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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-K



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

For the fiscal year ended December 31,
2002



|  |                                                                                             
|- | --------------------------------------------------------------------------------------------
|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. YesoNox

The
registrant is not subject to filing requirements of
Section 13 or 15(d) of the Securities and Exchange Act of
1934, but files reports required by those sections pursuant to
contractual obligations.

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

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

As
of March 14, 2003, 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                                             
|                   | Item 14. Controls and Procedures                                                                    
|PART IV           
|                   | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                           
|SIGNATURES        
|EX-21 Subsidiaries



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##### Table of Contents



AMERICAN CELLULAR CORPORATION

ANNUAL REPORT ON FORM 10-K


FOR THE YEAR ENDED DECEMBER 31, 2002

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                                   |  |  | 34 | 
|         | 8  |  |  | Financial Statements and Supplementary Data                                                      |  |  | 35 | 
|         | 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                                                   |  |  | 62 | 
|         | 14 |  |  | Controls and Procedures                                                                          |  |  | 65 | 
|PART IV 
|        
|         | 15 |  |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                             |  |  | 66 | 

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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, 2002, our wireless telephone
systems covered a total population of 5.0 million and we
had approximately 690,400 subscribers with an aggregate market
penetration of 13.8%. We provide wireless telephone service in
portions of Illinois, Kansas, Kentucky, Michigan, Minnesota, New
York, Ohio, Oklahoma, Pennsylvania, West Virginia and Wisconsin.
We offer digital voice and digital feature services to all of
our covered population through our existing Time Division
Multiple Access, or TDMA digital network. We are currently in
the process of updating to the Global System for Mobile
Communications, or GSM, and General Packet Radio Service, or
GPRS, digital network which will enable us to offer enhanced
data services. For the year ended December 31, 2002, on a
consolidated basis, we had total revenue of $452.8 million
and a net loss applicable to common stockholder of
$1.1 billion. At December 31, 2002, we had
$1.6 billion of indebtedness and a stockholders
deficit of $528.3 million.

On February 25, 2000, we were acquired by a
joint venture equally owned by AT&T Wireless Services, Inc.,
or AT&T Wireless, and Dobson Communications Corporation, or
Dobson Communications. Dobson Communications manages our
day-to-day operations in accordance with a management agreement.
Under the terms of this agreement, Dobson Communications has
fully integrated our operations with its own operations such
that Dobson Communications and we share common management and
administrative/back-office functions. In addition, Dobson
Communications and we operate in a manner that takes advantage
of our combined scale in as many areas as possible. We have
interoperable customer networks, market our products under the
CELLULAR ONE® trademark, have common rate-plan pricing and
marketing strategies and utilize a common billing vendor.
Because of the services provided by Dobson Communications under
the management agreement, we have no employees of our own or
officers that work exclusively for us.

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, less
competition for subscribers than wireless systems located in
larger metropolitan areas and a higher proportion of roaming
revenue. We focus on acquiring and operating wireless systems
that are adjacent to major metropolitan areas, which include a
high concentration of expressway corridors and roaming activity.

Beginning on June 30, 2002 and continuing
through December 31, 2002, we have failed to comply with a
financial covenant on our senior credit facility, which requires
that we not exceed a certain total debt leverage ratio. Our
lenders presently have the right, but not the obligation, to
accelerate the repayment of the entire amount outstanding under
the senior credit facility. Acceleration under the senior 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.
To date, no such acceleration has occurred. We anticipate that
our cash flow from operations, along with cash on hand, will be
sufficient to meet our capital requirements through October
2003, at which time we will be required to make additional cash
interest payments on our senior subordinated notes. If the cash
interest payments on our senior subordinated notes are not made,
the senior subordinated noteholders could declare the principal
and interest of the notes immediately due and payable. We
continue to hold discussions with our bank lenders and with
representatives of certain of our bondholders concerning a
potential reorganization. We can provide no assurance that we
would be successful in reorganizing or be able to meet our
obligation under the accelerated repayment terms. Therefore, at
December 31, 2002, all of our long-term debt is classified
as current. Unless such non-compliance is resolved, there
continues to be substantial doubt about our ability to continue
as a going concern, as expressed in the independent auditors
report.

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Strategy

Our strategy is to capitalize on our competitive
strengths and further develop and operate rural and suburban
wireless systems. We have developed organizational, marketing
and operational programs designed to increase the number of our
subscribers, promote superior customer service, enhance roaming
revenue, control operating costs and improve the profitability
of our operations.

Competitive Strengths

Strong Current Market Position.We have significant market share in
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 roaming
relationships, digital technologies, local sales channels and
diverse service offerings, including national, regional and
local rate plans.

Attractive Markets.Our markets have demonstrated positive
demographic growth trends, generally have maintained a high
population density relative to other rural and suburban markets
and generally have fewer competitors than metropolitan markets.
Also, our markets are attractive due to their proximity to
markets operated by our primary roaming partners in 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.
Substantially all of the licenses under which we operate are 850
MHz licenses. We believe that in the rural and suburban markets
in which we operate, the 850 MHz licenses generally provide the
wireless operator the most cost effective platform for
delivering service to the end user.

Advanced Digital Technology.We continue to increase the capacity
and capabilities of our systems to attract additional
subscribers, increase the use of our systems by existing
subscribers, increase roaming activity and further enhance the
overall efficiency of our network. Our primary technology is
TDMA. However, we are currently in the process of updating to
GSM to enable us to offer data capabilities and meet the needs
of our roaming partners who have begun utilizing GSM technology.

Strategic Roaming Relationships.We intend to maintain and expand
strategic relationships with operators of wireless systems in
major metropolitan statistical areas, or MSAs, near our wireless
systems. These relationships include roaming agreements to allow
our subscribers and the subscribers of our roaming partners to
roam on each others networks at favorable rates. In
addition, we deploy digital technology in our systems areas that
is the same as that selected by our roaming partners in the
neighboring MSA. We believe these strategic roaming
relationships and agreements enable us to maximize our roaming
revenue and offer our subscribers larger home rate
areas. Our two most significant strategic roaming relationships
are with AT&T Wireless and Cingular Wireless.

Localized Management of Distribution Channels.We distribute our products primarily
through retail outlets, a direct sales force and independent
dealers. Our local management teams have day-to-day operating
authority with the flexibility to respond to individual market
requirements. Their presence fosters a sense of customer service
and community spirit. In addition, we believe that our marketing
and customer service functions are more effective when tailored
to the local market population.

Targeted Sales Efforts.We seek to attract subscribers who
will generate high monthly revenue and low churn rates. Local
management designs marketing programs to target these
subscribers and tailors distinctive rate plans to emphasize the
quality, value and advantage of our services.

Superior Customer Service.We support local customer service
through retail stores, a direct sales force, and regional
customer service call centers that offer 24-hour services. 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.

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

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 approximately
1.5 million subscribers at December 31, 2002. This
size and scale enables 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 wireless markets. Information with
respect to populations in licensed areas is as of
December 31, 2002 and is our estimate based upon the
Claritas 2000 Bureau of Census results, adjusted to exclude
those portions of our rural service areas, or RSAs, and MSAs not
covered by our licenses. Net population represents total
population less minority ownership interests in our licenses.
Information with respect to subscribers is our estimate as of
December 31, 2002 and excludes the market we sold to
Verizon Wireless in February 2002. We determine market
penetration by dividing the total number of 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.

|                 |                                          |                        |  |            |           |  |  |         |           | 
|---------------- | ---------------------------------------- | ---------------------- |  | ---------- | --------- |  |  | ------- | --------- | 
|                 |                                          | Total                  |  | Net       
|Markets:         |                                          | Population             |  | Population
|                 |                                          |                        |  |           
|Central Region   |                                          |                        |  |            |           |  |  |        
|                 | Northeast Oklahoma/ Southeast Kansas PCS |                        |  | 259,400    |           |  |  | 259,400 |          
|                 |                                          |                        |  |            |           |  |  |        
|                 |                                          | Total Central Region   |  |            | 259,400   |  |  |         | 259,400   | 
|                 |                                          |                        |  |            |           |  |  |        
|Northwest Region |                                          |                        |  |            |           |  |  |        
|                 | Alton, IL MSA                            |                        |  | 21,700     |           |  |  | 18,900  |          
|                 | MI 1 RSA                                 |                        |  | 202,700    |           |  |  | 202,700 |          
|                 | Duluth MN MSA                            |                        |  | 243,800    |           |  |  | 243,800 |          
|                 | MN 2 RSA                                 |                        |  | 31,800     |           |  |  | 31,800  |          
|                 | MN 3 RSA                                 |                        |  | 58,400     |           |  |  | 58,400  |          
|                 | MN 4 RSA                                 |                        |  | 16,300     |           |  |  | 16,300  |          
|                 | MN 5 RSA                                 |                        |  | 214,700    |           |  |  | 214,700 |          
|                 | MN 6 RSA                                 |                        |  | 274,500    |           |  |  | 274,500 |          
|                 | Eau Claire WI MSA                        |                        |  | 148,300    |           |  |  | 145,300 |          
|                 | Wausau WI MSA                            |                        |  | 125,800    |           |  |  | 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 Northwest Region |  |            | 1,926,800 |  |  |         | 1,918,500 | 
|                 |                                          |                        |  |            |           |  |  |        

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|            |                      |                   |                                                |            |           |           |  |         |           |           | 
|----------- | -------------------- | ----------------- | ---------------------------------------------- | ---------- | --------- | --------- |  | ------- | --------- | --------- | 
|            |                      | Total             |                                                | Net       
|Markets:    |                      | Population        |                                                | Population
|            |                      |                   |                                                |           
|East 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 East Region |                                                |            | 2,810,800 |           |  |         | 2,799,600 |          
|            |                      |                   |                                                |            |           |           |  |        
|            |                      |                   | Total  American Cellular regions
    combined |            |           | 4,997,000 |  |         |           | 4,977,500 | 
|            |                      |                   |                                                |            |           |           |  |        
|            |                      |                   | Total subscribers                              |            |           | 690,400   |  |         |           |           | 
|            |                      |                   |                                                |            |           |           |  |        
|            |                      |                   | Total penetration                              |            |           | 13.8%     |  |         |           |           | 
|            |                      |                   |                                                |            |           |           |  |        

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. We
offer no-toll plans, nation-wide plans and unlimited local
calling plans. 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
offerings:

Wireless Calling.Our primary service offering is
wireless telephone service. We offer digital service using the
TDMA digital standard, and analog service using Advanced Mobile
Phone Service, or AMPS, in all of our wireless markets. In
addition, we offer various custom-calling features, including
voice mail, call forwarding, call waiting, three-way calling, no
answer transfer, caller ID, message waiting indicator, sleep
mode for longer battery life, voice activated dialing, and
mobile originated and mobile terminated short message service.

Voice Privacy and Call Security.As of December 31, 2002, 83.9% of
our subscribers utilize digital technology. Digital technology
is inherently more secure than analog technologies, and provides
increased voice privacy and enhanced fraud protection for our
customers.

Tri-Mode Handsets.Our digital subscribers use tri-mode,
dual-band handsets. These handsets are compatible with analog
cellular, digital cellular and digital PCS service, allowing our
subscribers access to AT&T Wireless national
footprint, as well as the extensive coverage areas of our other
roaming 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® trademark. We
believe the national support offered by the Cellular One Group
has enhanced our advertising exposure. 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® trademark pursuant
to licensing agreements with Cellular One Group. We pay
licensing and advertising fees based upon the population of the
licensed areas. Our licensing agreements with the Cellular One
Group are for five-year terms expiring on various dates. These
agreements may be renewed at our option for three additional
five-year terms. From time-to-time, we may consider alternative
brand name strategies and service marks.

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

We focus our marketing program on attracting
subscribers who we believe are likely to generate high monthly
revenue and low churn rates. We undertake extensive market
research to identify and design marketing programs to attract
these subscribers and tailor distinctive rate plans and roaming
rates to emphasize the quality, value and advantage of our
wireless service. We have established marketing alliances with
neighboring wireless systems to create larger home rate areas in
order to increase our roaming revenue and to attract new
subscribers. We market our service offerings primarily through
our direct sales force and company-owned retail stores. We also
use a network of dealers, such as electronics stores, car
dealerships and department stores. In addition to these
traditional channels, our marketing team continuously evaluates
other, less traditional, methods of distributing our services
and products, such as targeted telemarketing and direct mail
programs.

Segmented Rate Plans.We offer our subscribers a diverse
array of rate plans, so that each subscriber can choose the plan
that best fits that subscribers expected calling needs.
Our offerings include our Clear Across AmericaTM
national rate plans, which uses the networks of Dobson
Communications, and those of AT&T Wireless and Cingular
Wireless, plus regional and local rate plans at a variety of
pricing tiers. The majority of our new digital subscribers are
on our local rate plans, which generally include only areas
covered by our network as the home area. Our rate
plans generally combine a fixed monthly access charge, a
designated number of minutes-of-use, per minute usage charges
for minutes in excess of the included amount and additional
charges for certain custom-calling features. Most of our plans
include some features such as voice mail, caller ID, call
forwarding and call waiting. These plans offer value to the
customer while enhancing airtime usage and revenue. Local
management conducts market research to identify and design rate
plans to emphasize the quality, value and advantage of our
wireless communications services

Sales and Distribution

We primarily sell and distribute our wireless
services, phones and accessories through three distribution
channels; retail stores, direct sales and independent dealers.
For the year ended December 31, 2002, approximately 50% of
our gross subscriber additions were added through our retail
stores, while our direct sales force was responsible for over
10% and our independent dealers added almost 30%.

As of December 31, 2002, we had
approximately 80 retail stores and outlets. Most of our retail
stores are fully equipped to handle customer service. Some of
these stores are also authorized warranty repair centers. Our
stores provide customer-friendly retail environments, including
extended hours, a large selection of products and services, a
well trained sales staff and convenient locations, which are
designed to make the sales process quick and easy for the
subscriber.

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We train and compensate our sales force in a
manner designed to stress the importance of customer service,
high penetration levels and minimum acquisition costs per
subscriber. We believe that our direct sales force is able to
select and screen new subscribers and select pricing plans that
realistically match subscriber needs. As a result, we believe
that our direct sales force reduces our marketing costs because
our subscriber retention rate is higher than when we use
independent dealers. As of December 31, 2002 we had
approximately 80 direct sales representatives.

As of December 31, 2002, we had
approximately 165 independent dealers, or agents. These
independent dealers allow us a third distribution channel by
offering our services and equipment through retail outlets, such
as car dealerships, electronics stores, paging service companies
and independent contractors.

We believe that our after-sale telemarketing
program, which includes courtesy calls to our new customers and
is conducted by our sales force and customer service personnel,
helps to reduce our churn rates. This program enhances customer
loyalty and allows our sales staff to check customer
satisfaction as well as to offer additional calling features,
such as voicemail, call waiting and call forwarding.

Customer Service

Customer service is an essential element of our
marketing and operating philosophy. We attract new subscribers
and retain existing subscribers by providing high-quality
customer service. Our customers benefit from a local staff,
including a market manager, customer service field
representatives, technical and engineering staff, sales
representatives and installation and repair facilities. Local
offices and installation and repair facilities allow us to
better service our customers, schedule installations and make
repairs. As of December 31, 2002, our markets were serviced
by four regional call centers, which, in aggregate, employed
approximately 350 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.

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

Roaming

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

Our most significant roaming partner is AT&T
Wireless. For the year ended December 31, 2002, AT&T
Wireless customers accounted for approximately 49% of our
roaming revenue or approximately 15% of our total operating
revenue. Under our AT&T Wireless roaming agreement, AT&T
Wireless and we charge each other favorable roaming rates for
each of our respective markets. These rates will decrease over
time. Our roaming agreement with AT&T Wireless requires that
we maintain and provide certain call features and related
services to roaming customers, such as call waiting, call
forwarding, three-way calling, caller ID and voice mail. This
roaming agreement may be terminated or suspended by either party
if the FCC revokes a license covering a material portion of
either partys markets, or if either party fails to control
subscriber fraud, fails to adhere to system technical
requirements and upgrades or breaches any of the material terms
of the roaming agreement. The roaming agreement expires in June
2007 and excludes GSM/ GPRS, usage.

Another significant roaming partner is Cingular
Wireless. For the year ended December 31, 2002, Cingular
Wireless customers accounted for approximately 19% of our
roaming revenue or approximately 6% of our total operating
revenue. Under our Cingular Wireless roaming agreement, Cingular
Wireless and we

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charge each other favorable roaming rates for
both usage of TDMA and GSM in our respective markets. These
rates will decrease over time. Our roaming agreement with
Cingular Wireless requires that we maintain and provide certain
call features and related services to roaming customers, such as
call waiting, call forwarding, three-way calling, caller ID and
voice mail. This roaming agreement may be terminated or
suspended by either party if the FCC revokes a license covering
a material portion of either partys markets, or if either
party fails to control subscriber fraud, fails to adhere to
system technical requirements and upgrades or breaches any of
the material terms of the roaming agreement. The roaming
agreement expires in December 2011.


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

Billing System

Through December 2002, Verisign
Telecommunications Services, or VTS, provided exclusive billing
functions for all of our wireless operations. In November 2002,
we signed a five year contract with Convergys Corporation for
use of their billing and customer care systems under a service
bureau arrangement. Beginning after June 2003, we will replace
the VTS systems with the Convergys Atlys® billing and
customer care systems operating in a Convergys data center to
support wireless voice and data services as well as emerging
technology offerings. Consistent with the billing services
previously offered by VTS, Convergys will provide billing for
all our subscribers across all regions. Convergys will also
handle all the administration and maintenance of the Atlys®
application and the associated infrastructure. Convergys and
their partners will be responsible for the processing and
printing of all customer invoices.

Network Operations

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

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

Long Distance Connection.We have executed a wholesale long
distance agreement with AT&T Corp. to provide long distance
services for the next three years with the ability to lower cost
with increased growth.

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.

System Development and Technology

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

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

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

During the second half of 2002, we began to
overlay selected markets with GSM voice network. This network
will also support the GPRS 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 our
first phase of GSM/ GPRS overlay in most of our markets by the
end of 2003. GSM/ GPRS is the technology choice of both AT&T
Wireless and Cingular Wireless.

Competition

We compete with one or more companies in most of
our markets throughout our regions. These companies include
AT&T Wireless (Telecorp), Alltel, Cingular Wireless, Nextel,
Rural Cellular, Sprint PCS, T-Mobile, US Cellular and Verizon
Wireless.

The telecommunications industry is experiencing
significant technological changes, as evidenced by the
increasing pace of improvements in the capacity and quality of
digital technology, shorter cycles for new products and
enhancements and changes in consumer preferences and
expectations. Accordingly, we expect competition in the wireless
telecommunications industry to be dynamic and intense as a
result of competitors and the development of new technologies,
products and services. Many of our competitors have been
operating for a number of years, operate nationwide systems,
currently serve a substantial subscriber base and have
significantly greater financial, personnel, technical,
marketing, sales and distribution resources than we do. Some
competitors have begun to market enhanced data services, such as
single carrier radio transmission technology, or 1XRTT, and
GPRS. We are currently in the process of upgrading our networks
to GSM/ GPRS.

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

Subject to certain conditions, AT&T Wireless
has agreed not to build PCS networks using TDMA or analog
technology in any of the markets currently served by us until
February 25, 2005. AT&T currently operates a PCS TDMA
network that competes with portions of our markets in Kentucky.
AT&T inherited these competing networks with their purchase
of Telecorp and they have plans to deploy GSM/ GPRS technologies
in Kentucky during 2003. We plan to overlay our markets with
GSM/ GPRS technology during 2003 and 2004.

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

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

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

Discontinued Operations

On February 8, 2002, we sold Tennessee 4 RSA
to Verizon Wireless for a total purchase price of
$202.0 million. The Tennessee 4 RSA covered a total
population of approximately 290,800 and had a subscriber base of
approximately 24,900, which were not included in our
December 31, 2001 reported amounts. As a result of this
sale, the results of operations for Tennessee 4 RSA during the
years presented are included as discontinued operations in our
consolidated financial statements. Proceeds from this
transaction were primarily used to pay down bank debt.

Regulation

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

Federal Regulation

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

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reconsideration of the FCCs decision to
retain the cellular cross interest restriction with respect to
ownership interests in RSAs, as we believe the record does not
provide any support for distinguishing unfairly between
interests in RSAs and similar interests in MSAs. We have made
several other filings on this issue, but we cannot predict when
or if the FCC will act on our petitions.


Also pursuant to that Report and Order, as of
January 1, 2003, the FCC has eliminated the CMRS spectrum
cap rule and now engages in a case-by case review of
transactions that would raise concerns similar to those that the
spectrum cap was designed to address. By eliminating a hard cap
in favor of the more flexible analysis, we believe the changes
adopted by the FCC in the November 8, 2001 Report and Order
could further increase the ability of wireless operators to
attract capital or to make investments in other wireless
operators.

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 Commission recently adopted a Report and
Order that removed or significantly reduced the impact of many
outdated cellular rules, eliminated a number of technical
requirements and granted additional technical and operational
flexibility. Among the changes is a phase out over a five-year
period of the requirement that all cellular carriers provide
analog service throughout their territory. These new rule
changes became effective on February 18, 2003, and should enable
us to operate more efficiently and to utilize our licensed
spectrum more effectively in providing services that meet our
customers requirements.

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
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. 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 ESMR. 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 offerings from some
typical common carrier regulations, such as tariff and
interstate certification filings, thereby allowing us to respond
more quickly to our competition in the marketplace, 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, or E-911, services. These services provide state
and local emergency service providers with the ability to better
identify and locate callers using wireless services, including
callers using special devices for the hearing impaired. Our
obligations to implement these services occur in stages, and on
a market-by-market basis as emergency service providers request
the implementation of E-911 services within their locales. In
June 2002, the FCC extended the deadlines for meeting certain of
these 911 requirements  the Phase II
capabilities whereby emergency service providers receive the 911
callers geographic location  to March 1,
2003, at the earliest (the actual date for implementing this
capability in any given locale will be based on its readiness to
participate in E-911 services). We are currently constructing
facilities to implement these capabilities in several markets,
although we cannot state at this time whether we will be able to
meet all of the requirements imposed by the FCC, whether some
additional relief from these regulations will be required, or

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whether the FCC would grant such relief if we
request to do so. The extent to which we are required to deploy
E-911 services will affect our capital spending obligations. The
FCC in 1999 amended its rules to eliminate a requirement that
carriers be compensated for enhanced 911 costs and expand the
circumstances under which wireless carriers may be required to
offer E-911 services. Federal legislation enacted in 1999 may
limit our liability for uncompleted 911 calls to a degree
commensurate with wireline carriers in our markets.


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

The FCC permits cellular, broadband PCS, paging
and ESMR licensees to offer fixed services on a co-primary basis
along with mobile services. This rule may facilitate the
provision of wireless local loop service, which involves the use
of wireless links to provide local telephone service by cellular
licensees, as well as broadband PCS and ESMR licensees, although
the extent of lawful state regulation of such wireless
local loop service is undetermined.

Wireless carriers may also be designated as
Eligible Telecommunications Carriers and may receive
universal service support for providing service to consumers
that use wireless service in high cost areas as their only phone
service, as well as to consumers in these areas who also
maintain wireline service. We are currently contemplating
whether and where to apply for this designation in the various
jurisdictions in which we provide wireless services to
qualifying high cost areas.

The FCC has also adopted number
pooling rules that affect the way that telephone numbers
generally are allocated in order to make a more efficient
allotment of the dwindling numbers available. Number pooling is
only mandatory at this point within the wireline rate centers in
which we have drawn numbers and which are located in counties
that are included in the Top 100 MSAs as
defined by the FCCs rules. A number of our markets are
partially or wholly contained within the Top 100 MSAs. We
have expended capital preparing for number pooling in these
markets as well as preparing to support the roaming of pooled
numbers into our markets. The FCC also has authorized states to
initiate limited numbering administration to supplement federal
requirements including a number of states in which we provide
service.

In addition, the FCC has ordered all carriers,
including wireless carriers, to adopt a method for providing
customers with telephone number portability, i.e., the
ability to keep their telephone numbers when they change
telecommunications carriers, either wireless to wireless or, in
some instances, wireline to wireless, and vice versa. Under the
local number portability rules, a CMRS carrier located in one of
the Top 100 MSAs that received a request by February 24,
2003, from another carrier to allow end-users to port their
telephone numbers, must be capable of doing so by
November 24, 2003. Outside of the Top 100 MSAs, CMRS
carriers that receive a request to allow end users to port their
telephone numbers must be capable of doing so within six months
after receiving the request or within six months of
November 24, 2003, whichever is later. In addition, all
CMRS carriers have been required since November 24, 2002 to
support roaming nationwide for customers with ported or pooled
numbers. These number portability requirements are likely to
result in added capital expenditures for us to make necessary
system changes. We have intervened in support of a pending
appeal of these requirements filed by the wireless industry with
the United States Court of Appeals for the District of Columbia
Circuit. We are not able at this time to predict whether the
court will enjoin or remove these requirements or whether the
FCC will otherwise act to delay their implementation.

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

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renewal expectancy, it is very likely that the
FCC will renew our existing cellular and PCS licenses so that
they will not become subject to competing applications. To
receive a renewal expectancy, we must show that we have provided
substantial service during our past license term,
and have substantially complied with applicable FCC rules and
policies and the Communications Act. The FCC defines
substantial service as service which is sound,
favorable and substantially above a level of mediocre service
that might only minimally warrant renewal. If a licensee does
not receive a renewal expectancy, then the FCC will accept
competing applications for the license, subject to a comparative
hearing, and the FCC may award the license to another entity.


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. We have satisfied the initial construction requirements
for all of the PCS licenses we currently hold.

FCC rules restrict the voluntary assignments or
transfers of control of certain C and F Block licenses
awarded in closed bidding 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. These rules
could restrict our ability to acquire licenses from other
entities or to assign the licenses we hold and for which we have
applied to certain entities.

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 are
still determining 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 in areas in which clearing remains to
be accomplished 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 in which we hold a controlling
interest or us 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 local exchange carriers to pay reciprocal
compensation for the exchange of traffic with other carriers,
including CMRS carriers such as us, at rates more closely
related to cost. In a rulemaking proceeding pertaining to
interconnection between local exchange carriers 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. 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 or compensated for such traffic.

The Telecommunications Act requires, and the FCC
has adopted, rules that require interstate communications
carriers, including cellular and PCS carriers, to make an
equitable and non-discriminatory contribution to a
Universal Service Fund that reimburses communications carriers
that provide basic communications services to users who receive
services at subsidized rates. We have made such payments as the
FCC has required. We may also seek to qualify for payments from
these federal and state programs in high cost areas where we
provide wireless communications services. If such payments are
made available to us, they would be an additional source of
revenue to us that could be used to support the service we
provide in the

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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. The FCC also
put in place new restrictions on the way carriers recover their
contributions from customers, effective April 1, 2003. We
are working diligently to comply with these new requirements.
They may have an impact on our ability to recover our
administrative costs for administering our participation in the
program.


Additionally, the Telecommunications Act
specifically exempts CMRS 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 CMRS
subscribers are not denied access to the long distance carrier
of their choosing, if the FCC determines that the public
interest so requires. Our customers have access to alternative
long distance carriers using toll free numbers.

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 have been
revised but have limited potential to impose upon us new costs,
obligations, or burdens on our current marketing activities.

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.

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

The overall impact on our business of the
regulatory policy changes flowing from the Telecommunications
Act will likely remain unresolved for the foreseeable future, as
the wireless marketplace continues to absorb its various
pro-competitive initiatives. Provisions of the statute relating
to interconnection, telephone number portability, universal
service, equal access, use of customer proprietary network
information and resale could subject the entire wireless
industry to additional costs and increased competition, the
effects of which cannot currently be determined.

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.

16



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##### Table of Contents



However, states may continue to regulate
other terms and conditions of wireless service, and
a number of state authorities have initiated actions or
investigations of various wireless carrier practices. The
outcome of these proceedings is uncertain and could require us
to change certain of our marketing practices and ultimately
increase state regulatory authority over the wireless industry.


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




Item 2. Properties

As our operations are managed entirely by Dobson
Communications, we utilize four of the five regional call
centers operated by Dobson Communications. Of the four regional
call centers we utilize, two are actually leased by us in our
existing wireless markets located in Duluth, Minnesota and
Poughkeepsie, New York. In addition, our wireless operations
leased approximately 80 retail locations throughout our markets.
We review these leases from time to time and, in the future, may
lease or acquire new facilities as needed. We do not anticipate
encountering any material difficulties in meeting our future
needs for leased space.




Item 3. Legal Proceedings

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




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

Not applicable

17



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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 14, 2003, ACC Acquisition LLC was the
sole holder of record of our common stock.






|        |                        
|------- | -----------------------
|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, 2002, and for the year ended
December 31, 2002 from our consolidated financial
statements included in Item 8, which have been audited by KPMG
LLP. 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 were reclassified as of
December 31, 2001 to reflect our sale of Tennessee 4 RSA as
discontinued operations. We derived the consolidated financial
data for the year ended December 31, 1999 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 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.

|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |         |         |        | 
|----------------------------- | ----------------------- | --------------------------------------------------------------- | ------------------------ | ------------ | -------- | ------------ | - | ------------ | -------- | ------------ | - | -------- | -------- | ------- | - | ------- | -------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------ | 
|                              |                         |                                                                 |                          | PriCellular 
|                              |                         | American Cellular                                               |                          | (the        
|                              |                         |                                                                 |                          | predecessor 
|                              |                         |                                                                 |                          | Period from  |          |              |   | Period from  |          | company)    
|                              |                         |                                                                 |                          | February 25, |          |              |   | February 26, |          |             
|                              |                         |                                                                 |                          | 2000         |          |              |   | 1998         |          | Six Months  
|                              |                         | Year Ended                                                      |                          | Year Ended   |          | through      |   | Year Ended   |          | through      |   | Ended   
|                              |                         | December 31,                                                    |                          | December 31, |          | December 31, |   | December 31, |          | December 31, |   | June 30,
|                              |                         | 2002                                                            |                          | 2001         |          | 2000         |   | 1999         |          | 1998         |   | 1998    
|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |         
|                              |                         |                                                                
|                              |                         | ($ in thousands except per share data)                         
|Statement of Operations Data: |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |        
|                              | Total operating revenue |                                                                 | $                        | 452,830      |          |              | $ | 417,243      |          |              | $ | 309,343  |          |         | $ | 325,821 |          |         | $ | 137,487 |         |         | $ | 108,670 |        
|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |        
|                              | Operating expenses:     |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |         |        
|                              |                         | Cost of service (exclusive of items shown
    separately below) |                          |              | 110,412  |              |   |              | 106,707  |              |   |          | 61,062   |         |   |         | 57,246   |         |   |         | 25,995  |         |   |         | 20,911  |       
|                              |                         | Cost of equipment                                               |                          |              | 34,206   |              |   |              | 37,182   |              |   |          | 26,769   |         |   |         | 19,356   |         |   |         | 7,271   |         |   |         | 5,365   |       
|                              |                         | Selling, general and administrative                             |                          |              | 127,914  |              |   |              | 117,406  |              |   |          | 75,349   |         |   |         | 74,428   |         |   |         | 37,625  |         |   |         | 30,230  |       
|                              |                         | Depreciation and amortization                                   |                          |              | 66,746   |              |   |              | 182,637  |              |   |          | 147,257  |         |   |         | 97,217   |         |   |         | 45,569  |         |   |         | 17,553  |       
|                              |                         | Non-recurring charges                                           |                          |              |         |              |   |              |         |              |   |          |         |         |   |         |         |         |   |         | 4,355   |         |   |         | 4,889   |       
|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |        
|                              |                         |                                                                 | Total operating expenses |              |          | 339,278      |   |              |          | 443,932      |   |          |          | 310,437 |   |         |          | 248,247 |   |         |         | 120,815 |   |         |         | 78,948 | 
|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |        
|                              | Operating income (loss) |                                                                 |                          | 113,552      |          |              |   | (26,689      | )        |              |   | (1,094   | )        |         |   | 77,574  |          |         |   | 16,672  |         |         |   | 29,722  |        
|                              |                         | Interest expense                                                |                          |              | (142,004 | )            |   |              | (165,457 | )            |   |          | (133,270 | )       |   |         | (106,888 | )       |   |         | (61,477 | )       |   |         | (38,955 | )     
|                              |                         | Impairment of goodwill                                          |                          |              | (800,894 | )            |   |              |         |              |   |          |         |         |   |         |         |         |   |         |        |         |   |         |        |       
|                              |                         | Other income, net                                               |                          |              | 1,388    |              |   |              | 3,723    |              |   |          | 537      |         |   |         | 4,918    |         |   |         | 4,936   |         |   |         | 2,947   |       
|                              |                         | Income tax benefit (expense)                                    |                          |              | 14,383   |              |   |              | 52,199   |              |   |          | 33,242   |         |   |         | (5,418   | )       |   |         | (530    | )       |   |         |        |       
|                              |                         |                                                                 |                          |              |          |              |   |              |          |              |   |          |          |         |   |         |          |         |   |         |         |         |   |        

18



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##### Table of Contents



|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |   | 
|-------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------- | ----------- | ------------ | - | ------------ | ---------- | ------------ | - | ------------ | -------- | ---------- | - | - | ------- | ---- | - | - | ------- | ---- | - | - | ------ | - | 
|                                                                                       |                                |                                        |             | PriCellular 
|                                                                                       |                                | American Cellular                      |             | (the        
|                                                                                       |                                |                                        |             | predecessor 
|                                                                                       |                                |                                        |             | Period from  |   |              |            | Period from  |   | company)    
|                                                                                       |                                |                                        |             | February 25, |   |              |            | February 26, |   |             
|                                                                                       |                                |                                        |             | 2000         |   |              |            | 1998         |   | Six Months  
|                                                                                       |                                | Year Ended                             |             | Year Ended   |   | through      |            | Year Ended   |   | through      |          | Ended     
|                                                                                       |                                | December 31,                           |             | December 31, |   | December 31, |            | December 31, |   | December 31, |          | June 30,  
|                                                                                       |                                | 2002                                   |             | 2001         |   | 2000         |            | 1999         |   | 1998         |          | 1998      
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |           
|                                                                                       |                                |                                       
|                                                                                       |                                | ($ in thousands except per share data)
|Loss from continuing operations                                                        |                                |                                        | (813,575    | )            |   |              | (136,224   | )            |   |              | (100,585 | )          |   |   | (29,814 | )    |   |   | (40,399 | )    |   |   | (6,286 | )
|(Loss) income from discontinued operations, net
    of income taxes                    |                                |                                        | (654        | )            |   |              | (1,439     | )            |   |              | 1,342    |            |   |   |        |      |   |   |        |      |   |   |       |  
|Gain from sale of discontinued operations, net of
    income taxes                     |                                |                                        | 13,472      |              |   |              |           |              |   |              |         |            |   |   |        |      |   |   |        |      |   |   |       |  
|Cumulative effect of change in accounting
    principle, net of income taxes           |                                |                                        | (281,640    | )            |   |              |           |              |   |              |         |            |   |   |        |      |   |   |        |      |   |   |       |  
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  
|Net loss                                                                               |                                |                                        | (1,082,397  | )            |   |              | (137,663   | )            |   |              | (99,243  | )          |   |   | (29,814 | )    |   |   | (40,399 | )    |   |   | (6,286 | )
|Dividends on preferred stock                                                           |                                |                                        | (4,661      | )            |   |              | (2,139     | )            |   |              |         |            |   |   | (44,105 | )    |   |   | (21,375 | )    |   |   | (3,357 | )
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  
|Net loss applicable to common stockholder                                              |                                | $                                      | (1,087,058  | )            |   | $            | (139,802   | )            |   | $            | (99,243  | )          |   | $ | (73,919 | )    |   | $ | (61,774 | )    |   | $ | (9,643 | )
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  
|Basic net loss applicable to common stockholder
    per common share:                  |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  
|                                                                                       | Continuing operations          |                                        | $           | (8,135,750   | ) |              | $          | (1,362,235   | ) |              | $        | (1,005,857 | ) |   | $       | (111 | ) |   | $       | (150 | ) |   | $      |  | 
|                                                                                       | Discontinued operations        |                                        |             | 128,182      |   |              |            | (14,393      | ) |              |          | 13,423     |   |   |         |     |   |   |         |     |   |   |        |  | 
|                                                                                       | Change in accounting principal |                                        |             | (2,816,400   | ) |              |            |             |   |              |          |           |   |   |         |     |   |   |         |     |   |   |        |  | 
|                                                                                       | Dividends on preferred stock   |                                        |             | (46,612      | ) |              |            | (21,387      | ) |              |          |           |   |   |         | (163 | ) |   |         | (79  | ) |   |        |  | 
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  
|Total basic and diluted net loss applicable to
    common stockholder per common share |                                | $                                      | (10,870,580 | )            |   | $            | (1,398,015 | )            |   | $            | (992,434 | )          |   | $ | (274    | )    |   | $ | (229    | )    |   | $ |       |  
|                                                                                       |                                |                                        |             |              |   |              |            |              |   |              |          |            |   |   |         |      |   |   |         |      |   |   |        |  

|                    |                                        |                    |   |           |   |      |   |           |  |      |   |           |  |  |   |           |  |  |   |           | 
|------------------- | -------------------------------------- | ------------------ | - | --------- | - | ---- | - | --------- |  | ---- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                    |                                        |                   
|                    |                                        | As of December 31,
|                    |                                        |                   
|                    |                                        | 2002               |   | 2001      |   | 2000 |   | 1999      |  | 1998
|                    |                                        |                    |   |           |   |      |   |           |  |     
|                    |                                        |                   
|                    |                                        | ($ in thousands)  
|Balance Sheet Data: |                                        |                    |   |           |   |      |   |           |  |      |   |           |  |  |   |           |  |  |   |          
|                    | Cash and cash equivalents              |                    | $ | 15,866    |   |      | $ | 5,962     |  |      | $ | 14,881    |  |  | $ | 74,896    |  |  | $ | 34,015    | 
|                    | Property, plant and equipment, net     |                    |   | 185,935   |   |      |   | 203,168   |  |      |   | 184,655   |  |  |   | 173,425   |  |  |   | 159,792   | 
|                    | Total assets                           |                    |   | 1,208,244 |   |      |   | 2,699,030 |  |      |   | 2,690,103 |  |  |   | 1,484,143 |  |  |   | 1,517,600 | 
|                    | Mandatorily redeemable preferred stock |                    |   | 35,000    |   |      |   | 35,000    |  |      |   |          |  |  |   |          |  |  |   |          | 
|                    | Current portion of long-term debt      |                    |   | 1,588,509 |   |      |   | 46,909    |  |      |   | 27,465    |  |  |   | 25,608    |  |  |   | 3,000     | 
|                    | Long term debt, net of current portion |                    |   |          |   |      |   | 1,760,208 |  |      |   | 1,650,535 |  |  |   | 1,170,580 |  |  |   | 1,195,971 | 
|                    | Stockholders (deficit) equity         |                    |   | (528,275  | ) |      |   | 554,563   |  |      |   | 665,757   |  |  |   | 233,555   |  |  |   | 263,369   | 

|                      |                                                   |                                             |   |                   |   |              |   |                   |   |              |   |          |   |  |   |         |   |  |   |         |   |  |   |         |  
|--------------------- | ------------------------------------------------- | ------------------------------------------- | - | ----------------- | - | ------------ | - | ----------------- | - | ------------ | - | -------- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                      |                                                   |                                             |   | PriCellular      
|                      |                                                   | American Cellular                           |   | (the predecessor 
|                      |                                                   |                                             |   | company)         
|                      |                                                   |                                             |   | Period from       |   |              |   | Period from       |   |             
|                      |                                                   |                                             |   | February 25, 2000 |   |              |   | February 26, 1998 |   | Six Months  
|                      |                                                   | Year Ended                                  |   | Year Ended        |   | through      |   | Year Ended        |   | through      |   | Ended   
|                      |                                                   | December 31,                                |   | December 31,      |   | December 31, |   | December 31,      |   | December 31, |   | June 30,
|                      |                                                   | 2002                                        |   | 2001              |   | 2000         |   | 1999              |   | 1998         |   | 1998    
|                      |                                                   |                                             |   |                   |   |              |   |                   |   |              |   |         
|                      |                                                   |                                            
|                      |                                                   | ($ in thousands except per subscriber data)
|Other Financial Data: |                                                   |                                             |   |                   |   |              |   |                   |   |              |   |          |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Capital expenditures                              |                                             | $ | 48,798            |   |              | $ | 74,850            |   |              | $ | 58,450   |   |  | $ | 50,462  |   |  | $ | 24,260  |   |  | $ | 20,517  |  
|Other Data:           |                                                   |                                             |   |                   |   |              |   |                   |   |              |   |          |   |  |   |         |   |  |   |         |   |  |   |        
|                      | Subscribers (at period end)                       |                                             |   | 690,400           |   |              |   | 632,100           |   |              |   | 531,200  |   |  |   | 434,700 |   |  |   | 334,500 |   |  |   | 286,000 |  
|                      | Penetration (at period end)(1)                    |                                             |   | 13.8              | % |              |   | 12.6              | % |              |   | 11.2     | % |  |   | 8.9     | % |  |   | 6.8     | % |  |   | 5.9     | %
|                      | Average monthly churn rate(2)                     |                                             |   | 1.9               | % |              |   | 1.8               | % |              |   | 1.6      | % |  |   | 1.6     | % |  |   | 1.8     | % |  |   | 1.4     | %
|                      | Average monthly service revenue per subscriber(3) |                                             | $ | 39                |   |              | $ | 39                |   |              | $ | 38       |   |  | $ | 39      |   |  | $ | 40      |   |  | $ | 40      |  



---



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

19



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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

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, 2002, our
wireless systems covered a population of 5.0 million and we
had approximately 690,400 subscribers. We are owned by a
joint venture, which is equally owned by AT&T Wireless
and Dobson Communications.

Beginning on June 30, 2002 and continuing
through December 31, 2002, we have failed to comply with a
financial covenant on our senior credit facility, which requires
that we not exceed a certain total debt leverage ratio. Our
lenders presently have the right, but not the obligation, to
accelerate the repayment of the entire amount outstanding under
the senior credit facility. Acceleration under the senior credit
facility would allow the holders of our senior subordinated
notes to declare the principal and interest of our senior
subordinated notes immediately due and payable. We would then be
required to either refinance the debt or repay the amounts due.
To date, no such acceleration has occurred. We anticipate that
our cash flow from operations, along with cash on hand, will be
sufficient to meet our capital requirements through October
2003, at which time we will be required to make additional cash
interest payments on our senior subordinated notes. If the cash
interest payments on our senior subordinated notes are not made,
the senior subordinated noteholders could declare the principal
and interest of the notes immediately due and payable. We
continue to hold discussions with our bank lenders and with
representatives of certain of our bondholders concerning a
potential reorganization. We can provide no assurance that we
would be successful in reorganizing or be able to meet our
obligation under the accelerated repayment terms. Therefore, at
December 31, 2002, all of our long-term debt is classified
as current. Unless such non-compliance is resolved, there
continues to be substantial doubt about our ability to continue
as a going concern, as expressed in the independent auditors
report.

Discontinued Operations

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

Subscribers

Our subscriber base contains three types of
subscribers; post-paid, reseller and pre-paid. At
December 31, 2002 post-paid subscribers accounted for the
largest portion of our subscriber base, at 95.3%. These
subscribers pay a monthly access fee for a wireless service plan
that generally includes a fixed amount of minutes and certain
service features. In addition to the monthly access fee, these
subscribers are typically billed in arrears for long-distance
charges, roaming charges and rate plan overages. Our reseller
subscribers are similar to our post-paid subscribers in that
they pay monthly fees to utilize our network and services,
however, these subscribers are billed by a third party
(reseller), who has effectively resold our service to the end
user (subscriber). We in turn bill the third party for the
monthly usage of the end user. At December 31, 2002, the
reseller base accounted for 4.0% of our total subscriber base.
Our pre-paid subscribers, which at December 31, 2002
accounted for less than 1% of our subscriber base, are
subscribers that pre-pay for an agreed upon amount of usage.

Our average monthly revenue per subscriber and
total gross additions are calculated and reported based only on
post-paid subscriber information.

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Revenue

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

We derive service revenue primarily by providing
wireless services to our subscribers. The wireless industry has
experienced declining average revenue per minute as competition
among wireless service providers has led to reductions in rates
for airtime. The per minute yield on our service revenue
(service revenue divided by subscriber minutes-of-use) was $0.18
for the year ended December 31, 2002, $0.22 for the year
ended December 31, 2001 and $0.30 per minute for the
combined year 2000. These declines have generally been offset by
significant increases in average minutes-of-use per subscriber.
The average minute-of-use per subscriber increased 22.8% for the
year ended December 31, 2002 compared to 2001, and 39.0%
for the year ended December 31, 2001 compared to 2000. We
believe that the industry trend toward increasing minutes-of-use
per subscriber will continue to offset declining revenue 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 revenue accounted for 29.9% of our
operating revenue for the year ended December 31, 2002,
31.7% of our operating revenue for the year ended
December 31, 2001 and 36.8% of our operating revenue for
the combined year 2000. Roaming revenue typically yields
slightly higher average per minute rates and higher margins than
revenue 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
among wireless providers. Our roaming yield (roaming revenue,
which includes airtime, toll charges and surcharges, divided by
roaming minutes-of-use) was $0.27 for the year ended
December 31, 2002, $0.38 for the year ended
December 31, 2001 and $0.55 per minute for the combined
year 2000. We believe that the trend of increasing roaming
minutes will continue to at least partially offset declining
roaming yields. Roaming minutes increased 44.8% for the year
ended December 31, 2002 compared to 2001, and 44.5% for the
year ended December 31, 2001 compared to 2000. Roaming
yields are decreasing as a result of new contracts and scheduled
rate reduction in existing contracts. We believe these roaming
contracts are beneficial because they secure existing traffic
and provide opportunity for a continuing increase in the volume
of traffic. 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.

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

Costs and Expenses

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

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

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

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

Our general and administrative costs include all
infrastructure costs, including costs for customer support,
billing, collections, and corporate administration. 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 subscribers and populations in our respective licensed
areas.

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

Critical Accounting Policies and
Practices

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

Our general and administrative expenses and
certain other operating expenses include all infrastructure
costs, including costs for customer support, billing,
collections and corporate administration. 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 Dobson
Communications and us, the change could have a significant
impact on our results of operations.

We depreciate our property, plant and equipment
and amortize our customer lists and certain other definite life
intangible assets over their useful lives. These useful lives
are based on our estimates of the period that the assets will
generate revenue. Our policy was to review the carrying value of
our long-lived assets and certain identifiable intangibles
whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. With the implementation
of SFAS No. 142, Goodwill and Other Intangible
Assets, which requires companies to cease the amortization
of existing goodwill and intangible assets with indefinite
lives, we reassessed the useful lives of our intangible assets.
A significant portion of our intangible assets is classified as
Wireless license acquisition costs, which represents
our costs associated with acquiring our FCC licenses. These
licenses allow us to provide wireless services by giving us the
exclusive right to utilize certain radio frequency spectrum.
Although the FCC licenses are issued for only a fixed time,
generally ten years, these licenses are renewed by the FCC on a
routine basis and for a nominal fee. In addition, we have
determined that there are no legal, regulatory, contractual,
competitive, economic or other factors that limit the useful
life of these FCC licenses. As a result, our wireless license
acquisition costs are treated as indefinite life intangible
assets. Therefore, upon implementing SFAS No. 142 in its
entirety on January 1, 2002, we ceased the amortization of
both goodwill and wireless license acquisition costs and now
test for impairment of goodwill and wireless license acquisition
costs at least annually and only adjust the carrying amount of
these

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intangible assets upon an impairment of the
goodwill or wireless license acquisition costs. We also
determine on an annual basis whether facts and circumstances
continue to support an indefinite useful life.


This change in policy has and may continue to
have a significant impact to our results of operations and
financial position. For the years ended December 31, 2001 and
2000, we recorded $58.3 million and $50.3 million of
amortization expense related to our goodwill and
$34.5 million and $28.7 million amortization expense,
net of income tax benefit, related to our wireless license
acquisition costs. Without this amortization, our 2001 and 2000
operating results would have been:

|                                                               |  |                        |         |      |  |   |         | 
|-------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                                                               |  | 2001                   |         | 2000
|                                                               |  |                        |         |     
|                                                               |  |                       
|                                                               |  | ($ in thousands except
|                                                               |  | per share data)       
|Net loss                                                       |  | $                      | 44,858  |      |  | $ | 20,236  | 
|Net loss applicable to common stockholder                      |  |                        | 46,997  |      |  |   | 20,236  | 
|Net loss applicable to common stockholder per
    common share |  | $                      | 469,966 |      |  | $ | 202,361 | 

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

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

In addition, during fourth quarter 2002, we
continued to have factors impacting our business for which a
re-evaluation was necessary. We continue to be out of compliance
with our total leverage ratio covenant of our

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senior credit facility, which has given our
lenders the right to accelerate the repayment of the entire
amount outstanding under our senior credit facility. To date, no
such acceleration has occurred and we continue to hold
discussions with our bank lenders and with representatives of
certain of our bondholders concerning a potential
reorganization. Based on these discussions and other factors,
including an increase in a risk-based discount factor, we
determined that our goodwill continued to be impaired based on
current enterprise valuations. Therefore, we recorded an
additional impairment loss of $423.9 million at
December 31, 2002, bringing our total impairment loss on
goodwill to $800.9 million for the year ended
December 31, 2002.


We believe it is necessary for an understanding
of our significant accounting policies to read the above in
conjunction with Note 2 of Item 8, Significant
Accounting Policies, of this Form 10-K.

Results of Operations

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

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

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

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

For the year ended December 31, 2002, our
service revenue increased $35.6 million, or 13.4%, to
$302.1 million from $266.5 million for the year ended
December 31, 2001. The increase was primarily attributable
to increased market penetration and subscriber usage. Our
subscriber base increased 9.2% to 690,400 at December 31,
2002 from 632,100 at December 31, 2001. Even though we have
experienced increased competition and market pressure, our
average monthly service revenue per subscriber remained constant
at $39 for the years ended December 31, 2002 and 2001. This
is a result of our service revenue being positively impacted by
changes in the mix of digital and analog subscribers in our
subscriber base. On December 31, 2002, 83.9% of our
subscriber base was on digital rate plans compared to 72.6% at
December 31, 2001. Our digital subscribers tend to use more
minutes in a larger home area than our analog subscribers.

For the year ended December 31, 2002, our
roaming revenue increased $2.8 million, or 2.2%, to
$135.1 million from $132.3 million for the year ended
December 31, 2001. Roaming minutes have increased by 44.8%
from 2001 to 2002, however, our roaming revenue per
minute-of-use has decreased by 28.9%. As previously described,
both the increase in roaming minutes, along with the decline in
our roaming yield have resulted from roaming agreements we have
entered into which encourage our roaming partners to send us
additional traffic by offering them reduced roaming rates.

For the year ended December 31, 2002, our
equipment and other revenue decreased $3.0 million, or
15.9%, to $15.5 million from $18.5 million for the
year ended December 31, 2001. This was primarily a result
from a slow-down in the migration of existing subscribers from
analog to digital service and a decrease in total gross
subscriber additions during 2002 compared to 2001. We migrated
48,200 subscribers from analog to digital for the year ended
December 31, 2002, compared to 69,900 for the year ended
December 31, 2001. Gross subscriber additions were 198,400
for the year ended December 31, 2002 compared to 201,900
for the year ended December 31, 2001.

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

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

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

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

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

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

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

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

Interest expense.For the year ended
December 31, 2002, our interest expense decreased
$23.5 million, or 14.2%, to $142.0 million from $165.5
million for 2001. Of this decrease, $4.8 million resulted
from the expiration of our interest rate swap agreement in June
2002. The remaining decrease primarily resulted from

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an overall decrease in our variable interest
rates and the reduction of the outstanding balance on our credit
facility.


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

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

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

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

Net loss.For
the year ended December 31, 2002, our net loss was
$1.1 billion. Our net loss increased $944.7 million,
from $137.7 million for the year ended December 31,
2001. The increase in our net loss was attributable to our
impairment of goodwill and the cumulative effect of change in
accounting principle related to the implementation of SFAS
No. 142, both described above.

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

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

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  
|                                           |                                                                 | December 31,      |                          | February 24,    |        | December 31, |        | December 31,
|                                           |                                                                 | 2001              |                          | 2000            |        | 2000         |        | 2000        
|                                           |                                                                 |                   |                          |                 |        |              |        |             
|                                           |                                                                 |                  
|                                           |                                                                 | ($ in thousands) 
|Operating revenue:                         |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|                                           | Service revenue                                                 |                   | $                        | 266,507         |        |              | $      | 31,189       |       |        | $        | 181,275  |        |         | $        | 212,464  |       
|                                           | Roaming revenue                                                 |                   |                          | 132,251         |        |              |        | 21,005       |       |        |          | 113,108  |        |         |          | 134,113  |       
|                                           | Equipment and other revenue                                     |                   |                          | 18,485          |        |              |        | 2,469        |       |        |          | 14,960   |        |         |          | 17,429   |       
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|                                           |                                                                 |                   | Total operating revenue  |                 |        | 417,243      |        |              |       | 54,663 |          |          |        | 309,343 |          |          |        | 364,006 | 
|Operating expenses:                        |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|                                           | Cost of service (exclusive of items shown
    separately below) |                   |                          | 106,707         |        |              |        | 10,165       |       |        |          | 61,062   |        |         |          | 71,227   |       
|                                           |                                                                 | Cost of equipment |                          |                 | 37,182 |              |        |              | 3,510 |        |          |          | 26,769 |         |          |          | 30,279 |        
|Marketing and selling                      |                                                                 |                   | 56,462                   |                 |        |              | 5,347  |              |       |        | 36,580   |          |        |         | 41,927   |         
|General and administrative                 |                                                                 |                   | 60,944                   |                 |        |              | 8,301  |              |       |        | 38,769   |          |        |         | 47,070   |         
|                                           | Depreciation and amortization                                   |                   |                          | 182,637         |        |              |        | 16,720       |       |        |          | 147,257  |        |         |          | 163,977  |       
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|                                           |                                                                 |                   | Total operating expenses |                 |        | 443,932      |        |              |       | 44,043 |          |          |        | 310,437 |          |          |        | 354,480 | 
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|Operating (loss) income                    |                                                                 |                   | (26,689                  | )               |        |              | 10,620 |              |       |        | (1,094   | )        |        |         | 9,526    |         
|                                           | Interest expense                                                |                   |                          | (165,457        | )      |              |        | (16,051      | )     |        |          | (133,270 | )      |         |          | (149,321 | )     
|                                           | Other income (expense), net                                     |                   |                          | 3,723           |        |              |        | (520         | )     |        |          | 537      |        |         |          | 17       |       
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|Loss before income taxes                   |                                                                 |                   | (188,423                 | )               |        |              | (5,951 | )            |       |        | (133,827 | )        |        |         | (139,778 | )       
|Income tax benefit (expense)               |                                                                 |                   | 52,199                   |                 |        |              | (154   | )            |       |        | 33,242   |          |        |         | 33,088   |         
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|Loss from continuing operations            |                                                                 |                   | (136,224                 | )               |        |              | (6,105 | )            |       |        | (100,585 | )        |        |         | (106,690 | )       
|(Loss) income from discontinued operations |                                                                 |                   | (1,439                   | )               |        |              |       |              |       |        | 1,342    |          |        |         | 1,342    |         
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|Net loss                                   |                                                                 |                   | (137,663                 | )               |        |              | (6,105 | )            |       |        | (99,243  | )        |        |         | (105,348 | )       
|Dividends on preferred stock               |                                                                 |                   | (2,139                   | )               |        |              |       |              |       |        |         |          |        |         |         |         
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         
|Net loss applicable to common stockholder  |                                                                 | $                 | (139,802                 | )               |        | $            | (6,105 | )            |       | $      | (99,243  | )        |        | $       | (105,348 | )       
|                                           |                                                                 |                   |                          |                 |        |              |        |              |       |        |          |          |        |         |          |         

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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. The
following table sets forth the components of our operating
revenue for the periods indicated:

|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |       |  
|--------------------------- | ----- | ----------------------- | ------- | ---------- |  | ------ | ---- | ---------- | - | - | ------- | ------- |  |  | ---- | ----- | -
|                            |       |                        
|                            |       | Year Ended December 31,
|                            |       |                        
|                            |       |                         |         |           
|                            |       | 2001                    |         | 2000      
|                            |       |                         |         |           
|                            |       | Amount                  |         | Percentage |  | Amount |      | Percentage
|                            |       |                         |         |            |  |        |      |           
|                            |       |                        
|                            |       | ($ in thousands)       
|Service revenue             |       | $                       | 266,507 |            |  |        | 63.9 | %          |   | $ | 212,464 |         |  |  | 58.4 | %    
|Roaming revenue             |       |                         | 132,251 |            |  |        | 31.7 | %          |   |   | 134,113 |         |  |  | 36.8 | %    
|Equipment and other revenue |       |                         | 18,485  |            |  |        | 4.4  | %          |   |   | 17,429  |         |  |  | 4.8  | %    
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      
|                            | Total |                         | $       | 417,243    |  |        |      | 100.0      | % |   | $       | 364,006 |  |  |      | 100.0 | %
|                            |       |                         |         |            |  |        |      |            |   |   |         |         |  |  |      |      

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 $39 for the year ended December 31, 2001 from $38
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, 72.6% of our subscriber base
was on digital rate plans compared to 44.6% 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%. As previously described,
both the increase in roaming minutes, along with the decline in
our roaming yield have resulted from roaming agreements we have
entered into which encourage our roaming partners to send us
additional traffic by offering them reduced roaming rates.

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. The
following table sets forth the components of our cost of service
for the periods indicated:

|              |                       |                         |        |            |  |        |      |            |   |   |        |        |  |  |      |       |  
|------------- | --------------------- | ----------------------- | ------ | ---------- |  | ------ | ---- | ---------- | - | - | ------ | ------ |  |  | ---- | ----- | -
|              |                       |                        
|              |                       | Year Ended December 31,
|              |                       |                        
|              |                       |                         |        |           
|              |                       | 2001                    |        | 2000      
|              |                       |                         |        |           
|              |                       | Amount                  |        | Percentage |  | Amount |      | Percentage
|              |                       |                         |        |            |  |        |      |           
|              |                       |                        
|              |                       | ($ in thousands)       
|Network costs |                       | $                       | 43,313 |            |  |        | 40.6 | %          |   | $ | 26,484 |        |  |  | 37.2 | %    
|Roaming costs |                       |                         | 63,394 |            |  |        | 59.4 | %          |   |   | 44,743 |        |  |  | 62.8 | %    
|              |                       |                         |        |            |  |        |      |            |   |   |        |        |  |  |      |      
|              | Total cost of service |                         | $      | 106,707    |  |        |      | 100.0      | % |   | $      | 71,227 |  |  |      | 100.0 | %
|              |                       |                         |        |            |  |        |      |            |   |   |        |        |  |  |      |      

For the year ended December 31, 2001, our
network costs, which are the costs we incur from operating our
wireless network and providing service to our customers,
increased $16.8 million, or 63.5%, to $43.3 million
from $26.5 million for the comparable period in 2000. This
increase was primarily the result of increased network costs
such as leased circuits, interconnection charges and wholesale
toll charges due to increased usage by our subscribers, along
with increases in rent incurred from our cell site leases as a
result of the continued build-out of our network.

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For the year ended December 31, 2001,
roaming costs increased by $18.7 million, or 41.7%, to
$63.4 million from $44.7 million compared to the same
period in 2000. This increase was the result of a 116.3%
increase in the minutes used by our customers on third-party
wireless providers networks, offset by a 36.4% decrease in rates
charged by those providers resulting from new lower rate
agreements.

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 201,900
gross subscriber additions during the year ended
December 31, 2001 compared to 200,800 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.

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 million. 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 RSA
market, which we sold to Verizon Wireless on February 8,
2002. This increase was primarily from increased interest
expense allocated to Tennessee 4 RSA.

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 with a liquidation value of $1,000 per
share, by one of our principal owners, Dobson Communications, on
June 29, 2001.

Liquidity and Capital Resources

We have required, and will 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, which may not be available to us in the future, 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 our subsidiaries or us.

Cash Flow Activities

At December 31, 2002, we had a working
capital deficit of $1.6 billion, a ratio of current assets
to current liabilities of 0.06:1, and an unrestricted cash
balance of $15.9 million, which compares to a working
capital deficit of $10.5 million, a ratio of current assets
to current liabilities of 0.9:1, and an unrestricted cash
balance of $6.0 million at December 31, 2001. Our
working capital deficit and ratio of current assets to current

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liabilities have both been negatively impacted as
a result of our reclassification of our long-term debt to
current.


Our net cash provided by operating activities
totaled $19.2 million for 2002, while our net cash used in
operating activities was $9.9 million for 2001 and our net
cash provided by operating activities was $19.5 million for
the period from February 25, 2000 through December 31,
2000. Net cash provided by operating activities increased
$29.1 million in 2002 compared to 2001, primarily due to
decreases in our deferred income taxes, offset by changes in our
current assets and liabilities. 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.

Our net cash provided by investing activities,
totaled $145.3 million for the year ended December 31,
2002, while our net cash used in investing activities was
$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. During 2002, cash was provided from
investing activities as a result of the proceeds received from
the sale of Tennessee 4 RSA totaling
$194.4 million and a decrease in capital expenditures.
Capital expenditures were $48.8 million for the year ended
December 31, 2002, $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 used in financing activities was
$154.6 million for the year ended December 31, 2002,
while our net cash provided by financing activities was
$56.7 million for the year ended December 31, 2001 and
$11.0 million for the period from February 25, 2000 to
December 31, 2000. Financing activities for the year ended
December 31, 2002 consisted of repayments of long-term debt
totaling $347.1 million, primarily funded from proceeds
from the sale of Tennessee 4 RSA, which was offset by
proceeds from long-term debt of $127.8 million and
maturities of restricted investments of $66.5 million.
Financing activity sources for the year ended December 31,
2001 consisted of proceeds from long-term debt of
$233.0 million, proceeds from senior subordinated notes of
$693.0 million, proceeds from issuance of preferred stock
of $35.0 million, maturities of restricted investments of
$39.0 million and a capital contribution of
$16.4 million, which was offset by repayments of long-term
debt totaling $797.4 million, purchase of restricted
investments of $133.2 million and deferred financing costs
of $19.9 million.

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 loans. Our credit facility was
amended on March 14, 2001, when we permanently repaid
$200.0 million of the term loans. 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 an additional
$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 modified 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 RSA to Verizon Wireless for a
total purchase price of $202.0 million during February
2002, we permanently prepaid $190.0 million of this credit
facility. The maximum availability of the credit facility is
limited by restrictions, such as certain financial ratios. As of
December 31, 2002, we had outstanding borrowings under our
credit facility of $894.3 million, with no additional
amounts available for future borrowings.

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Our 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 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 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 1.35 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 1.80 to 1 at December 31, 2002 and
    increasing over time to 2.50 to 1; and                                                          
|
| |  | a ratio of operating cash flow minus capital
    expenditures to the sum of debt service requirements and cash
    distributions of 1.00 to 1 at December 31, 2002 and
    continuing over time at 1.00 to 1.

Through September 2002, interest on the revolving
credit facility and the term loan facilities was variable and
was based on a prime rate or a LIBOR formula. As a result of our
non-compliance with a financial covenant contained in our credit
facility, beginning in October 2002, all borrowings under our
credit facility are only available based on prime rate. The
weighted average interest rate for the year ended
December 31, 2002 was 5.0% and interest rates have ranged
in total between 4.4% and 10.0% since inception.

Our credit facility includes a financial covenant
which required that we not exceed a total debt leverage ratio
ranging from 9.25 to 1.00 in the first quarter of 2002 to 7.75
to 1.00 in the fourth quarter of 2002. At June 30, 2002 and
continuing through December 31, 2002, we failed to comply
with this covenant. Our lenders presently have the right, but
not the obligation, to accelerate the repayment of the entire
amount outstanding under the credit facility. Acceleration under
the credit facility would 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. To date, no such acceleration has occurred. We
anticipate that our cash flow from operations, along with cash
on hand, will be sufficient to meet our capital requirements
through October 2003, at which time we will be required to make
additional cash interest payments on our senior subordinated
notes. If the cash interest payments on our senior subordinated
notes are not made, the senior subordinated noteholders could
declare the principal and interest of the notes immediately due
and payable. We continue to hold discussions with our bank
lenders and with representatives of certain of our bondholders
concerning a potential reorganization. We can provide no
assurance that we would be successful in reorganizing or be able
to meet our obligation under the accelerated repayment terms.
Therefore, on June 30, 2002 and continuing through
December 31, 2002, we classified all of our long-term debt
as current. Unless such non-compliance is resolved, there
continues to be substantial doubt about our ability to continue
as a going concern, as expressed in the independent auditors
reports on our 2002 and 2001 financial statements. Also as a
result of our non-compliance, beginning in October 2002, all
borrowings under our credit facility are only available based on
prime rate, which has increased our borrowing rate.

During the year ended December 31, 2002, our
total scheduled principal payments made were $35.6 million
under this facility. During 2003, absent acceleration, we will
be required to make scheduled principal payments totaling
$56.8 million.

On March 14, 2001, we sold
$450.0 million principal amount of senior subordinated
notes due 2009 at a discount of $3.3 million. These notes
bear interest at an annual rate of 9.5%. The discount is being
amortized into interest expense over the life of the notes. On
June 4, 2001, we sold $250.0 million principal amount
of senior subordinated notes due 2009 at a discount of
$3.6 million that also bear interest at an annual rate of
9.5%. The discount is being amortized into interest expense over
the life of the notes.

On June 29, 2001, we received
$35.0 million from Dobson Communications Corporation from
its purchase of 35,000 shares of our 12.0% Series A
preferred stock. Each share of Series A preferred stock is

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entitled to 12.0% cumulative annual dividends on
the liquidation preference of $1,000 per share. Dividends
will accrue but will not be paid until declared by our Board of
Directors or when redeemed on June 29, 2011, which ever
occurs first.


Capital Commitments

We had capital expenditures of $48.8 million
during 2002. We have budgeted approximately $60.0 million
for capital expenditures in 2003. We plan on investing in our
property and equipment from operating cash flows expected to be
generated during 2003. The amount and timing of capital
expenditures may vary depending on the rate at which we expand
and develop our wireless systems, new regulatory requirements,
whether we consummate additional acquisitions and whether we are
successful in reorganizing.

We are obligated under an agreement to purchase
approximately $49.5 million of cell site and switching equipment
from Nortel Network Corp. prior to July 15, 2005.
Approximately $19.5 million of the commitment remained
outstanding at December 31, 2002. If we fail to fully meet
this commitment by July 15, 2005, we could be forced to pay
a penalty of up to 20% of the unfulfilled commitment. We expect
to substantially fulfill our purchase commitment under this
agreement prior to its scheduled completion date. We have and
will continue to finance our purchases under this commitment
using cash flows from operations.

At December 31, 2002, we had
$15.9 million of unrestricted cash and $42.3 million in
restricted cash, of which $34.1 million of the restricted
cash was in escrow to pay interest on our senior subordinated
notes. We anticipate that our cash flow from operations, along
with this cash, will be sufficient to meet our short-term cash
needs through October 2003, at which time we will require
additional cash interest payments on our senior subordinated
notes. If we are successful in reorganizing, we would expect to
have sufficient resources to satisfy our expected capital
expenditures, working capital and debt service obligations over
the next year. However, we cannot provide any assurance that we
will be successful in reorganizing or that any such needed
financing will be available on acceptable terms or at all.

The table below sets forth all of our contractual
cash obligations, absent acceleration from our credit facility,
as of December 31, 2002, which are obligations during the
following years.

|                                     |                                    |                  |        |             |  |             |         |                |  |   |         |         |  |   |         |         | 
|------------------------------------ | ---------------------------------- | ---------------- | ------ | ----------- |  | ----------- | ------- | -------------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|Contractual Cash Obligations         |                                    | 2003             |        | 2004 - 2005 |  | 2006 - 2007 |         | 2008 and after
|                                     |                                    |                  |        |             |  |             |         |               
|                                     |                                    |                 
|                                     |                                    | ($ in thousands)
|Long-term debt (absent acceleration) |                                    | $                | 56,760 |             |  | $           | 170,248 |                |  | $ | 495,176 |         |  | $ | 866,325 |        
|Operating leases                     |                                    |                  | 12,752 |             |  |             | 20,093  |                |  |   | 10,785  |         |  |   | 8,756   |        
|Series A preferred stock             |                                    |                  |       |             |  |             |        |                |  |   |        |         |  |   | 35,000  |        
|Purchase Obligations                 |                                    |                  |       |             |  |             | 19,500  |                |  |   |        |         |  |   |        |        
|                                     |                                    |                  |        |             |  |             |         |                |  |   |         |         |  |   |         |        
|                                     | Total contractual cash obligations |                  | $      | 69,512      |  |             | $       | 209,841        |  |   | $       | 505,961 |  |   | $       | 910,081 | 
|                                     |                                    |                  |        |             |  |             |         |                |  |   |         |         |  |   |         |        

In addition to the above cash obligations, unless
otherwise declared by our Board of Directors, we will be
required to pay cash dividends of $81.4 million on our
Series A preferred stock on June 29, 2011. Beginning
in October 2003, we will also be required to pay cash interest
payments on our 9.5% subordinated senior notes due 2009. The
interest payments on our senior notes will total
$33.3 million during 2003 and $66.5 million annually
through maturity in 2009.

Effect of New Accounting Standards

In July 2001, the Financial Accounting Standards
Board, or FASB issued SFAS No. 141, Business
Combinations and No. 142, Goodwill and Other
Intangible Assets. These standards prohibit the
application of the pooling-of-interests method of accounting for
business combinations effective June 30, 2001 and require
companies to cease the amortization of existing goodwill and
intangible assets with indefinite lives effective
January 1, 2002. As a result of the adoption of
SFAS No. 142, and as discussed above, we reassessed
the useful lives of our intangible assets. For the years ended
December 31, 2001 and 2000, we recorded $58.3 million
and $50.3 million of amortization expense related to our
goodwill and $34.5 million and

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$28.7 million of amortization expense, net
of income tax benefit, related to our wireless license
acquisition costs. Without this amortization, our 2001 and 2000
operating results would have been:


|                                                               |  |                        |         |      |  |   |         | 
|-------------------------------------------------------------- |  | ---------------------- | ------- | ---- |  | - | ------- | 
|                                                               |  | 2001                   |         | 2000
|                                                               |  |                        |         |     
|                                                               |  |                       
|                                                               |  | ($ in thousands except
|                                                               |  | per share data)       
|Net loss                                                       |  | $                      | 44,858  |      |  | $ | 20,236  | 
|Net loss applicable to common stockholder                      |  |                        | 46,997  |      |  |   | 20,236  | 
|Net loss applicable to common stockholder per
    common share |  | $                      | 469,966 |      |  | $ | 202,361 | 

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 do not expect the adoption of
SFAS No. 143 to have a material effect on our
financial condition or operations. SFAS No. 143
is required to be implemented 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
Accounting Principles Board, or APB, Opinion No. 30,
Reporting the Results of Operations  Reporting
the Effects of Disposal of a Segment of a Business, for
the disposal of segments of a business. This statement requires
that those long-lived assets be measured at the lower of
carrying amount or fair value less cost to sell. During the
fourth quarter 2001, we 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 RSA
as discontinued operations in our consolidated financial
statements. Tennessee 4 RSA was sold to Verizon
Wireless on February 8, 2002 and proceeds were used to pay
down long-term debt.

In July 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The provisions of
SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. We
do not expect the adoption of SFAS No. 146 to have a
material effect on our financial condition or operations.

The FASBs Emerging Issues Task Force issued
EITF 00-21: Accounting for Revenue Arrangements with
Multiple Deliverables, to address certain revenue
recognition issues. The guidance provided from EITF 00-21
addresses both the timing and classification in accounting for
different earnings processes. We do not expect that the adoption
of EITF 00-21 will have a material impact on our financial
condition or operations.

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.

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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.
At December 31, 2002, we were not involved with any
derivatives or other financial instruments, due to the fact that
our previous interest rate swaps expired on June 4, 2002.

At December 31, 2002, we had total debt
outstanding of $1.6 billion, of which, $894.3 million
bears interest at floating rates. These rates averaged 5.0% for
the year ended December 31, 2002. One percentage point of
an interest rate adjustment would change our cash interest
payments on an annual basis by approximately $8.9 million.

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Item 8. Financial Statements and
Supplementary Data


INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                                                                         |  |  |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|American Cellular Corporation and
    Subsidiaries                                                                                                                                       |  |  |    | 
|Independent Auditors Report                                                                                                                                                             |  |  | 36 | 
|Report of Independent Public Accountants                                                                                                                                                 |  |  | 38 | 
|Consolidated balance sheets as of
    December 31, 2002 and 2001                                                                                                                         |  |  | 39 | 
|Consolidated statements of operations for the
    years ended December 31, 2002 and 2001 and for the period
    from February 25, 2000 through December 31, 2000                         |  |  | 40 | 
|Consolidated statements of stockholders
    (deficit) equity for the years ended December 31, 2002
    and 2001 and for the period from February 25, 2000 through
    December 31, 2000 |  |  | 41 | 
|Consolidated statements of cash flows for the
    years ended December 31, 2002 and 2001 and for the period
    from February 25, 2000 through December 31, 2000                         |  |  | 42 | 
|Notes to consolidated financial statements                                                                                                                                               |  |  | 43 | 

INDEX TO SUPPLEMENTARY DATA

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

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INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholder of

American Cellular Corporation:


We have audited the 2002 consolidated financial
statements of American Cellular Corporation (a Delaware
corporation) and subsidiaries as listed in the accompanying
index. In connection with our audit of the 2002 consolidated
financial statements, we also have audited the 2002 financial
statement schedule as listed in item 15(a)(2). These
consolidated financial statements and financial statement
schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedule based on our audit. The 2001 and 2000 consolidated
financial statements and financial statements schedule of
American Cellular Corporation as listed in the accompanying
index were audited by other auditors who have ceased operations.
Those auditors report, dated March 22, 2002, on those
consolidated financial statements and financial statement
schedule was unqualified and included an explanatory paragraph
that described an uncertainty that the Company would continue
operating as a going concern, the change in its method for
accounting for derivative instruments and hedging activities and
the disposal of long lived assets, discussed in Note 5, 2
and 3, respectively, to the consolidated financial statements.

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

In our opinion, the 2002 consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of American
Cellular Corporation and subsidiaries as of December 31,
2002, and the results of their operations and their cash flows
for the year then ended in conformity with accounting principles
generally accepted in the United States of America. Also, in our
opinion, the related 2002 financial statement schedule, when
considered in relation to the basic financial statements taken
as a whole, present fairly, in all material respects, the
information set forth therein.

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 was not in
compliance with certain of its credit facility debt covenants as
of December 31, 2002, resulting in the lenders having the
right to accelerate the repayment of the entire amount
outstanding under the credit facility, which acceleration would
allow the holders of the senior subordinated notes to declare
the principal and interest of the senior subordinated notes
immediately due and payable. Additionally, the Company may not
generate sufficient cash flow from operations to meet its
expected capital expenditures and its October 2003 scheduled
interest payments on its senior subordinated notes. These
factors raise substantial doubt about the Companys ability
to continue operating as a going concern. Managements
plans in regard to these matters are also described in
Note 5. The consolidated financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.

As discussed in Note 2 to the consolidated
financial statements as of January 1, 2002, the Company
adopted the provisions of Statement of Financial Accounting
Standards No. 142 related to the change in accounting for
identifiable intangible assets with indefinite lives and for
goodwill.

As discussed above, the financial statements of
American Cellular Corporation as of December 31, 2001, and
for each of the years in the two-year period then ended were
audited by other auditors who have ceased operations. As
described in Note 2, these financial statements have been
revised to include the transitional disclosures required by
Statement of Financial Accounting Standards (Statement)
No. 142, Goodwill and Other Intangible Assets, which
was adopted by American Cellular Corporation as of
January 1, 2002. Our

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audit procedures with respect to the disclosures
in Note 2 with respect to 2001 and 2000 included
(a) agreeing the previously reported net loss to the
previously issued financial statements and the adjustments to
reported net loss representing amortization expense (including
any related tax effects) recognized in those periods related to
goodwill and intangible assets that are no longer being
amortized, to American Cellular Corporations underlying
records obtained from management and (b) testing the
mathematical accuracy of the reconciliation of adjusted net loss
to reported net loss applicable to common stockholders, and the
related net loss per share amounts. In our opinion, the
disclosures for 2001 and 2000 in Note 2 are appropriate.
However, we were not engaged to audit, review, or apply any
procedures to the 2001 and 2000 financial statements of American
Cellular Corporation other than with respect to such disclosures
and, accordingly, we do not express an opinion or any other form
of assurance on the 2001 and 2000 financial statements taken as
a whole.




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

Oklahoma City, Oklahoma

March 6, 2003


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NOTE:

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

2. THE PREDECESSOR AUDITOR HAS NOT
REISSUED THIS REPORT.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To the Board of Directors of

American Cellular Corporation:


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

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

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of American
Cellular Corporation and subsidiaries as of December 31,
2001 and 2000, and the results of their operations and their
cash flows for the year ended December 31, 2001 and the
period from February 25, 2000 through December 31,
2000, in conformity with accounting principles generally
accepted in the United States.

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

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



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

Oklahoma City, Oklahoma,

March 22, 2002


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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2002 AND 2001

|                                                                                                             |                                                          |      |                |               |   |   |               |               | 
|------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------- | ---- | -------------- | ------------- | - | - | ------------- | ------------- | 
|                                                                                                             |                                                          | 2002 |                | 2001         
|                                                                                                             |                                                          |      |                |              
|ASSETS                                                                                                      
|CURRENT ASSETS:                                                                                              |                                                          |      |                |               |   |   |               |              
|Cash and cash equivalents                                                                                    |                                                          | $    | 15,865,547     |               |   | $ | 5,962,148     |              
|Accounts receivable, net of allowance for
    doubtful accounts of $977,723 in 2002 and $1,548,098 in 2001.  |                                                          |      | 38,545,920     |               |   |   | 43,548,758    |              
|Restricted cash and investments (Note 2)                                                                     |                                                          |      | 38,206,378     |               |   |   | 65,678,101    |              
|Inventory (Note 2)                                                                                           |                                                          |      | 4,327,769      |               |   |   | 8,013,595     |              
|Deferred tax assets                                                                                          |                                                          |      | 2,151,000      |               |   |   | 6,500,891     |              
|Prepaid expenses                                                                                             |                                                          |      | 1,427,796      |               |   |   | 1,482,705     |              
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total current assets                                     |      |                | 100,524,410   |   |   |               | 131,186,198   | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|PROPERTY, PLANT AND EQUIPMENT, net (Note 4)                                                                  |                                                          |      | 185,935,029    |               |   |   | 203,168,050   |              
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|OTHER ASSETS:                                                                                                |                                                          |      |                |               |   |   |               |              
|Accounts receivable-affiliates                                                                               |                                                          |      | 1,278,034      |               |   |   |              |              
|Restricted investments (Note 2)                                                                              |                                                          |      | 4,122,232      |               |   |   | 32,184,495    |              
|Wireless license acquisition costs                                                                           |                                                          |      | 569,168,796    |               |   |   | 1,039,523,681 |              
|Goodwill                                                                                                     |                                                          |      | 285,107,091    |               |   |   | 1,077,123,680 |              
|Deferred financing costs, net of accumulated
    amortization of $14,629,268 in 2002 and $8,652,380 in 2001. |                                                          |      | 41,007,037     |               |   |   | 45,166,918    |              
|Customer list, net of accumulated amortization of
    $27,437,873 in 2002 and $17,681,703 in 2001.           |                                                          |      | 20,562,127     |               |   |   | 30,318,297    |              
|Other non-current assets                                                                                     |                                                          |      | 539,264        |               |   |   | 504,391       |              
|Assets of discontinued operations                                                                            |                                                          |      |               |               |   |   | 139,854,463   |              
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total other assets                                       |      |                | 921,784,581   |   |   |               | 2,364,675,925 | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total assets                                             |      | $              | 1,208,244,020 |   |   | $             | 2,699,030,173 | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|LIABILITIES AND STOCKHOLDERS
    (DEFICIT) EQUITY                                                          
|CURRENT LIABILITIES:                                                                                         |                                                          |      |                |               |   |   |               |              
|Accounts payable                                                                                             |                                                          | $    | 35,865,934     |               |   | $ | 21,375,257    |              
|Accounts payableaffiliates                                                                                  |                                                          |      |               |               |   |   | 17,729,679    |              
|Accrued expenses                                                                                             |                                                          |      | 1,140,021      |               |   |   | 10,475,570    |              
|Accrued interest payable                                                                                     |                                                          |      | 14,499,071     |               |   |   | 31,308,522    |              
|Accrued dividends payable                                                                                    |                                                          |      | 6,799,945      |               |   |   | 2,138,711     |              
|Deferred revenue and customer deposits                                                                       |                                                          |      | 11,014,222     |               |   |   | 11,745,161    |              
|Current portion of long-term debt                                                                            |                                                          |      | 1,588,509,275  |               |   |   | 46,909,091    |              
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total current liabilities                                |      |                | 1,657,828,468 |   |   |               | 141,681,991   | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|OTHER LIABILITIES:                                                                                           |                                                          |      |                |               |   |   |               |              
|Long-term debt, net of current portion                                                                       |                                                          |      |               |               |   |   | 1,760,208,032 |              
|Deferred tax liabilities                                                                                     |                                                          |      | 43,690,897     |               |   |   | 186,382,124   |              
|Liabilities of discontinued operations                                                                       |                                                          |      |               |               |   |   | 7,495,882     |              
|Other non-current liabilities                                                                                |                                                          |      |               |               |   |   | 23,698,750    |              
|Commitments (Note 7)                                                                                         |                                                          |      |                |               |   |   |               |              
|Mandatorily redeemable Series A preferred
    stock (Note 8)                                                 |                                                          |      | 35,000,000     |               |   |   | 35,000,000    |              
|STOCKHOLDERS (DEFICIT) EQUITY:                                                                              |                                                          |      |                |               |   |   |               |              
|Class A Common Stock, $.01 par value, 3,000
    shares authorized and 100 issued in 2002 and 2001.           |                                                          |      | 1              |               |   |   | 1             |              
|Paid-in capital                                                                                              |                                                          |      | 797,827,564    |               |   |   | 797,827,564   |              
|Retained deficit                                                                                             |                                                          |      | (1,326,102,910 | )             |   |   | (239,044,921  | )            
|Accumulated other comprehensive loss, net of
    income tax benefit of $9,479,500 in 2001.                   |                                                          |      |               |               |   |   | (14,219,250   | )            
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total stockholders (deficit) equity                     |      |                | (528,275,345  | ) |   |               | 544,563,394   | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              
|                                                                                                             | Total liabilities and stockholders
    (deficit) equity |      | $              | 1,208,244,020 |   |   | $             | 2,699,030,173 | 
|                                                                                                             |                                                          |      |                |               |   |   |               |              

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

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |              |             | 
|-------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | -------------- | ------------------ | ----------- | ------------------- | ------------ | ------------ | ----------- | - | ------------ | ------------ | ----------- | 
|                                                                                       |                                                                                                                                                             |                          |                |                    |             | For the Period from
|                                                                                       |                                                                                                                                                             |                          |                |                    |             | February 25, 2000  
|                                                                                       |                                                                                                                                                             | For the Year Ended       |                | For the Year Ended |             | through            
|                                                                                       |                                                                                                                                                             | December 31,             |                | December 31,       |             | December 31,       
|                                                                                       |                                                                                                                                                             | 2002                     |                | 2001               |             | 2000               
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                    
|OPERATING REVENUE:                                                                     |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       | Service revenue                                                                                                                                             |                          | $              | 302,144,063        |             |                     | $            | 266,507,216  |             |   | $            | 181,274,795  |            
|                                                                                       | Roaming revenue                                                                                                                                             |                          |                | 135,147,615        |             |                     |              | 132,250,992  |             |   |              | 113,108,060  |            
|                                                                                       | Equipment and other revenue                                                                                                                                 |                          |                | 15,537,979         |             |                     |              | 18,484,430   |             |   |              | 14,960,111   |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       |                                                                                                                                                             | Total operating revenue  |                |                    | 452,829,657 |                     |              |              | 417,242,638 |   |              |              | 309,342,966 | 
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|OPERATING EXPENSES:                                                                    |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       | Cost of service (exclusive of items shown
    separately below)                                                                                             |                          |                | 110,412,273        |             |                     |              | 106,706,736  |             |   |              | 61,062,239   |            
|                                                                                       | Cost of equipment                                                                                                                                           |                          |                | 34,205,796         |             |                     |              | 37,182,246   |             |   |              | 26,768,354   |            
|                                                                                       | Marketing and selling                                                                                                                                       |                          |                | 57,623,167         |             |                     |              | 56,462,163   |             |   |              | 36,580,294   |            
|                                                                                       | General and administrative                                                                                                                                  |                          |                | 70,290,928         |             |                     |              | 60,944,109   |             |   |              | 38,768,894   |            
|                                                                                       | Depreciation and amortization                                                                                                                               |                          |                | 66,745,545         |             |                     |              | 182,636,954  |             |   |              | 147,256,833  |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       |                                                                                                                                                             | Total operating expenses |                |                    | 339,277,709 |                     |              |              | 443,932,208 |   |              |              | 310,436,614 | 
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|OPERATING INCOME (LOSS)                                                                |                                                                                                                                                             |                          | 113,551,948    |                    |             |                     | (26,689,570  | )            |             |   | (1,093,648   | )           
|OTHER INCOME (EXPENSE):                                                                |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       | Interest expense                                                                                                                                            |                          |                | (142,003,848       | )           |                     |              | (165,456,826 | )           |   |              | (133,270,017 | )          
|                                                                                       | Impairment of goodwill (Note 6)                                                                                                                             |                          |                | (800,893,860       | )           |                     |              |             |             |   |              |             |            
|                                                                                       | Other income, net                                                                                                                                           |                          |                | 1,387,501          |             |                     |              | 3,723,072    |             |   |              | 536,308      |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|LOSS BEFORE INCOME TAXES AND DISCONTINUED
    OPERATIONS                               |                                                                                                                                                             |                          | (827,958,259   | )                  |             |                     | (188,423,324 | )            |             |   | (133,827,357 | )           
|                                                                                       | Income tax benefit                                                                                                                                          |                          |                | 14,383,305         |             |                     |              | 52,199,794   |             |   |              | 33,241,703   |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|LOSS FROM CONTINUING OPERATIONS                                                        |                                                                                                                                                             |                          | (813,574,954   | )                  |             |                     | (136,223,530 | )            |             |   | (100,585,654 | )           
|DISCONTINUED OPERATIONS: (Note 3)                                                      |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       | (Loss) income from discontinued operations, net
    of income tax benefit (expense) of $435,838 in 2002,
    $(1,188,394) in 2001 and $(2,548,131) in 2000. |                          |                | (653,909           | )           |                     |              | (1,439,293   | )           |   |              | 1,342,266    |            
|                                                                                       | Gain from sale of discontinued operations, net of
    income tax expense of $50,282,976 for the year ended
    December 31, 2002                            |                          |                | 13,472,110         |             |                     |              |             |             |   |              |             |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                    |                                                                                                                                                             |                          | (800,756,753   | )                  |             |                     | (137,662,823 | )            |             |   | (99,243,388  | )           
|                                                                                       | Cumulative effect of change in accounting
    principle, net of income tax benefit of $187,760,000
    (Note 2)                                             |                          |                | (281,640,000       | )           |                     |              |             |             |   |              |             |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|NET LOSS                                                                               |                                                                                                                                                             |                          | (1,082,396,753 | )                  |             |                     | (137,662,823 | )            |             |   | (99,243,388  | )           
|DIVIDENDS ON PREFERRED STOCK                                                           |                                                                                                                                                             |                          | (4,661,236     | )                  |             |                     | (2,138,710   | )            |             |   |             |             
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|NET LOSS APPLICABLE TO COMMON STOCKHOLDER                                              |                                                                                                                                                             | $                        | (1,087,057,989 | )                  |             | $                   | (139,801,533 | )            |             | $ | (99,243,388  | )           
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|BASIC AND DILUTED NET (LOSS) INCOME PER COMMON
    SHARE:                              |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|                                                                                       | Continuing operations                                                                                                                                       |                          |                | (8,135,750         | )           |                     |              | (1,362,235   | )           |   |              | (1,005,857   | )          
|                                                                                       | Discontinued operations                                                                                                                                     |                          |                | 128,182            |             |                     |              | (14,393      | )           |   |              | 13,423       |            
|                                                                                       | Cumulative effect of change in accounting
    principle                                                                                                     |                          |                | (2,816,400         | )           |                     |              |             |             |   |              |             |            
|                                                                                       | Dividends on preferred stock                                                                                                                                |                          |                | (46,612            | )           |                     |              | (21,387      | )           |   |              |             |            
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|TOTAL BASIC AND DILUTED NET LOSS APPLICABLE TO
    COMMON STOCKHOLDER PER COMMON SHARE |                                                                                                                                                             | $                        | (10,870,580    | )                  |             | $                   | (1,398,015   | )            |             | $ | (992,434     | )           
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             
|BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
    OUTSTANDING                       |                                                                                                                                                             |                          | 100            |                    |             |                     | 100          |              |             |   | 100          |             
|                                                                                       |                                                                                                                                                             |                          |                |                    |             |                     |              |              |             |   |              |             

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

40



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |                |             |  
|----------------- | -------------------------- | -------------------------------------------------------------------------------- | - | ------------------------------ | ----------- | ------- | --- | ----------- | - | ------------- | - | ---------------- | - | - | ----------- | ---------- | - | - | -------------- | -------------- | - | - | ----------- | - | ----------- | - | ------------ | -------------- | ----------- | -
|                  |                            |                                                                                  |   |                               
|                  |                            |                                                                                  |   | Stockholders (Deficit) Equity
|                  |                            |                                                                                  |   |                               
|                  |                            |                                                                                  |   |                                |             |         |     | Accumulated |   |              
|                  |                            |                                                                                  |   | Class A                        |             |         |     | Other       |   | Total        
|                  |                            | Comprehensive                                                                    |   | Common                         |             | Paid in |     | Retained    |   | Comprehensive |   | Stockholders   
|                  |                            | Loss                                                                             |   | Stock                          |             | Capital |     | Deficit     |   | Loss          |   | (Deficit) Equity
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                 
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |  
|FEBRUARY 25, 2000 |                            |                                                                                  |   |                                |             |         | 100 |             |   | $             | 1 |                  |   | $ | 764,999,999 |            |   |   |               |                |   |   |            |   |             | $ | 765,000,000  |               
|                  | 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 No. 133 transition adjustment, net of tax                                   |   |                                | (9,510,365  | )       |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | (9,510,365  | ) |              |                | (9,510,365  | )
|                  |                            | SFAS No. 133 transition adjustment reclassified
    into earnings, net of tax    |   |                                | 9,510,365   |         |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | 9,510,365   |   |              |                | 9,510,365   |  
|                  |                            | Change in fair value of hedge transactions, net
    of tax                       |   |                                | (14,219,250 | )       |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | (14,219,250 | ) |              |                | (14,219,250 | )
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|                  | Total comprehensive loss   |                                                                                  | $ | (151,882,073                   | )           |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |                |            
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|                  | Capital contribution       |                                                                                  |   |                                |             |         |     |            |   |               |   |                 |   |   |             | 32,827,565 |   |   |                |               |   |   |             |  |             |   |              | 32,827,565     |            
|                  | Preferred stock dividends  |                                                                                  |   |                                |             |         |     |            |   |               |   |                 |   |   |             |           |   |   |                | (2,138,710     | ) |   |             |  |             |   |              | (2,138,710     | )          
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|DECEMBER 31, 2001 |                            |                                                                                  |   |                                |             |         | 100 |             |   |               | 1 |                  |   |   | 797,827,564 |            |   |   | (239,044,921   | )              |   |   | (14,219,250 | ) |             |   | 544,563,394  |               
|                  | Net loss                   |                                                                                  | $ | (1,082,396,753                 | )           |         |     |            |   |               |   |                 |   |   |             |           |   |   |                | (1,082,396,753 | ) |   |             |  |             |   |              | (1,082,396,753 | )          
|                  |                            | Amounts related to hedge transactions
    reclassified into earnings, net of tax |   |                                | 12,595,376  |         |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | 12,595,376  |   |              |                | 12,595,376  |  
|                  |                            | Ineffective hedge transaction reclassified into
    earnings, net of tax         |   |                                | 643,751     |         |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | 643,751     |   |              |                | 643,751     |  
|                  |                            | Change in fair value of hedge transactions, net
    of tax                       |   |                                | 980,123     |         |     |             |  |               |   |                  |  |   |             |            |  |   |                |                |  |   |             |   | 980,123     |   |              |                | 980,123     |  
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|                  | Total comprehensive loss   |                                                                                  | $ | (1,068,177,503                 | )           |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |                |            
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|                  | Preferred stock dividends  |                                                                                  |   |                                |             |         |     |            |   |               |   |                 |   |   |             |           |   |   |                | (4,661,236     | ) |   |             |  |             |   |              | (4,661,236     | )          
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               
|DECEMBER 31, 2002 |                            |                                                                                  |   |                                |             |         | 100 |             |   | $             | 1 |                  |   | $ | 797,827,564 |            |   | $ | (1,326,102,910 | )              |   | $ |            |   |             | $ | (528,275,345 | )             
|                  |                            |                                                                                  |   |                                |             |         |     |             |   |               |   |                  |   |   |             |            |   |   |                |                |   |   |             |   |             |   |              |               

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

41



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |              |             |             |  
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------------------- | ------------------ | ----------- | ------------------- | ---------- | ------------ | ----------- | ----------- | ----------- | ------------ | ----------- | ----------- | -
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             | For the Period from
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             | February 25, 2000  
|                                                                            |                                                                                                                              | For the Year Ended                                               |                                                         | For the Year Ended |             | through            
|                                                                            |                                                                                                                              | December 31, 2002                                                |                                                         | December 31, 2001  |             | December 31, 2000  
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                    
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            | Net loss from continuing operations                                                                                          |                                                                  | $                                                       | (813,574,954       | )           |                     | $          | (136,223,530 | )           |             | $           | (100,585,654 | )          
|                                                                            | Adjustments to reconcile net loss from continuing
    operations to net cash provided by (used in) operating
    activities |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |              |            
|                                                                            |                                                                                                                              | Depreciation and amortization                                    |                                                         |                    | 66,745,545  |                     |            |              | 182,636,954 |             |             |              | 147,256,833 |            
|                                                                            |                                                                                                                              | Amortization of bond premium and financing costs                 |                                                         |                    | 6,700,267   |                     |            |              | 5,718,138   |             |             |              | 3,426,409   |            
|                                                                            |                                                                                                                              | Deferred income taxes and investment tax credits,
    net        |                                                         |                    | (15,766,622 | )                   |            |              | (58,021,420 | )           |             |              | (27,900,333 | )          
|                                                                            |                                                                                                                              | Cash used in operating activities of discontinued
    operations |                                                         |                    | (7,175,022  | )                   |            |              |            |             |             |              |            |            
|                                                                            |                                                                                                                              | Loss on ineffective hedge transaction                            |                                                         |                    | 1,072,919   |                     |            |              |            |             |             |              |            |            
|                                                                            |                                                                                                                              | Impairment of goodwill                                           |                                                         |                    | 800,893,860 |                     |            |              |            |             |             |              |            |            
|                                                                            |                                                                                                                              | Loss (gain) on disposition of assets, net                        |                                                         |                    | 18,463      |                     |            |              | 481,208     |             |             |              | (139,632    | )          
|                                                                            | Changes in current assets and liabilities -                                                                                  |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |              |            
|                                                                            |                                                                                                                              | Accounts receivable                                              |                                                         |                    | 5,002,838   |                     |            |              | 2,660,505   |             |             |              | (15,703,276 | )          
|                                                                            |                                                                                                                              | Inventory                                                        |                                                         |                    | 3,685,826   |                     |            |              | 182,739     |             |             |              | (4,310,319  | )          
|                                                                            |                                                                                                                              | Prepaid expenses and other                                       |                                                         |                    | 1,662,299   |                     |            |              | (3,334,691  | )           |             |              | (6,979,840  | )          
|                                                                            |                                                                                                                              | Accounts payable                                                 |                                                         |                    | (3,145,151  | )                   |            |              | (11,036,387 | )           |             |              | 34,547,797  |            
|                                                                            |                                                                                                                              | Accrued expenses                                                 |                                                         |                    | (26,145,000 | )                   |            |              | 4,782,503   |             |             |              | (13,688,395 | )          
|                                                                            |                                                                                                                              | Deferred revenue and customer deposits                           |                                                         |                    | (730,939    | )                   |            |              | 2,297,022   |             |             |              | 3,531,713   |            
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            |                                                                                                                              |                                                                  | Net cash provided by (used in) operating
    activities |                    |             | 19,244,329          |            |              |             | (9,856,959  | )           |              |             | 19,455,303  |  
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            | Capital expenditures                                                                                                         |                                                                  |                                                         | (48,798,472        | )           |                     |            | (74,850,030  | )           |             |             | (58,449,899  | )          
|                                                                            | Increase in receivable affiliate                                                                                             |                                                                  |                                                         | (1,278,034         | )           |                     |            |             |             |             |             |             |            
|                                                                            | Proceeds from sale of PCS licenses                                                                                           |                                                                  |                                                         |                   |             |                     |            | 5,000,000    |             |             |             |             |            
|                                                                            | Net proceeds from sale of discontinued operations                                                                            |                                                                  |                                                         | 194,427,958        |             |                     |            |             |             |             |             |             |            
|                                                                            | Change in receivable from discontinued operations                                                                            |                                                                  |                                                         |                   |             |                     |            | 11,454,868   |             |             |             | 17,509,334   |            
|                                                                            | Other investing activities                                                                                                   |                                                                  |                                                         | 955,852            |             |                     |            | 2,623,869    |             |             |             | (23,788      | )          
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            |                                                                                                                              |                                                                  | Net cash provided by (used in) investing
    activities |                    |             | 145,307,304         |            |              |             | (55,771,293 | )           |              |             | (40,964,353 | )
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            | Proceeds from long-term debt                                                                                                 |                                                                  |                                                         | 127,800,000        |             |                     |            | 233,000,000  |             |             |             | 114,000,000  |            
|                                                                            | Repayments of long-term debt                                                                                                 |                                                                  |                                                         | (347,131,227       | )           |                     |            | (797,395,544 | )           |             |             | (111,000,000 | )          
|                                                                            | Proceeds from senior subordinated notes                                                                                      |                                                                  |                                                         |                   |             |                     |            | 693,020,500  |             |             |             |             |            
|                                                                            | Investment from Dobson Communications                                                                                        |                                                                  |                                                         |                   |             |                     |            | 35,000,000   |             |             |             |             |            
|                                                                            | Deferred financing costs                                                                                                     |                                                                  |                                                         | (1,817,007         | )           |                     |            | (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                                                                                         |                                                                  |                                                         | 66,500,000         |             |                     |            | 38,976,389   |             |             |             |             |            
|                                                                            | Purchase of restricted investments                                                                                           |                                                                  |                                                         |                   |             |                     |            | (133,191,937 | )           |             |             |             |            
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            |                                                                                                                              |                                                                  | Net cash (used in) provided by financing
    activities |                    |             | (154,648,234        | )          |              |             | 56,709,733  |             |              |             | 11,038,615  |  
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                    |                                                                                                                              |                                                                  | 9,903,399                                               |                    |             |                     | (8,918,519 | )            |             |             | (10,470,435 | )           
|CASH AND CASH EQUIVALENTS, beginning of year                                |                                                                                                                              |                                                                  | 5,962,148                                               |                    |             |                     | 14,880,667 |              |             |             | 25,351,102  |             
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|CASH AND CASH EQUIVALENTS, end of year                                      |                                                                                                                              | $                                                                | 15,865,547                                              |                    |             | $                   | 5,962,148  |              |             | $           | 14,880,667  |             
|                                                                            |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                          |                                                                                                                              |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |             
|                                                                            | Cash paid for                                                                                                               |                                                                  |                                                         |                    |             |                     |            |              |             |             |             |              |            
|                                                                            | Interest, net of amounts capitalized                                                                                         |                                                                  | $                                                       | 153,476,700        |             |                     | $          | 154,662,660  |             |             | $           | 124,274,707  |            
|                                                                            | Income taxes                                                                                                                 |                                                                  | $                                                       | 3,043,875          |             |                     | $          | 1,171,633    |             |             | $           | 9,193        |            
|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.

42



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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 (collectively,
the Company) were acquired by ACC Acquisition LLC
(the Joint Venture), an equally owned joint venture
between Dobson Communications and AT&T Wireless. 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. At June 30, 2002 and
continuing through December 31, 2002, the Company was
unable to satisfy all of the covenants under the credit
facility. The Company is unable to borrow under the credit
facility to fund its ongoing operations, planned capital
expenditures or other permissible uses.

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

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 revenue and
expenses for the markets for which it provides wireless
services. Significant intercompany accounts and transactions
have been eliminated.

Business Segment

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

Cash and Cash Equivalents

Cash and cash equivalents of $15.9 million
at December 31, 2002 and $6.0 million at December 31,
2001 consist of cash and short-term investments with original
maturities of three months or less.

Restricted Cash and Investments

Restricted cash and investments totaled
$42.3 million at December 31, 2002 and
$97.9 million at December 31, 2001, of which
$34.1 million at December 31, 2002 and the entire
$97.9 million at December 31, 2001 was for the
interest pledge deposits held in escrow 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 interest
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 interest payments

43



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


issued to bondholders. In addition, restricted
cash and investments totaling $8.2 million at
December 31, 2002 consist of an escrow to cover any future
contingencies related to the Companys sale of Tennessee 4
RSA to Verizon Wireless during February 2002. If there are no
claims against this transaction, the Company will receive
$4.1 million of the escrow reserve during February 2003 and
the remaining $4.1 million during February 2004.

Allowance for Doubtful Accounts

Allowance for doubtful accounts of
$1.0 million at December 31, 2002 and
$1.5 million at December 31, 2001 are based on a
percentage of aging receivables. The Company reviews it
allowance for doubtful accounts monthly by evaluating balances
for collectibility.

Inventory

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

Impairment of Long-Lived Assets

Through December 31, 2001, the
Companys accounting policy for impairment of long-lived
assets was to review the carrying value of its long-lived assets
and certain identifiable intangible assets whenever events or
changes in circumstances indicate that the carrying value may
not be recoverable. If such circumstances were deemed to exist,
the carrying value of the asset would be compared to the
estimated undiscounted future cash flows generated by the asset.
The Companys definite life assets will continue to be
amortized over their estimated useful lives and are subject to
the same impairment criteria. As a result of fully implementing
SFAS No. 142 on January 1, 2002, the Company is now
required to evaluate the carrying value of its indefinite life
intangible assets using their fair values, at least annually. To
complete this evaluation, the Company first performed a
comparison of the carrying amount of its wireless license
acquisition costs to the fair value of those assets. For
purposes of this comparison, it is the Companys policy to
aggregate its wireless license acquisition costs. The Company
determines the fair value of its wireless license acquisition
costs based on its estimated future discounted cash flows. The
Company then assesses the carrying amount of its goodwill for
possible impairment. For goodwill, there is a two-step approach
for assessing impairment. The first step requires an evaluation
of the Companys fair value to its carrying amount,
including goodwill. The Companys fair value is determined
based on estimated future discounted cash flows. If it is
determined that the Companys estimated fair value exceeds
its carrying amount, then its goodwill is deemed to be impaired.
Then, the second step of the impairment test is used to measure
the amount of impairment loss. During 2002, the Company has
identified impairments relating to its goodwill and indefinite
life intangible assets. See Recently Issued Accounting
Pronouncements below for further details.

Wireless License Acquisition Costs

Wireless license acquisition costs consist of
amounts paid to acquire FCC licenses to provide wireless
services. Prior to the implementation of SFAS No. 142
Goodwill and Other Intangible assets, wireless
license acquisition costs were being amortized on a
straight-line basis over twenty years. Amortization expense of
$57.5 million was recorded in 2001 and $47.9 million
was recorded for the period from February 25, 2000 through
December 31, 2000. Upon implementation of SFAS
No. 142, effective January 1, 2002, the Company no
longer amortizes wireless license acquisition costs. Instead,
the Company is testing for the impairment of indefinite life
intangible assets at least annually and will only adjust the
carrying amount of these intangible assets upon an impairment of
the indefinite life intangible assets.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


The ongoing value and remaining useful lives of
intangible and other long-term assets are subject to periodic
evaluation. During 2002, the Company identified impairments
relating to its wireless license acquisition costs, see
Recently Issued Accounting Pronouncements below for
further discussion.

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 $9.8 million was recorded in 2002,
$9.6 million was recorded in 2001 and $8.1 million was
recorded for the period from February 25, 2000 through
December 31, 2000. Based on the remaining life of the
Companys customer list acquisition costs, the remaining
balance of $20.6 million will be substantially amortized
over the next two years at approximately $9.6 million per
year.

Goodwill

Prior to the implementation of SFAS No. 142
Goodwill and Other Intangible assets, goodwill was
being amortized on a straight-line basis over twenty years.
Amortization expense related to goodwill of $58.3 million
was recorded in 2001 and $50.3 million was recorded for the
period from February 25, 2000 through December 31,
2000. Upon implementation of SFAS No. 142, effective
January 1, 2002, the Company no longer amortizes goodwill.
Instead, the Company is testing for the impairment of goodwill
at least annually and will only adjust the carrying amount of
goodwill upon an impairment of the goodwill.

The ongoing value and remaining useful lives of
intangible and other long-term assets are subject to periodic
evaluation. During 2002, the Company identified impairments
relating to its goodwill, see Recently Issued Accounting
Pronouncements below for further discussion.

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
$6.0 million was recorded in 2002, $5.2 million was
recorded in 2001 and $3.4 million was recorded for the
period from February 25, 2000 through December 31,
2000. Based on the current life of the Companys long-term
debt, the estimated amortization of deferred financing costs
would be approximately $6.2 million per year until the
costs are fully amortized in 2009.

Derivative Instruments and Hedging
Activities

On January 1, 2001, the Company implemented
SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activity. With this implementation, the
Company began recording a liability and a transition adjustment,
net of income tax benefit, to other comprehensive loss during
2001 in connection with these derivative contracts. All
derivatives are recognized on the balance sheet at their fair
value. All of the Companys derivatives that qualify for
hedge accounting treatment are cash flow hedges. The
Company designates its cash flow hedge derivatives as such on
the date the derivative contract is entered into. The Company
formally documents all relationships between hedging instruments
and hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transaction. The Company
also assesses, both at the hedges inception and on an
ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in cash
flows of hedged items.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


The Companys accumulated other
comprehensive loss, net of income tax benefit, was
$14.2 million as of December 31, 2001. As a result of
the expiration of the Companys interest rate swap
agreement on June 4, 2002, there is no balance at
December 31, 2002. During 2002 and 2001, there were no
gains or losses reclassified into earnings as a result of the
discontinuance of hedge accounting treatment for any of the
Companys derivatives.

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

Revenue Recognition

The Company records service revenue over the
period it is earned. The cost of providing service is recognized
as incurred. Airtime and toll revenue are billed in arrears. The
Company accrued estimated unbilled revenue for services provided
of $3.0 million as of December 31, 2002 and
$2.9 million as of December 31, 2001, which is
included in accounts receivable in the accompanying consolidated
balance sheets. Monthly access charges are billed in advance and
are reflected as deferred revenue on the accompanying
consolidated balance sheets. Equipment revenue is recognized
when the equipment is delivered to the customer. The
Companys ability to sell wireless equipment is independent
of the Companys ability to offer wireless services to its
customers; therefore, the Company considers equipment sales a
separate earnings process and accounts for it accordingly.
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, or SAB, No. 101
Revenue Recognition. The impact of implementing SAB
101 was not material to the Companys revenue or results of
operations.

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. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.

Disposal of Long-Lived Assets

As of January 1, 2001, the Company
implemented SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. The discontinued
operations described in (Note 3) are reflected in the financial
statements as (Loss) Income from Discontinued Operations.
Periods prior to December 31, 2001, have been adjusted to
reflect this change in accounting standard.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


Earnings Per Share

Basic earnings per common share is computed by
the weighted average number of shares of common stock
outstanding during the year. There were no potentially dilutive
securities outstanding during 2002, 2001 and 2000.

Use of Estimates

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

Significant Concentrations

In connection with providing wireless services to
customers of other wireless carriers, the Company has
contractual agreements with those carriers, which provide for
agreed-upon billing rates between the parties. The percent of
Companys roaming revenue earned from three wireless
carriers was 88% during the year ended December 31, 2002,
78% during the year ended December 31, 2001 and 70% for the
period from February 25, 2000 through December 31,
2000.

Reclassifications

Certain reclassifications have been made to the
previously presented 2001 and 2000 balances to conform them to
the current presentation.

Recently Issued Accounting
Pronouncements

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

The Company also determines on an annual basis
whether facts and circumstances continue to support an
indefinite useful life. For the year ended December 31,
2001, the Company recorded $58.3 million of

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


amortization expense related to its goodwill and
$34.5 million of amortization expense, net of income tax
benefit, related to its wireless license acquisition costs. For
the period from February 25, 2000 through December 31,
2000, the Company recorded $50.3 million of amortization
expense related to its goodwill and $28.7 million of
amortization expense, net of income tax benefit, related to its
wireless license acquisition costs. Without this amortization,
the Companys 2001 and 2000 operating results would have
been:

|                                                               |  |                            |         |              |  |   |         | 
|-------------------------------------------------------------- |  | -------------------------- | ------- | ------------ |  | - | ------- | 
|                                                               |  |                            |         | For the     
|                                                               |  |                            |         | period from 
|                                                               |  |                            |         | February 25,
|                                                               |  | For the year               |         | 2000        
|                                                               |  | ended                      |         | through     
|                                                               |  | December 31,               |         | December 31,
|                                                               |  | 2001                       |         | 2000        
|                                                               |  |                            |         |             
|                                                               |  |                           
|                                                               |  | ($ in thousands except per
|                                                               |  | share data)               
|Net loss                                                       |  | $                          | 44,858  |              |  | $ | 20,236  | 
|Net loss applicable to common stockholder                      |  |                            | 46,997  |              |  |   | 20,236  | 
|Net loss applicable to common stockholder per
    common share |  | $                          | 469,966 |              |  | $ | 202,361 | 

Through December 31, 2001, the
Companys accounting policy for impairment of long-lived
assets was to review the carrying value of long-lived assets and
certain identifiable intangibles whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. If such circumstances were deemed to exist, the
carrying value of the asset would be compared to the estimated
undiscounted future cash flows generated by the asset. The
Companys definite life assets will continue to be
amortized over their estimated useful lives and are subject to
the same impairment criteria. As a result of fully implementing
SFAS No. 142 on January 1, 2002, the Company is now
required to evaluate the carrying value of its indefinite life
intangible assets using their fair values, at least annually. If
the carrying amount of the intangible asset exceeds its fair
value, an impairment loss shall be recognized in an amount equal
to that excess.

Upon implementation of SFAS No. 142 on
January 1, 2002, the Company first performed a comparison
of the carrying amount of its wireless license acquisition costs
to the fair value of those assets. For purposes of this
comparison, it is the Companys policy to aggregate its
wireless license acquisition costs. The Company determined the
fair value of its wireless license acquisition costs based on
their estimated future discounted cash flows. Based on the
comparison, the Company determined that the carrying amount of
its wireless license acquisition costs exceeded their estimated
fair value. As a result, the Company recorded a charge in the
first quarter of 2002, net of income tax benefit, of
$281.6 million to reflect the write-down of its wireless
license acquisition costs to their fair value. The Company then
assessed the carrying amount of its goodwill for possible
impairment. For goodwill, there is a two-step approach for
assessing impairment. The first step requires a comparison of
the fair value of the Company to its carrying amount, including
goodwill. The Companys fair value was determined based on
estimated future discounted cash flows. It was determined that
the estimated fair value of the Company exceeded its carrying
amount and thus, its goodwill was not deemed to be impaired.
Since the Companys goodwill was not deemed to be impaired
as of January 1, 2002, the second step of the impairment
test, which is used to measure the amount of impairment loss was
not required to be completed upon implementation of SFAS
No. 142. See Note 6 below.

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

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



2. SIGNIFICANT ACCOUNTING POLICIES:
(Continued)


liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon
settlement. The Company does not expect the adoption of SFAS
No. 143 to have a material effect on its financial
condition or operations. SFAS No. 143 is required to be
implemented 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,
the Company 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 RSA as
discontinued operations. See Note 3 below.

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated
after December 31, 2002. The Company does not expect the
adoption of SFAS No. 146 to have a material effect on its
financial condition or operations.

The FASBs Emerging Issues Task Force issued
EITF 00-21: Accounting for Revenue Arrangements with
Multiple Deliverables, to address certain revenue
recognition issues. The guidance provided from EITF 00-21
addresses both the timing and classification in accounting for
different earnings processes. The Company does not expect that
the adoption of EITF 00-21 will have a material impact on its
financial condition or operations.

3. DISCONTINUED OPERATIONS:

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

Pursuant to SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, which
replaced 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
RSA operations, assets and liabilities as discontinued
operations. The assets and liabilities of such operations have
been classified as Assets of

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



3. DISCONTINUED OPERATIONS:
(Continued)


discontinued operations and
Liabilities of discontinued operations, on the
December 31, 2001 consolidated balance sheets and consist
of the following:

|                                        |                                              |                   |        |         | 
|--------------------------------------- | -------------------------------------------- | ----------------- | ------ | ------- | 
|                                        |                                              | December 31, 2001
|                                        |                                              |                  
|                                        |                                              | ($ in thousands) 
|Cash and cash equivalents               |                                              | $                 | 85     |        
|Other current assets                    |                                              |                   | 4,442  |        
|Property, plant and equipment, net      |                                              |                   | 9,647  |        
|Goodwill, net                           |                                              |                   | 63,044 |        
|Wireless license acquisition costs, net |                                              |                   | 61,303 |        
|Other assets                            |                                              |                   | 1,333  |        
|                                        |                                              |                   |        |        
|                                        | Total assets of discontinued operations      |                   | $      | 139,854 | 
|                                        |                                              |                   |        |        
|Current liabilities                     |                                              | $                 | 1,744  |        
|Other liabilities                       |                                              |                   | 5,752  |        
|                                        |                                              |                   |        |        
|                                        | Total liabilities of discontinued operations |                   | $      | 7,496   | 
|                                        |                                              |                   |        |        

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:

|                                           |  |                     |        |              |  |                     |        |   |  |   |        |  
|------------------------------------------ |  | ------------------- | ------ | ------------ |  | ------------------- | ------ | - |  | - | ------ | -
|                                           |  | 2002                |        | 2001         |  | 2000               
|                                           |  |                     |        |              |  |                    
|                                           |  | For the Period from |        | For the      |  | For the Period from
|                                           |  | January 1, 2002     |        | Year Ended   |  | February 25, 2000  
|                                           |  | through             |        | December 31, |  | through            
|                                           |  | Disposition         |        | 2001         |  | December 31, 2000  
|                                           |  |                     |        |              |  |                    
|                                           |  |                    
|                                           |  | ($ in thousands)   
|Operating revenue                          |  | $                   | 2,319  |              |  | $                   | 30,976 |   |  | $ | 27,494 |  
|(Loss) income before income taxes          |  |                     | (1,090 | )            |  |                     | (251   | ) |  |   | 3,890  |  
|Income tax benefit (expense)               |  |                     | 436    |              |  |                     | (1,188 | ) |  |   | (2,548 | )
|(Loss) income from discontinued operations |  |                     | (654   | )            |  |                     | (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 based on Tennessee 4
RSAs pro rata population coverage, to properly reflect the
interest that was incurred to finance the Tennessee 4 RSA
operations. The interest expense allocated to these operations
was $1.0 million for the period from January 1, 2002
through disposition (February 8, 2002), $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 RSA
on February 8, 2002, and recorded operating losses totaling
$0.7 million incurred through February 8, 2002, and
the related gain on the sale totaling $13.5 million, net of
tax expense.

4. PROPERTY, PLANT AND
EQUIPMENT:

Property, plant and equipment are recorded at
cost. Newly constructed wireless systems are added to property,
plant and equipment at cost, which includes contracted services,
direct labor, materials and overhead. Existing property, plant
and equipment purchased through acquisitions is recorded at its
fair value at the date of the purchase. Repairs, minor
replacements and maintenance are charged to operations as
incurred.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



4. PROPERTY, PLANT AND EQUIPMENT:
(Continued)


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 $57.0 million was recorded
for the year ended December 31, 2002, $57.3 million
was recorded for the year ended December 31, 2001 and
$41.0 million was recorded for the period from
February 25, 2000 through December 31, 2000.

Listed below are the major classes of property,
plant and equipment, their estimated useful lives, in years, and
their balances as of December 31, 2002 and 2001:

|                                            |                                    |        |      |                  |  |      |          |         |  |   |         |         | 
|------------------------------------------- | ---------------------------------- | ------ | ---- | ---------------- |  | ---- | -------- | ------- |  | - | ------- | ------- | 
|                                            |                                    | Useful |      |                  |  |     
|                                            |                                    | Life   |      | 2002             |  | 2001
|                                            |                                    |        |      |                  |  |     
|                                            |                                    |        |      |                 
|                                            |                                    |        |      | ($ in thousands)
|Wireless systems and equipment              |                                    |        | 3-10 |                  |  | $    | 299,259  |         |  | $ | 265,077 |        
|Buildings and improvements                  |                                    |        | 5-40 |                  |  |      | 20,466   |         |  |   | 17,635  |        
|Vehicles, aircraft and other work equipment |                                    |        | 3-10 |                  |  |      | 1,624    |         |  |   | 1,479   |        
|Furniture and office equipment              |                                    |        | 5-10 |                  |  |      | 16,122   |         |  |   | 13,747  |        
|Plant under construction                    |                                    |        |      |                  |  |      | 8,490    |         |  |   | 1,979   |        
|Land                                        |                                    |        |      |                  |  |      | 1,046    |         |  |   | 1,046   |        
|                                            |                                    |        |      |                  |  |      |          |         |  |   |         |        
|                                            | Property, plant and equipment      |        |      |                  |  |      |          | 347,007 |  |   |         | 300,963 | 
|Accumulated depreciation                    |                                    |        |      |                  |  |      | (161,072 | )       |  |   | (97,795 | )      
|                                            |                                    |        |      |                  |  |      |          |         |  |   |         |        
|                                            | Property, plant and equipment, net |        |      |                  |  |      | $        | 185,935 |  |   | $       | 203,168 | 
|                                            |                                    |        |      |                  |  |      |          |         |  |   |         |        

5. LONG-TERM DEBT:

The Companys long-term debt as of
December 31, 2002 and 2001, consisted of the following:

|                                           |                      |                  |           |           |  |   |           |           | 
|------------------------------------------ | -------------------- | ---------------- | --------- | --------- |  | - | --------- | --------- | 
|                                           |                      | 2002             |           | 2001     
|                                           |                      |                  |           |          
|                                           |                      |                 
|                                           |                      | ($ in thousands)
|Credit facility                            |                      | $                | 894,273   |           |  | $ | 1,113,604 |          
|Senior Subordinated Notes, net of discount |                      |                  | 694,236   |           |  |   | 693,513   |          
|                                           |                      |                  |           |           |  |   |           |          
|                                           | Total debt           |                  |           | 1,588,509 |  |   |           | 1,807,117 | 
|Less-current maturities                    |                      |                  | 1,588,509 |           |  |   | 46,909    |          
|                                           |                      |                  |           |           |  |   |           |          
|                                           | Total long-term debt |                  | $         |          |  |   | $         | 1,760,208 | 
|                                           |                      |                  |           |           |  |   |           |          

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 loans. The Company used
proceeds from the issuance of its $450.0 million senior
subordinated notes due 2009, to reduce the credit facility to
$1.55 billion. On May 31, 2001, the 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 of an
additional $250.0 million senior subordinated notes due
2009, which reduced the credit facility to $1.34 billion.
On September 27, 2001, the Company and its lenders agreed
to a third amendment of the credit facility, which

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. LONG-TERM DEBT: (Continued)


modified certain financial covenants (as
described below). In addition to the Companys financial
covenants, the Company is required to make prepayments of
proceeds received from significant asset sales, new borrowings
and a portion of excess cash flow. Therefore, when the Company
completed the sale of Tennessee 4 RSA to Verizon
Wireless for a total purchase price of $202.0 million
during February 2002, the Company permanently prepaid
approximately $190.0 million of its credit facility. The
maximum availability of the credit facility is limited by
restrictions, such as certain financial ratios. As of
December 31, 2002, the Company had outstanding borrowings
under the credit facility of $894.3 million, with no
additional amounts available for future borrowings.

The Companys 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 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 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 1.35 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 1.80 to 1 at December 31,
    2002 and increasing over time to 2.50 to 1; and                                                          
|
| |  | a ratio of operating cash flow minus capital
    expenditures to the sum of debt service requirements and cash
    distributions of 1.00 to 1 at December 31, 2002
    and continuing over time at 1.00 to 1.

Through September 2002, interest on the revolving
credit facility and the term loans was variable and was based on
a prime rate or a LIBOR formula. As a result of the
Companys non-compliance with a financial covenant
contained in the credit facility, beginning in October 2002, all
borrowings under the credit facility are only available based on
prime rate. The weighted average interest rate for the year
ended December 31, 2002 was 5.0%, and interest rates have
ranged in total between 4.4% and 10.0% since inception. This
credit facility is collateralized by substantially all of the
assets of the Company.

The Companys credit facility includes a
financial covenant which required the Company to not exceed a
total debt leverage ratio ranging from 9.25 to 1.00 in
the first quarter of 2002 to 7.75 to 1.00 in the
fourth quarter of 2002. At June 30, 2002 and continuing
through December 31, 2002, the Company failed to comply
with this covenant. The lenders presently have the right, but
not the obligation, to accelerate the repayment of the entire
amount outstanding under the credit facility. Acceleration under
the credit facility would 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. To date, no such acceleration has
occurred and the Company continues to hold discussions with its
bank lenders and with representatives of certain of the
Companys bondholders concerning a potential
reorganization. There is no assurance that the Company would be
successful in reorganizing or be able to meet its obligation
under the accelerated repayment terms. Therefore, on
June 30, 2002 and continuing through December 31,
2002, the Company has classified all of its long-term debt as
current. Unless such non-compliance is resolved, there continues
to be substantial doubt about the Companys ability to
continue as a going concern, as expressed in the independent
auditors report on the Companys 2002 and 2001 financial
statements. Also as a result of the Companys
non-compliance, beginning in October 2002, all borrowings

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. LONG-TERM DEBT: (Continued)


under its credit facility are only available
based on prime rate, which has increased the Companys
borrowing rate.

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. These
notes bear interest at an annual rate of 9.5%. The discount is
being amortized into interest expense 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 also bear
interest at an annual rate of 9.5%. The discount is being
amortized into interest expense over the life of the notes.

Restricted cash and investments totaling
$34.1 million as of December 31, 2002, consist of the
remaining balance 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.

The Company anticipates that its cash flow from
operations, along with cash on hand, will be sufficient to meet
its capital requirements through October 2003, at which time the
Company will be required to make additional cash interest
payments on its senior subordinated notes. If the cash interest
payments on its senior subordinated notes are not made, the
senior subordinated noteholders could declare the principal and
interest of the notes immediately due and payable.

Scheduled Future Payments

Scheduled future payments of long-term debt,
absent acceleration, for years subsequent to December 31,
2002, are as follows:

|                    |  |                  |           | 
|------------------- |  | ---------------- | --------- | 
|                    |  | ($ in thousands)
|                    |  |                 
|2003                |  | $                | 56,760    | 
|2004                |  |                  | 75,669    | 
|2005                |  |                  | 94,579    | 
|2006                |  |                  | 172,635   | 
|2007                |  |                  | 322,541   | 
|2008 and thereafter |  |                  | 866,325   | 
|                    |  |                  |           | 
|                    |  | $                | 1,588,509 | 
|                    |  |                  |           | 

Interest Rate Hedges

Through September 2002, the Company paid interest
on its bank credit facility at a variable factor, based on LIBOR
or prime rate. As a result of the Companys non-compliance,
beginning in October 2002, all borrowings under its credit
facility are only available based on 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 derivative contract expired in June 2001 and was
replaced with another derivative contract that expired

53



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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



5. LONG-TERM DEBT: (Continued)


June 4, 2002, which set the interest rate on
$1.03 billion of debt at a rate of 6.7%. As of
December 31, 2002 the Company does not have any derivative
contracts related to its credit facility.

On January 1, 2001, the Company implemented
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activity. With this
implementation, the Company began recording a liability and a
transition adjustment, net of income tax benefit, to other
comprehensive loss during 2001 in connection with these
derivative contracts. The Companys accumulated other
comprehensive loss, net of income tax benefit, was
$14.2 million as of December 31, 2001. As a result of
the expiration of the Companys interest rate swap
agreement on June 4, 2002, there is no balance at
December 31, 2002.

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

6. GOODWILL IMPAIRMENT:

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

In addition, during fourth quarter 2002, the
Company continued to have factors impacting its business for
which a re-evaluation was necessary. The Company continued to
not be in-compliance with its total leverage ratio covenant on
its senior credit facility, which has given its lenders
the right to accelerate the repayment of the entire amount
outstanding under its senior credit facility. To date, no such
acceleration has occurred and the Company continues to hold
discussions with its bank lenders and with representatives of
certain of the Companys bondholders concerning a potential
reorganization. Based on these discussions and other factors,
including an increase in a risk-based discount factor, the
Company determined its goodwill was further impaired based on
enterprise valuations as of the fourth quarter of 2002.
Therefore, the Company recorded an additional impairment loss of
$423.9 million at December 31, 2002, bringing its
total impairment loss on goodwill to $800.9 million for the
year ended December 31, 2002.

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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7. LEASES, COMMITMENTS AND
CONTINGENCIES:

Leases

The Company has numerous operating leases; these
leases are primarily for their retail stores, cell site towers
and their locations, and vehicles. Future minimum lease payments
required under these operating leases having an initial or
remaining noncancellable lease term in excess of one year at
December 31, 2002, are as follows:

|                    |  |                  |        | 
|------------------- |  | ---------------- | ------ | 
|                    |  | ($ in thousands)
|                    |  |                 
|2003                |  | $                | 12,752 | 
|2004                |  |                  | 11,012 | 
|2005                |  |                  | 9,081  | 
|2006                |  |                  | 6,794  | 
|2007                |  |                  | 3,991  | 
|2008 and thereafter |  |                  | 8,756  | 

Lease expense under the above leases was
$14.2 million for the year ended December 31, 2002,
$11.0 million for the year ended December 31, 2001 and
$6.8 million for the period from February 25, 2000 through
December 31, 2000.

Commitments

The Company is a party to 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 July 15,
2005. Of the commitment, approximately $19.5 million
remained at December 31, 2002. If the Company fails to fully
meet this commitment by July 15, 2005, it could be forced
to pay a penalty of up to 20% of the unfulfilled commitment. The
Company expects to fulfill its purchase commitment under this
agreement prior to its completion date.

Contingencies

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

8. MANDATORILY REDEEMABLE PREFERRED
STOCK:

On June 29, 2001, the Company received
$35.0 million from one of its principal owners, Dobson
Communications, from its purchase of 35,000 shares of the
Companys Series A preferred stock. The Company has
350,000 authorized shares of its Series A preferred stock,
which has a par value of $0.01 per share and is mandatorily
redeemable on June 29, 2011 for $1,000 per share, plus
accrued and unpaid dividends. Each share of Series A
preferred stock is entitled to 12% cumulative annual dividends
on the liquidation preference of $1,000 per share. Dividends
will accrue but will not be paid until declared by the
Companys Board of Directors or when redeemed on
June 29, 2011, whichever occurs first. At December 31,
2002, the Company had $6.8 million in accrued dividends
relating to its Series A preferred stock. Shareholders of
the Series A preferred stock have no voting rights.

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



8. MANDATORILY REDEEMABLE PREFERRED
STOCK: (Continued)


9. STOCKHOLDERS
(DEFICIT) EQUITY:

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

10. 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 $0.3 million for the year ended
December 31, 2002, $0.6 million for the year ended
December 31, 2001 and $0.3 million for the period from
February 25, 2000, through December 31, 2000, and were
recorded as general and administrative expenses in the
accompanying statements of operations.

11. TAXES:

Benefit for income taxes for the years ended
December 31, 2002 and 2001, and for the period from
February 25, 2000 through December 31, 2000 were as
follows:

|                                          |                          |                  |         |              |   |              |         |         |   |   |         |         |  
|----------------------------------------- | ------------------------ | ---------------- | ------- | ------------ | - | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                                          |                          |                  |         |              |   | February 25,
|                                          |                          | Year Ended       |         | Year Ended   |   | 2000 through
|                                          |                          | December 31,     |         | December 31, |   | December 31,
|                                          |                          | 2002             |         | 2001         |   | 2000        
|                                          |                          |                  |         |              |   |             
|                                          |                          |                 
|                                          |                          | ($ in thousands)
|Federal income taxes                     |                          |                  |         |              |   |              |         |         |   |   |         |        
|Deferred                                  |                          | $                | (12,226 | )            |   | $            | (44,370 | )       |   | $ | (28,256 | )      
|State income taxes (current and deferred) |                          |                  | (2,157  | )            |   |              | (7,830  | )       |   |   | (4,986  | )      
|                                          |                          |                  |         |              |   |              |         |         |   |   |         |        
|                                          | Total income tax benefit |                  | $       | (14,383      | ) |              | $       | (52,200 | ) |   | $       | (33,242 | )
|                                          |                          |                  |         |              |   |              |         |         |   |   |         |        

The benefits for income taxes for the years ended
December 31, 2002 and 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,
|                                                                            |  | Year Ended       |          | Year Ended   |  | 2000 through
|                                                                            |  | December 31,     |          | December 31, |  | December 31,
|                                                                            |  | 2002             |          | 2001         |  | 2000        
|                                                                            |  |                  |          |              |  |             
|                                                                            |  |                 
|                                                                            |  | ($ in thousands)
|Income taxes at statutory rate (34%)                                        |  | $                | (281,506 | )            |  | $            | (64,064 | ) |  | $ | (45,501 | )
|State income taxes, net of Federal income tax
    effect                    |  |                  | (49,677  | )            |  |              | (11,305 | ) |  |   | (8,030  | )
|Goodwill impairment or amortization, for which no
    benefit is recognized |  |                  | 316,737  |              |  |              | 23,326  |   |  |   | 20,111  |  
|Other, net                                                                  |  |                  | 63       |              |  |              | (157    | ) |  |   | 178     |  
|                                                                            |  |                  |          |              |  |              |         |   |  |   |         |  
|                                                                            |  | $                | (14,383  | )            |  | $            | (52,200 | ) |  | $ | (33,242 | )
|                                                                            |  |                  |          |              |  |              |         |   |  |   |         |  

56



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##### Table of Contents



AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



11. TAXES: (Continued)


The tax effects of the temporary differences
which gave rise to deferred tax assets and liabilities at
December 31, 2002 and 2001, were as follows:

|                                  |                                            |                                              |                                         |              |         |         |   |          |          |          |  
|--------------------------------- | ------------------------------------------ | -------------------------------------------- | --------------------------------------- | ------------ | ------- | ------- | - | -------- | -------- | -------- | -
|                                  |                                            | December 31,                                 |                                         | December 31,
|                                  |                                            | 2002                                         |                                         | 2001        
|                                  |                                            |                                              |                                         |             
|                                  |                                            |                                             
|                                  |                                            | ($ in thousands)                            
|Current deferred income taxes:    |                                            |                                              |                                         |              |         |         |   |         
|                                  | Allowance for doubtful accounts receivable |                                              | $                                       | 391          |         |         | $ | 682      |         
|                                  | Accrued liabilities                        |                                              |                                         | 1,760        |         |         |   | 5,819    |         
|                                  |                                            |                                              |                                         |              |         |         |   |         
|                                  |                                            | Net current deferred income tax asset        |                                         |              | 2,151   |         |   |          | 6,501    |         
|                                  |                                            |                                              |                                         |              |         |         |   |         
|Noncurrent deferred income taxes: |                                            |                                              |                                         |              |         |         |   |         
|                                  | Property, plant and equipment, net         |                                              |                                         | (29,560      | )       |         |   | (29,270  | )       
|                                  | Intangible assets                          |                                              |                                         | (141,673     | )       |         |   | (320,473 | )       
|                                  | Interest rate hedges                       |                                              |                                         |             |         |         |   | 9,479    |         
|                                  | Tax credits and carryforwards              |                                              |                                         | 127,542      |         |         |   | 153,882  |         
|                                  |                                            |                                              |                                         |              |         |         |   |         
|                                  |                                            | Net noncurrent deferred income tax liability |                                         |              | (43,691 | )       |   |          | (186,382 | )       
|                                  |                                            |                                              |                                         |              |         |         |   |         
|                                  |                                            |                                              | Total net deferred income tax liability |              | $       | (41,540 | ) |          | $        | (179,881 | )
|                                  |                                            |                                              |                                         |              |         |         |   |         

At December 31, 2002, the Company had NOL
carryforwards of approximately $318.9 million, which may be
utilized to reduce future Federal income taxes payable. These
NOL carryforwards begin to expire in 2009.

The Company periodically reviews the need for a
valuation allowance against deferred tax assets and recognizes
these assets to the extent that realization is more likely than
not. Based on a review of taxable income, history and trends,
forecasted taxable income and expiration of carryforwards, the
Company has not provided a valuation allowance for the NOL
carryforwards because management believes that it is more likely
than not that all of the deferred tax assets of the Company will
be realized prior to their expiration.

12. RELATED PARTY TRANSACTIONS:

The Company had receivables totaling
$1.3 million at December 31, 2002, due from related
parties and payables totaling $17.7 million at
December 31, 2001, 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. The
services provided to the Company by Dobson Communications
include executive management, all administrative functions such
as accounting, human resources, legal, and information services,
as well as, certain call center/customer service functions.
Dobson Communications has integrated the operations of the
Company with its own operations such that Dobson Communications
and the Company share common management and
administrative/back-office functions. Costs incurred from these
services 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 estimated subscribers and
populations in their respective licensed areas. Shared costs
allocated to the Company from Dobson Communications were
$17.1 million for the year ended December 31, 2002,
$10.6 million for the year ended December 31, 2001 and
$4.1 million for the period from February 25, 2000 through
December 31, 2000. In addition, the Company reimbursed
Dobson Communications for other expenses incurred by them on the
Companys behalf, which represents actual compensation
costs related to those Dobson Communications employees that
perform job functions that are exclusively attributable to the
Companys operations, totaling

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AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



12. RELATED PARTY TRANSACTIONS:
(Continued)


$42.9 million for the year ended
December 31, 2002, $40.4 million for the year ended
December 31, 2001 and $27.8 million for the period
from February 25, 2000 through December 31, 2000.

The Company received $66.3 million during
2002, $55.5 million during 2001 and $46.6 million
during 2000, in roaming fees from one of its principal owners,
AT&T Wireless. In return, the Company paid
AT&T Wireless $24.2 million during 2002,
$20.0 million during 2001 and $8.5 million during 2000
for roaming fees.

13. 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:

|                                |  |                  |         |            |  |                 |         |            |  |   |           |  |  |   |           | 
|------------------------------- |  | ---------------- | ------- | ---------- |  | --------------- | ------- | ---------- |  | - | --------- |  |  | - | --------- | 
|                                |  |                  |         |           
|                                |  | 2002             |         | 2001      
|                                |  |                  |         |           
|                                |  | Carrying Amount  |         | Fair Value |  | Carrying Amount |         | Fair Value
|                                |  |                  |         |            |  |                 |         |           
|                                |  |                 
|                                |  | ($ in thousands)
|Restricted cash and investments |  | $                | 42,329  |            |  | $               | 42,329  |            |  | $ | 97,863    |  |  | $ | 97,863    | 
|Credit facility                 |  |                  | 894,273 |            |  |                 | 894,273 |            |  |   | 1,113,604 |  |  |   | 1,113,604 | 
|Senior Subordinated notes       |  |                  | 694,236 |            |  |                 | 131,905 |            |  |   | 693,513   |  |  |   | 676,175   | 
|Interest rate hedge liability   |  |                  |        |            |  |                 |        |            |  |   | 23,699    |  |  |   | 23,699    | 

14. SUBSEQUENT EVENTS:

Subsequent to December 31, 2002, the Company
received $4.1 million of an escrow reserve that was held to
cover any future contingencies related to the Companys
sale of Tennessee 4 RSA to Verizon Wireless during February
2002. These funds were used to pay down the Companys
credit facility.

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##### Table of Contents



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                                      |  |  | 2002 |                                        |  | $        | 99,883     |               |  | $            | 115,810    |   |  | $ | 124,202  |   |  | $ | 112,935    |  
|                                                       |  |  | 2001 |                                        |  | $        | 90,290     |               |  | $            | 106,107    |   |  | $ | 116,550  |   |  | $ | 104,297    |  
|Operating income                                       |  |  | 2002 |                                        |  | $        | 18,824     |               |  | $            | 30,301     |   |  | $ | 36,379   |   |  | $ | 28,047     |  
|                                                       |  |  | 2001 |                                        |  | $        | (15,310    | )             |  | $            | (3,945     | ) |  | $ | 2,339    |   |  | $ | (9,774     | )
|Net (loss) income                                      |  |  | 2002 |                                        |  | $        | (282,153   | )             |  | $            | (381,616   | ) |  | $ | 4,280    |   |  | $ | (422,908   | )
|                                                       |  |  | 2001 |                                        |  | $        | (38,691    | )             |  | $            | (32,831    | ) |  | $ | (30,275  | ) |  | $ | (35,866    | )
|Net (loss) income applicable to common
    stockholder |  |  | 2002 |                                        |  | $        | (283,267   | )             |  | $            | (382,764   | ) |  | $ | 3,098    |   |  | $ | (424,125   | )
|                                                       |  |  | 2001 |                                        |  | $        | (38,691    | )             |  | $            | (32,831    | ) |  | $ | (31,150  | ) |  | $ | (37,129    | )
|Net (loss) income per average common share             |  |  | 2002 |                                        |  | $        | (2,832,672 | )             |  | $            | (3,827,636 | ) |  | $ | 30,980   |   |  | $ | (4,241,253 | )
|                                                       |  |  | 2001 |                                        |  | $        | (386,913   | )             |  | $            | (328,306   | ) |  | $ | (311,502 | ) |  | $ | (371,294   | )

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

During 2002, the Company changed its independent
accounting firm. Information regarding the Companys
engagement of KPMG LLP is set forth in a Form 8-K filed on
June 27, 2002.




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, 2002.

|                      |  |     |    |          |  |                                       
|--------------------- |  | --- | -- | -------- |  | --------------------------------------
|Name                  |  | Age |    | Position
|                      |  |     |    |         
|Everett R. Dobson     |  |     | 43 |          |  | President and Director                
|Mark D. Bradner       |  |     | 46 |          |  | Vice President and Director           
|Tamara A. Bramel      |  |     | 44 |          |  | Vice President and Director           
|Bruce R. Knooihuizen  |  |     | 46 |          |  | Treasurer, Vice President and Director
|Timothy J. Duffy      |  |     | 43 |          |  | Vice President                        
|Douglas B. Stephens   |  |     | 43 |          |  | Vice President                        
|Ronald L. Ripley      |  |     | 56 |          |  | Secretary                             
|Richard D. Sewell, Jr |  |     | 45 |          |  | 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.

Mark D. Bradnerhas
served as our Vice President and Director since May 2002.
Mr. Bradner first became associated with AT&T Wireless
in 1994. Since 2000, Mr. Bradner has served as Vice
President of Corporate Development. Between 1991 and 1993,
Mr. Bradner was Senior Vice President, General Counsel and
Corporate Secretary for Pacific First Bank. From 1980 to 1991,
Mr. Bradner was with the law firm Stoel Rives Boley Jones
& Grey. He holds a A.B. in Economics from Stanford, and
received his Juris Doctor from George Washington University.

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 that was
formerly an operating unit of US West. Previously, he was
Treasurer and Controller of Ameritech Cellular 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.

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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.

Douglas B. Stephenshas served as our Vice President since
January 2002, and as a Vice President and Interim Chief
Operating Officer of Dobson Communications since December 2001.
Mr. Stephens was a Regional Vice President for Dobson
Communications Central Region from April 1997 until December
2001. In this capacity, Mr. Stephens responsibilities
included all sales and operations for the wireless properties
throughout Texas, Oklahoma, Kansas and Missouri.
Mr. Stephens has 19 years wireless experience. From
March 1990 until March 1997, he was employed by United States
Cellular, serving as National Accounts Manager and then as
General Manager, responsible for its Indiana, Kentucky and Ohio
cluster. Prior to that, Mr. Stephens was Director of Sales
and Marketing for Cellular Communications Inc. out of Cleveland,
Ohio. Mr. Stephens received a Bachelor of Science in
business management from the University of Nebraska at Lincoln.

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 Dobson Communications. 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.

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|         |                                                   
|-------- | --------------------------------------------------
|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. Dividends will accrue but will
not be paid until declared by our Board of Directors or when
redeemed on June 29, 2011, whichever occurs first.

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. ACC Acquisition LLC
then contributed the cash and licenses 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 had aggregate principal
amounts outstanding of approximately $307.8 million as of
December 31, 2002, including fees and interest. 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.

On March 31, 2003, Bank of America and DCCLP
reached an agreement in principle for the amendment and
restructuring of the DCCLP loan. Under the terms of the
agreement in principle, Bank of America would permanently
release its lien on a sufficient number of shares of Dobson
Communications common stock, so that DCCLP would retain a
controlling interest in Dobson Communications and no change of
control could occur under credit agreements, indentures,
preferred stock and other instruments to which Dobson
Communications and its subsidiaries are parties in the event of
a subsequent default by DCCLP under the restructured loan. The
agreement in principle is not binding to either party, and is
subject to the completion of a definitive legal agreement. In
order to allow time for the completion of a definitive legal
agreement, Bank of America has agreed to extend the maturity
date of the DCCLP loan to April 21, 2003. We can provide no
assurance that DCCLP and Bank of America will consummate the
transactions provided for in the agreement in principle.

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 were to experience 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

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| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                  

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

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. 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

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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.                                                                                                                                                                                                                                                                                                                                                                                                                                        

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.

We reimbursed Dobson Communications
$17.1 million during 2002, $10.6 million during 2001 and
$4.1 million during 2000, for allocated shared costs. In
addition, we reimbursed Dobson Communications for other expenses
incurred by them on our behalf, primarily related to
compensation-related expenses, totaling $42.9 million for
2002, $40.4 million for 2001 and $27.8 million for
2000.

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.

We received $66.3 million during 2002,
$55.5 million during 2001 and $46.6 million during
2000, in roaming fees from AT&T Wireless and paid AT&T
Wireless $24.2 million during 2002, $20.0 million
during 2001 and $8.5 million during 2000 in roaming fees.
We received $0.7 million during 2002, $0.6 million
during 2001 and $1.4 million during 2000, in roaming fees
from Dobson Communications and paid Dobson Communications
$1.3 million during 2002, $1.5 million during 2001 and
$1.3 million during 2000, in roaming fees.

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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 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 revenue in excess of
    $5.0 billion;                                                                 
|
| |  | derives less than one-third of its aggregate
    revenue 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.




Item 14. Controls and
Procedures

Within the 90-day period prior to the filing of
this report, an evaluation was performed under the supervision
and with the participation of our management, including the
Chief Executive Officer (CEO) and Chief Financial Officer
(CFO), of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in
Rule 13a-14(c) under the Securities Exchange Act of 1934).
Based on that evaluation, our management, including the CEO and
CFO, concluded that our disclosure controls and procedures were
effective.

There have been no significant changes in our
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

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PART IV






|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | 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                                                                                                                                  
| | Independent Auditors Report                                                                                                                                                        
| | Report of Independent Public Accountants.                                                                                                                                           
| | Consolidated balance sheets as of
    December 31, 2002 and 2001.                                                                                                                   
| | Consolidated statements of operations for the
    years ended December 31, 2002 and 2001 and for the period
    from February 25, 2000 to December 31, 2000.                        
| | Consolidated statements of stockholders
    (deficit) equity for the years ended December 31, 2002
    and 2001 and for the period from February 25, 2000 to
    December 31, 2000.
| | Consolidated statements of cash flows for the
    years ended December 31, 2002 and 2001 and for the period
    from February 25, 2000 to December 31, 2000.                        
| | Notes to consolidated financial statements.                                                                                                                                         

(a)(2) Financial Statement Schedules:



| |                                               
| | ----------------------------------------------
| | Report of Independent Public Accountants.     
| | 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.

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NOTE:

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

2. THE PREDECESSOR AUDITOR HAS NOT
REISSUED THIS REPORT.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To the Board of Directors of

American Cellular Corporation:


We have audited 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 6 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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Item 15(a)2

SCHEDULE II

AMERICAN CELLULAR CORPORATION AND
SUBSIDIARIES

SCHEDULE OF VALUATION ALLOWANCE
ACCOUNTS


YEARS ENDED DECEMBER 31, 2002 AND 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
|                                            |  |                  |       |            |  |            |       |            
|                                            |  |                 
|                                            |  | ($ in thousands)
|Allowance for Doubtful Accounts Receivable: |  |                  |       |            |  |            |       |             |  |   |       |  |  |   |       | 
|2002.                                       |  | $                | 1,548 |            |  | $          | 7,272 |             |  | $ | 7,842 |  |  | $ | 978   | 
|2001.                                       |  |                  | 1,658 |            |  |            | 9,190 |             |  |   | 9,300 |  |  |   | 1,548 | 
|2000.                                       |  |                  |      |            |  |            | 3,847 |             |  |   | 2,189 |  |  |   | 1,658 | 

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

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(3) Exhibits

|        |        |             |  |                                                                                                                                                                                                                            |  |  |             | 
|------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                                 
|Numbers |        | 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)[3.1.1]  | 
|        | 3.1.2  |             |  | Certificate of Designation for the Series A
    Preferred Stock of American Cellular Corporation                                                                                                                           |  |  | (5)[3.1.2]  | 
|        | 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    |             |  | Escrow and Security Agreement dated June 4,
    2001 between American Cellular Corporation and United States
    Trust Company of New York                                                                                 |  |  | (4)[4.5]    | 
|        | 4.5    |             |  | Registration Rights Agreement dated June 4,
    2001 between American Cellular Corporation, Banc of America
    Securities LLC and Lehman Brothers, Inc.                                                                   |  |  | (4)[4.6]    | 
|        | 4.6    |             |  | First Amendment to Credit Agreement dated
    March 2, 2001                                                                                                                                                                |  |  | (1)[10.4.1] | 
|        | 4.7    |             |  | Second Amendment to Credit Agreement dated
    May 31, 2001                                                                                                                                                                |  |  | (2)[10.4.2] | 
|        | 4.8    |             |  | Third Amendment to Credit Agreement dated
    September 27, 2001                                                                                                                                                           |  |  | (5)[10.4.3] | 
|        | 4.8.1  |             |  | Limited Waiver to Credit Agreement dated
    April 10, 2002                                                                                                                                                                |  |  | (6)[10.4.4] | 
|        | 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]   | 
|        | 10.3.1 |             |  | Addendum to Amended and Restated Operating
    Agreement between AT&T Wireless Services, Inc. (and its
    affiliates) and ACC Acquisition, LLC (and its affiliates) dated
    May 8, 2002                                 |  |  | (7)[10.3.1] | 
|        | 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]   | 
|        | 10.5*  |             |  | License Agreement, dated October 8, 2001, by
    and between H.O. Systems, Inc. and American Cellular Corporation                                                                                                          |  |  | (5)[10.5]   | 
|        | 10.6*  |             |  | Purchase and License Agreement between Nortel
    Networks, Inc. and Dobson Communications Corporation, dated
    November 16, 2001                                                                                        |  |  | (5)[10.6]   | 
|        | 10.6.1 | *           |  | Amendment No. 1 to the Purchase and License
    Agreement between Nortel Networks, Inc. and Dobson
    Communications Corporation, dated August 5, 2002                                                                    |  |  | (8)[10.6.1] | 
|        | 10.7   |             |  | Form of License Agreement among Cellular One
    Group and various subsidiaries of American Cellular Corporation                                                                                                           |  |  | (1)[10.7]   | 

69



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##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                          |  |  |             | 
|------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                               
|Numbers |        | Description |  | Filing                                                                                                                                                                                                                  
|        |        |             |  |                                                                                                                                                                                                                         
|        | 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] | 
|        | 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)[10.13]  | 
|        | 10.14  |             |  | Master Services Agreement between American
    Cellular Corporation and Convergys Information Management Group
    Inc. dated December 1, 2002.                                                                          |  |  | (9)[10.14]  | 
|        | 21     |             |  | Subsidiaries                                                                                                                                                                                                             |  |  | (10)        | 



---



|  |                                                                              
|- | -----------------------------------------------------------------------------
|* | 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 as an exhibit to the Registrants
    Annual Report on Form 10-K for the year ended
    December 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.       
|   
|(6) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    March 31, 2002, as the exhibit number indicated in brackets
    and incorporated by reference herein.    
|   
|(7) | Filed as an exhibit to the Registrants
    current report on Form 8-K on May 17, 2002 as the exhibit
    number indicated in brackets and incorporated by reference
    herein.                             
|   
|(8) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2002, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|   
|(9) | Filed as an exhibit to the Registrants
    current report on Form 8-K on December 12, 2002, as
    the exhibit number indicated in brackets and incorporated by
    reference herein.                       



|     |               
|---- | --------------
|(10) | Filed herewith

(b) Reports on Form 8-K

The registrant filed a Current Report on
Form 8-K on December 12, 2002, which reported the
Registrant entered into an agreement with Convergys Information
Management Group Inc. (Convergys) pursuant to which
Convergys would provide integrated billing and customer care
services (the Master Services Agreement), under
Item 5. Other Events.

70



---



##### 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 31st day of
March 2003.



| |                              
| | -----------------------------
| | 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 on March 31, 2003.

|                                             |  |                                                                         
|-------------------------------------------- |  | ------------------------------------------------------------------------
|Signatures                                   |  | Title                                                                   
|                                             |  |                                                                         
|/s/ EVERETT R. DOBSONEverett R. Dobson       |  | President and Director (Principal Executive
    Officer)                
|                                            
|/s/ BRUCE R. KNOOIHUIZENBruce R. Knooihuizen |  | Treasurer, Vice President and Director
    (Principal Financial Officer)
|                                            
|/s/ MARK D. BRADNERMark D. Bradner           |  | Vice President and Director                                             
|                                            
|/s/ TAMARA A. BRAMELTamara A. Bramel         |  | Vice President and Director                                             
|                                            
|/s/ TRENTON W. LEFORCETrenton W. Leforce     |  | Corporate Controller (Principal Accounting
    Officer)                 

71



---



##### Table of Contents



CERTIFICATIONS FOR FORM 10-K

I, Everett R. Dobson, President and Director,
certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this annual report on
    Form 10-K of American Cellular Corporation (the
    registrant);                                                                                                                                                                                                                                
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                          



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



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



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



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



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



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

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

March 31, 2003

72



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##### Table of Contents



CERTIFICATIONS FOR FORM 10-K

I, Bruce R. Knooihuizen, Treasurer and Director,
certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this annual report on
    Form 10-K of American Cellular Corporation (the
    registrant);                                                                                                                                                                                                                                
|
| | 2. Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                          



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b. evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c. presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



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



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b. any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



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



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



| |     |                         
| | --- | ------------------------
| | By: | /s/ BRUCE R. KNOOIHUIZEN

| |                                          
| | -----------------------------------------
| |                                          
| | Bruce R. Knooihuizen                     
| | Treasure, Vice President and
    Director

March 31, 2003

73



---



##### Table of Contents



INDEX TO EXHIBITS

|        |        |             |  |                                                                                                                                                                                                                            |  |  |             | 
|------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                                 
|Numbers |        | Description |  | Filing                                                                                                                                                                                                                    
|        |        |             |  |                                                                                                                                                                                                                           
|        | 3.1    |             |  | Fourth Restated Certificate of Incorporation of
    American Cellular Corporation                                                                                                                                          |  |  | (1)[3.1]    | 
|        | 3.1.1  |             |  | Amendment to Fourth Restated Certificate of
    Incorporation of American Cellular Corporation                                                                                                                             |  |  | (5)[3.1.1]  | 
|        | 3.1.2  |             |  | Certificate of Designation for the Series A
    Preferred Stock of American Cellular Corporation                                                                                                                           |  |  | (5)[3.1.2]  | 
|        | 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    |             |  | Escrow and Security Agreement dated June 4,
    2001 between American Cellular Corporation and United States
    Trust Company of New York                                                                                 |  |  | (4)[4.5]    | 
|        | 4.5    |             |  | Registration Rights Agreement dated June 4,
    2001 between American Cellular Corporation, Banc of America
    Securities LLC and Lehman Brothers, Inc.                                                                   |  |  | (4)[4.6]    | 
|        | 4.6    |             |  | First Amendment to Credit Agreement dated
    March 2, 2001                                                                                                                                                                |  |  | (1)[10.4.1] | 
|        | 4.7    |             |  | Second Amendment to Credit Agreement dated
    May 31, 2001                                                                                                                                                                |  |  | (2)[10.4.2] | 
|        | 4.8    |             |  | Third Amendment to Credit Agreement dated
    September 27, 2001                                                                                                                                                           |  |  | (5)[10.4.3] | 
|        | 4.8.1  |             |  | Limited Waiver to Credit Agreement dated
    April 10, 2002                                                                                                                                                                |  |  | (6)[10.4.4] | 
|        | 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]   | 
|        | 10.3.1 |             |  | Addendum to Amended and Restated Operating
    Agreement between AT&T Wireless Services, Inc. (and its
    affiliates) and ACC Acquisition, LLC (and its affiliates) dated
    May 8, 2002                                 |  |  | (7)[10.3.1] | 
|        | 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]   | 
|        | 10.5*  |             |  | License Agreement, dated October 8, 2001, by
    and between H.O. Systems, Inc. and American Cellular Corporation                                                                                                          |  |  | (5)[10.5]   | 
|        | 10.6*  |             |  | Purchase and License Agreement between Nortel
    Networks, Inc. and Dobson Communications Corporation, dated
    November 16, 2001                                                                                        |  |  | (5)[10.6]   | 
|        | 10.6.1 | *           |  | Amendment No. 1 to the Purchase and License
    Agreement between Nortel Networks, Inc. and Dobson
    Communications Corporation, dated August 5, 2002                                                                    |  |  | (8)[10.6.1] | 
|        | 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]   | 



---



##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                          |  |  |             | 
|------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ----------- | 
|Exhibit |        |             |  | Method of                                                                                                                                                                                                               
|Numbers |        | 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)[10.13]  | 
|        | 10.14  |             |  | Master Services Agreement between American
    Cellular Corporation and Convergys Information Management Group
    Inc. dated December 1, 2002.                                                                          |  |  | (9)[10.14]  | 
|        | 21     |             |  | Subsidiaries                                                                                                                                                                                                             |  |  | (10)        | 



---



| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| | * | 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 as an exhibit to the Registrants
    Annual Report on Form 10-K for the year ended
    December 31, 2001, as the exhibit number indicated in
    brackets and incorporated by reference herein.       
|
| | (6) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    March 31, 2002, as the exhibit number indicated in brackets
    and incorporated by reference herein.    
|
| | (7) | Filed as an exhibit to the Registrants
    current report on Form 8-K on May 17, 2002 as the exhibit
    number indicated in brackets and incorporated by reference
    herein.                             
|
| | (8) | Filed as an exhibit to the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 31, 2002, as the exhibit number indicated in
    brackets and incorporated by reference herein.
|
| | (9) | Filed as an exhibit to the Registrants
    current report on Form 8-K on December 12, 2002, as
    the exhibit number indicated in brackets and incorporated by
    reference herein.                       



|     |               
|---- | --------------
|(10) | Filed herewith