279  |         |         |          | 19,356 |        
|                                           |                                | Marketing and selling         |                          |                 | 56,462  |              |        |              | 5,347  |              |          |          | 36,580  |         |          |          | 41,927  |         |         |          | 31,078 |        
|                                           |                                | General and administrative    |                          |                 | 60,944  |              |        |              | 8,301  |              |          |          | 38,769  |         |          |          | 47,070  |         |         |          | 43,350 |        
|                                           |                                | Depreciation and amortization |                          |                 | 182,637 |              |        |              | 16,720 |              |          |          | 147,257 |         |          |          | 163,977 |         |         |          | 97,217 |        
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|                                           |                                |                               | Total operating expenses |                 |         | 443,932      |        |              |        | 44,043       |          |          |         | 310,437 |          |          |         | 354,480 |         |          |        | 248,247 | 
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|Operating (loss) income                    |                                |                               | (26,689                  | )               |         |              | 10,620 |              |        |              | (1,094   | )        |         |         | 9,526    |          |         |         | 77,574  |         
|                                           | Interest expense               |                               |                          | (165,457        | )       |              |        | (16,051      | )      |              |          | (133,270 | )       |         |          | (149,321 | )       |         |         | (106,888 | )     
|                                           | Other income (expense), net    |                               |                          | 3,723           |         |              |        | (520         | )      |              |          | 537      |         |         |          | 17       |         |         |         | 4,918    |       
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|Loss before income taxes                   |                                |                               | (188,423                 | )               |         |              | (5,951 | )            |        |              | (133,827 | )        |         |         | (139,778 | )        |         |         | (24,396 | )       
|                                           | Income tax benefit (provision) |                               |                          | 52,199          |         |              |        | (154         | )      |              |          | 33,242   |         |         |          | 33,088   |         |         |         | (5,418   | )     
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|Loss from continuing operations            |                                |                               | (136,224                 | )               |         |              | (6,105 | )            |        |              | (100,585 | )        |         |         | (106,690 | )        |         |         | (29,814 | )       
|(Loss) income from discontinued operations |                                |                               | (1,439                   | )               |         |              |       |              |        |              | 1,342    |          |         |         | 1,342    |          |         |         |        |         
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|Net loss                                   |                                |                               | (137,663                 | )               |         |              | (6,105 | )            |        |              | (99,243  | )        |         |         | (105,348 | )        |         |         | (29,814 | )       
|Dividends on preferred stock               |                                |                               | (2,139                   | )               |         |              |       |              |        |              |         |          |         |         |         |          |         |         | (44,105 | )       
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         
|Net loss applicable to common stockholder  |                                | $                             | (139,802                 | )               |         | $            | (6,105 | )            |        | $            | (99,243  | )        |         | $       | (105,348 | )        |         | $       | (73,919 | )       
|                                           |                                |                               |                          |                 |         |              |        |              |        |              |          |          |         |         |          |          |         |         |         |         

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| |                                                                                    
| | -----------------------------------------------------------------------------------
| | Year Ended December 31, 2001 Compared
	to the Combined Year Ended December 31, 2000

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, 2001, our total operating revenue increased
$53.2 million, or 14.6%, to $417.2 million from
$364.0 million for the comparable period in 2000. Our total
service revenue, roaming revenue and equipment and other revenue
represented 63.9%, 31.7% and 4.4%, respectively, of our total
operating revenue during the year ended December 31, 2001
and 58.4%, 36.8% and 4.8%, respectively, of our total operating
revenue during the year ended December 31, 2000.

For the year ended December 31, 2001, our
service revenue increased $54.0 million, or 25.4%, to
$266.5 million from $212.5 million for the year ended
December 31, 2000. The increase was primarily attributable
to increased penetration and usage in the existing company
markets. Our subscriber base increased 19.0% to 632,100 at
December 31, 2001 from 531,200 at December 31, 2000.
Our average monthly service revenue per subscriber increased
2.7% to $38 for the year ended December 31, 2001 from $37
for the comparable period in 2000. Our average monthly service
revenue per subscriber has been positively impacted by changes
in the mix of digital and analog subscribers in our subscriber
base. On December 31, 2001, 73% of our subscriber base was
on digital rate plans compared to 45% at December 31, 2000.
Our digital rate plans typically produce higher service revenue
per subscriber and allow subscribers to use more minutes in a
larger home area than our analog rate plan.

For the year ended December 31, 2001, our
roaming revenue decreased $1.8 million, or 1.4%, to
$132.3 million from $134.1 million for the year ended
December 31, 2000. Roaming minutes have increased by 44.5%
from 2000 to 2001, however, our roaming revenue per
minute-of-use has decreased by 30.9%. Decreases in our revenue
per minute-of-use are a result of new lower rate contracts that
were entered into and scheduled rate reductions in existing
contracts.

For the year ended December 31, 2001, our
equipment and other revenue increased $1.1 million, or
6.1%, to $18.5 million from $17.4 million for the year
ended December 31, 2000. This increase was a result of
increased equipment sales as a result of growth in subscriber
additions, offset by increased phone discounts due to more
competitive markets.

Cost of service.For the year ended
December 31, 2001, our total cost of service increased
$35.5 million, or 49.8%, to $106.7 million from
$71.2 million for the comparable period in 2000. As
described with our service revenue above, on average, our
digital subscribers use more minutes than our analog
subscribers. This increased usage also increases the minutes
used by our subscribers outside our markets, thus increasing the
expenses we are charged by third-party wireless providers. Our
cost of service increased approximately $18.7 million due
to increased charges by third-party wireless providers. The
remaining increase of $16.8 million was primarily the
result of increased networking costs associated with our
increased build-out of cell sites and continual upgrades to our
digital network.

Cost of equipment.For the year ended
December 31, 2001, our cost of equipment increased
$6.9 million, or 22.8%, to $37.2 million during 2001
from $30.3 million in 2000, resulting from increases in the
volume of equipment sold due to the growth in gross subscriber
additions and the migration of subscribers from analog to
digital service.

Marketing and selling costs.For the year ended
December 31, 2001, our marketing and selling costs
increased $14.6 million, or 34.7%, to $56.5 million
from $41.9 million for the year ended December 31,
2000 due to growth in gross subscriber additions. We had
228,800 gross subscriber additions during the year ended
December 31, 2001 compared to 210,200 gross subscriber
additions during the year ended December 31, 2000.

General and administrative costs.For the year ended
December 31, 2001, our general and administrative costs
increased $13.8 million, or 29.5%, to $60.9 million
from $47.1 million for the year ended December 31,
2000. 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.

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Depreciation and amortization expense.For the year ended
December 31, 2001, our depreciation and amortization
expense increased $18.6 million, or 11.4%, to
$182.6 million from $164.0 million for 2000. The
increase is a result of additional depreciation on fixed assets
and amortization on intangible assets acquired during 2001 and
2000.

Interest expense.For the year ended
December 31, 2001, our interest expense increased
$16.2 million, or 10.8%, to $165.5 million from
$149.3. The increase primarily resulted from an overall increase
in our outstanding debt and an increase in interest rates
incurred as a result of our interest rate hedges on our credit
facility.

(Loss) income from discontinued
operations.For the year ended
December 31, 2001, we had a net loss from discontinued
operations of $1.4 million, compared to net income of
$1.3 million for the year ended December 31, 2000.
This increase of $2.7 million in our loss from discontinued
operations reflects our increased losses from the
Tennessee 4 market, which we sold to Verizon Wireless on
February 8, 2002. This increase was primarily from
increased interest expense allocated to Tennessee 4.

Net loss.For
the year ended December 31, 2001, our net loss was
$137.7 million. Our net loss increased $32.4 million,
or 30.7%, from $105.3 million for the year ended
December 31, 2000. The increase in our net loss was
primarily attributable to increased depreciation and
amortization expense and interest expense.

Dividends on preferred stock.For the year ended
December 31, 2001, our dividends on preferred stock were
$2.1 million. They are the result of the purchase of
35,000 shares of preferred stock by one of our principal
owners, Dobson Communications, on June 29, 2001.



| |                                                                                
| | -------------------------------------------------------------------------------
| | Combined Year Ended December 31, 2000
	Compared to Year Ended December 31, 1999

Operating revenue.For the year ended
December 31, 2000, our total operating revenue increased
$38.2 million, or 11.7%, to $364.0 million from
$325.8 million for the comparable period in 1999. Our total
service revenue, roaming revenue and equipment and other revenue
represented 58.4%, 36.8% and 4.8%, respectively, of total
operating revenue during the year ended December 31, 2000
and 54.1%, 40.3% and 5.6%, respectively, of total operating
revenue during the year ended December 31, 1999.

For the year ended December 31, 2000, our
service revenue increased $36.2 million, or 20.5%, to
$212.5 million from $176.3 million for the year ended
December 31, 1999. Our subscriber base increased 22.2% to
approximately 531,200 at December 31, 2000 from 434,700 at
December 31, 1999. Our average monthly service revenue per
subscriber decreased to $37 for the year ended December 31,
2000 from $39 for the year ended December 31, 1999 due to
the addition of lower rate subscribers and competitive market
pressures in 2000 compared to 1999.

For the year ended December 31, 2000, our
roaming revenue increased $2.9 million, or 2.2%, to
$134.1 million from $131.2 million for the year ended
December 31, 1999. Roaming minutes have increased by 28.4%
from 1999 to 2000, however, our roaming revenue per
minute-of-use has decreased by 22.5%. Decreases in our revenue
per minute-of-use are a result of new lower rate contracts that
were entered into and scheduled rate reductions in existing
contracts.

For the year ended December 31, 2000, our
equipment and other revenue decreased $0.9 million, or
4.9%, to $17.4 million from $18.3 million for the year
ended December 31, 1999 due to increased phone discounts
due to more competitive markets.

Cost of service.For the year ended
December 31, 2000, our total cost of service increased
$14.0 million, or 24.4%, to $71.2 million from
$57.2 million for the comparable period in 1999. The
increase was primarily attributable to increased subscribers and
minutes of use in our markets and markets owned by third party
wireless providers. Our cost of service increased approximately
$8.3 million due to increased charges by third-party
wireless providers. The remaining increase of $5.7 million
was primarily the result of increased networking costs
associated with our increased build-out of cell sites and
continual upgrades to our digital network.

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Cost of equipment.For the year ended
December 31, 2000, our cost of equipment increased
$10.9 million, or 56.4%, to $30.3 million from
$19.4 million in 1999, primarily as a result of increases
in the volume of equipment we sold due to the growth in gross
subscriber additions and the migration of subscribers from
analog to digital service.

Marketing and selling costs.For the year ended
December 31, 2000, our marketing and selling costs
increased $10.8 million, or 34.9%, to $41.9 million
from $31.1 million for the year ended December 31,
1999 due to growth in gross subscriber additions. We had
210,200 gross subscriber additions during the year ended
December 31, 2000 compared to 175,000 gross subscriber
additions during the year ended December 31, 1999.

General and administrative costs.For the year ended
December 31, 2000, our general and administrative costs
increased $3.7 million, or 8.6%, to $47.1 million from
$43.4 million for the year ended December 31, 1999.
This increase was the result of increased infrastructure costs
such as customer service, billing, collections and
administrative costs as a result of our overall growth of our
business.

Depreciation and amortization expense.For the year ended
December 31, 2000, our depreciation and amortization
expense increased $66.8 million, or 68.7%, to
$164.0 million from $97.2 million for 1999. The
increase is a result of additional depreciation on fixed assets
and amortization on intangible assets acquired as part of our
acquisition by the joint venture between AT&T Wireless and
Dobson Communications in February 2000.

Interest expense.For the year ended
December 31, 2000, our interest expense increased
$42.4 million, or 39.7%, to $149.3 million from
$106.9 million for the year ended December 31, 1999.
The increase was primarily a result of increased borrowings
during 2000 to finance our acquisition.

Income from discontinued operations.For the year ended
December 31, 2000, our net income from discontinued
operations totaled $1.3 million, which represents our net
income from the Tennessee 4 market that was sold to Verizon
Wireless on February 8, 2002.

Net loss.For
the year ended December 31, 2000, our net loss was
$105.3 million. Our net loss increased $75.5 million,
or 253.4%, from $29.8 million for the year ended
December 31, 1999. The increase in our net loss was
primarily attributable to our increase in depreciation and
amortization expense and interest expense resulting from our
acquisition by the joint venture, which was partially offset by
an increase in revenue.

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 have
financed our operations through cash flows from operating
activities, bank debt, the sale of debt securities and infusions
of equity capital from one of our parents and its affiliates.
Neither Dobson Communications nor AT&T Wireless is obligated
to contribute equity capital or other financing to us or our
subsidiaries.

Net Cash Flow

At December 31, 2001, we had a working
capital deficit of $0.5 million, a ratio of current assets
to current liabilities of 1:1 and an unrestricted cash balance
of $6.0 million, which compares to a working capital
deficit of $26.5 million, a ratio of current assets to
current liabilities of 0.7:1 and an unrestricted cash balance of
$14.9 million at December 31, 2000.

Our net cash used in operating activities totaled
$9.9 million for 2001 compared to net cash provided by
operating activities of $19.5 million for the period from
February 25, 2000 through December 31, 2000. The
decrease of $29.4 million from the period from
February 25, 2000 through December 31, 2000, to 2001
was primarily due to an increase in our net loss, deferred
income taxes and our change in accounts payable for the period,
which was offset by increased depreciation and amortization and
our change in accounts receivable.

Our net cash used in investing activities,
totaling $55.8 million for the year ended December 31,
2001 and $41.0 million for the period from
February 25, 2000 to December 31, 2000, related
primarily to capital

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expenditures. Capital expenditures were
$74.9 million for the year ended December 31, 2001,
and $58.4 million for the period from February 25,
2000 to December 31, 2000.


Net cash provided by financing activities was
$56.7 million for the year ended December 31, 2001
compared to $11.0 million for the period from
February 25, 2000 to December 31, 2000. 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.

Capital Resources

On February 25, 2000, we obtained a
$1.75 billion bank credit facility that included a
$300.0 million revolving credit facility and
$1.45 billion of term loan facilities. Our credit facility
was amended on March 14, 2001, when we permanently repaid
$200.0 million of the term loan. We used proceeds from the
issuance of our $450.0 million Senior Subordinated Notes
due 2009, to reduce our credit facility to $1.55 billion.
We further amended our credit facility on June 4, 2001,
when we permanently repaid $201.3 million of the term loan
with proceeds from our issuance of $250.0 million Senior
Subordinated Notes due 2009, which reduced our credit facility
to $1.34 billion. On September 27, 2001, our lenders
and we agreed to a third amendment of the credit facility, which
modifies certain financial covenants (as described below). In
addition to our financial covenants, we are required to make
prepayments of proceeds received from significant asset sales,
new borrowings and a portion of excess cash flow. Therefore,
when we completed the sale of Tennessee 4 to Verizon
Wireless for a total purchase price of $202.0 million
during February 2002, we permanently prepaid approximately
$190.0 million of this credit facility. The maximum
availability of the credit facility is limited by restrictions,
such as certain financial ratios. The maximum availability
subject to these restrictions is $1,145.8 million. As of
December 31, 2001, we had outstanding borrowings under our
credit facility of $1,113.6 million, and approximately
$32.2 million of credit availability.

Our amended credit facility imposes a number of
restrictive covenants that, among other things, limit our
ability to incur additional indebtedness, create liens and pay
dividends. In addition, we are required to maintain certain
financial ratios, including, but not limited to:



| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a ratio of senior indebtedness to operating cash
	flow of 7.00 to 1 at December 31, 2001, decreasing to 5.75
	to 1 at December 31, 2002 and decreasing over time to 2.50
	to 1;                                    
|
| |  | a ratio of total indebtedness to operating cash
	flow of 10.10 to 1 at December 31, 2001, decreasing to 7.75
	to 1 at December 31, 2002 and decreasing over time to 4.00
	to 1;                                    
|
| |  | a ratio of operating cash flow to debt service
	requirements of 1.20 to 1 at December 31, 2001, increasing
	to 1.35 to 1 at December 31, 2002 and decreasing over time
	to 1.20 to 1;                              
|
| |  | a ratio of operating cash flow to interest
	expense requirement of 1.45 to 1 at December 31, 2001,
	increasing to 1.80 to 1 at December 31, 2002 and increasing
	over time to 2.50 to 1;                           
|
| |  | beginning on December 31, 2002, a ratio of
	operating cash flow minus capital expenditures to the sum of
	debt service requirements and cash distributions of 1.00 to 1
	and continuing over time at 1.00 to 1; and
|
| |  | a limitation on capital expenditures.                                                                                                                                                                              

Interest on the revolving credit facility and the
term loan facilities is variable and is based on a prime rate or
a LIBOR formula. The weighted average interest rate at
December 31, 2001 was 7.1% and interest rates have ranged
in total between 5.0% and 10.1% since inception. We are required
to reduce the outstanding principal balances of our term loans
by a maximum of $46.9 million during the next twelve months.

This credit facility imposes a number of
restrictive covenants that, among other things, limit our
ability to incur additional indebtedness, create liens, make
capital expenditures and pay dividends.

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Our credit facility includes a financial covenant
requiring us to not exceed a total debt leverage ratio ranging
from 9.25 to 1.00 in the first quarter to 7.75 to 1.00 in the
fourth quarter 2002. Absent debt reduction from projected debt
levels or an amendment to the credit facility modifying this
covenant, we will likely violate this covenant during 2002. We
are currently in discussions with our lenders regarding an
amendment to our credit facility. However, if we are unable to
comply with the total debt leverage ratio or we renegotiate the
credit facility and there is a covenant violation, our lenders
would have the right, but not the obligation, to accelerate the
repayment of the entire amount outstanding under the credit
facility. In addition, an acceleration under the credit facility
would allow the holders of our Senior Subordinated Notes to
declare the principal and interest of the Senior Subordinated
Notes immediately due and payable. We would then be required to
either refinance the debt or repay the amounts due. If this were
to occur, we would attempt to renegotiate the debt with the
holders to provide for a more extended repayment term. There is
no assurance that we would be able to renegotiate the debt under
these conditions or meet its obligation under the accelerated
repayment terms. As a result, we may not continue as a going
concern.

On March 14, 2001, we sold
$450.0 million Senior Subordinated Notes due 2009 at a
discount of $3.3 million that carry an interest rate of
9.5%. The discount will be amortized over the life of the notes.
On June 4, 2001, we sold $250.0 million of Senior
Subordinated Notes due 2009 at a discount of $3.6 million
that carry an interest rate of 9.5%. The discount will be
amortized over the life of the notes.

On June 29, 2001, we received
$35.0 million from Dobson Communications from its purchase
of 35,000 shares of our 12.0% Series A Preferred
Stock. See Item 13 for a description of this preferred
stock.

Capital Commitments

We had capital expenditures of $74.9 million
during 2001. We have budgeted approximately $50.0 to
$55.0 million for capital expenditures in 2002, of which,
approximately $5.0 million to $10.0 million will be
used to begin our GSM/GPRS overlay. We may also require
additional financing for future acquisitions and to refinance
our debt at its final maturities. The amount and timing of
capital expenditures may vary depending on the rate at which we
expand and develop our wireless systems and whether we
consummate additional acquisitions.

Although we cannot provide any assurance,
assuming successful implementation of our strategy, including
the further development of our wireless systems, growth in our
cash flows, and renegotiation of our credit facility, if
necessary to avoid a default as described above, we believe that
borrowings under our credit facility, the proceeds from the sale
of $35.0 million of Series A preferred stock on
June 29, 2001 and cash flows from operations are expected
to be sufficient to satisfy our currently expected capital
expenditures, working capital and debt service obligations over
the next year. The actual amount and timing of our future
capital requirements may differ materially from our estimates as
a result of, among other things, the demand for our services and
regulatory, technological and competitive developments. We
currently expect that we may have to refinance our indebtedness
at their respective maturities commencing in 2007. Sources of
additional financing may include commercial bank borrowings,
vendor financing and the sale of equity or debt securities. We
cannot assure you that any such financing will be available on
acceptable terms or at all.

Effect of New Accounting Standards

In July 2001, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards
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 stop amortizing existing goodwill and intangible assets with
indefinite lives effective January 1, 2002. In addition,
any goodwill or indefinite life intangible assets acquired
between July 1, 2001 and December 31, 2001 would not
be amortized. Under the new rules, we will treat our wireless
licenses as indefinite life intangible assets. As a result,
effective January 1, 2002, we will no longer amortize
goodwill and wireless licenses. Instead, we will test for
impairment of goodwill or indefinite life intangibles at least
annually and would only adjust the carrying amount of these
intangible assets upon an impairment of the goodwill or
indefinite life intangible assets. During the year ended
December 31, 2001, we

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recorded approximately $58.3 million and
approximately $34.5 million of amortization expense, net of
income tax, related to our goodwill and wireless license
acquisition costs, respectively. Through December 31, 2001,
our accounting policy was to evaluate the carrying value of our
intangible assets based on our undiscounted cash flows. However,
as a result of implementing SFAS 142, we are now required
to evaluate the carrying value of our indefinite life
intangibles using their fair values. Upon the implementation of
SFAS No. 142 on January 1, 2002, we expect to record
charges, net of income tax, of approximately $282 million,
to reflect the write-down of our wireless license acquisition
costs to their fair value.


In July 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This
statement provides accounting and reporting standards for costs
associated with the retirement of long-lived assets. It requires
entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred.
When the liability is initially recorded, the entity capitalizes
a cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its
present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon
settlement. We have not yet determined the effect that this new
accounting standard may have on our results of operations,
financial position and cash flows. We will be required to
implement this standard effective January 1, 2003.

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, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.
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 assets, including discontinued
operations, and replaces the provisions of 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, two of our wholly-owned, indirect
subsidiaries, entered into a definitive agreement to sell
Tennessee 4 RSA. As a result of this sale, we 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 as
discontinued operations in our consolidated financial statements.

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 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

Our primary market risk relates 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.
The counterparty is a

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##### Table of Contents



major financial institution. As of
December 31, 2001, we had interest rate hedges under
various derivative contracts totaling $1.03 billion on our
$1.34 billion credit facility. The terms of these
agreements expire in June 2002. Increases in interest expense
related to the interest rate hedge for the years ended
December 31, 2001 and 2000 were reflected in our results of
operations. Prior to 2001, these amounts were immaterial since
the interest rates from the hedge were consistent to current
market interest rates. However, for the year ended
December 31, 2001, the interest expense related to the
hedge was approximately $25.8 million due to the decline in
current market interest rates.


The fair market value of long-term fixed interest
rate debt is subject to interest rate risk. Generally, the fair
market value of fixed interest rate debt will increase as
interest rates fall and decrease as interest rates raise. The
estimated fair market values of our total long-term fixed rate
debt and our variable-rate debt are shown in Note 12 to our
December 31, 2001 consolidated financial statements. Based
on our market risk sensitive instruments outstanding at
December 31, 2001, we have determined that there was no
material market risk exposure to our consolidated financial
position, results of operations or cash flows as of such date.

29



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Item 8. Financial Statements and
Supplementary Data


INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                                           |  |  |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|American Cellular Corporation and
	Subsidiaries                                                                                                            |  |  |    | 
|Report of Independent Public Accountants                                                                                                                   |  |  | 31 | 
|Consolidated balance sheets as of
	December 31, 2001 and 2000                                                                                              |  |  | 32 | 
|Consolidated statements of operations for the
	year ended December 31, 2001 and for the period from
	February 25, 2000 through December 31, 2000           |  |  | 33 | 
|Consolidated statements of stockholders
	equity for the year ended December 31, 2001 and for the
	period from February 25, 2000 through December 31, 2000 |  |  | 34 | 
|Consolidated statements of cash flows for the
	year ended December 31, 2001 and for the period from
	February 25, 2000 through December 31, 2000           |  |  | 35 | 
|Notes to consolidated financial statements                                                                                                                 |  |  | 36 | 
|Report of Independent Auditors                                                                                                                             |  |  | 48 | 
|Consolidated statement of operations for the year
	ended December 31, 1999                                                                                 |  |  | 49 | 
|Consolidated statement of stockholders
	equity for the year ended December 31, 1999                                                                       |  |  | 50 | 
|Consolidated statement of cash flows for the year
	ended December 31, 1999                                                                                 |  |  | 51 | 
|Notes to consolidated financial statements                                                                                                                 |  |  | 52 | 

INDEX TO SUPPLEMENTARY DATA

|                                                |  |  |    | 
|----------------------------------------------- |  |  | -- | 
|American Cellular Corporation and
	Subsidiaries |  |  |    | 
|Selected quarterly financial data               |  |  | 59 | 

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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, 2001 AND 2000

|                                                                                                                                     |                                            |      |               |               |  |   |               |               | 
|------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ---- | ------------- | ------------- |  | - | ------------- | ------------- | 
|                                                                                                                                     |                                            | 2001 |               | 2000         
|                                                                                                                                     |                                            |      |               |              
|ASSETS                                                                                                                              
|CURRENT ASSETS:                                                                                                                      |                                            |      |               |               |  |   |               |              
|Cash and cash equivalents                                                                                                            |                                            | $    | 5,962,148     |               |  | $ | 14,880,667    |              
|Accounts receivable, net of allowance for
	doubtful accounts of $1,548,098 and $1,658,093 in 2001 and 2000,
	respectively            |                                            |      | 43,548,758    |               |  |   | 46,209,263    |              
|Restricted cash and investments                                                                                                      |                                            |      | 65,678,101    |               |  |   |              |              
|Inventory                                                                                                                            |                                            |      | 8,013,595     |               |  |   | 8,196,334     |              
|Deferred tax assets                                                                                                                  |                                            |      | 6,500,891     |               |  |   | 7,170,411     |              
|Prepaid expenses and other                                                                                                           |                                            |      | 1,744,011     |               |  |   | 1,386,845     |              
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total current assets                       |      |               | 131,447,504   |  |   |               | 77,843,520    | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|PROPERTY, PLANT AND EQUIPMENT, net                                                                                                   |                                            |      | 203,168,050   |               |  |   | 184,654,958   |              
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|OTHER ASSETS:                                                                                                                        |                                            |      |               |               |  |   |               |              
|Restricted investments                                                                                                               |                                            |      | 32,184,495    |               |  |   |              |              
|Wireless license acquisition costs, net of
	accumulated amortization of $105,365,205 and $47,882,793 in 2001
	and 2000, respectively |                                            |      | 1,039,523,681 |               |  |   | 1,086,201,425 |              
|Goodwill, net of accumulated amortization of
	$108,592,621 and $50,277,607 in 2001 and 2000, respectively                            |                                            |      | 1,069,532,164 |               |  |   | 1,129,512,357 |              
|Deferred financing costs and other, net of
	accumulated amortization of $8,652,380 and $3,426,409 in 2001
	and 2000, respectively    |                                            |      | 45,410,003    |               |  |   | 30,603,549    |              
|Customer list, net of accumulated amortization of
	$17,681,703 and $8,106,703 in 2001 and 2000, respectively                         |                                            |      | 30,318,297    |               |  |   | 39,893,297    |              
|Assets of discontinued operations                                                                                                    |                                            |      | 139,854,463   |               |  |   | 141,393,717   |              
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total other assets                         |      |               | 2,356,823,103 |  |   |               | 2,427,604,345 | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total assets                               |      | $             | 2,691,438,657 |  |   | $             | 2,690,102,823 | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|LIABILITIES AND STOCKHOLDERS
	EQUITY                                                                                               
|CURRENT LIABILITIES:                                                                                                                 |                                            |      |               |               |  |   |               |              
|Accounts payable                                                                                                                     |                                            | $    | 13,783,741    |               |  | $ | 28,873,545    |              
|Accounts payable-affiliates                                                                                                          |                                            |      | 17,729,679    |               |  |   | 11,805,894    |              
|Accrued expenses                                                                                                                     |                                            |      | 10,475,570    |               |  |   | 15,157,173    |              
|Accrued interest payable                                                                                                             |                                            |      | 31,308,522    |               |  |   | 11,596,175    |              
|Deferred revenue and customer deposits                                                                                               |                                            |      | 11,745,161    |               |  |   | 9,448,139     |              
|Current portion of long-term debt                                                                                                    |                                            |      | 46,909,091    |               |  |   | 27,465,000    |              
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total current liabilities                  |      |               | 131,951,764   |  |   |               | 104,345,926   | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|OTHER LIABILITIES:                                                                                                                   |                                            |      |               |               |  |   |               |              
|Payablesaffiliates                                                                                                                  |                                            |      |              |               |  |   | 9,193,025     |              
|Long-term debt, net of current portion                                                                                               |                                            |      | 1,760,208,032 |               |  |   | 1,650,535,000 |              
|Deferred tax liabilities                                                                                                             |                                            |      | 186,382,124   |               |  |   | 253,883,043   |              
|Liabilities of discontinued operations                                                                                               |                                            |      | 7,495,882     |               |  |   | 6,389,217     |              
|Other non-current liabilities                                                                                                        |                                            |      | 23,698,750    |               |  |   |              |              
|Commitments (Note 11)                                                                                                                |                                            |      |               |               |  |   |               |              
|Series A preferred stock                                                                                                             |                                            |      | 37,138,711    |               |  |   |              |              
|STOCKHOLDERS EQUITY:                                                                                                                |                                            |      |               |               |  |   |               |              
|Class A Common Stock, $.01 par value,
	475,000 shares authorized and 100 issued in 2001 and 2000                                     |                                            |      | 1             |               |  |   | 1             |              
|Paid-in capital                                                                                                                      |                                            |      | 797,827,564   |               |  |   | 764,999,999   |              
|Retained deficit                                                                                                                     |                                            |      | (239,044,921  | )             |  |   | (99,243,388   | )            
|Accumulated other comprehensive loss, net of
	income tax benefit of $9,479,500                                                       |                                            |      | (14,219,250   | )             |  |   |              |              
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total stockholders equity                 |      |               | 544,563,394   |  |   |               | 665,756,612   | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              
|                                                                                                                                     | Total liabilities and stockholders equity |      | $             | 2,691,438,657 |  |   | $             | 2,690,102,823 | 
|                                                                                                                                     |                                            |      |               |               |  |   |               |              

The accompanying notes are an integral part of
these consolidated balance sheets.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                       |                               |                          |              |                     |             |   |              |              |             | 
|---------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------ | ------------ | ------------------- | ----------- | - | ------------ | ------------ | ----------- | 
|                                                                                                                       |                               |                          |              | For the Period from
|                                                                                                                       |                               |                          |              | February 25, 2000  
|                                                                                                                       |                               | For the Year Ended       |              | through            
|                                                                                                                       |                               | December 31,             |              | December 31,       
|                                                                                                                       |                               | 2001                     |              | 2000               
|                                                                                                                       |                               |                          |              |                    
|OPERATING REVENUE:                                                                                                     |                               |                          |              |                     |             |   |              |             
|                                                                                                                       | Service revenue               |                          | $            | 266,507,216         |             |   | $            | 181,274,795  |            
|                                                                                                                       | Roaming revenue               |                          |              | 132,250,992         |             |   |              | 113,108,060  |            
|                                                                                                                       | Equipment and other revenue   |                          |              | 18,484,430          |             |   |              | 14,960,111   |            
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|                                                                                                                       |                               | Total operating revenue  |              |                     | 417,242,638 |   |              |              | 309,342,966 | 
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|OPERATING EXPENSES:                                                                                                    |                               |                          |              |                     |             |   |              |             
|                                                                                                                       | Cost of service               |                          |              | 106,706,736         |             |   |              | 61,062,239   |            
|                                                                                                                       | Cost of equipment             |                          |              | 37,182,246          |             |   |              | 26,768,354   |            
|                                                                                                                       | Marketing and selling         |                          |              | 56,462,163          |             |   |              | 36,580,294   |            
|                                                                                                                       | General and administrative    |                          |              | 60,944,109          |             |   |              | 38,768,894   |            
|                                                                                                                       | Depreciation and amortization |                          |              | 182,636,954         |             |   |              | 147,256,833  |            
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|                                                                                                                       |                               | Total operating expenses |              |                     | 443,932,208 |   |              |              | 310,436,614 | 
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|OPERATING LOSS                                                                                                         |                               |                          | (26,689,570  | )                   |             |   | (1,093,648   | )           
|OTHER INCOME (EXPENSE):                                                                                                |                               |                          |              |                     |             |   |              |             
|                                                                                                                       | Interest expense              |                          |              | (165,456,826        | )           |   |              | (133,270,017 | )          
|                                                                                                                       | Other income, net             |                          |              | 3,723,072           |             |   |              | 536,308      |            
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|LOSS BEFORE INCOME TAXES AND DISCONTINUED
	OPERATIONS                                                                  |                               |                          | (188,423,324 | )                   |             |   | (133,827,357 | )           
|INCOME TAX BENEFIT                                                                                                     |                               |                          | 52,199,794   |                     |             |   | 33,241,703   |             
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|NET LOSS FROM CONTINUING OPERATIONS                                                                                    |                               |                          | (136,223,530 | )                   |             |   | (100,585,654 | )           
|DISCONTINUED OPERATIONS:
	(Note 3)                                                                                     |                               |                          |              |                     |             |   |              |             
|(LOSS) INCOME FROM DISCONTINUED OPERATIONS,
	net of income tax provision of $1,188,394 in 2001 and $2,548,131
	in 2000 |                               |                          | (1,439,293   | )                   |             |   | 1,342,266    |             
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|NET LOSS                                                                                                               |                               |                          | (137,662,823 | )                   |             |   | (99,243,388  | )           
|DIVIDENDS ON PREFERRED STOCK                                                                                           |                               |                          | (2,138,710   | )                   |             |   |             |             
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|NET LOSS APPLICABLE TO COMMON STOCKHOLDER                                                                              |                               | $                        | (139,801,533 | )                   |             | $ | (99,243,388  | )           
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|BASIC NET LOSS APPLICABLE TO COMMON STOCKHOLDER
	PER COMMON SHARE                                                      |                               | $                        | (1,398,015   | )                   |             | $ | (992,434     | )           
|                                                                                                                       |                               |                          |              |                     |             |   |              |             
|BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                       |                               |                          | 100          |                     |             |   | 100          |             
|                                                                                                                       |                               |                          |              |                     |             |   |              |             

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

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                  |                            |                                                                        |   |                      |             |         |     |             |   |               |   |               |   |   |             |            |   |   |              |              |   |   |             |   |             |   |             |              |             |  
|----------------- | -------------------------- | ---------------------------------------------------------------------- | - | -------------------- | ----------- | ------- | --- | ----------- | - | ------------- | - | ------------- | - | - | ----------- | ---------- | - | - | ------------ | ------------ | - | - | ----------- | - | ----------- | - | ----------- | ------------ | ----------- | -
|                  |                            |                                                                        |   |                     
|                  |                            |                                                                        |   | Stockholders Equity
|                  |                            |                                                                        |   |                     
|                  |                            |                                                                        |   |                      |             |         |     | Accumulated |   |              
|                  |                            |                                                                        |   | Class A              |             |         |     | Other       |   | Total        
|                  |                            | Comprehensive                                                          |   | Common               |             | Paid in |     | Retained    |   | Comprehensive |   | Stockholders
|                  |                            | Loss                                                                   |   | Stock                |             | Capital |     | Deficit     |   | Loss          |   | Equity       
|                  |                            |                                                                        |   |                      |             |         |     |             |   |               |   |              
|                  |                            |                                                                        |   |                      |             |         |     |             |   |               |   |               |   |  
|FEBRUARY 25, 2000 |                            |                                                                        |   |                      |             |         | 100 |             |   | $             | 1 |               |   | $ | 764,999,999 |            |   |   |             |              |   |   |            |   |             | $ | 765,000,000 |             
|                  | Capital contribution       |                                                                        |   |                      |             |         |     |            |   |               |   |              |   |   |             |           |   |   |              |             |   |   |             |  |             |   |             |             |            
|                  | Net loss                   |                                                                        |   |                      |             |         |     |            |   |               |   |              |   |   |             |           |   |   |              | (99,243,388  | ) |   |             |  |             |   |             | (99,243,388  | )          
|                  |                            |                                                                        |   |                      |             |         |     |             |   |               |   |               |   |   |             |            |   |   |              |              |   |   |             |   |             |   |             |             
|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 |             
|                  |                            |                                                                        |   |                      |             |         |     |             |   |               |   |               |   |   |             |            |   |   |              |              |   |   |             |   |             |   |             |             

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

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |              |             |             |  
|------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------------------------- | ------------------- | ----------- | ----------- | ----------- | ------------ | ----------- | ----------- | -
|                                                                         |                                                                                                                        |                                                        |                                                      | For the Period from
|                                                                         |                                                                                                                        |                                                        |                                                      | February 25, 2000  
|                                                                         |                                                                                                                        | For the Year Ended                                     |                                                      | through            
|                                                                         |                                                                                                                        | December 31, 2001                                      |                                                      | December 31, 2000  
|                                                                         |                                                                                                                        |                                                        |                                                      |                    
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         | Net loss from continuing operations                                                                                    |                                                        | $                                                    | (136,223,530        | )           |             | $           | (100,585,654 | )          
|                                                                         | Adjustments to reconcile net loss from continuing
	operations to net cash (used in) provided by operating
	activities |                                                        |                                                      |                     |             |             |             |              |            
|                                                                         |                                                                                                                        | Depreciation and amortization                          |                                                      |                     | 182,636,954 |             |             |              | 147,256,833 |            
|                                                                         |                                                                                                                        | Amortization of bond premium and financing costs       |                                                      |                     | 5,718,138   |             |             |              | 3,426,409   |            
|                                                                         |                                                                                                                        | Deferred income taxes and investment tax credits,
	net |                                                      |                     | (58,021,420 | )           |             |              | (27,900,333 | )          
|                                                                         |                                                                                                                        | Loss (gain) on disposition of assets, net              |                                                      |                     | 481,208     |             |             |              | (139,632    | )          
|                                                                         | Changes in current assets and liabilities                                                                             |                                                        |                                                      |                     |             |             |             |              |            
|                                                                         |                                                                                                                        | Accounts receivable                                    |                                                      |                     | 2,660,505   |             |             |              | (15,703,276 | )          
|                                                                         |                                                                                                                        | Inventory                                              |                                                      |                     | 182,739     |             |             |              | (4,310,319  | )          
|                                                                         |                                                                                                                        | Prepaid expenses and other                             |                                                      |                     | (3,334,691  | )           |             |              | (6,979,840  | )          
|                                                                         |                                                                                                                        | Accounts payable                                       |                                                      |                     | (11,036,387 | )           |             |              | 34,547,797  |            
|                                                                         |                                                                                                                        | Accrued expenses                                       |                                                      |                     | 4,782,503   |             |             |              | (13,688,395 | )          
|                                                                         |                                                                                                                        | Deferred revenue and customer deposits                 |                                                      |                     | 2,297,022   |             |             |              | 3,531,713   |            
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         |                                                                                                                        |                                                        | Net cash (used in) provided by operating
	activities |                     |             | (9,856,959  | )           |              |             | 19,455,303  |  
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         | Capital expenditures                                                                                                   |                                                        |                                                      | (74,850,030         | )           |             |             | (58,449,899  | )          
|                                                                         | Proceeds from sale of PCS licenses                                                                                     |                                                        |                                                      | 5,000,000           |             |             |             |             |            
|                                                                         | Change in receivable from discontinued operations                                                                      |                                                        |                                                      | 11,454,868          |             |             |             | 17,509,334   |            
|                                                                         | Other investing activities                                                                                             |                                                        |                                                      | 2,623,869           |             |             |             | (23,788      | )          
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         |                                                                                                                        |                                                        | Net cash used in investing activities                |                     |             | (55,771,293 | )           |              |             | (40,964,353 | )
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         | Proceeds from long-term debt                                                                                           |                                                        |                                                      | 233,000,000         |             |             |             | 114,000,000  |            
|                                                                         | Repayments of long-term debt                                                                                           |                                                        |                                                      | (797,395,544        | )           |             |             | (111,000,000 | )          
|                                                                         | Proceeds from senior subordinated notes                                                                                |                                                        |                                                      | 693,020,500         |             |             |             |             |            
|                                                                         | Issuance of preferred stock                                                                                            |                                                        |                                                      | 35,000,000          |             |             |             |             |            
|                                                                         | Deferred financing costs                                                                                               |                                                        |                                                      | (19,920,432         | )           |             |             | (1,154,410   | )          
|                                                                         | (Repayments to) advances from affiliate for
	capital expenditures                                                      |                                                        |                                                      | (9,193,025          | )           |             |             | 9,193,025    |            
|                                                                         | Capital contribution                                                                                                   |                                                        |                                                      | 16,413,782          |             |             |             |             |            
|                                                                         | Maturities of restricted investments                                                                                   |                                                        |                                                      | 38,976,389          |             |             |             |             |            
|                                                                         | Purchase of restricted investments                                                                                     |                                                        |                                                      | (133,191,937        | )           |             |             |             |            
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         |                                                                                                                        |                                                        | Net cash provided by financing activities            |                     |             | 56,709,733  |             |              |             | 11,038,615  |  
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                |                                                                                                                        |                                                        | (8,918,519                                           | )                   |             |             | (10,470,435 | )           
|CASH AND CASH EQUIVALENTS, beginning of year                             |                                                                                                                        |                                                        | 14,880,667                                           |                     |             |             | 25,351,102  |             
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|CASH AND CASH EQUIVALENTS, end of year                                   |                                                                                                                        | $                                                      | 5,962,148                                            |                     |             | $           | 14,880,667  |             
|                                                                         |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                       |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         | Cash paid for                                                                                                         |                                                        |                                                      |                     |             |             |             |              |            
|                                                                         | Interest, net of amounts capitalized                                                                                   |                                                        | $                                                    | 154,662,660         |             |             | $           | 124,274,707  |            
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
	FINANCING ACTIVITIES: |                                                                                                                        |                                                        |                                                      |                     |             |             |             |             
|                                                                         | Capital contribution of PCS licenses and certain
	other assets                                                         |                                                        | $                                                    | 16,413,783          |             |             |             |             |            

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

35



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1. ORGANIZATION:

American Cellular Corporation was originally
formed on February 26, 1998, to acquire the operations of
PriCellular Corporation. On February 25, 2000, American
Cellular Corporation and its subsidiaries (the
Company) were acquired by ACC Acquisition LLC, an equally
owned joint venture between Dobson Communications and AT&T
Wireless Services, Inc. (the Joint Venture). The
acquisition costs as of February 25, 2000 were pushed down
to the Company, thus creating a new basis in the assets and
liabilities of the Company. Therefore, the financial statements
and the related notes presented here for the year ended
December 31, 2000, are for the period from the acquisition
date (February 25, 2000) through December 31, 2000.
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.

Capital Resources and Growth

The Company has substantial indebtedness and debt
service requirements and is subject to significant financial
restrictions and limitations. If the Company is unable to
satisfy any of the covenants under the credit facility,
including financial covenants, the Company will be unable to
borrow under the credit facility during such time period 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.

2. SIGNIFICANT ACCOUNTING
POLICIES:

Principles of Consolidation

The consolidated financial statements of the
Company include the accounts of all subsidiaries. For financial
reporting purposes, the Company reports 100% of revenues and
expenses for the markets for which it provides wireless
services. Significant intercompany accounts and transactions
have been eliminated.

Business Segments

The Company operates in one business segment
pursuant to Statement of Financial Accounting Standards
(SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information.

Cash and Cash Equivalents

Cash and cash equivalents on the accompanying
consolidated balance sheets include cash and short-term
investments with original maturities of three months or less.

Inventory

The Company values its inventory at the lower of
cost or market on the first-in, first-out method of accounting.

Impairment of Long-Lived Assets

The Company assesses potential impairments of
long-lived assets, certain identifiable intangibles and goodwill
when there is evidence that events or changes in circumstances
indicate that an assets carrying value

36



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


may not be recoverable. An impairment loss is
recognized when the sum of the expected future net cash flows is
less than the carrying amount of the asset. The amount of any
recognized impairment would be based on the estimated fair value
of the asset subject to impairment compared to the carrying
amount of such asset. At December 31, 2001, such losses
have been identified by the Company.

Wireless License Acquisition Costs

Wireless license acquisition costs consist of
amounts paid to acquire FCC licenses to provide wireless
services. Wireless license acquisition costs are being amortized
on a straight-line basis over twenty years. Amortization expense
of $57,482,412 and $47,882,793 was recorded in 2001 and the
period from February 25, 2000 through December 31,
2000, respectively.

The ongoing value and remaining useful lives of
intangible and other long-term assets are subject to periodic
evaluation. See Recently Issued Accounting
Pronouncements below for additional discussion of
accounting for wireless license acquisition costs.

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 $9,575,000 and $8,106,703 was recorded
in 2001 and the period from February 25, 2000 through
December 31, 2000, respectively.

Goodwill

Goodwill is being amortized on a straight-line
basis over twenty years. Amortization expense related to
goodwill of $58,315,014 and $50,277,607 was recorded in 2001 and
the period from February 25, 2000 through December 31,
2000, respectively.

The ongoing value and remaining useful lives of
intangible and other long-term assets are subject to periodic
evaluation. See Recently Issued Accounting
Pronouncements below for additional discussion of
accounting for goodwill.

Deferred Financing Costs

Deferred financing costs consist primarily of
fees incurred to secure long-term debt. Deferred financing costs
are being amortized on a straight-line basis over the nine-year
term of the debt and recorded as interest expense. Interest
expense related to the amortization of these costs of $5,225,971
and $3,426,409 was recorded in 2001 and for the period from
February 25, 2000 through December 31, 2000,
respectively.

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 files a 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). Deferred income taxes
reflect the estimated future tax effects of differences between
financial statement and tax bases of assets and liabilities at
year-end.

37



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


Revenue Recognition

The Company records service revenues over the
period they are earned. The cost of providing service is
recognized as incurred. Airtime and toll revenue is billed in
arrears. The Company accrued estimated unbilled revenues for
services provided of $2,858,515 and $3,280,176 as of
December 31, 2001 and 2000, respectively, which are
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 sales are recognized when
the equipment is delivered to the customer. Subscriber
acquisition costs (primarily commissions and losses on equipment
sales) are expensed as incurred.

As of December 31, 2000, the Company
implemented SEC Staff Accounting Bulletin (SAB)
No. 101 Revenue Recognition. The impact of
implementing SAB 101 was not material to the Companys
revenues or results of operations.

Disposal of Long-Lived Assets

As of January 1, 2001, the Company
implemented SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets,
(SFAS 144). The discontinued operations
described in (Note 3) are reflected in the financial
statements as (Loss) Income from Discontinued
Operations. Prior year balances have been adjusted to
reflect this change in accounting standard.

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.
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. Approximately 78%
and 70% of the Companys roaming revenue was earned from
three wireless carriers during the year ended December 31,
2001 and the period from February 25, 2000 through
December 31, 2000, respectively.

Recently Issued Accounting
Pronouncements

In July 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133,
Derivatives and Hedging.
(SFAS 133). SFAS 133 establishes uniform
hedge accounting criteria for all derivatives requiring
companies to formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.
Under SFAS 133, derivatives are recorded in the balance
sheet as either an asset or liability measured at its fair
value, with changes in the fair value recognized as a component
of comprehensive income or in current earnings. SFAS 138,
was issued in June 2000 as an amendment to SFAS 133 and
addresses issues causing implementation difficulties. On
January 1, 2001, in accordance with SFAS 133, the
Company recorded a liability and a transition adjustment, net of
income tax, to other comprehensive loss totaling
$9.5 million relating to its interest rate hedges.

In July 2001, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards
No. 141, Business Combinations and
No. 142, Goodwill and Other Intangible Assets.
These

38



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


standards prohibit the application of the
pooling-of-interests method of accounting for business
combinations effective June 30, 2001 and require companies
to stop amortizing existing goodwill and intangible assets with
indefinite lives effective January 1, 2002. In addition,
any goodwill or indefinite life intangible assets acquired
between July 1, 2001 and December 31, 2001 would not
be amortized. Under the new rules, the Company would treat its
wireless licenses as indefinite life intangible assets. As a
result, effective January 1, 2002, the Company will no
longer amortize goodwill and wireless licenses. Instead, the
Company will test for impairment of goodwill or indefinite life
intangibles at least annually and would only adjust the carrying
amount of these intangible assets upon an impairment of the
goodwill or indefinite life intangible assets. During, the year
ended December 31, 2001, the Company recorded approximately
$58.3 million and approximately $34.5 million of
amortization expense, net of income tax, related to its goodwill
and wireless license acquisition costs, respectively. Through
December 31, 2001, the Companys accounting policy was
to evaluate the carrying value of its intangible assets based on
its undiscounted cash flows. However, as a result of
implementing SFAS 142, the Company is now required to
evaluate the carrying value of its indefinite life intangibles
using their fair values. Upon implementation of SFAS
No. 142 on January 1, 2002, the Company expects to
record charges, net of income tax, of approximately
$282 million to reflect the write-down of its wireless
license acquisition costs to their fair value.

In July 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This
statement provides accounting and reporting standards for costs
associated with the retirement of long-lived assets. It requires
entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred.
When the liability is initially recorded, the entity capitalizes
a cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its
present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon
settlement. The Company has not yet determined the effect that
this new accounting standard may have on our results of
operations, financial position and cash flows. The Company will
be required to implement this standard effective January 1,
2003.

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, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.
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 assets, including discontinued
operations, and replaces the provisions of 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, two of the Companys wholly-owned,
indirect subsidiaries, entered into a definitive agreement to
sell Tennessee 4 RSA. With this sale, the Company decided
to early adopt this standard during the fourth quarter 2001,
effective January 1, 2001, to properly reflect the results
of operations, assets and liabilities of Tennessee 4 as
discontinued operations, see Note 3 below.

3. DISCONTINUED OPERATIONS:

On October 30, 2001, two of the
Companys wholly-owned, indirect subsidiaries entered into
a definitive agreement with Verizon Wireless to sell
Tennessee 4 RSA for a total purchase price of
$202.0 million. The Tennessee 4 RSA covers a
population of approximately 290,800. The sale was completed on
February 8, 2002, and proceeds were primarily used to pay
down bank debt. The Companys financials have been restated
to

39



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



3. DISCONTINUED OPERATIONS:
(Continued)


reflect the sale of these properties to Verizon
Wireless, which are accounted for as discontinued operations in
the Companys consolidated financial statements.

Pursuant to SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, which
replaces APB Opinion No. 30 for the disposal of segments of
a business, the consolidated financial statements have been
restated for all periods presented to reflect the Tennessee 4
operations, assets and liabilities as discontinued operations.
The assets and liabilities of such operations have been
classified as Assets of discontinued operations and
Liabilities of discontinued operations,
respectively, on the December 31, 2001 and 2000
consolidated balance sheets and consist of the following:

|                                        |                                              |                  |        |              |  |   |        |         | 
|--------------------------------------- | -------------------------------------------- | ---------------- | ------ | ------------ |  | - | ------ | ------- | 
|                                        |                                              | December 31,     |        | December 31,
|                                        |                                              | 2001             |        | 2000        
|                                        |                                              |                  |        |             
|                                        |                                              |                 
|                                        |                                              | ($ in thousands)
|Cash and cash equivalents               |                                              | $                | 85     |              |  | $ | 242    |        
|Other current assets                    |                                              |                  | 4,442  |              |  |   | 2,197  |        
|Property, plant and equipment, net      |                                              |                  | 9,647  |              |  |   | 8,331  |        
|Goodwill, net                           |                                              |                  | 63,044 |              |  |   | 65,739 |        
|Wireless license acquisition costs, net |                                              |                  | 61,303 |              |  |   | 63,218 |        
|Other assets                            |                                              |                  | 1,333  |              |  |   | 1,667  |        
|                                        |                                              |                  |        |              |  |   |        |        
|                                        | Total assets of discontinued operations      |                  | $      | 139,854      |  |   | $      | 141,394 | 
|                                        |                                              |                  |        |              |  |   |        |        
|Current liabilities                     |                                              | $                | 1,744  |              |  | $ | 1,834  |        
|Other liabilities                       |                                              |                  | 5,752  |              |  |   | 4,555  |        
|                                        |                                              |                  |        |              |  |   |        |        
|                                        | Total liabilities of discontinued operations |                  | $      | 7,496        |  |   | $      | 6,389   | 
|                                        |                                              |                  |        |              |  |   |        |        

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

|                                           |  |                    |        |                     |  |   |        |  
|------------------------------------------ |  | ------------------ | ------ | ------------------- |  | - | ------ | -
|                                           |  |                    |        | For the Period from
|                                           |  |                    |        | February 25, 2000  
|                                           |  | For the Year Ended |        | through            
|                                           |  | December 31,       |        | December 31,       
|                                           |  | 2001               |        | 2000               
|                                           |  |                    |        |                    
|                                           |  |                   
|                                           |  | ($ in thousands)  
|Net revenues                               |  | $                  | 30,976 |                     |  | $ | 27,494 |  
|(Loss) income before income taxes          |  |                    | (251   | )                   |  |   | 3,890  |  
|Income tax provision                       |  |                    | (1,188 | )                   |  |   | (2,548 | )
|(Loss) income from discontinued operations |  |                    | (1,439 | )                   |  |   | 1,342  |  

The long-term debt of the Company is at the
consolidated level, and is not reflected by each individual
market. Thus, the Company has allocated a portion of interest
expense to the discontinued operations to properly reflect the
interest that was incurred to finance the Tennessee 4
operations. The interest expense allocated to these operations
was $9.6 million for the year ended December 31, 2001
and $7.7 million for the period from February 25, 2000
through December 31, 2000.

The Company completed the sale of Tennessee 4 on
February 8, 2002, and will record losses incurred through
that date and the related gain on the sale, during the first
quarter of 2002.

40



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

4. 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 overhead and capitalized interest. For
the year ended December 31, 2001 and the period from
February 25, 2000 through December 31, 2000, interest
capitalized was not material. 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
$57,264,527 and $40,989,730 was recorded for the year ended
December 31, 2001 and the period from February 25,
2000 through December 31, 2000, respectively.

Listed below are the major classes of property,
plant and equipment and their estimated useful lives, in years,
as of December 31, 2001 and 2000:

|                                            |                                    |        |      |      |  |      |             |             |  |   |             |             | 
|------------------------------------------- | ---------------------------------- | ------ | ---- | ---- |  | ---- | ----------- | ----------- |  | - | ----------- | ----------- | 
|                                            |                                    | Useful |      |      |  |     
|                                            |                                    | Life   |      | 2001 |  | 2000
|                                            |                                    |        |      |      |  |     
|Wireless systems and equipment              |                                    |        | 3-10 |      |  | $    | 265,077,424 |             |  | $ | 172,377,536 |            
|Buildings and improvements                  |                                    |        | 5-40 |      |  |      | 17,635,367  |             |  |   | 9,529,416   |            
|Vehicles, aircraft and other work equipment |                                    |        | 3-10 |      |  |      | 1,478,789   |             |  |   | 1,495,878   |            
|Furniture and office equipment              |                                    |        | 5-10 |      |  |      | 13,747,058  |             |  |   | 12,319,460  |            
|Plant under construction                    |                                    |        |      |      |  |      | 1,979,214   |             |  |   | 28,876,710  |            
|Land                                        |                                    |        |      |      |  |      | 1,045,688   |             |  |   | 1,045,688   |            
|                                            |                                    |        |      |      |  |      |             |             |  |   |             |            
|                                            | Property, plant and equipment      |        |      |      |  |      |             | 300,963,540 |  |   |             | 225,644,688 | 
|Accumulated depreciation                    |                                    |        |      |      |  |      | (97,795,490 | )           |  |   | (40,989,730 | )          
|                                            |                                    |        |      |      |  |      |             |             |  |   |             |            
|                                            | Property, plant and equipment, net |        |      |      |  |      | $           | 203,168,050 |  |   | $           | 184,654,958 | 
|                                            |                                    |        |      |      |  |      |             |             |  |   |             |            

5. LONG-TERM DEBT:

The Companys long-term debt as of
December 31, 2001 and 2000, consisted of the following:

|                                           |                      |      |               |               |  |   |               |               | 
|------------------------------------------ | -------------------- | ---- | ------------- | ------------- |  | - | ------------- | ------------- | 
|                                           |                      | 2001 |               | 2000         
|                                           |                      |      |               |              
|Credit facility                            |                      | $    | 1,113,604,456 |               |  | $ | 1,678,000,000 |              
|Senior Subordinated Notes, net of discount |                      |      | 693,512,667   |               |  |   |              |              
|                                           |                      |      |               |               |  |   |               |              
|                                           | Total debt           |      |               | 1,807,117,123 |  |   |               | 1,678,000,000 | 
|Less-Current maturities                    |                      |      | 46,909,091    |               |  |   | 27,465,000    |              
|                                           |                      |      |               |               |  |   |               |              
|                                           | Total long-term debt |      | $             | 1,760,208,032 |  |   | $             | 1,650,535,000 | 
|                                           |                      |      |               |               |  |   |               |              

Credit Facility

On February 25, 2000, the Company obtained a
$1.75 billion credit facility to retire existing debt and
complete the acquisition of the 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 Company and its lenders agreed to an
amendment to the credit facility. This amendment became
effective on March 14, 2001, when the Company permanently
repaid $200.0 million of the term notes under the credit
facility. The Company used proceeds from the issuance of
$450.0 million Senior Subordinated Notes due 2009, to
reduce the credit facility to $1.55 billion. On
May 31, 2001, the Company and its lenders agreed to a
second amendment to the credit facility. This amendment became
effective on June 4, 2001, when the Company permanently
repaid $201.3 million of the term notes under the credit
facility with proceeds from the issuance

41



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. LONG-TERM DEBT: (Continued)


of $250.0 million Senior Subordinated Notes
due 2009, which reduced the credit facility to
$1.34 billion. On September 27, 2001, the Company and
its lenders agreed to a third amendment of the credit facility,
which modifies certain financial covenants (as described below).
The maximum availability of the credit facility is limited by
restrictions, such as certain financial ratios. The maximum
availability subject to these restrictions is
$1,145.8 million. As of December 31, 2001, the Company
had outstanding borrowings under the credit facility of
$1,113.6 million, and approximately $32.2 million of
credit availability.

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



| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a ratio of senior indebtedness to operating cash
	flow of 7.00 to 1 at December 31, 2001, decreasing to 5.75
	to 1 at December 31, 2002 and decreasing over time to 2.50
	to 1;                                    
|
| |  | a ratio of total indebtedness to operating cash
	flow of 10.10 to 1 at December 31, 2001, decreasing to 7.75
	to 1 at December 31, 2002 and decreasing over time to 4.00
	to 1;                                    
|
| |  | a ratio of operating cash flow to debt service
	requirements of 1.20 to 1 at December 31, 2001, increasing
	to 1.35 to 1 at December 31, 2002 and decreasing over time
	to 1.20 to 1;                              
|
| |  | a ratio of operating cash flow to interest
	expense requirement of 1.45 to 1 at December 31, 2001,
	increasing to 1.80 to 1 at December 31, 2002 and increasing
	over time to 2.50 to 1;                           
|
| |  | beginning on December 31, 2002, a ratio of
	operating cash flow minus capital expenditures to the sum of
	debt service requirements and cash distributions of 1.00 to 1
	and continuing over time at 1.00 to 1; and
|
| |  | a limitation on capital expenditures.                                                                                                                                                                              

Interest on the revolving credit facility and the
term loan facilities is variable and is based on a prime rate or
a LIBOR formula. The weighted average interest rate at
December 31, 2001 was 7.1%, and interest rates have ranged
in total between 5.0% and 10.1% since inception. This credit
facility is collateralized by substantially all of the assets of
the Company.

This credit facility imposes a number of
restrictive covenants that, among other things, limit the
Companys ability to incur additional indebtedness, create
liens, make capital expenditures and pay dividends.

The Companys credit facility includes a
financial covenant requiring the Company to not exceed a total
debt leverage ratio ranging from 9.25 to 1.00 in the first
quarter to 7.75 to 1.00 in the fourth quarter 2002. Absent debt
reduction from projected debt levels or an amendment to the
credit facility modifying this covenant, the Company will likely
violate this covenant during 2002. Management is currently in
discussions with the lenders regarding an amendment to the
credit facility. However, if the Company is unable to comply
with the total debt leverage ratio or is unable to renegotiate
the credit facility and there is a covenant violation, the
lenders would have the right, but not the obligation, to
accelerate the repayment of the entire amount outstanding under
the credit facility. In addition, an acceleration under the
credit facility would allow the holders of the Senior
Subordinated Notes to declare the principal and interest of the
Senior Subordinated Notes immediately due and payable. The
Company would then be required to either refinance the debt or
repay the amounts due. If this were to occur, management would
attempt to renegotiate the debt with the holders to provide for
a more extended repayment term. There is no assurance that
management would be able to renegotiate the debt under these
conditions or meet its obligation under the accelerated
repayment terms. As a result, this raises substantial doubt
about the Companys ability to continue as a going concern.

42



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. LONG-TERM DEBT: (Continued)


Senior Subordinated Notes

On March 14, 2001, the Company completed the
sale of $450.0 million Senior Subordinated Notes due 2009.
These notes were sold at a discount of $3.3 million and
carry an interest rate of 9.5%. The discount will be amortized
over the life of the notes. On June 4, 2001, the Company
completed the sale of $250.0 million of Senior Subordinated
Notes due 2009. These notes were sold at a discount of
$3.6 million and carry an interest rate of 9.5%. The
discount will be amortized over the life of the notes.

Restricted cash and investments consist of
interest pledge deposits for the Senior Subordinated Notes. The
interest pledge deposits include the initial deposit of
$85.2 million for the $450.0 million Senior
Subordinated Notes, net of interest earned and payments issued
to bondholders and the additional deposit of $48.0 million
for the $250.0 million Senior Subordinated Notes, net of
interest earned and payments issued to bondholders.

Minimum Future Payments

Minimum future payments of long-term debt for
years subsequent to December 31, 2001, are as follows:

|                    |  |   |               | 
|------------------- |  | - | ------------- | 
|2002                |  | $ | 46,909,091    | 
|2003                |  |   | 70,407,214    | 
|2004                |  |   | 93,905,337    | 
|2005                |  |   | 117,403,461   | 
|2006                |  |   | 212,449,323   | 
|2007 and thereafter |  |   | 1,266,042,697 | 
|                    |  |   |               | 
|                    |  | $ | 1,807,117,123 | 
|                    |  |   |               | 

Interest Rate Hedges

The Company pays interest on its bank credit
facility based on a variable factor, such as LIBOR or prime
rate. The Company will from time-to-time enter into derivative
contracts to reduce exposure against rising interest rates.

During 2000, the Company entered into a
$1.03 billion derivative contract on its credit facility,
in order to hedge its interest rate exposure, whereby the
interest rate on the facility was effectively fixed at a rate of
7.3%. This agreement expired in June 2001 and was replaced with
another agreement. The new agreement expires June 30, 2002
and sets the interest rate on $1.03 billion of debt at a
rate of 6.7%.

On January 1, 2001, in accordance with
SFAS 133, the Company recorded a liability and a transition
adjustment, net of income tax, to other comprehensive loss
totaling $9.5 million relating to its interest rate hedges.
As of December 31, 2001, the Companys accumulated
other comprehensive loss, net of income tax, grew to
$14.2 million as a result of the decline in interest rates.
All of the contracts related to this amount will be settled and
reversed out of accumulated other comprehensive loss during 2002.

6. STOCKHOLDERS EQUITY:

On June 29, 2001, the Company received
$35.0 million from one of its principal owners, Dobson
Communications, for the purchase of 35,000 shares of its
Series A Preferred Stock. Each share of Series A
Preferred Stock is entitled to cumulative annual dividends on
the liquidation preference of $1,000 per share, subject to
certain adjustments. Dividends will accrue but will not be
payable until the fifth anniversary of the issuance of the
Series A Preferred Stock.

43



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



6. STOCKHOLDERS EQUITY:
(Continued)


On January 18, 2001, the Company received a
$32.8 million capital contribution from its shareholder.
This contribution consisted of cash, PCS licenses relating to
areas in northeast Oklahoma and southeast Kansas, and certain
other assets.

On February 25, 2000, AT&T Wireless and
Dobson Communications contributed $765.0 million to the
Joint Venture to complete the acquisition of the Company.

7. ACQUISITION:

On February 25, 2000, the Joint Venture
acquired the Company for $2.44 billion, of which
$765.0 million was in the form of a capital contribution to
the Company and the remaining $1.675 billion was financed
by the Companys new credit facility. The Companys
markets include systems in eleven states. This acquisition was
accounted for as a purchase. Accordingly, the cost of the
acquisition was allocated to the Companys assets and
liabilities. The allocation of the $2.44 billion of
purchase price on February 25, 2000, was the following:

|                              |  |   |               |  
|----------------------------- |  | - | ------------- | -
|Current assets                |  | $ | 63,606,606    |  
|Property, plant and equipment |  |   | 174,511,971   |  
|Wireless license costs        |  |   | 1,200,089,119 |  
|Customer list                 |  |   | 50,000,000    |  
|Goodwill                      |  |   | 1,248,454,988 |  
|Other assets                  |  |   | 33,898,836    |  
|Current liabilities           |  |   | (48,778,143   | )
|Deferred tax liabilities      |  |   | (281,783,377  | )
|                              |  |   |               |  
|                              |  | $ | 2,440,000,000 |  
|                              |  |   |               |  

8. EMPLOYEE BENEFIT PLANS:

All employees are employed by one of the
Companys principal owners, 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 approximately $590,000 and $308,500 for the year
ended December 31, 2001 and for the period from
February 25, 2000, through December 31, 2000,
respectively, and were recorded as general and administrative
expenses in the accompanying statements of operations.

9. TAXES:

Benefit for income taxes for the years ended
December 31, 2001 and for the period from February 25,
2000 through December 31, 2000 were as follows:

|                                          |                          |              |             |              |   |   |             |             |  
|----------------------------------------- | ------------------------ | ------------ | ----------- | ------------ | - | - | ----------- | ----------- | -
|                                          |                          |              |             | February 25,
|                                          |                          |              |             | 2000        
|                                          |                          | Year Ended   |             | through     
|                                          |                          | December 31, |             | December 31,
|                                          |                          | 2001         |             | 2000        
|                                          |                          |              |             |             
|Federal income taxes                     |                          |              |             |              |   |   |             |            
|Deferred                                  |                          | $            | (44,369,825 | )            |   | $ | (28,255,448 | )          
|State income taxes (current and deferred) |                          |              | (7,829,969  | )            |   |   | (4,986,255  | )          
|                                          |                          |              |             |              |   |   |             |            
|                                          | Total income tax benefit |              | $           | (52,199,794  | ) |   | $           | (33,241,703 | )
|                                          |                          |              |             |              |   |   |             |            

44



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



9. TAXES: (Continued)


The benefits for income taxes for the years ended
December 31, 2001, and for the period from
February 25, 2000 through December 31, 2000, differ
from amounts computed at the statutory rate as follows:

|                                                           |  |              |             |              |  |   |             |  
|---------------------------------------------------------- |  | ------------ | ----------- | ------------ |  | - | ----------- | -
|                                                           |  |              |             | February 25,
|                                                           |  |              |             | 2000        
|                                                           |  | Year Ended   |             | through     
|                                                           |  | December 31, |             | December 31,
|                                                           |  | 2001         |             | 2000        
|                                                           |  |              |             |             
|Income taxes at statutory rate (34%)                       |  | $            | (64,063,930 | )            |  | $ | (45,501,301 | )
|State income taxes, net of Federal income tax
	effect      |  |              | (11,305,399 | )            |  |   | (8,029,641  | )
|Goodwill amortization, for which no benefit is
	recognized |  |              | 23,326,005  |              |  |   | 20,111,043  |  
|Other, net                                                 |  |              | (156,470    | )            |  |   | 178,196     |  
|                                                           |  |              |             |              |  |   |             |  
|                                                           |  | $            | (52,199,794 | )            |  | $ | (33,241,703 | )
|                                                           |  |              |             |              |  |   |             |  

The tax effects of the temporary differences
which gave rise to deferred tax assets and liabilities at
December 31, 2001 and 2000, were as follows:

|                                  |                                            |                                              |                                         |              |              |              |   |              |              |              |  
|--------------------------------- | ------------------------------------------ | -------------------------------------------- | --------------------------------------- | ------------ | ------------ | ------------ | - | ------------ | ------------ | ------------ | -
|                                  |                                            | December 31,                                 |                                         | December 31,
|                                  |                                            | 2001                                         |                                         | 2000        
|                                  |                                            |                                              |                                         |             
|Current deferred income taxes:    |                                            |                                              |                                         |              |              |              |   |             
|                                  | Allowance for doubtful accounts receivable |                                              | $                                       | 682,000      |              |              | $ | 724,100      |             
|                                  | Accrued liabilities                        |                                              |                                         | 5,819,000    |              |              |   | 6,446,300    |             
|                                  |                                            |                                              |                                         |              |              |              |   |             
|                                  |                                            | Net current deferred income tax asset        |                                         |              | 6,501,000    |              |   |              | 7,170,400    |             
|                                  |                                            |                                              |                                         |              |              |              |   |             
|Noncurrent deferred income taxes: |                                            |                                              |                                         |              |              |              |   |             
|                                  | Fixed assets                               |                                              |                                         | (29,270,000  | )            |              |   | (30,843,424  | )           
|                                  | Intangible assets                          |                                              |                                         | (320,473,000 | )            |              |   | (346,975,198 | )           
|                                  | Interest rate hedges                       |                                              |                                         | 9,479,500    |              |              |   |             |             
|                                  | Tax credits and carryforwards              |                                              |                                         | 153,881,500  |              |              |   | 123,935,622  |             
|                                  |                                            |                                              |                                         |              |              |              |   |             
|                                  |                                            | Net noncurrent deferred income tax liability |                                         |              | (186,382,000 | )            |   |              | (253,883,000 | )           
|                                  |                                            |                                              |                                         |              |              |              |   |             
|                                  |                                            |                                              | Total net deferred income tax liability |              | $            | (179,881,000 | ) |              | $            | (246,712,600 | )
|                                  |                                            |                                              |                                         |              |              |              |   |             

At December 31, 2001, the Company had NOL
carryforwards of approximately $386.0 million, which may be
utilized to reduce future Federal income taxes payable. These
NOL carryforwards begin to expire in 2009.

10. RELATED PARTY TRANSACTIONS:

At December 31, 2001 and 2000, the Company
had payables totaling approximately $17.7 million and
$21.0 million, respectively, due to related parties. The
amounts represent expenditures and expense allocations made by
Dobson Communications on behalf of the Company.

Dobson Communications provides certain services
to the Company in accordance with a management agreement.
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. Costs allocated to the Company from
Dobson Communications were approximately $10.6 million and
$4.1 million for the year ended December 31, 2001 and
for the period from February 25, 2000 through
December 31, 2000, respectively. In addition, the Company
reimbursed Dobson Communications for other expenses incurred by
them on the Companys behalf, primarily related to
compensation-related expenses, totaling $40.4 million and

45



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



10. RELATED PARTY TRANSACTIONS:
(Continued)


$27.8 million for the year ended
December 31, 2001 and for the period from February 25,
2000 through December 31, 2000, respectively.

11. COMMITMENTS:

Effective November 16, 2001, the Company
entered into an equipment supply agreement with Nortel Networks
Inc., in which the Company agreed to purchase approximately
$49.5 million of cell site and switching equipment between
November 16, 2001 and December 31, 2004. Of the
commitment, approximately $43.4 million remained at
December 31, 2001.

Future minimum lease payments required under
operating leases that have an initial or remaining
noncancellable lease term in excess of one year at
December 31, 2001, are as follows:

|                    |  |   |            | 
|------------------- |  | - | ---------- | 
|2002                |  | $ | 10,030,000 | 
|2003                |  |   | 8,525,000  | 
|2004                |  |   | 7,045,000  | 
|2005                |  |   | 5,497,000  | 
|2006                |  |   | 3,612,000  | 
|2007 and thereafter |  |   | 8,932,000  | 

Lease expense under the above leases was
approximately $11.0 million and $6.8 million for the
year ended December 31, 2001, and for the period from
February 25, 2000 through December 31, 2000,
respectively.

12. FAIR VALUE OF FINANCIAL
INSTRUMENTS:

Unless otherwise noted, the carrying value of the
Companys financial instruments approximates fair value.
The Company estimates 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 for debt with similar terms and
remaining maturation. The Company estimates the fair value of
its interest rate hedge based on the current market value of the
hedge instruments.

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

|                                |  |                 |               |            |  |                 |               |            |  |   |               |  |  |   |               | 
|------------------------------- |  | --------------- | ------------- | ---------- |  | --------------- | ------------- | ---------- |  | - | ------------- |  |  | - | ------------- | 
|                                |  |                 |               |           
|                                |  | 2001            |               | 2000      
|                                |  |                 |               |           
|                                |  | Carrying Amount |               | Fair Value |  | Carrying Amount |               | Fair Value
|                                |  |                 |               |            |  |                 |               |           
|Restricted cash and investments |  | $               | 97,862,596    |            |  | $               | 97,862,596    |            |  | $ |              |  |  | $ |              | 
|Credit facility                 |  |                 | 1,113,604,456 |            |  |                 | 1,113,604,456 |            |  |   | 1,678,000,000 |  |  |   | 1,678,000,000 | 
|Senior Subordinated notes       |  |                 | 693,512,667   |            |  |                 | 676,174,850   |            |  |   |              |  |  |   |              | 
|Interest rate hedge liability   |  |                 | 23,698,750    |            |  |                 | 23,698,750    |            |  |   |              |  |  |   | 15,850,608    | 

13. SUBSEQUENT EVENTS:

On February 8, 2002, one of the
Companys wholly-owned, indirect subsidiaries 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 covers a total population of

46



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



13. SUBSEQUENT EVENTS:
(Continued)


approximately 290,800 and a subscriber base of
approximately 24,900, which are not included in the
Companys December 31, 2001 reported amounts. As a
result of this agreement, the results of operations for
Tennessee 4 RSA during the years presented are included in
the Companys consolidated financial statements as
discontinued operations.

47



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##### Table of Contents



Report of Independent Auditors

To the Board of Directors of

American Cellular Corporation:


We have audited the accompanying consolidated
statements of operations, stockholders equity and cash
flows of American Cellular Corporation and subsidiaries (the
Company) for the year ended December 31, 1999. These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated results of American Cellular
Corporation and its subsidiaries operations and its cash flows
for the year ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.



| |                  
| | -----------------
| | ERNST & YOUNG LLP

Chicago, Illinois,

February 9, 2000


48



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In Thousands)


|                                       |  |              |          |  
|-------------------------------------- |  | ------------ | -------- | -
|                                       |  | Year Ended  
|                                       |  | December 31,
|                                       |  | 1999        
|                                       |  |             
|Revenues                               |  |              |          |  
|Service revenues                       |  | $            | 176,323  |  
|Roaming revenues                       |  |              | 131,174  |  
|Equipment sales                        |  |              | 9,931    |  
|Other                                  |  |              | 8,393    |  
|                                       |  |              |          |  
|Total revenues                         |  |              | 325,821  |  
|Costs and expenses                     |  |              |          |  
|Cost of cellular service               |  |              | 57,246   |  
|Cost of equipment sold                 |  |              | 19,356   |  
|General and administrative             |  |              | 43,350   |  
|Sales and marketing                    |  |              | 31,078   |  
|Depreciation and amortization          |  |              | 97,217   |  
|                                       |  |              |          |  
|Total costs and expenses               |  |              | 248,247  |  
|                                       |  |              |          |  
|Operating income                       |  |              | 77,574   |  
|Other income (expense)                 |  |              |          |  
|Interest expense                       |  |              | (106,888 | )
|Interest income                        |  |              | 4,912    |  
|Other income, net                      |  |              | 6        |  
|                                       |  |              |          |  
|                                       |  |              | (101,970 | )
|                                       |  |              |          |  
|Loss before provision for income taxes |  |              | (24,396  | )
|Provision for income taxes             |  |              | (5,418   | )
|                                       |  |              |          |  
|Net loss                               |  | $            | (29,814  | )
|                                       |  |              |          |  

See notes to consolidated financial statements.

49



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITY

(Dollars in Thousands)


|                                              |  |                 |           |              |  |              |         |            |  |             |         |        |  |         |   |         |  |  |        |   |  |   |   |  |  |   |        |  |  |   |          |  
|--------------------------------------------- |  | --------------- | --------- | ------------ |  | ------------ | ------- | ---------- |  | ----------- | ------- | ------ |  | ------- | - | ------- |  |  | ------ | - |  | - | - |  |  | - | ------ |  |  | - | -------- | -
|                                              |  |                 |           |              |  |              |         |            |  |            
|                                              |  | Series A        |           | Class A      |  | Class B      |         |            |  |            
|                                              |  |                 |           |              |  |              |         |            |  |            
|                                              |  |                 |           |              |  |              |         |            |  |            
|                                              |  | Preferred Stock |           | Common Stock |  | Common Stock |         | Additional |  |            
|                                              |  |                 |           |              |  |              |         | Paid-In    |  | Accumulated
|                                              |  | Shares          |           | Amount       |  | Shares       |         | Amount     |  | Shares      |         | Amount |  | Capital |   | Deficit
|                                              |  |                 |           |              |  |              |         |            |  |             |         |        |  |         |   |        
|Balance at December 31, 1998                  |  |                 | 3,250,000 |              |  | $            | 344,375 |            |  |             | 250,000 |        |  | $       | 3 |         |  |  | 19,387 |   |  | $ |  |  |  | $ | 25,191 |  |  | $ | (106,200 | )
|Conversion of Class B stock                   |  |                 |          |              |  |              |        |            |  |             | 4,819   |        |  |         |  |         |  |  | (4,819 | ) |  |   |  |  |  |   |       |  |  |   |         |  
|Accrued preferred stock dividends             |  |                 |          |              |  |              | 44,105  |            |  |             |        |        |  |         |  |         |  |  |       |   |  |   |  |  |  |   |       |  |  |   | (44,105  | )
|Net loss for the year ended December 31, 1999 |  |                 |          |              |  |              |        |            |  |             |        |        |  |         |  |         |  |  |       |   |  |   |  |  |  |   |       |  |  |   | (29,814  | )
|                                              |  |                 |           |              |  |              |         |            |  |             |         |        |  |         |   |         |  |  |        |   |  |   |   |  |  |   |        |  |  |   |          |  
|Balance at December 31, 1999                  |  |                 | 3,250,000 |              |  | $            | 388,480 |            |  |             | 254,819 |        |  | $       | 3 |         |  |  | 14,568 |   |  | $ |  |  |  | $ | 25,191 |  |  | $ | (180,119 | )
|                                              |  |                 |           |              |  |              |         |            |  |             |         |        |  |         |   |         |  |  |        |   |  |   |   |  |  |   |        |  |  |   |          |  

See notes to consolidated financial statements.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In Thousands)


|                                                                                  |                                                   |                                  |         |         |        |  
|--------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------- | ------- | ------- | ------ | -
|                                                                                  |                                                   | Year Ended                      
|                                                                                  |                                                   | December 31,                    
|                                                                                  |                                                   | 1999                            
|                                                                                  |                                                   |                                 
|Operating activities                                                              |                                                   |                                  |         |        
|Net loss                                                                          |                                                   | $                                | (29,814 | )      
|Adjustments to reconcile net loss to net cash
	provided by operating activities  |                                                   |                                  |         |        
|                                                                                  | Depreciation and amortization                     |                                  |         | 97,217  |       
|                                                                                  | Amortization of deferred financing costs          |                                  |         | 4,409   |       
|                                                                                  | Deferred income taxes                             |                                  |         | 5,171   |       
|                                                                                  | Accretion of discount on Senior Notes             |                                  |         | 217     |       
|                                                                                  | Amortization of premium on restricted investments |                                  |         | 281     |       
|                                                                                  | Changes in working capital components:            |                                  |         |         |       
|                                                                                  |                                                   | Accounts receivable              |         |         | (6,181 | )
|                                                                                  |                                                   | Inventories                      |         |         | (3,211 | )
|                                                                                  |                                                   | Prepaid and other current assets |         |         | (1,071 | )
|                                                                                  |                                                   | Accounts payable                 |         |         | (555   | )
|                                                                                  |                                                   | Interest payable                 |         |         | (1,988 | )
|                                                                                  |                                                   | Accrued operating expenses       |         |         | (4,075 | )
|                                                                                  |                                                   | Income and other taxes payable   |         |         | 2,836  |  
|                                                                                  |                                                   | Deferred revenue                 |         |         | (668   | )
|                                                                                  |                                                   | Other current liabilities        |         |         | 408    |  
|                                                                                  |                                                   |                                  |         |        
|Net cash provided by operating activities                                         |                                                   |                                  | 62,976  |        
|Investing activities                                                              |                                                   |                                  |         |        
|Purchase of fixed assets                                                          |                                                   |                                  | (50,462 | )      
|Proceeds from sale of fixed assets                                                |                                                   |                                  | 2,179   |        
|Change in restricted investments, net                                             |                                                   |                                  | 26,425  |        
|                                                                                  |                                                   |                                  |         |        
|Net cash used in investing activities                                             |                                                   |                                  | (21,858 | )      
|Financing activities                                                              |                                                   |                                  |         |        
|Repayment on credit facility                                                      |                                                   |                                  | (3,000  | )      
|Proceeds from termination of hedging instruments                                  |                                                   |                                  | 3,182   |        
|Deferred financing costs                                                          |                                                   |                                  | (419    | )      
|                                                                                  |                                                   |                                  |         |        
|Net cash used in financing activities                                             |                                                   |                                  | (237    | )      
|                                                                                  |                                                   |                                  |         |        
|Increase in cash and cash equivalents                                             |                                                   |                                  | 40,881  |        
|Cash and cash equivalents at beginning of year                                    |                                                   |                                  | 34,015  |        
|                                                                                  |                                                   |                                  |         |        
|Cash and cash equivalents at end of year                                          |                                                   | $                                | 74,896  |        
|                                                                                  |                                                   |                                  |         |        
|Supplemental Disclosure of Cash Flow
	Information                                 |                                                   |                                  |         |        
|Cash paid during the period for:                                                  |                                                   |                                  |         |        
|                                                                                  | Interest                                          |                                  | $       | 104,250 |       
|                                                                                  | Income taxes                                      |                                  |         | 671     |       

See notes to consolidated financial statements.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1. Organization, Basis of Presentation,
and Pending Sale of Business

American Cellular Corporation, a Delaware
corporation, was formed on February 26, 1998, to acquire
the operations of PriCellular Corporation. American Cellular
Corporation and Subsidiaries (the Company) is principally
engaged in the ownership and operation of cellular telephone
systems. The Company operates in one business segment pursuant
to Statement of Financial Accounting Standards
(SFAS) No. 131, Disclosures About Segments of an
Enterprise and Related Information.

The consolidated financial statements include the
assets, liabilities, and results of operations of entities in
which the Company has a controlling interest. All significant
intercompany balances and transactions have been eliminated.

Pending Sale of Business

On October 5, 1999, American Cellular
Corporation entered into an Agreement and plan of Merger (the
Merger Agreement) pursuant to which a newly formed joint venture
of Dobson Communications Corporation and AT&T Wireless
Systems, Inc. will, subject to the terms and conditions set
forth in the Merger Agreement, acquire the Company by merging a
wholly owned subsidiary of the joint venture with and into the
Company (the Merger). Pursuant to the Merger Agreement, each
share of Class A common stock, par value $.01 per
share, of the Company will, at the effective time of the Merger
(the Effective Time), be converted into the right to receive
$3,244.24 per share in cash, plus interest thereon for the
period commencing January 1, 2000, through and including
the closing sate at a rate of 8% per annum (the Common
Stock Purchase Price). As provided in the Merger Agreement, the
Common Stock Purchase Price is subject to adjustment in the
event shares of common stock are repurchased by the Company
pursuant to stock repurchase rights prior to the Effective Time.

The Merger Agreement further provides that each
share of nonvoting Class B common stock, par value
$.01 per share, of the Company issued and outstanding
immediately prior to the Effective Time will become fully vested
and will automatically be converted into one share of
Class A common stock at the Effective Time in accordance
with the terms of the grant thereof and, as such, will there
upon be subject to conversion into the right to receive the
Common Stock Purchase Price. In addition, each share of
nonvoting Series A Preferred Stock par value $.01 per
share, of the Company issued and outstanding immediately prior
to the Effective Time will, consistent with the terms of such
preferred stock designated in the Companys certificate of
incorporation, be converted at the Effective Time into the right
to receive $100 per share in cash plus all accrued but
unpaid dividends thereon to and including the Effective Time.

Concurrent with the execution of the Merger
Agreement, certain stockholders of the Company executed a
stockholder Voting Agreement, dated as of October 5, 1999,
pursuant to which, among other things, such stockholders agreed
to vote all shares beneficially owned by such persons in favor
of the Merger and each of the other transactions contemplated by
the Merger Agreement at any meeting of the Companys
stockholders in connection with the Merger (or otherwise to
consent in writing thereto, as the case may be). As majority of
the stockholders of the Company voted to approve the Merger
Agreement and the transactions contemplated thereby, including
the Merger, at a meeting of the stockholders held on
October 5, 1999.

The Merger is expected to be completed in
February 2000.

2. Significant Accounting
Policies

Use of Estimates

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

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Investments in Cellular Operations

The Company owns a 44.5% interest in a joint
venture with SBC Communications, Inc. (SBC). Under the
terms of the joint venture agreement, the Company recorded
preferential distributions, which totaled $5.3 million for
the year ended December 31, 1999, which are included in
other revenues. SBC has operating control of the properties
and, accordingly, the Company accounts for its investment using
the cost method. The Company also had an option to put its joint
venture interest to SBC, which it exercised for
$39.1 million on December 1, 1999. The sale of the
Companys investment, which is expected to close in the
first quarter 2000, will result in a pretax gain of
approximately $3.6 million.

Revenue Recognition

The Company earns revenue by providing access to
its cellular system and for usage of its cellular system
(collectively subscriber revenues), for providing service to
customers from other cellular systems who roam through the
service area (roaming revenues), and for long-distance calls
placed by the Companys customers and those of other
carriers within the Companys service area (toll revenues).

Access revenue is billed one month in advance and
is recognized when earned. Airtime, long-distance, and roaming
revenues are recognized when the service is rendered. Equipment
sales are recognized on delivery of the equipment to the
customer.

Advertising Costs

Advertising costs relating to new subscribers are
expensed in the period in which they are incurred. Advertising
expense amounted to $6.6 million for the year ended
December 31, 1999.

Comprehensive Loss

Net loss for the year ended December 31,
1999, is the same as comprehensive loss.

Concentrations of Credit Risk

No single customer is large enough to pose a
significant financial risk to the Company. The Company maintains
an allowance for losses based on the expected collectibility of
accounts receivable. Credit losses have been within
managements expectations.

Pending Accounting Standard

In June 1998, the Financial Accounting Standards
Board issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, which will
be adopted by the Company effective January 1, 2001. The
Statement will require the Company to recognize all derivatives,
including interest rate swaps and collars, on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted
to fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in fair value of
derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective
portion of a derivatives change in fair value will be
immediately recognized in earnings. The Company has terminated
all of its interest rate swaps and collars as of
December 31, 1999. Accordingly, unless other derivative
instruments are acquired, management does not expect the
adoption of Statement 133 will have any effect on the results of
operations or financial position of the Company.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Cellular Facilities, Equipment, and
Other

Cellular facilities, equipment, and other fixed
assets are recorded at cost, including labor associated with
construction. Depreciation is computed using the straight-line
method over the estimated useful lives, typically three to seven
years. Depreciation expense was $34.6 million for the year
ended December 31, 1999.

3. Long-Term Debt

Long-term debt consists of the following (in
thousands):

|                                  |                      |              |           |              |  |   |           |         | 
|--------------------------------- | -------------------- | ------------ | --------- | ------------ |  | - | --------- | ------- | 
|                                  |                      | December 31, |           | Fair        
|                                  |                      | 1999         |           | Market Value
|                                  |                      |              |           |             
|Borrowings under Credit Facility: |                      |              |           |              |  |   |           |        
|                                  | Revolver Loans       |              | $         | 66,000       |  |   | $         | 66,000  | 
|                                  | Tranche A Term Loans |              |           | 450,000      |  |   |           | 450,000 | 
|                                  | Tranche B Term Loans |              |           | 198,500      |  |   |           | 198,500 | 
|                                  | Tranche C Term Loans |              |           | 198,500      |  |   |           | 198,500 | 
|10.5% Senior Notes, due 2008      |                      |              | 283,188   |              |  |   | 316,350   | (1)    
|                                  |                      |              |           |              |  |   |           |        
|                                  |                      |              | 1,196,188 |              |  | $ | 1,229,350 |        
|                                  |                      |              |           |              |  |   |           |        
|Less: Current portion             |                      |              | (25,608   | )            |  |   |           |        
|                                  |                      |              |           |              |  |   |           |        
|                                  |                      | $            | 1,170,580 |              |  |   |           |        
|                                  |                      |              |           |              |  |   |           |        



---



|    |                              
|--- | -----------------------------
|(1) | Based on quoted market price.

The bank syndicated Credit Facility provides a
subsidiary of the Company up to $1 billion in four tranches
($450 million on Tranche A, $200 million for each
Tranche B and C, and up to $150 million on the
Revolver). Payments under the Credit Facility are due quarterly,
in varying installments through December 2007. Additional
payments are required for excess cash flow pursuant to the
Credit Facility agreement. These amounts totaled $21,608,000 in
1999 and accordingly, are reflected as current at
December 31, 1999. Interest is payable quarterly at the
adjusted prime rate, plus the applicable margin for each tranche
(0.125% for the Revolver and Tranche A, 1.5% for
Tranche B, and 1.75% for Tranche C) or LIBOR, plus the
applicable margin for each tranche (1.125% for the Revolver and
Tranche A, 2.5% for Tranche B, and 2.75% for
Tranche C), based on the subsidiary consolidated leverage
ratio. As of December 31, 1999, the interest rates
applicable on the tranches of the Credit Facility ranged from
approximately 6.73% to 8.35%, yielding a weighted-average rate
of 7.38%. In addition, commitment fees of 0.25% on the
unutilized portion of the Revolver are payable quarterly. At
December 31, 1999, the Company had $84.0 million
available under the Revolver Loans of the Credit Facility.
Substantially all of the subsidiaries assets are pledged as
collateral to the Credit Facility. The Credit Facility contains
several financial covenants related to the subsidiarys
leverage and debt service ratios and restrictions on the
subsidiarys incurrence of additional debt, payment of
dividends, incurrence of liens, and payments and transfers of
net assets from the subsidiary to the Company. Restricted net
assets of the Company approximated $464.1 million as of
December 31, 1999.

On May 13, 1998, the Company issued
approximately $285.0 million aggregate principal amount of
10.5% Senior Notes (the Notes), due 2008. The Notes are
unsecured and subordinated to the Credit Facility. The Notes
were issued at a price of 99.24% or $282.8 million. The
original issue discount on the Notes accretes, compounded
semiannually, to yield an effective rate of 10.63%. Interest is
payable semiannually on each May 15 and November 15.
The first six scheduled interest payments on the Notes will be
funded from securities held in escrow.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Notes are subject to redemption at any time
on or after May 15, 2003, at the option of the Company, in
amounts of $1,000 at the following redemption prices, if
redeemed during the 12-month period beginning May 15 of the
years indicated below:

|           |  |            |        |  
|---------- |  | ---------- | ------ | -
|           |  | Redemption
|Year       |  | Prices    
|           |  |           
|2003       |  |            | 105.25 | %
|2004       |  |            | 103.50 |  
|2005       |  |            | 101.75 |  
|Thereafter |  |            | 100.00 |  

The holders of record receive the redemption
price plus any accrued and unpaid interest. In addition, at any
time prior to May 15, 2001, the Company may use the net
cash proceeds of one or more equity offerings to redeem up to an
aggregate 35% of the principal amount of Notes originally issued
at a redemption price equal to 110.50%, plus any accrued and
unpaid interest.

In the event of a change of control as defined in
the Notes indenture, each holder of Notes will have the right to
require the Company to repurchase all or any part of such
holders Notes, at a cash price equal to 101% of the
aggregate principal amount plus any accrued and unpaid interest.
On January 12, 2000, ACC Acquisition Company, an entity
formed to complete the acquisition of the Company described in
Note 1, announced a tender offer to purchase all of the
Companys outstanding Notes at a redemption price as
described in the Offer to Purchase and Consent Solicitation.

As part of its interest rate risk management
program, the Company utilized interest rate swap and collar
agreements to hedge variable interest rate risk under the Credit
Facility. Net interest paid or received related to such
agreements was recorded using the accrual method and as an
adjustment to interest expense. At December 31, 1998, the
Company had interest rate collars with an aggregate notional
amount of $700 million, effectively fixing the interest
rate between 5.38% and 6.00%, expiring in 2001. At
December 31, 1998, the Company had an interest rate swap
with a notional amount of $100 million, effectively fixing
the interest rate to 5.84%, expiring in 2001. During the fourth
quarter of 1999, the Company terminated all of its interest rate
swap and collar agreements resulting in a gain of approximately
$3.3 million. The gain has been deferred and is being
amortized into income over the remaining terms of the swap and
collar agreements. The deferred gain at December 31, 1999,
totaled approximately $3.2 million.

The maturities of the Companys long-term
debt are as follows (in thousands):

|           |  |   |           | 
|---------- |  | - | --------- | 
|2000       |  | $ | 25,608    | 
|2001       |  |   | 49,000    | 
|2002       |  |   | 49,000    | 
|2003       |  |   | 71,500    | 
|2004       |  |   | 71,500    | 
|Thereafter |  |   | 929,580   | 
|           |  |   |           | 
|           |  | $ | 1,196,188 | 
|           |  |   |           | 

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

4. Income Taxes

The significant components of the Companys
deferred tax liabilities and assets are as follows (in
thousands):

|                           |                                           |              |         |         |  
|-------------------------- | ----------------------------------------- | ------------ | ------- | ------- | -
|                           |                                           | December 31,
|                           |                                           | 1999        
|                           |                                           |             
|Deferred tax liabilities:  |                                           |              |         |        
|                           | Cellular facilities, equipment, and other |              | $       | (27,457 | )
|                           | Intangible assets                         |              |         | (8,102  | )
|                           | State and local deferred taxes            |              |         | (6,656  | )
|                           | Investment in joint venture               |              |         | (3,065  | )
|                           | Other                                     |              |         | (5,032  | )
|Deferred tax assets:       |                                           |              |         |        
|                           | Net operating loss carryforwards          |              |         | 79,651  |  
|                           | Accruals                                  |              |         | 952     |  
|                           | Other                                     |              |         | 3,249   |  
|                           |                                           |              |         |        
|Net deferred tax assets    |                                           |              | 33,540  |        
|Valuation allowance        |                                           |              | (33,540 | )      
|                           |                                           |              |         |        
|Net deferred tax liability |                                           | $            |        |        
|                           |                                           |              |         |        

At December 31, 1999, the Company had
federal tax net operating loss carryforwards (NOLs) of
approximately $207.5 million which are available to offset
future federal taxable income. NOLs begin expiring in the year
2009 through 2018 as follows: 2009-$2.0 million;
2010-$1.7 million; 2011-$5.6 million;
2012-$22.4 million; and 2018-$175.8 million. At
December 31, 1999, the Company had state tax NOLs of
approximately $126.6 million.

The Company established a valuation allowance in
accordance with generally accepted accounting principles. The
Company continually reviews the adequacy of the valuation
allowance and recognizes the benefits of deferred tax assets
only when managements assessment indicates that it is more
likely than not that the deferred tax assets will be realized.

A reconciliation of the income tax provision
based upon the federal statutory rate to the actual income tax
provision is as follows (in thousands):

|                                                 |                    |              |        |       | 
|------------------------------------------------ | ------------------ | ------------ | ------ | ----- | 
|                                                 |                    | Year Ended  
|                                                 |                    | December 31,
|                                                 |                    | 1999        
|                                                 |                    |             
|Income tax benefit at federal statutory rate     |                    | $            | (8,539 | )    
|Effect of:                                       |                    |              |        |      
|State income tax expense, net of federal benefit |                    |              | 818    |      
|Amortization of goodwill/cellular licenses       |                    |              | 12,951 |      
|AMT provision and other                          |                    |              | 188    |      
|                                                 |                    |              |        |      
|                                                 | Income tax expense |              | $      | 5,418 | 
|                                                 |                    |              |        |      

56



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Income tax expense consists of the following (in
thousands):

|                     |         |   |       |       | 
|-------------------- | ------- | - | ----- | ----- | 
|Current taxes:       |         |   |       |      
|                     | Federal |   | $     | 160   | 
|                     | State   |   |       | 87    | 
|                     |         |   |       |      
|Total current taxes  |         |   | 247   |      
|                     |         |   |       |      
|Deferred taxes:      |         |   |       |      
|                     | Federal |   |       | 4,000 | 
|                     | State   |   |       | 1,171 | 
|                     |         |   |       |      
|Total deferred taxes |         |   | 5,171 |      
|                     |         |   |       |      
|Total tax provision  |         | $ | 5,418 |      
|                     |         |   |       |      

For the year ended December 31, 1999, the
Company recorded a deferred tax provision of $5,171,000 related
to the utilization of preacquisition net operating loss
carryforwards. In accordance with SFAS No. 109,
Accounting for Income Taxes, the utilization of such
preacquisition tax benefits has been recorded as a reduction to
goodwill.

5. Stockholders Equity

Preferred Stock

The Company issued 3,250,000 shares of
Series A Preferred Stock for gross proceeds of
$325 million. The preferred stock accrues dividends daily
at the rate of 12% per annum, compounded quarterly. Such
dividends shall accrue and be cumulative on the stated value of
$100 per share. Dividends shall be payable quarterly, in
arrears, on the last day of each December, March, June, and
September. Dividends shall be paid in cash. If the payment does
not occur on a regular dividend date, dividends shall accrue to
the final payment date.

The holders of Series A Preferred Stock have
preference and priority over the holders of shares of any stock
of the Company ranking junior to the Series A Preferred
Stock, with respect to the payment of dividends or distribution
of assets, whether upon liquidation, dissolution, winding up, or
otherwise (Junior Stock). No dividend or distribution shall be
declared or paid, either directly or indirectly, nor shall any
Junior Stock, or any warrants, rights, calls, or options
exercisable or convertible into any Junior Stock be redeemed,
purchased, retired, or otherwise acquired for any consideration,
unless as of such date the Company has paid all dividends
accrued and payable to date on the Series A Preferred Stock.

If the Company shall adopt a plan of liquidation,
dissolution, or winding up, no distribution shall be made to the
holders of shares of Junior Stock, unless the holders of
Series A Preferred Stock have received in cash the stated
value, $100 per share, plus all accrued but unpaid
dividends thereon.

The Company shall have the right to redeem
outstanding shares of Series A Preferred Stock at any time
in aggregate amounts of $5 million or more at any one time.
The redemption price shall be $100 per share plus the
amount of all accrued and unpaid dividends through the
redemption date.

The Series A Preferred Stock have no voting
rights, except certain actions in which each share of
Series A Preferred Stock shall have one vote.

The notes receivable from two stockholders
related to the Series A Preferred Stock bear interest
at 6%.

Class B Common Stock

The Company has reserved 21,739 shares of
its Class B Common Stock for issuance to certain of its
employees. As of December 31, 1999, 14,568 shares are
outstanding. The shares vest in equal, annual

57



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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

increments over a four-year period starting on
the date of issuance. The shares are convertible into shares of
Class A Common Stock on a one-to-one basis, and
automatically convert when vested. As of December 31, 1999,
4,819 shares have vested.

Other

Upon termination of employment without cause,
certain employees have the right to put their Class A and B
Common Stock and Series A Preferred Stock at the fair
market value, provided the Company will have the right to pay
certain amounts by issuing shares of Series A Preferred
Stock.

6. Lease Commitments

Minimum rental commitments as of
December 31, 1999, for all noncancelable operating leases,
consisting principally of leases for office space, real estate,
and tower space, were as follows (in thousands):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2000       |  | $ | 5,133  | 
|2001       |  |   | 4,500  | 
|2002       |  |   | 3,992  | 
|2003       |  |   | 3,572  | 
|2004       |  |   | 2,572  | 
|Thereafter |  |   | 12,473 | 
|           |  |   |        | 
|           |  | $ | 32,242 | 
|           |  |   |        | 

Total rent expense amounted to approximately
$5.8 million for the year ended December 31, 1999.

7. Related Parties

The Company obtains customer information
management and billing services from a vendor in which two of
the Companys directors have an indirect and noncontrolling
ownership interest. Services provided to the Company by this
vendor pursuant to the terms of a license agreement, totaled
$9.3 million for the year ended December 31, 1999.

58



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Supplementary Data

Selected Quarterly Financial Data
(unaudited)

|                                       |  |  |      |                                        |  |          |         |               |  |              |         |   |  |   |         |   |  |   |         |  
|-------------------------------------- |  |  | ---- | -------------------------------------- |  | -------- | ------- | ------------- |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                       |  |  |      |                                       
|                                       |  |  |      | Quarter Ended                         
|                                       |  |  |      |                                       
|                                       |  |  |      | March 31,                              |  | June 30, |         | September 30, |  | December 31,
|                                       |  |  |      |                                        |  |          |         |               |  |             
|                                       |  |  |      |                                       
|                                       |  |  |      | ($ in thousands except per share data)
|Operating revenue                      |  |  | 2001 |                                        |  | $        | 90,290  |               |  | $            | 106,107 |   |  | $ | 116,550 |   |  | $ | 104,297 |  
|                                       |  |  | 2000 |                                        |  | $        | 26,187  |               |  | $            | 90,285  |   |  | $ | 101,776 |   |  | $ | 91,094  |  
|Operating income (loss)                |  |  | 2001 |                                        |  | $        | (15,310 | )             |  | $            | (3,945  | ) |  | $ | 2,339   |   |  | $ | (9,774  | )
|                                       |  |  | 2000 |                                        |  | $        | (2,648  | )             |  | $            | 4,169   |   |  | $ | 8,792   |   |  | $ | (11,406 | )
|Net loss                               |  |  | 2001 |                                        |  | $        | (38,691 | )             |  | $            | (32,831 | ) |  | $ | (30,275 | ) |  | $ | (35,866 | )
|                                       |  |  | 2000 |                                        |  | $        | (11,682 | )             |  | $            | (24,237 | ) |  | $ | (24,954 | ) |  | $ | (38,370 | )
|Loss applicable to common stockholders |  |  | 2001 |                                        |  | $        | (38,691 | )             |  | $            | (32,831 | ) |  | $ | (31,150 | ) |  | $ | (37,129 | )
|                                       |  |  | 2000 |                                        |  | $        | (11,682 | )             |  | $            | (24,237 | ) |  | $ | (24,954 | ) |  | $ | (38,370 | )
|Loss per average common share          |  |  | 2001 |                                        |  | $        | (387    | )             |  | $            | (328    | ) |  | $ | (312    | ) |  | $ | (371    | )
|                                       |  |  | 2000 |                                        |  | $        | (117    | )             |  | $            | (242    | ) |  | $ | (250    | ) |  | $ | (384    | )

59



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

None.




PART III




Item 10. Directors and Executive
Officers of the Registrant

Our directors and executive officers are set
forth below. The ages and position titles of the persons set
forth below are as of December 31, 2001.

|                       |  |     |    |          |  |                            
|---------------------- |  | --- | -- | -------- |  | ---------------------------
|Name                   |  | Age |    | Position
|                       |  |     |    |         
|Everett R. Dobson      |  |     | 42 |          |  | President and Director     
|Joseph E. Stumpf       |  |     | 35 |          |  | Vice President and Director
|Tamara A. Bramel       |  |     | 43 |          |  | Vice President and Director
|Bruce R. Knooihuizen   |  |     | 45 |          |  | Treasurer and Director     
|Timothy J. Duffy       |  |     | 42 |          |  | Vice President             
|Ronald L. Ripley       |  |     | 56 |          |  | Secretary                  
|Richard D. Sewell, Jr. |  |     | 44 |          |  | Assistant Treasurer        

Everett R. Dobsonhas served as our President and Director, and a member of the
management committee of our parent, ACC Acquisition LLC, since
February 2000. Since April 1996, Mr. Dobson has served as
Chairman of the Board, Chief Executive Officer and a director of
Dobson Communications. From 1990 to 1996, he was a director,
President and Chief Operating Officer of Dobson Communications.
Mr. Dobson served on the board of the Cellular
Telecommunications & Internet Association in 1993 and 1994.
He holds a B.A. in Economics from Southwestern Oklahoma State
University and currently sits on its Foundation Board and chairs
its Investment Committee.

Joseph E. Stumpfhas
served as our Vice President and Director, and as a member of
the management committee of our parent, ACC Acquisition LLC,
since October 2000. He has served as Vice President,
Acquisitions and Development at AT&T Wireless since July
2000. From 1997 to 1999 he was a junior partner with
Rutledge & Company (now Rutledge Capital), a private
equity firm based in Greenwich, CT. He practiced in the area of
mergers and acquisitions and corporate finance as an Associate
at the law firm Skadden, Arps, Slate, Meagher & Flom
LLP, Los Angeles from 1995 to 1997 and at the law firm
White & Case LLP in its Los Angeles, Hanoi and Bangkok
offices from 1993 to 1995. He was a Senior Financial Services
Consultant at Price Waterhouse, Los Angeles from 1988 to 1990
and held various finance and accounting positions with Great
American Bank, San Diego from 1984 to 1988. He holds a B.S.
in Business Administration from San Diego State University,
an M.B.A. from Arizona State University and a J.D. from the
University of Southern California.

Tamara A. Bramelhas
served as our Vice President and Director since April 2001.
Ms. Bramel first became associated with AT&T Wireless
in 1985. Since 1999, Ms. Bramel has served as Vice
President and General Manager of operations of AT&T Wireless
in the southern United States. In this capacity, Ms. Bramel
oversees operations of AT&T Wireless properties in
Florida, Georgia, Kansas, Louisiana, Missouri, North Carolina,
Oklahoma and Texas. Between 1985 and 1999, Ms. Bramel
served AT&T Wireless in several capacities, including
Controller, Director of Finance and Operations, Director of
Consumer Sales and General Manager for Oklahoma, Arkansas and
Missouri. She holds a B.B.A. in Accounting from the University
of Oklahoma and is a Certified Public Accountant.

Bruce R. Knooihuizenhas served as our Treasurer and Director, and as a member of the
management committee of our parent, ACC Acquisition LLC, since
February 2000. He has served as Vice President and Chief
Financial Officer of Dobson Communications since July 1996. From
1994 to 1996, Mr. Knooihuizen was Chief Financial Officer
and Secretary for The Westlink Co. in San Diego, a wireless
provider which was formerly an operating unit of US West.
Previously, he was Treasurer and Controller of Ameritech Cellular

60



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from 1990 to 1994; Director, Accounting
Operations of Ameritech Applied Technologies from 1988 to 1990;
and Controller of Ameritech Properties in 1988, all located in
Chicago. From 1980 to 1988, he held various financial and
accounting positions with The Ohio Bell Telephone Company.
Mr. Knooihuizen received a B.S. in Finance from Miami
University in Oxford, Ohio and an M.B.A. in finance from the
University of Cincinnati.


Timothy J. Duffyhas
served as our Vice President since October 2000. He has served
as Chief Technical Officer and Senior Vice President of Network
Operations and Engineering for Dobson Cellular Systems since
December 1998. In this capacity, he manages Dobsons
wireless network facilities as well as engineering, design and
build out of new cellular networks. Prior to joining us,
Mr. Duffy worked for Sygnet Communications from 1985 to
1998 in engineering and related management positions. In 1983,
he was employed as Director of Engineering for the Constrander
Corporation where he was responsible for seven AM and FM radio
broadcast facilities in Ohio and Pennsylvania. From 1976 to
1982, he served as Chief Engineer of radio station WGRP in
Greenville, Pennsylvania. Mr. Duffy holds a
U.S. patent concerning the integration of wireless phone
location information to make call management decisions. He is a
member of the Institute of Electrical and Electronics Engineers
and holds a degree in Electrical Engineering from Pennsylvania
State University.

Ronald L. Ripleyhas
served as our Secretary since February 2000. Mr. Ripley is
Vice President and Senior Corporate Counsel of Dobson
Communications, having served in that capacity since joining
Dobson Communications in November 1997. From 1972 until November
1997, he was in the private practice of law in Oklahoma City,
Oklahoma, the last eleven years of which he was a shareholder in
the firm of Linn and Neville. He received a B.B.A. (with honors)
in business and a Juris Doctor degree in law, both from the
University of Oklahoma.

Richard D. Sewell,
Jr.has served as our Assistant
Treasurer since February 2000. Mr. Sewell is Treasurer of
Dobson Communications. He was employed by Dal-Tile International
Inc., a ceramic tile manufacturer and distributor, as Vice
President Finance from 1997 to 1998, as Vice
President Treasurer from 1995 to 1997 and as Vice
President Financial Reporting from 1990 to 1995. From 1979
to 1989, Mr. Sewell was employed by a predecessor entity to
Ernst & Young, a public accounting firm, concluding as
a principal in their Entrepreneurial Service Group.
Mr. Sewell received a B.S. in Accounting from the
University of Missouri Kansas City.




Item 11. Executive
Compensation

All compensation of our executive officers is
paid by their primary employer. Directors receive no cash
compensation for service on the Board of Directors or Committees
of the Board. We reimburse directors for out-of-pocket expenses
incurred in attending board meetings.






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

All of our outstanding capital stock is held by
ACC Acquisition LLC, which is equally and beneficially owned by
AT&T Wireless and Dobson Communications.




Item 13. Certain Relationships and
Related Transactions

Issuance of Preferred Stock

On June 29, 2001, we received
$35.0 million from one of our principal owners, Dobson
Communications, for the purchase of 35,000 shares of our
Series A Preferred Stock. Each share of Series A
Preferred Stock is entitled to cumulative annual dividends on
the liquidation preference of $1,000 per share, subject to
certain adjustments. Dividends will accrue but will not be
payable until the fifth anniversary of the issuance of the
Series A Preferred Stock.

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Contribution Agreement

On January 18, 2001, pursuant to a
contribution agreement among affiliates of AT&T Wireless,
Dobson Communications and ACC Acquisition LLC, Dobson
Communications made a capital contribution of $16.4 million
in cash and AT&T Wireless contributed PCS licenses and other
assets in certain portions of northeast Oklahoma and southeast
Kansas to our parent, ACC Acquisition LLC. The cash and licenses
were then contributed by ACC Acquisition LLC to us.

Limited Liability Company Agreement

Governance

We are wholly-owned by ACC Acquisition LLC, a
limited liability company equally owned by AT&T Wireless and
Dobson Communications. Under its limited liability company
agreement, ACC Acquisitions management is vested in a
four-person management committee, which consists of two
representatives designated by AT&T Wireless and two
designated by Dobson Communications. The approval of any merger,
sale of a material portion of our assets, offering of our
securities, our liquidation or other significant matter requires
the affirmative vote of all representatives.

Change of Control

The limited liability company agreement of our
immediate parent, ACC Acquisition, contains change of control
provisions. The principal stockholder of Dobson Communications,
Dobson CC Limited Partnership, or DCCLP, and certain of its
affiliates have entered into credit agreements with Bank of
America, N.A. These credit agreements have aggregate principal
amounts outstanding of approximately $280 million as of
March 15, 2002. To secure their obligations under these
credit agreements DCCLP and these affiliates individually
pledged certain assets, which include beneficial ownership of
securities representing controlling interests in DCCLP and
Dobson Communications. These loans will mature on March 31,
2003, unless extended.

If an event of default occurs under the loan
agreements and the lender elects to foreclose on the collateral,
Dobson Communications could experience a change of control under
ACC Acquisitions operating agreement. If Dobson
Communications experiences a change of control and either:



| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ACC Acquisition remains a limited liability
	company and AT&T Wireless and its affiliates retain 100% of
	their initial voting interest and at least 80% of their initial
	economic interest in ACC Acquisition; or
|
| |  | ACC Acquisition is converted to a corporation,
	and AT&T Wireless and its affiliates retain at least 50% of
	their initial beneficial economic interest in ACC Acquisition,                                        

then AT&T Wireless and its affiliates will
have the right to initiate a buy/sell procedure. Pursuant to
this procedure, AT&T Wireless may offer to purchase Dobson
Communications interest in ACC Acquisition, or sell its
interest in ACC Acquisition to Dobson Communications, at a price
established by AT&T Wireless or, at its election, by Dobson
Communications. If this offer is made, Dobson Communications
must either agree to sell its interest in ACC Acquisition to
AT&T Wireless at the established price or purchase AT&T
Wireless interest in ACC Acquisition at the same price. In
addition, Dobson Communications will lose its right to appoint
one of its two representatives to the management committee and
its power to approve some significant matters.

If AT&T Wireless chooses not to initiate the
buy/sell procedure upon a change of control, Dobson
Communications will have the right, subject to certain
conditions, to initiate the buy/sell procedure. In addition,
either Dobson Communications or AT&T Wireless may initiate a
buy/sell procedure on the same terms described above after
February 25, 2005. AT&T Wireless may also initiate a
buy/sell procedure if:



| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we offer commercial mobile radio services other
	than wireless telecommunications services using TDMA or analog
	technology in service areas covering more than 15% of our total
	population; and
|
| |  | AT&T Wireless is offering, or intends to
	offer, these services in our service areas.                                                                                                            

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Upon the consummation of a buy-sell procedure,
our management agreement with Dobson Communications will
immediately terminate, as will the limited non-compete and
preferential roaming agreements among AT&T Wireless, Dobson
Communications and us.

Transfer Restrictions

Prior to February 25, 2003, neither AT&T
Wireless nor Dobson Communications may transfer any interest in
ACC Acquisition to a third party without the consent of the
other. After February 25, 2003, each of AT&T Wireless
and Dobson Communications has the right to transfer up to 20% of
their economic interest in ACC Acquisition, subject to a pro
rata tag-along right in favor of the other party. Any transfers
above that 20% threshold will be subject to a right of first
refusal and a tag-along right in favor of the other party. After
February 25, 2003, if more than 20% of the economic
interests in ACC Acquisition held by Dobson Communications or
AT&T Wireless are transferred directly or indirectly to a
third party, the transferring party will lose their voting
rights in ACC Acquisition (including the right to appoint
representatives to the management committee).

Limits on Competition

So long as we continue to meet quality standards
applicable generally to wireless systems owned by AT&T
Wireless and its affiliates that utilize TDMA technology,
AT&T Wireless has agreed not to construct, own or acquire a
controlling interest in, or manage a communications system that
provides TDMA mobile wireless service in areas in which we
operate our cellular systems until February 25, 2005.
However, AT&T Wireless and its affiliates may:



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | resell our communications services;                                                                                                                                      
|
| |  | act as our agent for the sale of our
	communications services;                                                                                                           
|
| |  | continue to provide wireless services to
	customers of AT&T Wireless or its affiliates in our
	territory;                                                                
|
| |  | provide or resell wireless telecommunications
	services to or from specific locations; and                                                                               
|
| |  | act as an agent for other carriers who provide
	cellular products and services to national account customers of
	the carrier in the geographic areas in which we operate.

Management Agreement

Dobson Cellular Systems, Inc., a subsidiary of
Dobson Communications, provides all supervision, design,
construction and management for us under a management agreement
dated February 25, 2000. 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 perform services for us under the
management agreement, we reimburse Dobson Cellular for the
allocable cost of the service provided, which for indirect
services is generally based on the relative size of our
populations or subscribers. Because of the services provided by
Dobson Cellular 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 ACC Acquisition (acting through its management
	committee excluding any representatives of Dobson
	Communications) upon a material breach by Dobson Cellular, upon
	a failure by ACC Acquisition to satisfy certain quality or
	financial performance standards established by Dobson
	Communications and AT&T Wireless, and in the event of
	certain changes of control of Dobson Communications or transfers
	by Dobson Communications of its interests in ACC
	Acquisition; and
|
| |  | by Dobson Cellular upon a material breach by ACC
	Acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                       

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Additionally, the management agreement terminates
upon the consummation of a purchase and sale transaction
pursuant to the buy/sell procedure.

Upon termination of the management agreement for
any reason, AT&T Wireless will designate a replacement
manager, which may be an affiliate of AT&T Wireless.

During 2001 and 2000, we reimbursed Dobson
Communications $10.6 million and $4.1 million for
allocated shared costs, respectively. In addition, we reimbursed
Dobson Communications for other expenses incurred by them on our
behalf, primarily related to compensation-related expenses,
totaling $40.4 million and $27.8 million for 2001 and
2000, respectively.

Operating Agreements

We have entered into twenty year operating
agreements dated February 25, 2000, with each of AT&T
Wireless and Dobson Cellular Systems, a subsidiary of Dobson
Communications.

Under the terms of these agreements, until
February 25, 2005:



| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Dobson Cellular will be the preferred provider of
	roaming services for our subscribers who roam in Dobson
	Cellulars markets;                  
|
| |  | AT&T Wireless will be the preferred provider
	of roaming services for our subscribers who roam in AT&T
	Wireless markets; and                   
|
| |  | we will be the preferred provider of roaming
	services for Dobson Cellulars subscribers and AT&T
	Wireless subscribers who roam in our markets.
|
| |  | In addition, the operating agreements contain
	provisions providing for declining rates over the twenty-year
	term of the agreement.             

The operating agreements only provide preferred
provider status to each of the parties for TDMA service.
Preferred provider status for GSM/GPRS is not provided for in
the operating agreements.

During 2001 and 2000, we received approximately
$55.5 million and $46.6 million in roaming fees from
AT&T Wireless and paid AT&T Wireless approximately
$20.0 million and $8.5 million in roaming fees,
respectively. During 2001 and 2000, we received approximately
$0.6 million and $1.4 million in roaming fees from
Dobson Communications and paid Dobson Communications
approximately $1.5 million and $1.3 million in roaming
fees, respectively.

In addition, to the extent permitted by law,
AT&T Corp. will be our preferred provider of long distance
service for so long as AT&T Wireless is the preferred
provider of roaming services for our subscribers who roam in
AT&T Wireless markets.

Pursuant to the ACC Acquisitions limited
liability company agreement, AT&T Wireless has the right,
with respect to all or any portion of our markets, to terminate
its 5-year limited non-competition agreement and terminate its
roaming preferences described above upon a merger,
consolidation, asset acquisition or disposition or other
business combination of AT&T Corp. or its affiliates with a
business that:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | has annual telecommunication revenues in excess
	of $5.0 billion;                                                             
|
| |  | derives less than one-third of its aggregate
	revenues from wireless services; and                                            
|
| |  | owns FCC licenses to offer, and does offer,
	mobile wireless services serving more than 25% of the population
	in our markets.

Upon such acceleration or termination, the voting
interests held by AT&T Wireless will cease to exist, and we
will have the right to terminate the operating agreement with
respect to the same portion of our markets.

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PART IV






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

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



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | American Cellular Corporation and
	Subsidiaries                                                                                                       
| | Report of Independent Public Accountants.                                                                                                             
| | Consolidated balance sheets as of
	December 31, 2001 and 2000.                                                                                        
| | Consolidated statements of operations for the
	year ended December 31, 2001 and for the period from
	February 25, 2000 to December 31, 2000.          
| | Consolidated statements of stockholders
	equity for the year ended December 31, 2001 and for the
	period from February 25, 2000 to December 31, 2000.
| | Consolidated statements of cash flows for the
	year ended December 31, 2001 and for the period from
	February 25, 2000 to December 31, 2000.          
| | Notes to consolidated financial statements.                                                                                                           
| | Report of Independent Auditors.                                                                                                                       
| | Consolidated statement of operations for the year
	ended December 31, 1999.                                                                           
| | Consolidated statement of stockholders
	equity for the year ended December 31, 1999.                                                                 
| | Consolidated statement of cash flows for the year
	ended December 31, 1999.                                                                           
| | Notes to consolidated financial statements.                                                                                                           

(a)(2) Financial Statement Schedules:



| |                                           
| | ------------------------------------------
| | Schedule II Valuation Allowance
	Accounts

All other 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






REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To the Board of Directors of

American Cellular Corporation:


We have audited in accordance with auditing
standards generally accepted in the United States, the
consolidated financial statements of American Cellular
Corporation and subsidiaries included in this Form 10-K and
have issued our report thereon dated March 22, 2002. Our
report on the consolidated financial statements includes an
explanatory paragraph with respect to the Companys ability
to continue as a going concern as discussed in Note 5 to
the consolidated financial statements. In addition, our report
includes an additional explanatory paragraph with respect to the
change in the method of accounting for derivative instruments
and hedging activities and the disposal of long-lived assets as
discussed in Notes 2 and 3 to the consolidated financial
statements, respectively. Our audits were made for the purpose
of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14(a)2 is the responsibility of the
Companys management and is presented for purposes of
complying with the Securities and Exchange Commissions
rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth
therein in relation to the basic consolidated statements taken
as a whole.



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

Oklahoma City, Oklahoma,

March 22, 2002


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##### Table of Contents



Item 14(a)2

SCHEDULE II

AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

SCHEDULE OF VALUATION ALLOWANCE
ACCOUNTS


YEAR ENDED DECEMBER 31, 2001 AND THE
PERIOD FROM


FEBRUARY 25, 2000 THROUGH
DECEMBER 31, 2000


|                                            |  |              |           |            |  |            |           |             |  |   |           |  |  |   |           | 
|------------------------------------------- |  | ------------ | --------- | ---------- |  | ---------- | --------- | ----------- |  | - | --------- |  |  | - | --------- | 
|                                            |  | Balance at   |           | Charged to |  |            |           |            
|                                            |  | beginning of |           | costs and  |  |            |           | Balance at 
|                                            |  | year         |           | expenses   |  | Deductions |           | end of year
|                                            |  |              |           |            |  |            |           |            
|Allowance for Doubtful Accounts Receivable: |  |              |           |            |  |            |           |             |  |   |           |  |  |   |           | 
|2001                                        |  | $            | 1,658,093 |            |  | $          | 9,190,431 |             |  | $ | 9,300,426 |  |  | $ | 1,548,098 | 
|2000                                        |  | $            |          |            |  | $          | 3,846,517 |             |  | $ | 2,188,424 |  |  | $ | 1,658,093 | 

Allowance for doubtful accounts are deducted from
accounts receivable in the balance sheet.

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(3) Exhibits

|        |        |             |  |                                                                                                                                                                                                                   |  |  |             | 
|------- | ------ | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                        
|Number  |        | Description |  | Filing                                                                                                                                                                                                           
|        |        |             |  |                                                                                                                                                                                                                  
|        | 3.1    |             |  | Fourth Restated Certificate of Incorporation of
	American Cellular Corporation                                                                                                                                    |  |  | (1)[3.1]    | 
|        | 3.1.1  |             |  | Amendment to Fourth Restated Certificate of
	Incorporation of American Cellular Corporation                                                                                                                       |  |  | (5)         | 
|        | 3.1.2  |             |  | Certificate of Designation for the Series A
	Preferred Stock of American Cellular Corporation                                                                                                                     |  |  | (5)         | 
|        | 3.2    |             |  | Amended and Restated Bylaws of Registrant                                                                                                                                                                         |  |  | (1)[3.2]    | 
|        | 4.1    |             |  | Second Amended and Restated Limited Liability
	Company Agreement of ACC Acquisition LLC, dated
	February 25, 2000, between AT&T Wireless Services
	JV Co. and Dobson JV Company                                   |  |  | (1)[4.1]    | 
|        | 4.2    |             |  | Indenture dated March 14, 2001 between
	American Cellular Corporation and United States Trust Company of
	New York                                                                                                |  |  | (1)[4.2]    | 
|        | 4.3    |             |  | Escrow and Security Agreement dated
	March 14, 2001 between American Cellular Corporation and
	United States Trust Company of New York                                                                            |  |  | (1)[4.3]    | 
|        | 4.4    |             |  | Registration Rights Agreement dated
	March 14, 2001 between American Cellular Corporation,
	Lehman Brothers, Inc. and Banc of America Securities LLC                                                              |  |  | (1)[4.4]    | 
|        | 4.5    |             |  | Escrow and Security Agreement dated June 4,
	2001 between American Cellular Corporation and United States
	Trust Company of New York                                                                              |  |  | (4)[4.5]    | 
|        | 4.6    |             |  | Registration Rights Agreement dated June 4,
	2001 between American Cellular Corporation, Banc of America
	Securities LLC and Lehman Brothers, Inc.                                                                |  |  | (4)[4.6]    | 
|        | 10.1   |             |  | Amended and Restated Management Agreement, dated
	February 25, 2000, between Dobson Cellular Systems, Inc.
	and of ACC Acquisition LLC                                                                            |  |  | (1)[10.1]   | 
|        | 10.2   |             |  | Amended and Restated Operating Agreement, dated
	February 25, 2000, between Dobson Cellular Systems, Inc.
	(and its affiliates) and ACC Acquisition LLC (and its
	affiliates)                                     |  |  | (1)[10.2]   | 
|        | 10.3   |             |  | Amended and Restated Operating Agreement, dated
	February 25, 2000, between AT&T Wireless Services,
	Inc. (and its affiliates) and ACC Acquisition LLC (and its
	affiliates)                                      |  |  | (1)[10.3]   | 
|        | 10.4   |             |  | Credit Agreement, dated February 25, 2000,
	among American Cellular Corporation, Bank of America, N.A., CIBC
	World Market Corp., Barclays Bank PLC, Lehman Commercial Paper
	Inc., TD Securities Inc. and others |  |  | (1)[10.4]   | 
|        | 10.4.1 |             |  | First Amendment to Credit Agreement dated
	March 2, 2001                                                                                                                                                          |  |  | (1)[10.4.1] | 
|        | 10.4.2 |             |  | Second Amendment to Credit Agreement dated
	May 31, 2001                                                                                                                                                          |  |  | (2)[10.4.2] | 
|        | 10.4.3 |             |  | Third Amendment to Credit Agreement dated
	September 27, 2001                                                                                                                                                     |  |  | (5)         | 
|        | 10.5*  |             |  | License Agreement, dated October 8, 2001, by
	and between H.O. Systems, Inc. and American Cellular
	Corporation                                                                                                   |  |  | (5)         | 
|        | 10.6*  |             |  | Purchase and License Agreement between Nortel
	Networks, Inc. and Dobson Communications Corporation, dated
	November 16, 2001                                                                                     |  |  | (5)         | 
|        | 10.7   |             |  | Form of License Agreement among Cellular One
	Group and various subsidiaries of American Cellular Corporation                                                                                                     |  |  | (1)[10.7]   | 
|        | 10.8   |             |  | Intercarrier Roamer Service Agreement, dated
	January 23, 1997, between American Cellular Corporation, as
	successor to PriCellular Corporation and United States Cellular
	Corporation                           |  |  | (1)[10.8]   | 

68



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##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                 |  |  |             | 
|------- | ------ | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                      
|Number  |        | Description |  | Filing                                                                                                                                                                                                         
|        |        |             |  |                                                                                                                                                                                                                
|        | 10.9.1 |             |  | Letter Agreement dated July 5, 2000
	accepting American Cellular Corporation as an affiliate of
	Dobson Cellular Systems, Inc.                                                                                  |  |  | (1)[10.9.1] | 
|        | 10.11  |             |  | Intercarrier Roamer Service Agreement, dated
	January 16, 1997, between Licensees and Permittees (as
	defined in the Agreement) and American Cellular Corporation,
	successor to PriCellular Corporation        |  |  | (1)[10.16]  | 
|        | 10.12  |             |  | 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                                          |  |  | (3)[10.17]  | 
|        | 10.13* |             |  | 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 |  |  | (5)         | 
|        | 99     |             |  | Letter regarding Arthur Andersen LLP                                                                                                                                                                            |  |  | (5)         | 



---



|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | 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
	March 31, 2001, as the exhibit number indicated in brackets
	and incorporated by reference herein.    
|   
|(3) | 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.
|   
|(4) | Filed as an exhibit to the Registrants
	Registration Statement on Form S-4 (no. 333-63454) as the
	exhibit number indicated in brackets and incorporated by
	reference herein.                     
|   
|(5) | Filed herewith                                                                                                                                                                                      

(b) Reports on Form 8-K

Not applicable

69



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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 27th day of
March, 2002.



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



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

| |                       
| | ----------------------
| |                       
| | Everett R. Dobson     
| | President and Director

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 and on the dates indicated.

|                                             |  |                                                       |  |               
|-------------------------------------------- |  | ----------------------------------------------------- |  | --------------
|Signatures                                   |  | Title                                                 |  | Date          
|                                             |  |                                                       |  |               
|/s/ EVERETT R. DOBSONEverett R. Dobson       |  | President and Director (Principal Executive
	Officer) |  | March 27, 2002
|                                            
|/s/ BRUCE R. KNOOIHUIZENBruce R. Knooihuizen |  | Treasurer and Director (Principal Financial
	Officer) |  | March 27, 2002
|                                            
|/s/ JOSEPH E. STUMPFJoseph E. Stumpf         |  | Vice President and Director                           |  | March 27, 2002
|                                            
|/s/ TAMARA A. BRAMELTamara A. Bramel         |  | Vice President and Director                           |  | March 27, 2002
|                                            
|/s/ TRENTON W. LEFORCETrenton W. LeForce     |  | Corporate Controller (Principal Accounting
	Officer)  |  | March 27, 2002

70



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##### Table of Contents



INDEX TO EXHIBITS

|        |        |             |  |                                                                                                                                                                                                                   |  |  |             | 
|------- | ------ | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                        
|Number  |        | Description |  | Filing                                                                                                                                                                                                           
|        |        |             |  |                                                                                                                                                                                                                  
|        | 3.1    |             |  | Fourth Restated Certificate of Incorporation of
	American Cellular Corporation                                                                                                                                    |  |  | (1)[3.1]    | 
|        | 3.1.1  |             |  | Amendment to Fourth Restated Certificate of
	Incorporation of American Cellular Corporation                                                                                                                       |  |  | (5)         | 
|        | 3.1.2  |             |  | Certificate of Designation for the Series A
	Preferred Stock of American Cellular Corporation                                                                                                                     |  |  | (5)         | 
|        | 3.2    |             |  | Amended and Restated Bylaws of Registrant                                                                                                                                                                         |  |  | (1)[3.2]    | 
|        | 4.1    |             |  | Second Amended and Restated Limited Liability
	Company Agreement of ACC Acquisition LLC, dated
	February 25, 2000, between AT&T Wireless Services
	JV Co. and Dobson JV Company                                   |  |  | (1)[4.1]    | 
|        | 4.2    |             |  | Indenture dated March 14, 2001 between
	American Cellular Corporation and United States Trust Company of
	New York                                                                                                |  |  | (1)[4.2]    | 
|        | 4.3    |             |  | Escrow and Security Agreement dated
	March 14, 2001 between American Cellular Corporation and
	United States Trust Company of New York                                                                            |  |  | (1)[4.3]    | 
|        | 4.4    |             |  | Registration Rights Agreement dated
	March 14, 2001 between American Cellular Corporation,
	Lehman Brothers, Inc. and Banc of America Securities LLC                                                              |  |  | (1)[4.4]    | 
|        | 4.5    |             |  | Escrow and Security Agreement dated June 4,
	2001 between American Cellular Corporation and United States
	Trust Company of New York                                                                              |  |  | (4)[4.5]    | 
|        | 4.6    |             |  | Registration Rights Agreement dated June 4,
	2001 between American Cellular Corporation, Banc of America
	Securities LLC and Lehman Brothers, Inc.                                                                |  |  | (4)[4.6]    | 
|        | 10.1   |             |  | Amended and Restated Management Agreement, dated
	February 25, 2000, between Dobson Cellular Systems, Inc.
	and of ACC Acquisition LLC                                                                            |  |  | (1)[10.1]   | 
|        | 10.2   |             |  | Amended and Restated Operating Agreement, dated
	February 25, 2000, between Dobson Cellular Systems, Inc.
	(and its affiliates) and ACC Acquisition LLC (and its
	affiliates)                                     |  |  | (1)[10.2]   | 
|        | 10.3   |             |  | Amended and Restated Operating Agreement, dated
	February 25, 2000, between AT&T Wireless Services,
	Inc. (and its affiliates) and ACC Acquisition LLC (and its
	affiliates)                                      |  |  | (1)[10.3]   | 
|        | 10.4   |             |  | Credit Agreement, dated February 25, 2000,
	among American Cellular Corporation, Bank of America, N.A., CIBC
	World Market Corp., Barclays Bank PLC, Lehman Commercial Paper
	Inc., TD Securities Inc. and others |  |  | (1)[10.4]   | 
|        | 10.4.1 |             |  | First Amendment to Credit Agreement dated
	March 2, 2001                                                                                                                                                          |  |  | (1)[10.4.1] | 
|        | 10.4.2 |             |  | Second Amendment to Credit Agreement dated
	May 31, 2001                                                                                                                                                          |  |  | (2)[10.4.2] | 
|        | 10.4.3 |             |  | Third Amendment to Credit Agreement dated
	September 27, 2001                                                                                                                                                     |  |  | (5)         | 
|        | 10.5*  |             |  | License Agreement, dated October 8, 2001, by
	and between H.O. Systems, Inc. and American Cellular
	Corporation                                                                                                   |  |  | (5)         | 
|        | 10.6*  |             |  | Purchase and License Agreement between Nortel
	Networks, Inc. and Dobson Communications Corporation, dated
	November 16, 2001                                                                                     |  |  | (5)         | 
|        | 10.7   |             |  | Form of License Agreement among Cellular One
	Group and various subsidiaries of American Cellular Corporation                                                                                                     |  |  | (1)[10.7]   | 
|        | 10.8   |             |  | Intercarrier Roamer Service Agreement, dated
	January 23, 1997, between American Cellular Corporation, as
	successor to PriCellular Corporation and United States Cellular
	Corporation                           |  |  | (1)[10.8]   | 
|        | 10.9.1 |             |  | Letter Agreement dated July 5, 2000
	accepting American Cellular Corporation as an affiliate of
	Dobson Cellular Systems, Inc.                                                                                    |  |  | (1)[10.9.1] | 



---



##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                 |  |  |            | 
|------- | ------ | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                      
|Number  |        | Description |  | Filing                                                                                                                                                                                                         
|        |        |             |  |                                                                                                                                                                                                                
|        | 10.11  |             |  | Intercarrier Roamer Service Agreement, dated
	January 16, 1997, between Licensees and Permittees (as
	defined in the Agreement) and American Cellular Corporation,
	successor to PriCellular Corporation        |  |  | (1)[10.16] | 
|        | 10.12  |             |  | 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                                          |  |  | (3)[10.17] | 
|        | 10.13* |             |  | 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 |  |  | (5)        | 
|        | 99     |             |  | Letter regarding Arthur Andersen LLP                                                                                                                                                                            |  |  | (5)        | 



---



|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | 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
	March 31, 2001, as the exhibit number indicated in brackets
	and incorporated by reference herein.    
|   
|(3) | 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.
|   
|(4) | Filed as an exhibit to the Registrants
	Registration Statement on Form S-4 (no. 333-63454) as the
	exhibit number indicated in brackets and incorporated by
	reference herein.                     
|   
|(5) | Filed herewith