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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

Commission file no. 333-71051

Dobson/ Sygnet

(405) 529-8500

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes o          No þ

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

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes o          No þ

      As of August 8, 2003, there were 100 shares of the registrant’s $1.00 par value common stock outstanding, all of which were beneficially owned by Dobson Communications Corporation.

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DOBSON/ SYGNET COMMUNICATIONS COMPANY

INDEX TO FORM 10-Q

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PART I. FINANCIAL INFORMATION

DOBSON/ SYGNET COMMUNICATIONS COMPANY

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

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DOBSON/ SYGNET COMMUNICATIONS COMPANY

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

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DOBSON/ SYGNET COMMUNICATIONS COMPANY

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

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DOBSON/ SYGNET COMMUNICATIONS COMPANY

      The condensed consolidated balance sheets of Dobson/ Sygnet Communications Company (“the Company”) as of June 30, 2003, the condensed consolidated statements of operations for the three and six months ended June 30, 2003 and 2002 and the condensed consolidated statements of cash flows for the six months ended June 30, 2003 and 2002 are unaudited. In the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, and cash flows for the periods presented.

      The condensed consolidated balance sheet data at December 31, 2002 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The financial statements presented herein should be read in connection with the Company’s December 31, 2002 consolidated financial statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2002.

      The Company was incorporated under the name Front Nine Holdings, Inc. as an Oklahoma corporation on July 23, 1998. The Company was formed to acquire the operations of Sygnet Wireless, Inc. Subsequently, the Company changed its name to Dobson/ Sygnet Communications Company and amended its certificate of incorporation on December 2, 1998 to reflect this change. On December 23, 1998, the Company completed the acquisition of Sygnet Wireless, Inc. for $337.5 million. The Company is a wholly-owned subsidiary of Dobson Communications Corporation (“Dobson Communications”) and is a provider of rural and suburban wireless telephone services.

      The Company, through its wholly-owned subsidiary, Sygnet Wireless, Inc., has credit facilities for an aggregate of $293.0 million, consisting of a $29.3 million revolving credit facility and $263.7 million of term loan facilities. Interest on the revolving credit facility and the term loan facilities is based on a prime rate or a LIBOR formula, and has ranged between 3.5% and 10.5% since inception. As of June 30, 2003, the Company had $267.1 million outstanding under its credit facility and it had $25.9 million of availability. Obligations under the credit facility are secured by a pledge of the capital stock of the Company’s subsidiary as well as a lien on substantially all of the Company’s assets and the assets of its operating subsidiary. The credit facility requires the maintenance of certain financial ratios. The failure to maintain such ratios would constitute an event of default, notwithstanding the Company’s ability to meet its debt service obligations. As of June 30, 2003, the Company was in compliance with the required financial ratios. In addition, the Company’s ability to borrow under the credit facility is limited by the requirement that, on a quarterly basis, the amount available under the credit facility will reduce until it terminates.

      As of June 30, 2003, the Company had outstanding $200.0 million principal amount of senior notes that bears interest at an annual rate of 12.25% and mature in 2008. On September 30, 2002 the Company’s parent, Dobson Communications, purchased $11.5 million principal amount of the Company’s outstanding senior notes for approximately $8.9 million.

      On May 19, 2003, the principal stockholder of Dobson Communications, DCCLP, and certain of its affiliates, entered into a new credit agreement with Bank of America, N.A. This credit agreement, which matures in May 2006, had an aggregate principal amount outstanding of $60 million as of June 30, 2003. To secure their obligations under this credit agreement, DCCLP and these affiliates individually pledged certain assets, which included beneficial ownership of shares of Dobson Communications class A and class B common stock. However, the new agreement eliminates the risk of a change of control of Dobson Communications related to a possible future default on the DCCLP loan as DCCLP has retained a sufficient number of shares of Dobson Communication’s class B common stock that are no longer pledged as collateral for DCCLP’s loan

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

from Bank of America, so that a default under the new credit agreement would not result in a change of control of Dobson Communications or the Company. As a result, the substantial doubt that existed as of December 31, 2002 and March 31, 2003 regarding the Company’s ability to continue operating as a going concern no longer exists. Under the terms of the new agreement with Bank of America, DCCLP transferred 32.5 million shares of Dobson Communications class A common stock to Bank of America.

      In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, “Business Combinations” and No. 142, “Goodwill and Other Intangible Assets.” These standards prohibit the application of the pooling-of-interests method of accounting for business combinations effective June 30, 2001 and require companies to cease amortization of existing goodwill and intangible assets with indefinite lives effective January 1, 2002. Under the new rules, the Company is treating its wireless license acquisition costs as indefinite life intangible assets. As a result, effective January 1, 2002, the Company ceased the amortization of its wireless license acquisition costs. Instead, the Company now tests its indefinite life intangible assets for impairment at least annually and will only adjust the carrying amount of these intangible assets upon an impairment of the indefinite life intangible assets. Through December 31, 2001, the Company’s accounting policy was to evaluate the carrying value of its intangible assets based on its undiscounted cash flows. However, as a result of implementing SFAS No. 142, the Company is now required to evaluate the carrying value of its indefinite life intangible assets using their fair values. Upon implementation of SFAS No. 142 on January 1, 2002, the Company recorded a charge, net of income tax benefit, of approximately $137.8 million to reflect the write down of its wireless license acquisition costs to their fair value.

      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.

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

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      The following discussion and analysis presents factors, which we believe are relevant to an assessment and understanding of our condensed consolidated financial position and results of operations. This financial and business analysis should be read in conjunction with our condensed consolidated financial statements and the related notes.

Overview

      We own and operate rural and suburban wireless communication systems serving a large cluster of properties. As of June 30, 2003, our systems covered a total population of approximately 2.4 million and we had 333,000 subscribers. Our wireless systems are located in Youngstown, Ohio and Erie, Pennsylvania, and in primarily rural and suburban areas between the Cleveland, Akron-Canton, Pittsburgh, Buffalo and Rochester metropolitan areas.

Subscribers

      Our subscriber base contains three types of subscribers; post-paid, reseller and pre-paid. Post-paid subscribers account for the largest portion of our subscriber base, at 98.0%. 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. The reseller base accounts for 1.4% of our total subscriber base. Our pre-paid subscribers, which account for less than 1.0% of our subscriber base, are subscribers that pre-pay for an agreed upon amount of minutes.

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

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 industry has experienced a trend of declining average revenue per minute as competition among wireless service providers has led to reductions in rates for airtime. The yield on our service revenue (service revenue divided by subscriber minutes-of-use) was $0.19 per minute for the three months ended June 30, 2003, $0.23 per minute for the three months ended June 30, 2002, $0.20 per minute for the six months ended June 30, 2003 and $0.24 per minute for the six months ended June 30, 2002. These declines have been generally offset by increases in average minutes-of-use per subscriber. The average minutes-of-use per subscriber increased 13.4% and 15.5% for the three and six months ended June 30, 2003 compared to the same periods in 2002. We believe that the industry trend of increasing minutes-of-use per subscriber will continue to offset declining revenues per minute-of-use due to the continued popularity of calling plans which offer a large number of included minutes and the enhanced service capacity of recently developed digital networks.

      We derive roaming revenue by providing service to subscribers of other wireless providers when those subscribers “roam” into our markets and use our systems to carry their calls. Roaming accounted for 22.6% of our operating revenue for the three months ended June 30, 2003, 24.6% for the three months ended June 30, 2002, 21.9% for the six months ended June 30, 2003 and 23.6% for the six months ended June 30, 2002. Roaming revenues have typically had higher margins than revenues from our subscribers. We achieve these higher margins because we incur relatively lower incremental costs related to network operation, billing, customer service and collections in servicing roaming customers as compared to our home subscribers. However, even though roaming revenue produces higher margins than revenue from our subscribers, the yields are declining due to increased market pressures and competition between wireless providers. Our roaming

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      We include long-distance revenue in service revenue 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 customers; therefore, we consider equipment sales to be 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”. Consistent with the trend of declining roaming revenue per minute, our roaming expense per minute has declined as well. This decline in expense per minute has contributed significantly to the recent trend of declining cost of service.

      Our cost of equipment represents the cost associated with telephone equipment and accessories sold to customers. In recent years, we and other wireless providers have increased the use of discounts on phone equipment and free phone promotions, as competition between service providers has intensified. As a result, we have incurred, and expect to continue to incur, losses on equipment sales. While we expect to continue these discounts and promotions, we believe that these promotions will result in increased revenue from increases in the number of wireless subscribers.

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

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

      Our depreciation and amortization expense represents the costs associated with the depreciation of our fixed assets and the amortization of certain intangible assets.

Critical Accounting Policies and Practices

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

      Our general and administrative expenses and certain other operating expenses include all infrastructure costs, including costs for customer support, billing, collections and corporate administration, all of which are provided by our parent, Dobson Communications. Dobson Communications shares these costs with us based

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      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 January 2002 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 wireless license acquisition costs and now test for impairment of wireless license acquisition costs at least annually and only adjust the carrying amount of these intangible assets upon an impairment of 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. 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 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 $137.8 million to reflect the write-down of our wireless license acquisition costs to their fair value.

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.

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      Operating revenues. For the three months ended June 30, 2003, our total operating revenue increased $2.6 million, or 5.0%, to $53.5 million from $50.9 million for the comparable period in 2002. The following table sets forth the components of our revenue for the periods indicated:

      For the three months ended June 30, 2003, our service revenue increased $2.4 million, or 6.5%, to $39.5 million from $37.1 million for the three months ended June 30, 2002. This increase was attributable to increased penetration and usage. Our average subscriber base increased 10.4% to 323,900 for the three months ended June 30, 2003 from 293,400 for the three months ended June 30, 2002. Our average monthly service revenue per subscriber decreased to $40 for the three months ended June 30, 2003, compared to $42 for the three months ended June 30, 2002 due to increased competition and market pressure.

      For the three months ended June 30, 2003, our roaming revenue decreased $0.4 million, or 3.3%, to $12.1 million from $12.5 million for the three months ended June 30, 2002. This decline in revenue was attributable to a 13.7% decline in our roaming revenue per minute-of-use, partially offset by a 12.1% increase in roaming minutes in our markets. 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 three months ended June 30, 2003, our equipment and other revenue increased $0.6 million, or 43.1%, to $1.9 million from $1.3 million for the three months ended June 30, 2002. This increase primarily resulted from an increased amount of wireless equipment upgrades during the three months ended June 30, 2003 compared to the same period in 2002.

      Cost of Service. For the three months ended June 30, 2003, our total cost of service decreased $1.5 million, or 12.7%, to $10.1 million from $11.6 million for the comparable period in 2002. The following table sets forth the components of our cost of service for the periods indicated:

      For the three months ended June 30, 2003, our network costs, which are the costs incurred from operating our wireless network and providing service to our customers, decreased $0.5 million, or 9.2%, to $5.6 million from $6.1 million for the comparable period in 2002. This decrease primarily resulted from credits received from certain of our network service providers and renegotiated lower local access rates charged to us by third-party providers for use of local access across the network.

      For the three months ended June 30, 2003, roaming costs decreased by $1.0 million, or 16.6%, to $4.5 million from $5.5 million compared to the same period in 2002. This decrease was the result of a 22.6% decline in rates charged by third-party wireless providers resulting from new lower rate agreements, offset by a 7.8% increase in the minutes used by our customers on those providers’ networks.

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      Cost of equipment. For the three months ended June 30, 2003, our cost of equipment decreased $0.4 million, or 8.9%, to $4.0 million from $4.4 million for the three months ended June 30, 2002, primarily as a result of a decrease in gross subscriber additions. Gross subscriber additions totaled 15,100 for the three months ended June 30, 2003 compared to gross subscriber additions of 22,000 for the three months ended June 30, 2002.

      Marketing and selling costs. For the three months ended June 30, 2003, our marketing and selling costs decreased $1.0 million, or 15.0%, to $5.5 million from $6.5 million for the three months ended June 30, 2002. In addition, as a percentage of total operating revenue, marketing and selling costs decreased to 10.3% for the three months ended June 30, 2003 from 12.7% for the three months ended June 30, 2002. This is a result of efficiencies gained from centralized marketing functions with our parent, Dobson Communications, and a decrease in gross subscriber additions.

      General and administrative costs. For the three months ended June 30, 2003, our general and administrative costs increased $0.2 million, or 3.7%, to $7.2 million from $7.0 million for the three months ended June 30, 2002. This increase was the result of increased infrastructure costs, including 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 average subscriber decreased to approximately $7 for the three months ended June 30, 2003 compared to approximately $8 for the three months ended June 30, 2002.

      Depreciation and amortization expense. For the three months ended June 30, 2003, our depreciation and amortization expense increased $0.8 million, or 11.3%, to $7.8 million from $7.0 million for the comparable period in 2002. This increase is a result of additional depreciation on fixed assets acquired in 2002 and the first six months of 2003.

      Interest expense. For the three months ended June 30, 2003, our interest expense decreased $0.7 million, or 7.0%, to $10.5 million from $11.2 million for the three months ended June 30, 2002. This decrease is a result of decreased variable interest rates and the reduction of the outstanding balance on our credit facility.

      Net income. For the three months ended June 30, 2003 our net income increased $3.0 million to $5.0 million from $2.0 million for the three months ended June 30, 2002. This increase in net income was a result of our overall increase in operating income.

      Operating revenues. For the six months ended June 30, 2003, our total operating revenue increased $7.5 million, or 7.8%, to $104.2 million from $96.7 million for the comparable period in 2002. The following table sets forth the components of our revenue for the periods indicated:

      For the six months ended June 30, 2003, our service revenue increased $6.6 million, or 9.3%, to $77.8 million from $71.2 million for the six months ended June 30, 2002. This increase was attributable to increased penetration and usage. Our average subscriber base increased 10.8% to 322,000 for the six months ended June 30, 2003 from 290,500 for the six months ended June 30, 2002. Our average monthly service revenue per subscriber decreased 2.4% to $40 for the six months ended June 30, 2003 compared to $41 for the six months ended June 30, 2002, due to increased competition and market pressure.

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      For the six months ended June 30, 2003, our roaming revenue increased $0.1 million, or 0.1%, to $22.9 million from $22.8 million for the six months ended June 30, 2002. This increase was primarily attributable to a 17.9% increase in roaming minutes in our markets due to expanded coverage areas and increased usage, offset by a 15.1% decline in our roaming revenue per minute-of-use.

      For the six months ended June 30, 2003, our equipment and other revenue increased $0.8 million, or 31.5%, to $3.5 million from $2.7 million for the six months ended June 30, 2002. This increase primarily resulted from an increased amount of wireless equipment upgrades during the six months ended June 30, 2003 compared to the same period in 2002.

      Cost of service. For the six months ended June 30, 2003, our total cost of service decreased $2.4 million, or 11.0%, to $20.1 million from $22.5 million for the comparable period in 2002. The following table sets forth the components of our cost of service for the periods indicated:

      For the six months ended June 30, 2003, our network costs, which are the costs incurred from operating our wireless network and providing service to our customers, decreased $0.3 million, or 2.9%, to $11.5 million from $11.8 million for the comparable period in 2002. This decrease primarily resulted from credits received from certain of our network service providers and renegotiated lower local access rates charged to us by third-party providers for use of local access across the network.

      For the six months ended June 30, 2003, roaming costs decreased by $2.1 million, or 20.0%, to $8.6 million from $10.7 million compared to the same period in 2002. This decrease was the result of a 26.6% decline in rates charged by third-party wireless providers resulting from new lower rate agreements, offset by a 9.0% increase in the minutes used by our customers on those providers’ networks.

      Cost of equipment. For the six months ended June 30, 2003, our cost of equipment decreased $1.3 million, or 14.0%, to $7.6 million from $8.9 million for the six months ended June 30, 2002, primarily as a result of a decrease in gross subscriber additions. Gross subscriber additions totaled 29,400 for the six months ended June 30, 2003 compared to gross subscriber additions of 43,900 for the six months ended June 30, 2002.

      Marketing and selling costs. For the six months ended June 30, 2003 and 2002, our marketing and selling costs decreased $1.9 million, or 15.5%, to $10.6 million from $12.5 million for the six months ended June 30, 2002. In addition, as a percentage of total operating revenue, marketing and selling costs decreased to 10.2% for the six months ended June 30, 2003 from 13.0% for the six months ended June 30, 2002. This is a result of efficiencies gained from centralized functions with our parent, Dobson Communications, and a decrease in gross subscriber additions.

      General and administrative costs. For the six months ended June 30, 2003, our general and administrative costs increased $1.7 million, or 12.7%, to $15.2 million from $13.5 million for the six months ended June 30, 2002. This increase was the result of increased infrastructure costs, including 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 average subscriber remained constant at approximately $8 for the six months ended June 30, 2003 and 2002.

      Depreciation and amortization expense. For the six months ended June 30, 2003, our depreciation and amortization expense increased $1.6 million, or 11.9%, to $15.4 million from $13.8 million for the comparable period in 2002. This increase is a result of additional depreciation on fixed assets acquired in 2002 and the first six months of 2003.

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      Interest expense. For the six months ended June 30, 2003, our interest expense decreased $1.5 million, or 6.5%, to $21.0 million from $22.5 million for the six months ended June 30, 2002. This decrease is a result of decreased variable interest rates and the reduction of the outstanding balance on our revolving credit facility.

      Cumulative effect of change in accounting principle. For the six months ended June 30, 2002, we recognized an impairment on our wireless license acquisition costs of approximately $137.8 million, net of tax benefit, as a result of implementing SFAS No. 142 “Goodwill and Other Intangible Assets.”

      Net income (loss). For the six months ended June 30, 2003, our net income was $8.8 million compared to a net loss of $135.9 million for the six months ended June 30, 2002. This increase in net income during the six months ended June 30, 2003, resulted primarily from the recognition of impairments of our intangible assets in 2002 totaling $137.8 million and an increase in operating income during 2003.

Liquidity and Capital Resources

      We have required, and will likely continue to require, substantial capital to further develop, expand and upgrade our wireless systems and those we may acquire. We have financed our operations through cash flows from operating activities, capital contributions from our parent, bank debt and the sale of debt securities.

      At June 30, 2003, we had a working capital deficit of $19.8 million (a ratio of current assets to current liabilities of 0.6:1) and an unrestricted cash balance of $5.7 million, which compares to working capital deficit of $11.8 million (a ratio of current assets to current liabilities of 0.8:1) and an unrestricted cash balance of $29.5 million at December 31, 2002.

      Our net cash provided by operating activities totaled $7.1 million for the six months ended June 30, 2003 compared to $17.1 million for the six months ended June 30, 2002. The decrease is primarily due to the changes in our current assets and liabilities.

      Our net cash used in investing activities totaled $12.5 million for the six months ended June 30, 2003 compared to $14.8 million for the six months ended June 30, 2002. This decrease resulted primarily from the payment of amounts due to affiliates for the six months ended June 30, 2002. Capital expenditures for the six months ended June 30, 2003 were $12.5 million compared to $13.6 million for the six months ended June 30, 2002.

      Net cash used in financing activities was $18.3 million for the six months ended June 30, 2003 compared to $4.2 million for the six months ended June 30, 2002. Financing activity uses for the six months ended June 30, 2003 consisted primarily of repayments of long-term debt totaling $18.3 million. Financing activity uses for the six months ended June 30, 2002, consisted primarily of repayments of long-term debt totaling $11.6 million, offset by proceeds from long-term debt of $7.5 million.

      Our capital expenditures were $12.5 million for the six months ended June 30, 2003. We are expecting approximately $25 million to $30 million for capital expenditures during 2003. The amount and timing of capital expenditures may vary depending on the rate at which we expand and develop our wireless systems and whether we consummate additional acquisitions.

      Through our wholly-owned subsidiary, Sygnet Wireless, Inc., we have credit facilities, for an aggregate of $293.0 million, consisting of a $29.3 million revolving credit facility and $263.7 million of term loan facilities. Interest on the revolving credit facility and the term loan facilities is based on a prime rate or a LIBOR formula. The weighted average interest rate for the six months ended June 30, 2003 was 4.3% and interest rates have ranged between 3.5% and 10.5% since inception of the credit facility. As of June 30, 2003, we had $267.1 million outstanding under our credit facility and we had $25.9 million of availability. Obligations under our facility are secured by a pledge of the capital stock of our subsidiary as well as a lien on substantially all of our assets and the assets of our operating subsidiary. The credit facility requires that we maintain certain financial ratios. The failure to maintain such ratios would constitute an event of default, notwithstanding our ability to meet our debt service obligations. As of June 30, 2003, we were in compliance with the required

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      As of June 30, 2003, we had outstanding $200.0 million principal amount of senior notes that bear interest at an annual rate of 12.25% and mature in 2008. On September 30, 2002, our parent, Dobson Communication, purchased $11.5 million principal amount of our outstanding senior notes for approximately $8.9 million.

      On May 19, 2003, the principal stockholder of Dobson Communications, DCCLP, and certain of its affiliates, entered into a new credit agreement with Bank of America, N.A. This credit agreement, which matures in May 2006, had an aggregate principal amount outstanding of $60 million as of June 30, 2003. To secure their obligations under this credit agreement, DCCLP and these affiliates individually pledged certain assets, which included beneficial ownership of shares of Dobson Communications class A and class B common stock. However, the new agreement eliminates the risk of a change of control of Dobson Communications related to a possible future default on the DCCLP loan as DCCLP has retained a sufficient number of shares of Dobson Communication’s class B common stock that are no longer pledged as collateral for DCCLP’s loan from Bank of America, so that a default under the new credit agreement would not result in a change of control of Dobson Communications or us. As a result, the substantial doubt that existed as of December 31, 2002 and March 31, 2003 regarding our ability to continue operating as a going concern no longer exists. Under the terms of the new agreement with Bank of America, DCCLP transferred 32.5 million shares of Dobson Communications class A common stock to Bank of America.

      Although we cannot provide you any assurance, we believe that, assuming successful implementation of our strategy, including the further development of our wireless systems and significant and sustained growth in our cash flow, borrowings under our bank facility and cash flow from operations will be sufficient to satisfy our capital expenditure, working capital and debt service obligations for the next twelve months. We will need to refinance our bank facility and the senior notes at their maturities, which begin in 2006. Our ability to do so will depend on, among other things, our financial condition at the time, the restrictions in the instruments governing our indebtedness and other factors, including market conditions beyond our control. The actual amount and timing of our future capital requirements may differ materially from our estimates as a result of, among other things, the demand for our services and regulatory, technological and competitive developments. Sources of additional financing may include commercial bank borrowings, vendor financing and the sale of equity or debt securities. We cannot assure you that any such financing will be available on acceptable terms or at all.

Effect of New Accounting Standards

      In July 2001, the FASB issued Statements of Financial Accounting Standards No. 141, “Business Combinations” and No. 142, “Goodwill and Other Intangible Assets.” These standards prohibit the application of the pooling-of-interests method of accounting for business combinations effective June 30, 2001 and require companies to stop the amortizing existing goodwill and intangible assets with indefinite lives effective January 1, 2002. Under the new rules, we are treating our wireless license acquisition costs as indefinite life intangible assets. As a result, effective January 1,2002, we ceased the amortization of wireless license acquisition costs. Instead, we will test our indefinite life intangible assets for impairment at least annually and will only adjust the carrying amount of these intangible assets upon an impairment of the indefinite life intangible assets. Through December 31, 2001, our accounting policy was to evaluate the carrying value of our intangible assets based on our undiscounted cash flows. However, as a result of implementing SFAS No. 142, we are now required to evaluate the carrying value of our indefinite life intangible assets using their fair values. As a result of our implementation of SFAS No. 142 on January 1, 2002, we recorded a charge, net of income tax benefit, of approximately $137.8 million to reflect the write down of our wireless license acquisition costs to their fair value.

      In July 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This statement provides accounting and reporting standards for costs associated with the retirement of long-lived assets. It requires entities to record the fair value of a liability for an asset retirement obligation in the period in

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      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 instruments and to raise additional capital; our ability to manage our rapid growth successfully and to compete effectively in our wireless business against competitors with greater financial, technical, marketing and other resources; changes in end-user requirements and preferences; the development of other technologies and products that may gain more commercial acceptance than those of ours; and adverse regulatory changes. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date hereof including, without limitation, changes in our business strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

      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. We currently are not involved with any derivatives or other financial instruments.

      The fair market value of long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates raise. Since we are not currently involved with any derivative or other financial instrument, we have determined that there is no material market risk exposure to our condensed consolidated financial position, results of operations or cash flows.

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

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PART II. OTHER INFORMATION

      We are not currently aware of any additional or material changes to 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.

      Not applicable

      Not applicable

      Not applicable

      Not applicable

      (a) Exhibits

      The following exhibits are filed as a part of this report:

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(1)	Filed as an exhibit to the Current Report on Form 8-K of Dobson Communications Corporation (333-23769) filed on January 7, 1999, as the exhibit number indicated in brackets and incorporated by reference herein.
(2)	Filed as an exhibit to Dobson/ Sygnet Communications Company’s Registration Statement on Form S-4 (Registration No. 333-71051), as the exhibit number indicated in brackets and incorporated by reference herein.
(3)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as the exhibit number indicated in brackets and incorporated by reference herein.
(4)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.
(5)	Filed herewith

      (b) Reports on Form 8-K

      None

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SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DOBSON/SYGNET COMMUNICATIONS COMPANY

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INDEX TO EXHIBITS

(1)	Filed as an exhibit to the Current Report on Form 8-K of Dobson Communications Corporation (333-23769) filed on January 7, 1999, as the exhibit number indicated in brackets and incorporated by reference herein.
(2)	Filed as an exhibit to Dobson/ Sygnet Communications Company’s Registration Statement on Form S-4 (Registration No. 333-71051), as the exhibit number indicated in brackets and incorporated by reference herein.
(3)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, as the exhibit number indicated in brackets and incorporated by reference herein.
(4)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.
(5)	Filed herewith