DOBSON COMMUNICATIONS CORP - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the Quarterly Period Ended June 30, 2003
or

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. 000-29225

Dobson Communications Corporation

(Exact name of registrant as specified in its charter)


Oklahoma		73-1513309
(State or other jurisdiction of incorporation or organization)		(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)

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 þ No o

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 1, 2003, there were 67,997,352 shares of registrant’s $.001 par value Class A Common Stock outstanding and 22,426,544 shares of the registrant’s $.001 par value Class B Common Stock outstanding.

TABLE OF CONTENTS


DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
EX-31.1 Rule 13a-14(a) Certification by CEO
EX-31.2 Rule 13a-14(a) Certification by CFO
EX-32.1 Section 1350 Certification by CEO
EX-32.2 Section 1350 Certification by CFO

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q


Item
Number		Page

PART I. FINANCIAL INFORMATION
1	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002		2
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and 2002		3
	Condensed Consolidated Statements of Stockholders’ Deficit for the Six Months Ended June 30, 2003		4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002		5
	Notes to Condensed Consolidated Financial Statements		6
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
3	Quantitative and Qualitative Disclosure about Market Risk		30
4	Controls and Procedures		31
PART II. OTHER INFORMATION
1	Legal Proceedings		32
2	Changes in Securities and Use of Proceeds		32
3	Defaults Upon Senior Securities		32
4	Submission of Matters to a Vote of Security Holders		32
5	Other Information		32
6	Exhibits and Reports on Form 8-K		33

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


				June 30,			December 31,
				2003			2002

				(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	256,184,604		$	294,202,659
	Restricted cash and investments				7,144,800			7,098,254
	Accounts receivable				74,627,455			58,632,227
	Inventory				13,721,401			6,193,855
	Prepaid expenses and other				9,622,383			6,044,660

		Total current assets			361,300,643			372,171,655

PROPERTY, PLANT AND EQUIPMENT, net					318,181,858			271,702,926

OTHER ASSETS:
	Receivables-affiliate				4,797,787			784,284
	Restricted assets				3,715,339			7,098,253
	Wireless license acquisition costs				1,128,273,210			1,035,547,289
	Deferred financing costs, net				45,101,591			49,950,466
	Other intangibles, net				12,211,746			18,796,563
	Goodwill				43,329,974			—
	Deposits				2,144,963			1,914,800
	Other non-current assets				24,995,503			25,249,272
	Assets of discontinued operations				—			178,056,420

		Total other assets			1,264,570,113			1,317,397,347

			Total assets	$	1,944,052,614		$	1,961,271,928


LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
	Accounts payable			$	71,195,623		$	52,105,963
	Accrued expenses				20,804,419			19,714,006
	Accrued interest				21,843,554			24,515,509
	Deferred revenue and customer deposits				13,956,509			12,837,967
	Current portion of long-term debt				62,633,437			50,704,238
	Accrued dividends payable				13,128,141			37,251,136
	Current portion of obligations under capital leases				962,600			1,324,267

		Total current liabilities			204,524,283			198,453,086

OTHER LIABILITIES:
	Long-term debt, net of current portion				1,175,410,214			1,222,435,718
	Deferred tax liabilities				130,910,967			51,801,039
	Minority interest				7,430,265			7,891,901
	Other non-current liabilities				387,642			2,610,029
	Liabilities of discontinued operations				—			62,808,416
	Commitments (Note 9)
	Senior exchangeable preferred stock, net				524,900,460			558,343,563
	Series AA Preferred Stock				—			200,000,000
STOCKHOLDERS’ DEFICIT:
	Class A Common Stock, $.001 par value, 175,000,000 shares authorized and 72,558,232 and 39,700,968 issued at June 30, 2003 and December 31, 2002, respectively				72,558			39,701
	Class B Common Stock, $.001 par value, 70,000,000 shares authorized and 22,426,544 and 54,977,481 shares issued June 30, 2003 and December 31, 2002, respectively				22,427			54,978
	Class C Common Stock, $.001 par value, 4,226 shares authorized and zero shares issued at June 30, 2003 and December 31, 2002				—			—
	Class D Common Stock, $.001 par value, 33,000 shares authorized and zero shares issued at June 30, 2003 and December 31, 2002				—			—
	Paid-in capital				892,736,421			674,023,222
	Retained deficit				(966,146,806	)		(989,852,500	)
	Accumulated other comprehensive loss, net of income tax benefit of $662,381 at December 31, 2002				—			(1,080,726	)
	Less 4,638,274 and 4,569,131 common shares held in treasury, at cost at June 30, 2003 and December 31, 2002, respectively				(26,195,817	)		(26,256,499	)

		Total stockholders’ deficit			(99,511,217	)		(343,071,824	)

			Total liabilities and stockholders’ deficit	$	1,944,052,614		$	1,961,271,928

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

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



			Three Months Ended						Six Months Ended
			June 30,						June 30,

			2003			2002			2003			2002


			(Unaudited)						(Unaudited)
OPERATING REVENUE:
	Service revenue		$	93,613,869		$	86,866,947		$	180,918,704		$	166,082,819
	Roaming revenue			54,425,903			51,273,400			99,825,737			95,242,368
	Equipment and other revenue			6,202,450			4,205,400			11,590,558			8,281,849

		Total operating revenue		154,242,222			142,345,747			292,334,999			269,607,036

OPERATING EXPENSES:
	Cost of service (exclusive of items shown separately below)			35,802,938			38,700,930			68,577,607			75,540,719
	Cost of equipment			9,946,860			10,340,794			18,979,020			20,444,441
	Marketing and selling			15,347,216			17,457,372			29,805,151			33,856,007
	General and administrative			17,435,529			17,653,227			35,356,401			35,061,589
	Depreciation and amortization			22,468,291			20,156,443			43,582,555			39,444,885

		Total operating expenses		101,000,834			104,308,766			196,300,734			204,347,641

OPERATING INCOME				53,241,388			38,036,981			96,034,265			65,259,395

OTHER (EXPENSE) INCOME:
	Interest expense			(24,073,826	)		(28,413,844	)		(48,732,374	)		(57,099,207	)
	Other income, net			2,536,951			1,531,017			4,496,447			2,690,583

INCOME BEFORE MINORITY INTERESTS IN INCOME OF SUBSIDIARIES AND INCOME TAXES				31,704,513			11,154,154			51,798,338			10,850,771
MINORITY INTERESTS IN INCOME OF SUBSIDIARIES				(1,785,369	)		(1,507,216	)		(3,404,820	)		(2,922,896	)
LOSS FROM INVESTMENT IN JOINT VENTURE				—			(177,158,196	)		—			(184,380,882	)

INCOME (LOSS) BEFORE INCOME TAXES				29,919,144			(167,511,258	)		48,393,518			(176,453,007	)
	Income tax (expense) benefit			(11,368,155	)		56,374,167			(18,388,416	)		57,027,411

INCOME (LOSS) FROM CONTINUING OPERATIONS				18,550,989			(111,137,091	)		30,005,102			(119,425,596	)
DISCONTINUED OPERATIONS: (Note 4)
	Income from discontinued operations, net of income tax expense of $2,210,266 for the three months ended 2003, $1,773,612 for the three months ended 2002, $4,411,839 for the six months ended 2003 and $6,220,270 for the six months ended 2002			3,606,223			2,893,788			7,198,263			10,148,861
	Loss from discontinued operations from investment in joint venture			—			—			—			(326,955	)
	Gain from disposal of discontinued operations, net of income tax expense of $16,859,455 in 2003 and $59,164,138 in 2002			27,507,533			—			27,507,533			88,314,922
	Gain from sale of discontinued operations from investment in joint venture			—			—			—			6,736,056

INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE:				49,664,745			(108,243,303	)		64,710,898			(14,552,712	)
	Cumulative effect of change in accounting principle, net of income tax benefit of $20,406,000 (Note 11)			—			—			—			(33,294,000	)
	Cumulative effect of change in accounting principle from investment in joint venture			—			—			—			(140,820,000	)

NET INCOME (LOSS)				49,664,745			(108,243,303	)		64,710,898			(188,666,712	)
	Dividends on preferred stock			(20,013,220	)		(23,860,194	)		(40,542,872	)		(46,860,374	)
	Gain on redemption of preferred stock			196,264,172			—			219,878,697			—

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS			$	225,915,697		$	(132,103,497	)	$	244,046,723		$	(235,527,086	)

BASIC NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS PER COMMON SHARE:
	Continuing operations			0.21			(1.22	)		0.33			(1.31	)
	Discontinued operations			0.34			0.03			0.39			1.15
	Change in accounting principle			—			—			—			(1.91	)
	Dividends on and redemption of preferred stock			1.95			(0.26	)		1.99			(0.51	)

BASIC NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS PER COMMON SHARE			$	2.50		$	(1.45	)	$	2.71		$	(2.58	)

BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING				90,254,127			90,806,645			90,183,364			91,222,067

DILUTED NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS PER COMMON SHARE			$	2.43		$	(1.45	)	$	2.64		$	(2.58	)

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING				92,896,931			90,806,645			92,377,978			91,222,067

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

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Six Months Ended June 30, 2003



					Stockholders’ Deficit


					Class A				Class B											Accumulated
					Common Stock				Common Stock											Other						Total
		Comprehensive													Paid-in		Retained			Comprehensive			Treasury			Stockholders’
		Income			Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Stock at Cost			Deficit


		(Unaudited)
DECEMBER 31, 2002			—			39,700,968	$	39,701		54,977,481		$	54,978		$	674,023,222	$	(989,852,500	)	$	(1,080,726	)	$	(26,256,499	)	$	(343,071,824	)
Net income		$	64,710,898			—		—		—			—			—		64,710,898			—			—			64,710,898
	Amounts related to hedged transactions reclassified into earnings, net of tax		1,382,213			—		—		—			—			—		—			1,382,213			—			1,382,213
	Change in fair value of hedge transactions, net of tax		(301,487	)		—		—		—			—			—		—			(301,487	)		—			(301,487	)

Total comprehensive income		$	65,791,624

Increase in subscription receivable						—		—		—			—			46,258		—			—			—			46,258
Preferred stock dividends						—		—		—			—			—		(40,542,872	)		—			—			(40,542,872	)
Issuance of common stock						32,857,264		32,857		(32,550,937	)		(32,551	)		281,141		—			—			—			281,447
Purchase of treasury stock, at cost						—		—		—			—			—		—			—			(421,379	)		(421,379	)
Issuance of treasury stock						—		—		—			—			—		(462,332	)		—			482,061			19,729
Additional paid in capital from redemption of preferred stock						—		—		—			—			218,385,800		—			—			—			218,385,800

JUNE 30, 2003						72,558,232	$	72,558		22,426,544		$	22,427		$	892,736,421	$	(966,146,806	)	$	—		$	(26,195,817	)	$	(99,511,217	)

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

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



				Six Months Ended
				June 30,

				2003			2002


				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Income (loss) from continuing operations			$	30,005,102		$	(119,425,596	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of effects of acquisitions —
		Depreciation and amortization			43,582,555			39,444,885
		Amortization of bond premium and financing costs			4,646,418			5,466,004
		Deferred income taxes			23,056,091			(47,206,469	)
		Cash provided by operating activities of discontinued operations			7,837,484			3,007,582
		Gain on disposition of assets, net			218,702			365,070
		Minority interests in income of subsidiaries			3,404,820			2,922,896
		Loss from investment in joint venture			—			184,380,882
		Accrued dividend income			—			(2,261,747	)
	Changes in current assets and liabilities —
		Accounts receivable			(4,109,369	)		74,179
		Inventory			(7,390,829	)		1,407,721
		Prepaid expenses and other			(3,906,882	)		(1,106,163	)
		Accounts payable			9,794,232			(7,539,072	)
		Accrued expenses			(4,364,764	)		(8,848,123	)
		Deferred revenue and customer deposits			336,338			512,305

			Net cash provided by operating activities		103,109,898			51,194,354

CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures				(50,266,366	)		(37,709,422	)
	(Increase) decrease in receivable-affiliates				(3,730,397	)		115,576
	Proceeds from sale of property, plant, and equipment				12,802			157,722
	Refund of funds held in escrow for contingencies on sold assets				7,094,075			91,205,000
	Cash used in investing activities from discontinued operations				(316,250	)		(5,059,652	)
	Net proceeds from sale of discontinued operations				—			335,619,711
	Other investing activities				(6,681,953	)		(2,377,567	)

			Net cash (used in) provided by investing activities		(53,888,089	)		381,951,368

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from long-term debt				—			336,000,000
	Repayments of long-term debt				(35,182,596	)		(676,460,530	)
	Distributions to partners				(3,866,457	)		(3,151,254	)
	Preferred stock dividends				(10,844,251	)		—
	Redemption of exchangeable preferred stock				(36,592,475	)		—
	Purchase of treasury stock				(421,379	)		(7,470,921	)
	Other financing activities				(332,706	)		(839,844	)

			Net cash used in financing activities		(87,239,864	)		(351,922,549	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS					(38,018,055	)		81,223,173
CASH AND CASH EQUIVALENTS, beginning of period					294,202,659			161,236,136

CASH AND CASH EQUIVALENTS, end of period				$	256,184,604		$	242,459,309

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid for —
		Interest, net of amounts capitalized		$	48,044,767		$	62,030,684
		Income taxes			3,563,775			2,611,861
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
	Stock dividend paid through the issuance of preferred stock			$	24,185,000		$	38,715,000
	Transfer of fixed assets to affiliates				227,453			407,403
	Net property and equipment acquired through exchange				8,424,439			—
	Net wireless acquisition costs disposed through exchange				(50,462,667	)		—

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

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The condensed consolidated balance sheets of Dobson Communications Corporation (“DCC”) and subsidiaries (collectively with DCC, the “Company”) as of June 30, 2003, the condensed consolidated statement of operations for the three and six months ended June 30, 2003 and 2002, the condensed consolidated statement of stockholders’ deficit for the six months ended June 30, 2003 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 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2002.


1.	Organization

The Company, through its predecessors, was organized in 1936 as Dobson Telephone Company and adopted its current organizational structure in 2000. The Company is a provider of rural and suburban wireless telephone services in portions of Alaska, Arizona, Kansas, Maryland, Michigan, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas and West Virginia.

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


2.	Investment in Unconsolidated Joint Venture

The Company owns a 50% interest in a joint venture that owns American Cellular Corporation (“American Cellular”). This investment is accounted for on the equity method. Beginning on June 30, 2002 and continuing through June 30, 2003, American Cellular failed to comply with a financial covenant in its senior credit facility, which requires that American Cellular not exceed a certain total debt leverage ratio. Due to factors and circumstances impacting American Cellular, American Cellular concluded that it was necessary to re-evaluate its carrying value of its goodwill and indefinite life intangible assets in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”. Based on re-evaluations, American Cellular concluded that there was an impairment of its goodwill at June 30, 2002 and December 31, 2002. As a result, American Cellular recognized an impairment loss totaling $377.0 million, at June 30, 2002, and an additional impairment loss of $423.9 million, at December 31, 2002. After recognizing its 50% interest of the impairment at June 30, 2002, the Company’s investment in the joint venture was written down to zero. Therefore, the additional impairment loss of $423.9 million at December 31, 2002, did not impact the Company’s results of operations or financial condition. The Company does not guarantee any of American Cellular’s obligations. Until future cumulative earnings, if any, are earned at American Cellular to restore American Cellular’s equity, the Company will not record its pro rata share of American Cellular’s operations.

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of the significant financial information for ACC Acquisition LLC and its subsidiary, American Cellular, as of June 30, 2003 and December 31, 2002, and for the three and six months periods ended June 30, 2003 and June 30, 2002:


	June 30,			December 31,
	2003			2002


	($ in thousands)
Current assets	$	80,802		$	102,199
Property, plant and equipment, net		184,788			185,935
Intangible assets		907,835			915,845
Other assets		585			5,939
Current liabilities		1,627,186			1,659,503
Preferred stock		35,000			35,000
Other liabilities		42,947			43,690
Members’ deficit		(531,124	)		(528,275	)



	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2003			2002			2003			2002


	($ in thousands)						($ in thousands)
Operating revenue	$	116,937		$	115,810		$	223,426		$	215,693
Operating income		35,633			30,301			62,556			49,126
Impairment of goodwill		—			(377,000	)		—			(377,000	)
Income (loss) from continuing operations		2,103			(381,616	)		(303	)		(394,947	)
Income from discontinued operations and sale of discontinued operations, net		—			—			—			12,818
Cumulative effect of change in accounting principle, net		—			—			—			(281,640	)
Dividends		(1,292	)		(1,148	)		(2,546	)		(2,262	)
Net income (loss) applicable to members		811			(382,764	)		(2,849	)		(666,031	)

American Cellular’s credit facility includes a financial covenant requiring American Cellular not to exceed a certain total debt leverage ratio. As described above, American Cellular was not in compliance with this covenant at June 30, 2002 and has continued to be out of compliance through June 30, 2003. The lenders presently have the right, but not the obligation, to accelerate the repayment of the entire amount outstanding under its credit facility. Acceleration under the credit facility would allow the holders of American Cellular’s senior subordinated notes to declare the principal and interest of the senior subordinated notes immediately due and payable. American Cellular would then be required to either refinance the debt or repay the amounts due. To date, no such acceleration has occurred. On June 30, 2002 and continuing through June 30, 2003, American Cellular has classified all of its long-term debt as current. Unless such non-compliance is resolved, there continues to be substantial doubt about American Cellular’s ability to continue as a going concern, as expressed in the independent auditors report on American Cellular’s 2002 and 2001 financial statements. Also as a result of American Cellular’s non-compliance, beginning in October 2002, all borrowings under its credit facility are only available based on prime rate, which has increased American Cellular’s borrowing rate.

On July 14, 2003, the Company and American Cellular initiated a plan to restructure American’s indebtedness and equity ownership. Pursuant to this plan, the Company and American Cellular commenced simultaneous exchange offers for American Cellular’s existing 9.5% senior subordinated notes due 2009 (the “existing notes”) and solicitation of consents and votes for a pre-packaged bankruptcy plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Pre-Packaged Plan”) in the event the requirements of

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the restructuring plan are not satisfied. In connection with the restructuring plan, holders of the existing notes who tender their notes will receive an aggregate of up to 45.1 million shares of the Company’s class A common stock, 700,000 shares of the Company’s convertible preferred stock with a maximum aggregate liquidation preference of $125 million, convertible into a maximum of 14.3 million shares of the Company’s class A common stock, and up to $50.0 million in cash in exchange for their existing notes. Under the terms of the restructuring plan, if the requisite holders of the existing notes did not agree to the restructuring plan, American Cellular would proceed to the Pre-Packaged Plan if American Cellular had the approval of holders of existing notes representing at least 66.67% of the outstanding aggregate principle amount of the existing notes that actually vote on the Pre-Packaged Plan and the approval of holders representing at least a majority in number of the holders of the existing notes who actually vote on the Pre-Packaged Plan. Pursuant to the Pre-Packaged Plan, holders of American Cellular’s existing notes would receive the same consideration as they would have received in the restructuring plan. Upon consummation of the restructuring plan, American Cellular would become a wholly-owned, indirect subsidiary of the Company.

On August 13, 2003, the Company and American Cellular jointly announced that they have accepted all of the existing notes that were tendered in connection with the proposed restructuring plan. As a condition of the restructuring plan, holders of at least 99.5% of the aggregate principal amount of American Cellular’s outstanding notes were required to accept the exchange offer and tender their notes, unless the Company and American Cellular agreed to a lesser participation. As of August 13, 2003 the Company stated that 97.4% of the outstanding principal amount of American Cellular’s notes had been tendered, thus, the Company and American Cellular determined to waive the 99.5% acceptance requirement, and accept all notes tendered, and to proceed with the consummation of the restructuring plan. Even though American Cellular also received substantially more than the required vote for its prepackaged plan of reorganization, the Company and American Cellular do not intend to pursue the restructuring through the Pre-Packaged Plan of reorganization for American Cellular. The Company expects to close the exchange transaction on August 18, 2003, or as soon thereafter as is practicable.

The Company has agreed to file a re-sale shelf registration statement for the new class A common and preferred stock within 20 days of the closing of the exchange.

Also related to the restructuring, on August 8, 2003, American Cellular and ACC Escrow Corp., a recently formed, wholly-owned, indirect subsidiary of the Company, completed the private offering of $900 million aggregate principal amount of 10% senior notes due 2011. The senior notes were issued at par on August 8, 2003, by ACC Escrow Corp. ACC Escrow was organized to merge into American Cellular as part of the restructuring plan. The net proceeds of the note offering were placed in escrow. Upon consummation of the restructuring plan, including the merger, the net proceeds from the offering will be used to fully repay American Cellular’s existing bank credit facility and to pay expenses of the restructuring. The Company is not a guarantor for these senior notes.

American Cellular expects to enter into a new senior credit facility, to be secured by certain of its assets, with availability up to $30 million. However, American Cellular does not currently have commitments for any such facility.


3.	Market Swap

On June 17, 2003, the Company completed the exchange of its two remaining wireless properties in California for two AT&T Wireless properties in Alaska. As a part of this transaction, AT&T Wireless transferred to the Company all of the Company’s Series AA preferred stock that it previously held. Upon the transfer of the Series AA preferred stock, the Company cancelled this issue.

The cost of the acquired Alaska assets was $126.0 million. As part of the exchange agreements, Dobson and AT&T agreed to make or receive a payment based on relative working capital balances for the affected

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

markets. As of the market swap date, the Company estimates a payment of $10.2 million would be required. The Company has determined a preliminary purchase price allocation and will finalize in future periods when the determination of final tax basis and the fair value of assets acquired and liabilities assumed is completed. The acquired Alaska assets are now consolidated with the Company’s consolidated financial statements. The assets and liabilities acquired on June 17, 2003 for the two Alaska properties are appropriately reflected in our financial statements as follows:


		June 17, 2003

		($ in thousands)
Current assets		$	12,553
Property, plant and equipment, net			33,251
Wireless license acquisition costs, net			92,749
Goodwill			43,330

	Total assets	$	181,883

Current liabilities		$	13,760
Deferred tax liabilities			38,532
Equity			129,591

	Total liabilities and equity	$	181,883

The Company has reclassified its financial statements to reflect the operations of its California properties as discontinued operations, see Note 4 below.


4.	Discontinued Operations

On June 17, 2003, the Company exchanged its California properties, as described above. In addition, the Company sold three wireless properties to Verizon Wireless for a total purchase price of $263.0 million. These properties include California 7 RSA, Ohio 2 RSA and Georgia 1 RSA. On February 28, 2002, the Company completed another transaction with Verizon Wireless in which the Company sold its 75% ownership interest in Arizona 5 RSA for a total purchase price of $85.0 million. In addition, on February 8, 2002, two wholly-owned, indirect subsidiaries of the Company’s 50% owned joint venture, American Cellular, sold Tennessee 4 RSA to Verizon Wireless for a total purchase price of $202.0 million. Proceeds from these transactions were primarily used to pay down bank debt. The Company’s financials have been reclassified to reflect the swap of these properties with AT&T and the sale of these properties to Verizon Wireless as discontinued operations in the condensed consolidated financial statements.

Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the condensed consolidated financial statements have been reclassified for all periods presented to reflect the operations, assets and liabilities of the markets being sold as discontinued operations. The assets and liabilities of such operations have been classified as “Assets of discontinued operations” and “Liabilities of discontinued

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

operations,” respectively, on the December 31, 2002 condensed consolidated balance sheet and consist of the following:


		December 31,
		2002

		($ in thousands)
Current assets		$	5,749
Property, plant and equipment, net			29,023
Wireless license acquisition costs, net			143,212
Other assets			72

	Total assets of discontinued operations	$	178,056

Current liabilities		$	3,472
Minority interest			1,397
Deferred tax liabilities			57,939

	Total liabilities of discontinued operations	$	62,808

The net income from discontinued operations was classified on the condensed consolidated statement of operations as “Income from discontinued operations.” For the six months ended June 30, 2002, these discontinued operations included both the results of operations for the properties sold to Verizon and the California properties included in the swap with AT&T Wireless. As for the three months ended June 30, 2003, the three months ended June 30, 2002 and the six months ended June 30, 2003, only the California properties are included. Summarized results of discontinued operations are as follows:



	2003						2002

	Three Months			Six Months			Three Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,


	($ in thousands)						($ in thousands)
Operating revenue		15,112			31,964			17,535			45,969
Income before income taxes		5,816			11,610			4,667			16,369
Income tax provision		(2,210	)		(4,412	)		(1,773	)		(6,220	)
Income from discontinued operations		3,606			7,198			2,894			10,149

The long-term debt of the Company is at the consolidated level and is not reflected by each individual market. Thus, the Company has allocated a portion of interest expense to the discontinued operations to properly reflect the interest that was incurred to finance the operations for these markets. The interest expense allocated to these operations was $1.0 million for the three months ended June 30, 2003, $2.2 million for the six months ended June 30, 2003, $1.8 million for the three months ended June 30, 2002 and $5.5 million for the six months ended June 30, 2002.

The Company completed the sale of Ohio 2 RSA, California 7 RSA and Georgia 1 RSA on February 8, 2002 and the sale of Arizona 5 RSA on February 28, 2002, and recorded income from discontinued operations totaling $5.1 million, net of tax expense, for the six months ended June 30, 2002, and recorded the related gains on the sale totaling $88.3 million, net of tax expense, for the six months ended June 30, 2002.

The Company completed the exchange of its two remaining California properties with AT&T Wireless on June 17, 2003, and recorded income from discontinued operations of $7.2 million, net of tax expense, for the six months ended June 30, 2003, and $5.0 million, net of tax expense, for the six months ended June 30, 2002. In addition, during the six months ended June 30, 2003, the Company recognized a gain in net income on the exchange, which totaled approximately $27.5 million, net of tax expense. As part of the consideration for this

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

transaction, AT&T Wireless transferred to the Company all of the Company’s Series AA preferred stock, which had a fair value that was substantially lower than the carrying value, thus resulting in a gain. This gain of $196.3 million is reflected in the Company’s income applicable to common stockholders as a gain on redemption of preferred stock.

The net loss from discontinued operations from investment in joint venture represents the discontinued operations from American Cellular, the Company’s 50% owned joint venture. The results are as follows:


	For the Period From
	January 1, 2002
	Through Disposition

	($ in thousands)
Operating revenues	$	2,319
Loss before income taxes		(1,090	)
Income tax benefit (provision)		436
Loss from discontinued operations		(654	)

American Cellular also allocated a portion of interest expense to their discontinued operations to properly reflect the interest that was incurred by American Cellular to finance the operations of its Tennessee 4 RSA market. The interest expense allocated to this market was $1.0 million for the period from January 1, 2002 through February 8, 2002, the date of disposition.

American Cellular completed the sale of Tennessee 4 RSA on February 8, 2002 and recorded operating losses incurred through February 8, 2002, and the related gain on the sale totaling approximately $12.8 million, net of tax expense.


5.	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 and materials overhead. Existing property, plant and equipment purchased through acquisitions is recorded at its fair value at the date of the purchase. Repairs, minor replacements and maintenance are charged to operations as incurred. The provisions for depreciation are provided using the straight-line method based on the estimated useful lives of the various classes of depreciable property. Depreciation expense for the six months ended June 30, 2003 and 2002 totaled $37.0 million and $32.2 million. Listed below are the gross property, plant and equipment amounts and the related accumulated depreciation for the periods described.


	June 30,			December 31,
	2003			2002


	($ in thousands)
Gross property, plant and equipment	$	553,267		$	469,933
Accumulated depreciation		(235,085	)		(198,230	)

Property, plant and equipment, net	$	318,182		$	271,703

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


6.	Long-Term Debt

The Company’s long-term debt consisted of the following:


		June 30,		December 31,
		2003		2002


		($ in thousands)
Credit facilities		$	751,199	$	786,382
Dobson/ Sygnet senior notes			188,500		188,500
DCC 10.875% senior notes, net of discount			298,324		298,238
DCC 11.75% senior notes			20		20

	Total debt		1,238,043		1,273,140
Less — Current maturities			62,633		50,704

	Total long-term debt	$	1,175,410	$	1,222,436

On September 30, 2002, the Company purchased $11.5 million principal amount of senior notes issued by the Company’s subsidiary, Dobson/ Sygnet Communications Company (“Dobson/ Sygnet”) for the purchase price of $8.9 million. This repurchase resulted in a reduction of the Company’s total outstanding debt and a gain from extinguishment of debt of $2.2 million after the write off of related deferred financing costs.


	*Interest Rate Hedges*

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

The Company had entered into a $135.0 million derivative contract on the Dobson Operating Co., L.L.C. (“DOC LLC”) credit facility whereby the interest rate was fixed at 6.9% plus a factor based on DOC LLC’s leverage. The derivative contract expired in April 2003. Additionally, the Company had entered into a $190.0 million derivative contract and a $300.0 million derivative contract on the DOC LLC credit facility which both expired during 2002.

The Company’s accumulated other comprehensive loss, net of income tax benefit, was $1.1 million as of December 31, 2002 and had decreased to zero at June 30, 2003. These contracts were reclassified from other comprehensive income and expensed in the statement of operations during 2002 and 2003.


	*Debt of DCCLP*

On May 19, 2003, the Company’s principal stockholder 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 its affiliates individually pledged certain assets, which included beneficial ownership of shares of the Company’s class A and class B common stock. However, the new agreement eliminates the risk of a change of control of the Company related to possible future default on the DCCLP loan as DCCLP has retained a sufficient number of shares of the Company’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 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 its new agreement with Bank of America, DCCLP transferred 32.5 million shares of the Company’s class A common stock to Bank of America. On July 18, 2003, an affiliate of Bank of America entered into agreements to sell 4.0 million shares of the

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company’s class A common stock, which had been acquired by the Bank as part of the loan restructuring between the Bank and DCCLP in May of 2003. These sales constitute a “Release Event,” as defined in the credit agreement. As a result, Bank of America has released its lien on an additional 1.5 million class B shares owned by DCCLP. Any future sale of class A common shares held by Bank of America will be subject to certain restrictions until May 2006.


7.	Redeemable Preferred Stock

As of June 30, 2003 and December 31, 2002, the Company’s authorized and outstanding Preferred Stock was as follows:


			Number of		Number of										Other
			Shares		Shares										Features,
	Number of		Outstanding at		Outstanding at						Liquidation		Mandatory		Rights,
	Shares		June 30,		December 31,		Par Value				Preference		Redemption		Preferences
Class	Authorized		2003		2002		Per Share		Dividends		Per Share		Date		and Powers

Senior Exchangeable		693,713		354,098		374,941	$	1.00		12.25% Cumulative	$	1,000		Jan. 15, 2008		Non-voting
Senior Exchangeable		431,272		183,601		198,780	$	1.00		13% Cumulative	$	1,000		May 1, 2009		Non-voting
Series AA		—		—		200,000	$	1.00		5.96% Cumulative	$	1,000		Feb. 8, 2011		Non-voting
Class E		40,000		—		—	$	1.00		15% Cumulative	$	1,131.92		Dec. 23, 2010		Non-voting
Other		4,835,015		—		—	$	1.00		—		—		—		—

		6,000,000		537,699		773,721

During the six months ended June 30, 2003, the Company repurchased a total of $32.7 million carrying value of its 12.25% senior exchangeable preferred stock and $27.5 million carrying value of its 13% senior exchangeable preferred stock. The preferred stock repurchase totaled 60,207 shares for $36.6 million, all of which were canceled by March 31, 2003. This repurchase resulted in an excess of carrying value over repurchase price of preferred stock totaling $23.6 million. The excess of carrying value over repurchase price has been included in net income applicable to common stockholders.

The Company recorded preferred stock dividends of $40.5 million for the six months ended June 30, 2003 consisting primarily of $10.8 million of cash dividends on its 12.25% senior exchangeable preferred stock and $12.0 million through the issuance of additional shares on its 12.25% senior exchangeable preferred stock, $12.2 million of dividends on its 13% senior exchangeable preferred stock through the issuance of additional shares and $5.5 million of accrued dividends on its Series AA preferred stock.

Beginning after January 15, 2003, the Company was required to pay dividends in cash on its 12.25% senior exchangeable preferred stock.

On June 17, 2003 the Company completed an exchange offer with AT&T Wireless that, among other things, resulted in AT&T Wireless transferring to the Company all of its outstanding shares of Series AA preferred stock. Upon receipt of the Series AA preferred stock the Company canceled that issue, including the related accrued dividends. See Note 3 and 4 for further details of this exchange.


8.	Stock-Based Compensation

The Company accounts for its stock option plans under APB Opinion 25, under which no compensation cost is recognized when options are granted at the market value. The following schedule shows the Company’s net income (loss) and net income (loss) per share for the three and six months ended June 30, 2003 and June 30, 2002, had compensation expense been determined consistent with the SFAS No. 123, “Accounting

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for Stock-Based Compensation”. The pro forma information presented below is based on several assumptions and should not be viewed as indicative of the Company’s future results.


			Three Months			Three Months			Six Months			Six Months
			Ended			Ended			Ended			Ended
			June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002


			($ in thousands, except for						($ in thousands, except for
			per share amounts)						per share amounts)
Net income (loss) applicable to common stockholders:
	As reported		$	225,916		$	(132,103	)	$	244,047		$	(235,527	)
		Deduct: Total stock based employee compensation expense determined under fair value based method for all awards		(1,782	)		(1,361	)		(3,564	)		(2,723	)

	Pro forma		$	224,134		$	(133,464	)	$	240,483		$	(238,250	)

Basic net income (loss) applicable to common stockholders per common share:
	As reported		$	2.50		$	(1.45	)	$	2.71		$	(2.58	)
	Pro forma		$	2.48		$	(1.47	)	$	2.67		$	(2.61	)
Diluted net income (loss) applicable to common stockholders per common share:
	As reported		$	2.43		$	(1.45	)	$	2.64		$	(2.58	)
	Pro forma		$	2.41		$	(1.47	)	$	2.60		$	(2.61	)

Subsequent to June 30, 2003, the Company’s Board of Directors adopted and approved a plan whereby options granted under the 2000 Plan could, at the election of the option holder, be exchanged for a specified number of new options to be granted no sooner than January 30, 2004. The period to make the election to exchange these options ended on July 29, 2003. Any new options to be granted would be subject to the same vesting schedule as the surrendered options.

As of July 29, 2003, all eligible option holders had elected to surrender their old options. Options totaling 2,515,000 shares were surrendered by a total of 65 option holders.


9.	Commitments

The Company entered into an equipment supply agreement in which the Company agreed to purchase approximately $100.5 million of cell site and switching equipment between November 16, 2001 and July 15, 2005, to update the wireless systems for the newly acquired and existing MSAs and RSAs. Of the commitment, approximately $20.6 million remained at June 30, 2003. The Company expects to fulfill its purchase commitments under this agreement prior to the completion dates.


10.	Contingencies

The Company is party to various 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.


11.	Changes in Accounting Policies and Procedures

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

DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 its 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 its wireless license acquisition costs and now tests for impairment of its wireless license acquisition costs at least annually and only adjusts the carrying amount of these intangible assets upon an impairment of the wireless license acquisition costs. The Company also determines on an annual basis whether facts and circumstances continue to support an indefinite useful life.

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, the Company 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 its 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, net of income tax benefit, of $33.3 million to reflect the write-down of its wireless license acquisition costs to their fair value and a charge of $140.8 million to reflect its equity in the write-down of the wireless license acquisition costs of its 50% owned joint venture, American Cellular to their fair values. In addition, at June 30, 2002 and continuing through June 30, 2003, American Cellular, failed to comply with the total debt leverage ratio required by its senior credit facility. Due to factors and circumstances impacting American Cellular, American Cellular concluded that it was necessary to re-evaluate the carrying value of its goodwill and its indefinite life intangible assets in accordance with SFAS No. 142. Based on these evaluations at June 30, 2002 and December 31, 2002, American Cellular concluded that there were impairments of its goodwill. Therefore, American Cellular recorded an impairment loss totaling $377.0 million at June 30, 2002, and 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. However, after recognizing the Company’s 50% interest in American’s impairment at June 30, 2002, the Company’s investment in the joint venture was written down to zero. Therefore, the additional impairment loss at December 31, 2002, did not impact the Company’s results of operations or financial condition.


12.	Reclassifications

Certain items have been reclassified in the 2002 consolidated financial statements to conform to the current presentation.


Item 2.	*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 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 are one of the largest providers of rural and suburban wireless communications systems in the United States. We began providing wireless telephone services in 1990 in Oklahoma and the Texas Panhandle. We have rapidly expanded our wireless operations with an acquisition strategy targeting underdeveloped rural and suburban areas, which have a significant number of potential customers with substantial needs for wireless communications. At June 30, 2003, our wireless systems covered a population of approximately 6.1 million and we had approximately 867,600 subscribers, with an aggregate market penetration of approximately 14.2%. We serve markets in portions of Alaska, Arizona, Kansas, Maryland, Michigan, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas and West Virginia.

AT&T Wireless and we own American Cellular, through our equally-owned joint venture. As of June 30, 2003, American Cellular’s systems covered a total population of 5.0 million and had approximately 697,500 subscribers, giving American Cellular an aggregate market penetration of 14.0%. We manage American Cellular, whose markets have demographic characteristics similar to ours in portions of Illinois, Kansas, Kentucky, Michigan, Minnesota, New York, Ohio, Oklahoma, Pennsylvania, West Virginia and Wisconsin.

We accounted for our interest in the American Cellular joint venture using the equity method of accounting. As a result, we have reflected our 50% share of the American Cellular joint venture’s equity in a single line item entitled “Investment in joint venture” in our balance sheet and we have reflected our 50% share of the American Cellular joint venture’s net income or losses in a single line item entitled “Loss from investment in joint venture” in our statement of operations. At June 30, 2002 and continuing through June 30, 2003, American Cellular was not in compliance with its total debt leverage ratio. Due to factors and circumstances impacting American Cellular, American Cellular concluded that it was necessary to re-evaluate the carrying value of its goodwill and indefinite life intangible assets in accordance with Statements of Financial Accounting Standards, or SFAS, No. 142. Based on re-evaluations American Cellular concluded that there were impairments of its goodwill at June 30, 2002 and December 31, 2002. As a result, American Cellular recognized an impairment loss totaling $377.0 million, at June 30, 2002, and an additional impairment loss of $423.9 million at December 31, 2002. After recognizing our 50% ownership of the impairment at June 30, 2002, our investment in the American Cellular joint venture was written down to zero. Therefore, the additional impairment loss of $423.9 million at December 31, 2002, did not impact our results of operations or financial condition. We do not guarantee any of American Cellular’s obligations. Until future cumulative earnings, if any, are earned at American Cellular to restore American Cellular’s equity, we will not record our pro rata share of American Cellular’s results.

On July 14, 2003, we and American Cellular initiated a plan to restructure American Cellular’s indebtedness and equity ownership. Pursuant to this plan, we and American Cellular commenced simultaneous exchange offers for American Cellular’s existing 9.5% senior subordinated notes due 2009 (the “existing notes”) and solicitation of consents and votes for a pre-packaged bankruptcy plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Pre-Packaged Plan”) in the event the requirements of the restructuring plan are not satisfied. In connection with the restructuring plan, holders of the existing notes who tender their notes will receive an aggregate of up to 45.1 million shares of our class A common stock, 700,000 shares of our convertible preferred stock with a maximum aggregate liquidation preference of $125 million, convertible into a maximum of 14.3 million shares of our class A common stock, and up to $50.0 million in cash in exchange for their existing notes. Under the terms of the restructuring plan, if the requisite holders of the existing notes did not agree to the restructuring plan, American Cellular would proceed to the Pre-Packaged Plan if American Cellular had the approval of holders of existing notes representing at least 66.67% of the outstanding aggregate principle amount of the existing notes that actually vote on the Pre-Packaged

Plan and the approval of holders representing at least a majority in number of the holders of the existing notes who actually vote on the Pre-Packaged Plan. Pursuant to the Pre-Packaged Plan, holders of American Cellular’s existing notes would receive the same consideration as they would have received in the restructuring plan. Upon consummation of the restructuring plan, American Cellular would become our wholly-owned, indirect subsidiary.

On August 13, 2003, we and American Cellular jointly announced that we have accepted all of the existing notes that were tendered in connection with the proposed restructuring plan. As a condition of the restructuring plan, holders of at least 99.5% of the aggregate principal amount of American Cellular’s outstanding notes were required to accept the exchange offer and tender their notes, unless we and American Cellular agreed to a lesser participation. As of August 13, 2003 we stated that 97.4% of the outstanding principal amount of American Cellular’s notes had been tendered, thus, we and American Cellular determined to waive the 99.5% acceptance requirements, and accept all notes tendered, and to proceed with the consummation of the restructuring plan. Even though American Cellular also received substantially more than the required vote for its prepackaged plan of reorganization, we and American Cellular do not intend to pursue the restructuring through the Pre-Packaged Plan of reorganization for American Cellular. We expect to close the exchange transaction on August 18, 2003, or as soon thereafter as is practicable.

We have agreed to file a re-sale shelf registration statement for the new class A common and preferred stock within 20 days of the closing of the exchange.

Also related to the restructuring, on August 8, 2003, American Cellular and ACC Escrow Corp., a recently formed, wholly-owned, indirect subsidiary of us, completed the private offering of $900 million aggregate principal amount of 10% senior notes due 2011. The senior notes were issued at par on August 8, 2003, by ACC Escrow Corp. ACC Escrow was organized to merge into American Cellular as part of the restructuring plan. The net proceeds of the note offering were placed in escrow. Upon consummation of the restructuring plan, including the merger, the net proceeds from the offering will be used to fully repay American Cellular’s existing bank credit facility and to pay expenses of the restructuring. We are not a guarantor for these senior notes.

Discontinued Operations

On June 17, 2003, we completed the exchange of our two remaining wireless properties in California for two AT&T Wireless properties in Alaska. Also, as a part of this transaction, AT&T Wireless transferred to us all of our Series AA preferred stock that it previously held. Upon the transfer of the Series AA preferred stock, we cancelled this issue and AT&T Wireless now owns less than 5.0% of our fully diluted class A common stock. We have reclassified our financial statements to reflect the operations of our California properties as discontinued operations. In addition, as a result of the completion of this transaction on June 17, 2003, the operating results from June 17, 2003 through June 30, 2003 and the assets and liabilities as of June 30, 2003 for the two Alaska properties are appropriately reflected in our financial statements.

On February 8, 2002, we completed the sale of three of our wireless properties to Verizon Wireless for a total purchase price of $263.0 million. These properties include California 7 RSA, Ohio 2 RSA and Georgia 1 RSA, which cover a total population of approximately 659,000. On February 28, 2002, we completed an additional sale to Verizon Wireless in which we sold our 75% ownership interest in Arizona 5 RSA for a total purchase price of $85.0 million. Arizona 5 RSA covers a total population of approximately 199,200. In addition, on February 8, 2002, two wholly-owned, indirect subsidiaries of our 50% owned joint venture, American Cellular, sold to Verizon Wireless Tennessee 4 RSA for a total purchase price of $202.0 million, which covers a total population of approximately 290,800. As a result of these sales, the results of operations, assets and liabilities of these markets during the periods presented are included as discontinued operations in our condensed consolidated financial statements. We used the proceeds from the sale of these properties primarily to pay down bank debt under the respective credit facilities.

Subscribers

Our subscriber base contains three types of subscribers; post-paid, reseller and pre-paid. At June 30, 2003 post-paid subscribers accounted for the largest portion of our subscriber base, at 93.4%. 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 June 30, 2003 the reseller base accounted for 4.0% of our total subscriber base. Our pre-paid subscribers, which at June 30, 2003 accounted for 2.6% 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.

Revenue

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

We derive service revenue by providing wireless services to our subscribers. The industry has experienced declining average revenue per minute as competition among wireless service providers has led to reductions in rates for airtime. The 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, $0.22 per minute for the three months ended June 30, 2002, $0.19 per minute for the six months ended June 30, 2003, and $0.23 per minute for the six months ended June 30, 2002. These declines have been generally offset by significant increases in average minutes-of-use per subscriber. The average minute-of-use per subscriber increased 14.1% and 16.1% for the three and six months ended June 30, 2003 compared to 2002. We believe that the industry trend toward increasing minutes-of-use per subscriber will continue to offset declining revenues per minute-of-use due to the continued popularity of 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 35.3% of our operating revenue for the three months ended June 30, 2003, 36.0% for the three months ended June 30, 2002, 34.1% for the six months ended June 30, 2003 and 35.3% 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 operations, billing, customer service and collections in servicing roaming customers as compared to our home subscribers. However, even though roaming revenue yields have offered higher margins than revenue from our subscribers, the yields are declining and are becoming more comparable to yields from our subscribers due to increased market pressures and competition between wireless providers. Our roaming yield (roaming service revenues, which includes airtime, toll charges and surcharges, divided by roaming minutes of use) was $0.22 per minute for the three months ended June 30, 2003, $0.25 per minute for the three months ended June 30, 2002, $0.22 per minute for the six months ended June 30, 2003, and $0.26 per minute for the six months ended June 30, 2002. We believe that the trend of increasing roaming minutes will continue to at least partially offset declining roaming yields. Roaming minutes increased 19.8% and 23.5% for the three and six months ended June 30, 2003 compared to 2002. Roaming yields are decreasing as a result of new contracts and scheduled rate reductions 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 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. We pay commissions to sales personnel and independent sales agents for new business generated.

Our general and administrative costs include all infrastructure costs, including costs for customer support, billing, collections, and corporate administration. We provide management and certain other services to our 50% owned subsidiary, American Cellular, in accordance with a management agreement. Therefore, our corporate and shared call center costs incurred by American Cellular and us are shared and allocated primarily based on our estimated subscribers and the 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.

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 revenues and expenses we recognize for and during the reporting period.

Our general and administrative expenses and certain other operating expenses include all infrastructure costs, including costs for customer support, billing, collections and corporate administration. We provide management and certain other services to all of our subsidiaries, including our 50% owned subsidiary, American Cellular, under the terms of a management agreement. As a result, we share our corporate and shared call center costs with our subsidiaries allocated primarily on the estimated subscribers and populations in our respective licensed areas. If there were a change in the method used to allocate shared costs among us and our subsidiaries, 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 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 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 $33.3 million to reflect the write-down of our wireless license acquisition costs to their fair value and a charge of $140.8 million to reflect our 50% share in the write down to their fair value of the wireless license acquisition costs of our 50%-owned subsidiary, American Cellular.

Results of Operations

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


	*Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002*

Operating revenue. For the three months ended June 30, 2003, our total operating revenue increased $11.9 million, or 8.4%, to $154.2 million from $142.3 million for the comparable period in 2002. The following table sets forth the components of our operating revenue for the periods indicated:



		Three Months Ended June 30,


		2003				2002

		Amount		Percentage		Amount		Percentage


		($ in thousands)
Service revenue		$	93,614		60.7%	$	86,867		61.0%
Roaming revenue			54,426		35.3%		51,274		36.0%
Equipment and other revenue			6,202		4.0%		4,205		3.0%

	Total	$	154,242		100.0%	$	142,346		100.0%

For the three months ended June 30, 2003, our service revenue increased $6.7 million, or 7.8%, to $93.6 million from $86.9 million for the three months ended June 30, 2002. This increase was primarily attributable to our increased subscriber base. Our average subscriber base increased 11.5% to 708,400 for the

three months ended June 30, 2003 from 635,600 for the three months ended June 30, 2002. Our average monthly service revenue per subscriber decreased to $43 for the three months ended June 30, 2003 compared to $45 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 increased $3.1 million, or 6.1%, to $54.4 million from $51.3 million for the three months ended June 30, 2002. This increase was attributable to a 19.8% increase in roaming minutes in our existing markets due to expanded coverage areas and increased usage, offset by a 12.4% decline in our roaming revenue per minute-of-use.

For the three months ended June 30, 2003, our equipment and other revenue increased $2.0 million, or 47.5%, to $6.2 million from $4.2 million for the three months ended June 30, 2002 primarily due to increases in amounts charged to our affiliates for the increased use of shared assets.

Cost of service. For the three months ended June 30, 2003, our total cost of service decreased $2.9 million, or 7.5%, to $35.8 million from $38.7 million for the comparable period in 2002. The following table sets forth the components of our cost of service for the periods indicated:



	Three Months Ended June 30,


	2003				2002

	Amount		Percentage		Amount		Percentage


	($ in thousands)
Network costs	$	20,848		58.2%	$	21,133		54.6%
Roaming costs		14,955		41.8%		17,568		45.4%

Total cost of service	$	35,803		100.0%	$	38,701		100.0%

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 $0.3 million, or 1.3%, to $20.8 million from $21.1 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 $2.6 million, or 14.9%, to $15.0 million from $17.6 million compared to the same period in 2002. This decrease was the result of a 21.6% decline in rates charged by those providers resulting from new lower rate agreements, offset by a 2.4% increase in the minutes used by our customers on third-party wireless providers’ networks.

Cost of equipment. For the three months ended June 30, 2003, our cost of equipment decreased $0.4 million, or 3.8%, to $9.9 million during 2003 from $10.3 million in 2002 as a result of a decrease in gross subscriber additions. Gross subscriber additions were 40,100 during the three months ended June 30, 2003 compared to 56,700 gross subscriber additions during 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 $2.2 million, or 12.1%, to $15.3 million from $17.5 million for the three months ended June 30, 2002. In addition, as a percentage of total operating revenue, marketing and selling costs decreased to 10.0% for the three months ended June 30, 2003 from 12.3% for the three months ended June 30, 2002, as a result of a decrease in gross subscriber additions.

General and administrative costs. For the three months ended June 30, 2003, our general and administrative costs decreased $0.3 million, or 1.2%, to $17.4 million from $17.7 million for the three months ended June 30, 2002. In addition, our average monthly general and administrative costs per average subscriber decreased 13.2% to approximately $8 for 2003 compared to approximately $9 for 2002. This decrease in general and administrative costs per subscriber was primarily from reductions in bad debt expense as a result of improved collections and efficiencies gained from further integration of acquired companies and increased economies of scale.

Depreciation and amortization expense. For the three months ended June 30, 2003, our depreciation and amortization expense increased $2.3 million, or 11.5%, to $22.5 million from $20.2 million for 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 $4.3 million, or 15.3%, to $24.1 million from $28.4 million for the three months ended June 30, 2002. The decrease resulted primarily from the reduction of our outstanding balance on our credit facility and decreased variable interest rates as a result of lower interest rates and the expiration of our hedges.

Other income, net. For the year ended June 30, 2003, our other income increased by $1.0 million, or 65.7%, to $2.5 million from $1.5 million for the year ended June 30, 2002 due to an increase in interest income.

Minority interests in income of subsidiaries. For the three months ended June 30, 2003, our minority interests in income of subsidiaries increased $0.3 million, or 18.5%, to $1.8 million from $1.5 million in 2002. This increase was attributable to the increased income earned from our subsidiaries in established markets in which we do not own a 100% interest.

Loss from investment in joint venture. For the three months ended June 30, 2002 we incurred a loss, net of income tax benefits before discontinued operations and cumulative effect of change in accounting principle, from our American Cellular joint venture totaling $177.2 million. This loss represents our proportionate loss in American Cellular, limited to our investment in American Cellular.

Discontinued operations. For the three months ended June 30, 2003, we had income from discontinued operations of $3.6 million as well as a gain from the sale of discontinued operations of $27.5 million, net of tax expense, compared to income from discontinued operations of $2.9 million in 2002. This income represents the income from operations for the two California properties that were included in the swap with AT&T Wireless.

Net Income (loss). For the three months ended June 30, 2003, our net income was $49.7 million. Our net income increased $157.9 million, from a net loss of $108.2 million for the three months ended June 30, 2002. The increase in our net income was primarily attributable to our loss recognized in 2002 from our investment in joint venture.

Dividends on preferred stock. For the three months ended June 30, 2003, our dividends on preferred stock decreased $3.9 million, or 16.1%, to $20.0 million from $23.9 million for the three months ended June 30, 2002. The decrease in dividends issued during the three months ended June 30, 2003, is a result of reductions in the number of shares of our preferred stock outstanding due to redemptions of our preferred stock in 2002 and 2003.


	*Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002*

Operating revenue. For the six months ended June 30, 2003, our total operating revenue increased $22.7 million, or 8.4%, to $292.3 million from $269.6 million for the comparable period in 2002. The following table sets forth the components of our operating revenue for the periods indicated:



		Six Months Ended June 30,


		2003				2002

		Amount		Percentage		Amount		Percentage


		($ in thousands)
Service revenue		$	180,919		61.9%	$	166,083		61.6%
Roaming revenue			99,826		34.1%		95,242		35.3%
Equipment and other revenue			11,590		4.0%		8,282		3.1%

	Total	$	292,335		100.0%	$	269,607		100.0%

For the six months ended June 30, 2003, our service revenue increased $14.8 million, or 8.9%, to $180.9 million from $166.1 million for the six months ended June 30, 2002. This increase was primarily

attributable to our increased subscriber base. Our average subscriber base increased 8.9% to 705,100 for the six months ended June 30, 2003 from 647,400 for the six months ended June 30, 2002. Our average monthly service revenue per subscriber decrease to $42 at June 30, 2003 compared to $43 for the six months ended June 30, 2002 due to increased competition and market pressure.

For the six months ended June 30, 2003, our roaming revenue increased $4.6 million, or 4.8%, to $99.8 million from $95.2 million for the six months ended June 30, 2002. This increase was attributable to a 23.5% increase in roaming minutes in our existing markets due to expanded coverage areas and increased usage, offset by a 15.7% decline in our roaming revenue per minute-of-use.

For the six months ended June 30, 2003, our equipment and other revenue increased $3.3 million, or 40.0%, to $11.6 million from $8.3 million for the six months ended June 30, 2002 primarily due to increases in amounts charged to our affiliates for the increased use of shared assets.

Cost of service. For the six months ended June 30, 2003, our total cost of service decreased $6.9 million, or 9.2%, to $68.6 million from $75.5 million for the comparable period in 2002. The following table sets forth the components of our cost of service for the periods indicated:



	Six Months Ended June 30,


	2003				2002

	Amount		Percentage		Amount		Percentage


	($ in thousands)
Network costs	$	41,214		60.1%	$	40,897		54.1%
Roaming costs		27,364		39.9%		34,644		45.9%

Total cost of service	$	68,578		100.0%	$	75,541		100.0%

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, increased slightly by $0.3 million to $41.2 million from $40.9 million for the comparable period in 2002. This increase was primarily the result of an increase in wholesale toll charges, due to increases in customer usage, and an increase in rent incurred from our cell site leases as a result of the continued build-out of our network, all offset by decreases resulting 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 $7.2 million, or 21.0%, to $27.4 million from $34.6 million compared to the same period in 2002. This decrease was the result of a 27.9% decline in rates charged by those providers resulting from new lower rate agreements, offset by a 6.2% increase in the minutes used by our customers on third-party wireless providers’ networks.

Cost of equipment. For the six months ended June 30, 2003, our cost of equipment decreased $1.4 million, or 7.2%, to $19.0 million during 2003 from $20.4 million in 2002 as a result of a decrease in gross subscriber additions. Gross subscriber additions were 78,800 during the six months ended June 30, 2003 compared to 110,100 gross subscriber additions during the six months ended June 30, 2002.

Marketing and selling costs. For the six months ended June 30, 2003, our marketing and selling costs decreased $4.1 million, or 12.0%, to $29.8 million from $33.9 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 12.6% for the six months ended June 30, 2002, as a result of a decrease in gross subscriber additions.

General and administrative costs. For the six months ended June 30, 2003, our general and administrative costs increased $0.3 million, or 0.1%, to $35.4 million from $35.1 million for the six months ended June 30, 2002. This increase was primarily the result of increased infrastructure costs, including customer service, billing, collections and administrative costs as a result of the overall growth of our business, offset by reductions in bad debt expense as a result of improved collections and efficiencies gained from further integration of acquired companies and increased economies of scale. Our average monthly general and

administrative costs per average subscriber decreased 10.7% to approximately $8 for 2003 compared to approximately $9 for 2002.

Depreciation and amortization expense. For the six months ended June 30, 2003, our depreciation and amortization expense increased $4.2 million, or 10.5%, to $43.6 million from $39.4 million for 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 six months ended June 30, 2003, our interest expense decreased $8.4 million, or 14.7%, to $48.7 million from $57.1 million for the six months ended June 30, 2002. The decrease resulted primarily from the reduction of our outstanding balance on our credit facility and decreased variable interest rates as a result of lower interest rates and the expiration of our hedges.

Other income, net. For the year ended June 30, 2003, our other income increased by $1.8 million, or 67.1%, to $4.5 million from $2.7 million for the year ended June 30, 2002 due to an increase in interest income.

Minority interests in income of subsidiaries. For the six months ended June 30, 2003, our minority interests in income of subsidiaries increased $0.5 million, or 16.5% to $3.4 million from $2.9 million in 2002. This increase was attributable to the increased income earned from our subsidiaries in established markets in which we do not own a 100% interest.

Loss from investment in joint venture. For the six months ended June 30, 2002 we incurred a loss, net of income tax benefits before discontinued operations and cumulative effect of change in accounting principle, from our American Cellular joint venture totaling $184.4 million. This loss represents our proportionate loss in American Cellular, limited to our investment in American Cellular.

Discontinued operations. For the six months ended June 30, 2003, we had income from discontinued operations (including the gain on the sale) of $34.7 million compared to income and gain on sale of $98.5 million in 2002. Discontinued operations during 2003 relate to the market swap with AT&T Wireless, while discontinued operations in 2002 relate to both the market swap with AT&T Wireless and the markets sold to Verizon Wireless.

Cumulative effect of change in accounting principle. For the six months ended June 30, 2002, we recognized a total impairment on our wireless license acquisition costs of approximately $174.1 million, net of tax benefit, as a result of implementing SFAS No. 142, “Goodwill and Other Intangible Assets.” Of this total, $33.3 million reflects our impairment and $140.8 million reflects the impairment from our 50% interest in American Cellular

Net Income (loss). For the six months ended June 30, 2003, our net income was $64.7 million. Our net income increased $253.4 million, from a net loss of $188.7 million for the six months ended June 30, 2002. The increase in our net income was primarily attributable to our loss recognized in 2002 from the cumulative effect of change in accounting principle and on our loss from investment in joint venture, offset by the gain from the sale of discontinued operations.

Dividends on preferred stock. For the six months ended June 30, 2003, our dividends on preferred stock decreased $6.4 million, or 13.5%, to $40.5 million from $46.9 million for the six months ended June 30, 2002. The decrease in dividends issued during the six months ended June 30, 2003, is a result of reductions in the number of shares of our preferred stock outstanding due to redemptions of our preferred stock in 2002 and 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, bank debt and the sale of debt and equity securities.


	*Net Cash Flow*

At June 30, 2003, we had working capital of $156.8 million, a ratio of current assets to current liabilities of 1.8:1 and an unrestricted cash balance of $256.2 million, which compares to working capital of $173.7 million, a ratio of current assets to current liabilities of 1.9:1 and an unrestricted cash balance of $294.2 million at December 31, 2002.

Our net cash provided by operating activities totaled $103.1 million for the six months ended June 30, 2003 compared to $51.2 million for the six months ended June 30, 2002. The increase was primarily due to an increase in our income from continuing operations and changes in our current assets and liabilities.

Our net cash used in investing activities totaled $53.9 million for the six months ended June 30, 2003, compared to cash provided by investing activities of $382.0 million for the six months ended June 30, 2002. Cash used in investing activities for the six months ended June 30, 2003 was primarily attributable to capital expenditures of $50.3 million. Cash provided by investing activities in the six months ended June 30, 2002 includes the net proceeds from the sale of certain markets to Verizon Wireless for a total of approximately $349.7 million, less approximately $14.1 million reserved in escrow.

Net cash used in financing activities was $87.2 million for the six months ended June 30, 2003 compared to $351.9 million for the six months ended June 30, 2002. Financing activity sources for the six months ended June 30, 2003 consisted primarily of repayments of long-term debt totaling $35.2 million, the redemption of $36.6 million of exchangeable preferred stock and cash dividends on our 12.25% senior exchangeable preferred stock of $10.8 million. For the six months ended June 30, 2002, net cash used in financing activities consisted of repayments of long-term debt totaling $676.5 million, offset by proceeds of long-term debt totaling $336.0 million.


	*Capital Resources*


	Dobson Operating Co., L.L.C. Credit Facility

On January 14, 2000, we obtained an $800.0 million credit facility and increased it by $125.0 million to $925.0 million on May 1, 2000. This credit facility is structured as a loan to our subsidiary, Dobson Operating Co. LLC. (“DOC LLC”), the successor by merger to Dobson Cellular Operating Company and Dobson Operating Company, with guarantees from certain of its subsidiaries and us.

At June 30, 2003, this credit facility included a $300.0 million revolving credit facility and $279.5 million remaining of term loan facilities consisting of a Term A Facility of $130.1 million, a Term B Facility of $80.7 million and an additional Term B Facility of $68.7 million. These loans begin to mature in 2007. As of June 30, 2003, we had $484.1 million outstanding under this credit facility and we had $95.5 million of availability.

Advances bear interest, at our option, on a prime rate or LIBOR formula. The weighted average interest rate was 3.4% for the six months ended June 30, 2003. Our obligations under the credit facility are secured by:

• a pledge of our ownership interest in DOC LLC;

• stock and partnership interests of certain of DOC LLC’s subsidiaries; and

• liens on substantially all of the assets of DOC LLC and its restricted subsidiaries, including FCC licenses, but only to the extent such licenses can be pledged under applicable law.

We are required to amortize the Term A Facility with quarterly principal payments of $5.0 million, which began on June 30, 2001, increasing over the term of the loan to quarterly principal payments of $11.3 million. We are required to amortize the Term B Facility with quarterly principal payments of $375,000 from March 31, 2000 increasing over the term of the loan to quarterly principal payments of $19.4 million. The company began amortizing the additional $125.0 million portion of the Term B Facility with quarterly principal payments of $312,500 on June 30, 2000, increasing over the term of the loan to quarterly principal payments of $16.5 million. Under certain circumstances, we are required to make prepayments of proceeds received from significant asset sales, new borrowings and sales of equity and a portion of excess cash flow.

When we completed the sale of four licenses to Verizon Wireless for a total purchase price of $348.0 million during February 2002, we permanently prepaid approximately $293.9 million towards this credit facility. In addition, we have the right to prepay the credit facility in whole or in part at any time.

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

• a ratio of senior indebtedness to operating cash flow of initially not more than 6.00 to 1 at June 30, 2003, decreasing over time to 5.00 to 1;

• a ratio of operating cash flow to debt service requirements of not less than 1.50 to 1;

• a ratio of operating cash flow to interest expense of not less than 2.25 to 1; and

• a ratio of operating cash flow minus capital expenditures to the sum of debt service requirements and cash distributions of not less than 1.15 to 1.

At June 30, 2003, we were in compliance with all required financial ratios and expect to continue to be in compliance throughout 2003.


	Dobson/ Sygnet Senior Notes

Our subsidiary, Dobson/ Sygnet Communications Company, had outstanding $200.0 million aggregate principal amount of senior notes that mature in 2008. On September 30, 2002, we purchased $11.5 million principal amount of these senior notes for $8.9 million. Therefore, on a consolidated basis at June 30, 2003, the outstanding Dobson/ Sygnet senior notes had an outstanding principal balance totaling $188.5 million and we recognized a gain of $2.2 million after the write-off of related deferred financing costs and taxes. The Dobson/ Sygnet notes bear interest at an annual rate of 12.25%, payable semi-annually on each June 15 and December 15. The Dobson/ Sygnet note indenture contains restrictive covenants that, among other things, limit the ability of Dobson/ Sygnet and its subsidiaries to incur additional indebtedness, create liens, pay dividends or make distributions in respect of their capital stock, make investments or certain other restricted payments, sell assets, redeem capital stock, issue or sell stock of restricted subsidiaries, enter into transactions with stockholders or affiliates or effect a consolidation or merger.


	Sygnet Wireless Credit Facility

Our indirect wholly-owned subsidiary, Sygnet Wireless, is a party to a secured credit agreement 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 the Sygnet credit facility and we had $25.9 million of availability under the Sygnet credit facility.

The obligations under the Sygnet credit facility are secured by a pledge of the capital stock of Dobson/ Sygnet’s operating subsidiary as well as a lien on substantially all of the assets of Dobson/ Sygnet and the assets of its operating subsidiary. The Sygnet credit facilities require that Dobson/ Sygnet and we maintain certain financial ratios. The failure to maintain these ratios would constitute an event of default, notwithstanding Dobson/ Sygnet’s ability to meet its debt service obligations. The Sygnet credit facilities amortize quarterly. The $29.3 million revolving credit facility terminates on September 23, 2006. The $263.7 million term loans terminate on December 23, 2007. As of June 30, 2003 Dobson/ Sygnet was in compliance with the required financial ratios. In addition, Dobson/ Sygnet’s ability to borrow under the Sygnet credit facility is limited by the requirement that, on a quarterly basis, the amount available under the credit facility will reduce until it terminates.


	American Cellular Credit Facility and Senior Subordinated Notes

The American Cellular joint venture has a bank credit facility of $1.34 billion with Bank of America N.A., as Administrative Agent and a group of participating lenders. American Cellular has required, and will likely continue to require, substantial capital to further develop, expand and upgrade its wireless systems. On July 18, 2003, American Cellular announced its plans to accelerate its GSM/ GPRS overlay of its networks and thus, American Cellular revised its expected capital expenditures for 2003. American Cellular originally projected 2003 capital expenditures of approximately $60 million now American Cellular plans to accelerate construction from 2004 into the current year, thus increasing 2003’s capital expenditures to approximately $105 million. At June 30, 2003, American Cellular had $23.1 million unrestricted cash and $4.1 million in restricted cash. Upon consummation of the proposed restructuring and executing a new secured credit facility, American Cellular expects to have sufficient resources to satisfy its expected capital expenditures, working capital and debt service obligations for the foreseeable future.

As of June 30, 2003, American Cellular had outstanding borrowings under its credit facility of $864.3 million, with no additional amounts available for future borrowings.

American Cellular’s amended credit facility imposes a number of restrictive covenants that, among other things, limit American Cellular’s ability to incur additional indebtedness, create liens and pay dividends. In addition, American Cellular 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 June 30, 2003, decreasing overtime to 2.50 to 1;

• a ratio of total indebtedness to operating cash flow of 7.50 to 1 at June 30, 2003, decreasing overtime to 4.00 to 1;

• a ratio of operating cash flow to debt service requirements of 1.20 to 1 at June 30, 2003, and thereafter;

• a ratio of operating cash flow to interest expense requirement of 1.80 to 1 at June 30, 2003, increasing over time to 2.50 to 1;

• a ratio of operating cash flow minus capital expenditures to the sum of debt service requirements and cash distributions of 1.00 to 1.

Through September 2002, interest on the revolving credit facility and the term loan facilities was variable and was based on a prime rate or a LIBOR formula. As a result of American Cellular’s non-compliance with a financial covenant contained in the credit facility, beginning in October 2002, all borrowings under American Cellular’s credit facility are only available based on prime rate. The weighted average interest rate for the six months ended June 30, 2003 was 5.8% and interest rates have ranged in total between 4.4% and 10.0% since inception.

American Cellular’s credit facility includes a financial covenant requiring that they not exceed a total debt leverage ratio of 7.50 to 1.00 in the second quarter of 2003. At June 30, 2002 and continuing through June 30, 2003, American Cellular failed to comply with this covenant. American Cellular’s 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 American Cellular’s senior subordinated notes to declare the principal and interest of the senior subordinated notes immediately due and payable. American Cellular would then be required to either refinance the debt or repay the amounts due. To date, no such acceleration has occurred. On June 30, 2002 and continuing through June 30, 2003, American Cellular classified all of its long-term debt as current. Unless such non-compliance is resolved, there continues to be substantial doubt about American Cellular’s ability to continue as a going concern, as expressed in the independent auditors reports on American Cellular’s 2002 and 2001 financial statements. Also as a result of American Cellular’s non-compliance, beginning in October 2002, all borrowings under American Cellular’s credit facility are only available based on prime rate, which has increased American Cellular’s borrowing rate. For the six months ended June 30, 2003, American Cellular’s total scheduled principle payments were approximately $23.2 million, under its facility. On August 8, 2003, however, American Cellular and ACC Escrow Corp., our recently formed, wholly-owned, indirect subsidiary, completed a private offering of

$900 million aggregate principal amount of 10% senior notes due 2011, for which proceeds were placed in escrow. Upon consummation of the exchange offer, the net proceeds of this offer will be used to repay American Cellular’s credit facility as part of the restructuring plan.

On March 14, 2001, American Cellular 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 will be amortized over the life of the notes. On June 4, 2001, American Cellular 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 will be amortized over the life of the notes.

For the six months ended June 30, 2003, American Cellular’s total scheduled principle payments were approximately $23.2 million, under its facility. During the remainder of 2003 absent acceleration, American Cellular will be required to make additional scheduled principal payments totaling $30.6.


	Dobson Communications

On February 8, 2001, we issued 200,000 shares of our Series AA Preferred Stock to AT&T Wireless for aggregate cash proceeds of $200.0 million. Each share of Series AA Preferred Stock was entitled to cumulative annual dividends of 5.96% on the liquidation preference of $1,000 per share, subject to certain adjustments. Dividends accrued but were not payable until after February 2006. Each share of Series AA Preferred Stock was mandatory exchangeable for one share of our Series A Convertible Preferred Stock, par value $1.00 per share. Each share of our Series A Convertible Preferred Stock was convertible into our class A common stock at a conversion price of $25.35 per share. At June 30, 2003, we had canceled all 200,000 shares of Series AA Preferred Stock issued and outstanding as a result of our exchange agreement with AT&T Wireless on June 17, 2003.

As of June 30, 2003, we had issued and outstanding 354,098 shares of 12.25% senior preferred stock and 183,601 shares of our 13% senior preferred stock with aggregate liquidation values of $354.1 million and $187.6 million, respectively, including accrued stock dividends. Each certificate of designation for our senior preferred stock contains restrictive covenants, which may limit our ability to incur indebtedness in the future.

On May 19, 2003, our principal stockholder 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 approximately $60 million as of June 30, 2003. To secure their obligations under this credit agreement, DCCLP and its affiliates individually pledged certain assets, which included beneficial ownership of shares of our class A and class B common stock. However, the new agreement eliminates our change of control risk related to possible future default on the DCCLP loan as DCCLP has retained a sufficient number of shares of our 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 our change of control. 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 its new agreement with Bank of America, DCCLP transferred 32.5 million shares of our class A common stock to Bank of America. On July 18, 2003, an affiliate of Bank of America entered into agreements to sell 4.0 million shares of our class A common stock, which had been acquired by Bank of America as part of the loan restructuring with DCCLP in May of 2003. These sales constitute a “Release Event,” as defined in the credit agreement. As a result, Bank of America has released its lien on an additional 1.5 million class B shares owned by DCCLP. Any future sale of shares of our common stock held by Bank of America will be subject to certain restrictions until May 2006.


	*Capital Commitments*

We had capital expenditures of $50.3 million for the six months ended June 30, 2003. On July 18, 2003, we announced our plans to accelerate our GSM/ GPRS overlay of networks and thus, we revised our expected capital expenditures for 2003. We originally projected 2003 capital expenditures of approximately $100 million, now we plan to accelerate construction from 2004 into the current year, thus increasing 2003’s capital expenditures to approximately $135 million to $145 million. 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. We may require additional financing for future acquisitions, to refinance our debt at its final maturities and to meet the mandatorily redemption provisions on our senior preferred stock.

In addition, on November 7, 2002, our Board of Directors adopted a new stock purchase plan, which authorizes us to purchase up to 10 million shares of our outstanding class A common stock over the next twelve months. At June 30, 2003, no shares had been repurchased under this plan.

On December 17, 2001, we made secured two-year loans to certain of our current and former officers and employees. The loans are secured by pledged shares of our class A common stock and under the loan agreements, the borrowers have no personal liability to us for the debt, beyond the loss of the pledged collateral. On July 16, 2003, our Board of Directors adopted a proposal, which confirmed that these borrowers could pay the balance of their loans by a sale of the pledged shares to us. We would then release any remaining excess collateral to the borrower. The value of the shares would be determined based on the average closing price of our class A common stock for the proceeding 5 trading days. To date, two borrowers have so repaid their loans. No changes were made in the due date or total amounts due from any of these borrowers.

We are obligated under an agreement to purchase approximately $100.5 million of cell site and switching equipment from Nortel Network Corp. prior to July 15, 2005. Approximately $20.6 million of the commitment remained outstanding at June 30, 2003. 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.

Although we cannot provide any assurance, assuming successful implementation of our strategy, including the further development of our wireless systems and significant and sustained growth in our cash flows, we believe that borrowings under our DOC LLC and Sygnet credit facilities, the remaining balance of our unrestricted cash and cash flows from operations will be sufficient to satisfy our currently expected capital expenditures, working capital and debt service obligations over the next year. The actual amount and timing of our future capital requirements may differ materially from our estimates as a result of, among other things, the demand for our services and regulatory, technological and competitive developments. We currently expect that we may need to refinance our indebtedness at their respective maturities commencing in 2006. We may also need to refinance our mandatory redemption obligations under our senior preferred stock. 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 $33.3 million to reflect the write down of our wireless license acquisition costs to their fair value and a charge of $140.8 million to reflect our 50% share in the write down to fair value of the wireless license acquisition costs of our 50% owned joint venture, American Cellular.

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 adopted this standard on January 1, 2003, with no 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.

In May, 2003, the FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of Liabilities and Equity.” This statement is effective for interim periods beginning after June 15, 2003 and will require that mandatorily redeemable preferred stock be classified as a liability and any related accretion of discount and accrual of dividends be charged to our statement of operations. Currently, the charges related to the mandatorily redeemable preferred stock are not reflected in net income (loss), but are reflected in determining net income (loss) applicable to common stock. At June 30, 2003, the carrying value of Dobson Communications’ mandatorily redeemable preferred stock that would have been reclassified as a liability was $524.9 million. The related dividends that would have been reflected as interest expense was $40.5 million for the six months ended June 30, 2003.

Forward-Looking Statements

The description of our plans set forth herein, including planned capital expenditures and acquisitions, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These plans involve a number of risks and uncertainties. Important factors that could cause actual capital expenditures, acquisition activity or our performance to differ materially from the plans include, without limitation, our ability to satisfy the financial covenants of our outstanding debt and preferred stock instruments and to raise additional capital; our ability to manage our rapid growth successfully and to compete effectively in our wireless business against competitors with greater financial, technical, marketing and other resources; changes in end-user requirements and preferences; the development of other technologies and products that may gain more commercial acceptance than those of ours; and adverse regulatory changes. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date hereof including, without limitation, changes in our business strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.


Item 3.	*Quantitative and Qualitative Disclosures about Market Risk*

Our primary market risk relates to changes in interest rates. Market risk is the potential loss arising from adverse changes in market prices and rates, including interest rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes. The objective of our financial risk management is to minimize the negative impact of interest rate fluctuations on our earnings and equity. The counterparty is a major financial institution. As of June 30, 2003, we did not have any interest rate hedges due to their expiration in April 2003. For the six months ended June 30, 2003 and 2002, the interest expense related to the expired hedges was approximately $2.2 million and $7.8 million, respectively, due to the decline in current market interest rates.

At June 30, 2003, we had long-term debt outstanding of $1.2 billion, of which, $751.2 million bears interest at floating rates. These rates averaged 7.4% for the six months ended June 30, 2003. One percentage

point of an interest rate adjustment would change our cash interest payments on an annual basis by approximately $7.5 million.


Item 4.	*Controls and Procedures*

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

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*

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.


Item 2.	*Changes in Securities and Use of Proceeds*

Not applicable


Item 3.	*Defaults Upon Senior Securities*

Not applicable


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

Our 2003 Annual Meeting of Stockholders was held on June 20, 2003. At the meeting, the following items were submitted to a vote of stockholders.

(a) The following nominees were elected to serve on the Board of Directors:


Name of Nominee	Votes Cast for		Votes Withheld

Everett R. Dobson		565,983,811		580,915
Russell L. Dobson		565,926,388		638,338
Stephen T. Dobson		565,983,826		580,900

The following will continue to serve on the Board of Directors:

Fred J. Hall

Justin L. Jaschke

Albert H. Pharis, Jr

(b) KPMG LLP was elected to serve as our Independent Public Accountants:


Name of Nominee	Votes Cast for		Votes Withheld

KPMG LLP		565,964,379		600,347


Item 5.	*Other Information*

Not applicable


Item 6.	*Exhibits and Reports on Form 8-K*

(a) Exhibits

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


Exhibit
Numbers			Description	Method of Filing

	2	.1	Agreement and Plan of Merger dated October 5, 1999 among ACC Acquisition LLC, ACC Acquisition Co. and American Cellular Corporation.		(7	)[2.11]
	2	.2	Agreement and Plan of Recapitalization among Dobson Communications Corporation, Dobson Operating Company, Dobson CC Limited Partnership, Russell L. Dobson, J.W. Childs Equity Partners II, L.P., AT&T Wireless, Inc. and the other stockholders of Dobson Communications Corporation’s Class A Common Stock and Class D Preferred Stock.		(7	)[2.15]
	3	.1	Registrant’s Amended and Restated Certificate of Incorporation.		(7	)[3.1]
	3	.1.1	Registrant’s Certificate of Retirement of Senior Exchangeable Preferred Stock dated January 7, 2003		(23	)[3.1.1]
	3	.1.2	Registrant’s Certificate of Retirement of Senior Exchangeable Preferred Stock dated February 4, 2003		(23	)[3.1.2]
	3	.2	Registrant’s Amended and Restated By-laws.		(12	)[3(ii)]
	4	.1	Amended, Restated, and Consolidated Revolving Credit and Term Loan Agreement dated as of January 18, 2000 among Dobson Operating Co., L.L.C., Banc of America Securities, LLC, Bank of America, N.A., Lehman Commercial Paper Inc. and TD Securities (USA) Inc., and First Union National Bank and PNC Bank, National Association, and the Lenders.		(7	)[4.6]
	4	.1.1	Amendment, Waiver and Consent to the Dobson Operating Co., L.L.C., Credit Agreement dated as of June 19, 2000 among Dobson Operating Co., L.L.C., as Borrower, Bank of America, N.A., as Administrative Agent, Required Lenders and Guarantors		(8	)[10.2]
	4	.1.2	Amendment and Consent dated November 24, 2000 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(13	)[4.3.2]
	4	.1.3	Amendment and Consent dated May 4, 2001 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.3]
	4	.1.4	Amendment dated August 1, 2001 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.4]
	4	.1.5	Amendment dated January 23, 2002 to the Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.5]
	4	.2	Indenture dated December 23, 1998 between Dobson/ Sygnet Communications Company, as Issuer, and United States Trust Company of New York, as Trustee.		(2	)[4.1]
	4	.3	Form of Common Stock Certificate.		(7	)[4.16]
	4	.4	Indenture dated June 22, 2000 by the Registrant and United States Trust Company of New York, as Trustee		(8	)[4]
	4	.5	Senior Debt Indenture dated as of July 18, 2001, between the Registrant and The Bank of New York, as Trustee		(14	)[4.2]
	4	.6.1	Subordinated Debt Indenture dated as of July 18, 2001 between the Registrant and The Bank of New York, as Trustee		(14	)[4.3]
	4	.6.2	Certificate of Trust for Dobson Financing Trust		(14	)[4.4]


Exhibit
Numbers			Description	Method of Filing

	4	.7	Declaration of Trust for Dobson Financing Trust		(14	)[4.5]
	4	.8	Indenture dated as February 28, 1997 between the Registrant and United States Trust Company of New York, as Trustee		(5	)[4.6]
	4	.9	Credit agreement among the Agents and Lenders named therein and Sygnet Wireless Inc. (f/k/a Dobson/ Sygnet Operating Company) dated December 22, 1998		(3	)[4.4]
	4	.10	Form of Certificate of Designation of the Powers, Preferences and Relative, Optional and Other Special Rights of the Registrant’s Series AA Preferred Stock		(12	)[4.1]
	4	.11	Form of Certificate of Designation of the Powers, Preferences and Relative, optional and Other Special Rights of the Registrant’s Series A Convertible Preferred Stock		(12	)[4.2]
	10	.1	Asset Exchange Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.1]
	10	.2	Transition Services Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.2]
	10	.3	Master Lease Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.3]
	10	.4	Cordova Option Agreement dated as of December 24, 2002, among AT&T Wireless Services, Inc., AT&T Wireless Services of Alaska, Inc. and Dobson Cellular Systems, Inc.		(22	)[10.4]
	10	.5	Registrant’s 2002 Employee Stock Purchase Plan		(19	)[10.1]
	10	.5.1*	Registrant’s 1996 Stock Option Plan, as amended.		(3	)[10.1.1]
	10	.5.2*	2000-1 Amendment to the DCC 1996 Stock Option Plan.		(7	)[10.1.3]
	10	.5.3*	Dobson Communications Corporation 2000 Stock Option Plan.		(7	)[10.1.4]
	10	.6	Registrant’s 2002 Stock Incentive Plan		(19	)[10.2]
	10	.7.1*	Letter dated June 3, 1996 from Registrant to Bruce R. Knooihuizen describing employment arrangement.		(5	)[10.3.2]
	10	.7.2*	Letter dated October 15, 1996 from Fleet Equity Partners to Justin L. Jaschke regarding director compensation.		(5	)[10.3.3]
	10	.7.3*	Letter dated October 28, 1997 from Registrant to R. Thomas Morgan describing employment arrangement.		(1	)[10.3.5]
	10	.7.4*	Letter dated August 25, 1998 from Registrant to Richard D. Sewell, Jr. describing employment arrangement.		(3	)[10.3.6]
	10	.7.5*	Consulting Agreement dated December 21, 1998 between Registrant and Albert H. Pharis, Jr.		(3	)[10.3.7]
	10	.7.6*	Consulting Agreement dated August 15, 1998 between the Registrant and Russell L. Dobson and Addendum thereto dated October 1, 1998.		(7	)[10.3.8]
	10	.8	General Purchase Agreement dated January 13, 1998 between Lucent Technologies, Inc. and Dobson Cellular Systems, Inc., as amended		(1	)[10.4.7]
	10	.8.1	Amendment No. 1 to General Purchase Agreement between Dobson Cellular Systems and Lucent Technologies, Inc.		(9	)[10.4.3]
	10	.9	Operating Agreement dated January 16, 1998, as amended, between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc.		(7	)[10.4.4]
	10	.9.1	Second Addendum to Operating Agreement between AT&T Wireless Services, Inc. and its Affiliates and Dobson Cellular Systems, Inc. and its Affiliates dated May 8, 2002		(18	)[10.5.1]


Exhibit
Numbers			Description	Method of Filing

	10	.9.2	Fourth Addendum to Operating Agreement between AT&T Wireless Services, Inc. and its Affiliates and Dobson Cellular Systems, Inc. and its Affiliates dated July 11, 2003		(24	)[10.9.2]
	10	.10†	Purchase and License Agreement between Nortel Networks, Inc. and Dobson Communications Corporation, dated as of November 16, 2001.		(17	)[10.6]
	10	.10.1†	Amendment No. 1 to the Purchase and License Agreement between Nortel Networks, Inc. and Dobson Communications Corporation, dated August 5, 2002.		(20	)[10.6.1]
	10	.11	Second Amended and Restated Partnership Agreement of Gila River Cellular General Partnership dated September 30, 1997		(6	)[10.8]
	10	.12	Stockholder and Investor Rights Agreement dated January 31, 2000 among the Registrant and the Shareholders listed therein (without exhibits).		(7	)[10.7.2.3]
	10	.12.1	Amendment No. 1 to Stockholder and Investor rights Agreement among AT&T Wireless Services, Inc., the Registrant, and certain other parties		(12	)[10.4]
	10	.13†	License Agreement dated October 8, 2001 between Dobson Communications Corporations and H.O. Systems, Inc.		(17	)[10.9]
	10	.14*	Form of Dobson Communications Corporation Director Indemnification Agreement.		(7	)[10.9]
	10	.15	Agreement and Plan of Reorganization and Corporation Separation between Dobson Communications Corporation and Logix Communications Enterprises dated January 24, 2000		(7	)[10.10]
	10	.16	Second Amended and Restated Limited Liability Company Agreement of ACC Acquisition LLC between AT&T Wireless JV Co. and Dobson JV Company dated as of February 25, 2000.		(10	)[10.1]
	10	.17	Amended and Restated Supplemental Agreement among AT&T Wireless, Dobson Communications Corporation, Dobson CC Limited Partnership, and other signatories thereto, dated February 25, 2000.		(10	)[10.1.1]
	10	.18	Amended and Restated Management Agreement between Dobson Cellular Systems, Inc. and ACC Acquisition LLC dated as of February 25, 2000.		(10	)[10.2]
	10	.19	Amended and Restated Operating Agreement dated February 25, 2000 by and between AT&T Wireless Services, Inc., on behalf of itself and its Affiliates (as defined therein) and ACC Acquisition L.L.C., on behalf of itself and its Affiliates (as defined therein).		(10	)[10.3]
	10	.19.1	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		(18	)[10.16.1]
	10	.20	Amended and Restated Operating Agreement dated February 25, 2000 by and between Dobson Cellular Systems, Inc., on behalf of itself and its Affiliates (as defined therein) and ACC Acquisition L.L.C., on behalf of itself and its Affiliates (as defined therein).		(10	)[10.4]
	10	.21.1	Stock Purchase Agreement Between AT&T Wireless Services, Inc. and Dobson Communications Corporation dated as of November 6, 2000.		(11	)[10.14]
	10	.21.2	Amendment No. 1 to Stock Purchase Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.1]
	10	.22	Exchange Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.2]
	10	.23	PCS Transfer Rights Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.3]


Exhibit
Numbers			Description	Method of Filing

	10	.24	Asset Purchase Agreement dated October 29, 2001 by and between Dobson Cellular Systems, Inc., and Cellco Partnership, a Delaware general partnership, d/b/a/ Verizon Wireless		(15	)[10.22]
	10	.25	Asset Purchase Agreement dated December 6, 2001 by and between Dobson Cellular System, Inc, and Cellco Partnership, a Delaware general partnership, d/b/a/ Verizon Wireless		(16	)[10.1]
	10	.26†	InterCarrier Multi-Standard Roaming Agreement effective as of January 25, 2002 between Cingular Wireless, LLC, and its affiliates, and Dobson Cellular Systems, Inc., and its affiliates.		(17	)[10.23]
	10	.27	Master Services Agreement between Dobson Cellular Systems, Inc. and Convergys Information Management Group Inc. dated December 1, 2002.		(21	)[10.24]
	10	.28†	Roaming Agreement for GSM/ GPRS between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc. dated July 11, 2003.		(24	)[10.28]
	*10	.29†	GSM/ GPRS Operating Agreement between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc. dated July 11, 2003, as amended.		(24	)[10.29]
	*10	.30†	Roaming Agreement for GSM/ GPRS between AT&T Wireless Services, Inc. and American Cellular Corporation dated July 11, 2003.		(24	)[10.30]
	*10	.31†	GSM/ GPRS Operating Agreement between AT&T Wireless Services, Inc. and American Cellular Corporation dated July 11, 2003.		(24	)[10.31]
	*10	.32†	Second Amended and Restated TDMA Operating Agreement between AT&T Wireless Services, Inc. on behalf of itself and its affiliates and ACC Acquisition LLC, on behalf of itself, American Cellular Corporation and their respective affiliates dated July 11, 2003		(24	)[10.32]
	31	.1	Rule 13a-14(a) Certification by our Chairman and Chief Executive Officer.		(4	)
	31	.2	Rule 13a-14(a) Certification by our Chief Financial Officer.		(4	)
	32	.1	Section 1350 Certification by our Chairman and Chief Executive Officer.		(4	)
	32	.2	Section 1350 Certification by our Chief Financial Officer.		(4	)

* Management contract or compensatory plan or arrangement.

† Confidential treatment has been requested for a portion of this document.

(1) Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997 as the exhibit number indicated in brackets and incorporated by reference herein.

(2) Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on January 7, 1999, as the exhibit number indicated in brackets and incorporated by reference herein.

(3) Filed as an exhibit to the Registrant’s Registration Statement on Form S-4 (Registration No. 333-71633), as the exhibit number indicated in brackets and incorporated by reference herein.

(4) Filed herewith.

(5) Filed as an exhibit to the Registrant’s Registration Statement of Form S-4 (Registration No. 333-23769), as the exhibit number indicated in brackets and incorporated by reference herein.

(6) Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 15, 1997 and amended on November 6, 1997, as the exhibit number indicated in brackets and incorporated by reference herein.

(7) Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-90759), as the exhibit number indicated in brackets and incorporated by reference herein.

(8) Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on July 6, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

(9) Filed as an exhibit to the Registrants’ Registration Statement on Form S-4/ A (Registration No. 333-41512), as the exhibit number indicated in brackets and incorporated by reference herein.

(10) Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on March 9, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

(11) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

(12) Filed as an exhibit to the Registrant’s current report on Form 8-K/ A on February 22, 2001 as the exhibit number indicated in brackets and incorporated by reference herein.

(13) Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 as the exhibit number indicated in brackets and incorporated by reference herein.

(14) Filed as an exhibit to the Registrant’s Registration Statement on Form S-3 (Registration No. 333-64916), as the exhibit number indicated in brackets and incorporated by reference herein.

(15) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 20, 2001, as the exhibit number indicated in brackets and incorporated by reference herein.

(16) Filed as an exhibit to the Registrant’s current report on Form 8-K on December 20, 2001 as the exhibit number indicated in brackets and incorporated by reference herein.

(17) 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.

(18) Filed as an exhibit to the Registrant’s current report on Form 8-K on May 16, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(19) Filed as an exhibit to the Registrant’s current report on Form 8-K on June 14, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(20) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 20, 2002, as the exhibit number indicated in brackets and incorporated by reference herein.

(21) 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.

(22) Filed as an exhibit to the Registrant’s current report on Form 8-K on January 7, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(23) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(24) Filed as an exhibit to the Registrant’s current report on Form 8-K on July 28, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(b) Reports on Form 8-K

The Registrant filed a Current Report on form 8-K on April 4, 2003, which reported the Registrant has been advised by it’s principle shareholder Dobson CC Limited Partnership, or DCCLP, that DCCLP and Bank of America, N.A. reached an agreement in principle for the amendment and restructuring of the Bank’s loan to DCCLP, which had a maturity date of March 31, 2003, under “Item 5. Other Events and Required FD Disclosure” and “Item 7. Financial Statement and Exhibits”.

The Registrant filed a Current Report on form 8-K on April 22, 2003, which reported the Registrant has been advised by it’s principle shareholder Dobson CC Limited Partnership, or DCCLP, that DCCLP and Bank of America, N.A. have extended the time to reach a definitive agreement for the amendment and restructuring of the Bank’s loan to DCCLP, until April 25, 2003, under “Item 5. Other Events and Required FD Disclosure” and “Item 7. Financial Statement and Exhibits”.

The Registrant filed a Current Report on form 8-K on May 15, 2003, which reported the Registrant’s submission to the Securities and Exchange Commission a certification by its Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Registrant’s report on Form 10-Q for the three months ended March 31, 2003, under “Item 9. Regulation FD Disclosure”.

The Registrant filed a Current Report on form 8-K on May 28, 2003, which reported the Registrant’s Executive Vice President and Chief Financial Officer, Bruce R. Knooihuizen, sold 79,475 shares of the Registrant’s common stock pursuant to Rule 144 promulgated under the Securities Act of 1933, under “Item 5. Other Events and Required FD Disclosure” and “Item 7. Financial Statement and Exhibits”.

The Registrant filed a Current Report on form 8-K on June 19, 2003, which reported the Registrant consummated the exchange of its FCC licenses and related assets located in California to AT&T Wireless Services, Inc., or AWE, for AWE’s FCC licenses and related assets located in Alaska, under “Item 2. Acquisitions and Disposition of Assets” and “Item 7. Financial Statements and Exhibits.”

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 COMMUNICATIONS CORPORATION


Date: August 14, 2003		/s/ EVERETT R. DOBSON ------------------------------------------------ Everett R. Dobson Chairman of the Board and Chief Executive Officer

Date: August 14, 2003		/s/ BRUCE R. KNOOIHUIZEN ------------------------------------------------ Bruce R. Knooihuizen Vice President and Chief Financial Officer (principal financial officer)

INDEX TO EXHIBITS


Exhibit
Numbers			Description	Method of Filing

	2	.1	Agreement and Plan of Merger dated October 5, 1999 among ACC Acquisition LLC, ACC Acquisition Co. and American Cellular Corporation.		(7	)[2.11]
	2	.2	Agreement and Plan of Recapitalization among Dobson Communications Corporation, Dobson Operating Company, Dobson CC Limited Partnership, Russell L. Dobson, J.W. Childs Equity Partners II, L.P., AT&T Wireless, Inc. and the other stockholders of Dobson Communications Corporation’s Class A Common Stock and Class D Preferred Stock.		(7	)[2.15]
	3	.1	Registrant’s Amended and Restated Certificate of Incorporation.		(7	)[3.1]
	3	.1.1	Registrant’s Certificate of Retirement of Senior Exchangeable Preferred Stock dated January 7, 2003		(23	)[3.1.1]
	3	.1.2	Registrant’s Certificate of Retirement of Senior Exchangeable Preferred Stock dated February 4, 2003		(23	)[3.1.2]
	3	.2	Registrant’s Amended and Restated By-laws.		(12	)[3(ii)]
	4	.1	Amended, Restated, and Consolidated Revolving Credit and Term Loan Agreement dated as of January 18, 2000 among Dobson Operating Co., L.L.C., Banc of America Securities, LLC, Bank of America, N.A., Lehman Commercial Paper Inc. and TD Securities (USA) Inc., and First Union National Bank and PNC Bank, National Association, and the Lenders.		(7	)[4.6]
	4	.1.1	Amendment, Waiver and Consent to the Dobson Operating Co., L.L.C., Credit Agreement dated as of June 19, 2000 among Dobson Operating Co., L.L.C., as Borrower, Bank of America, N.A., as Administrative Agent, Required Lenders and Guarantors		(8	)[10.2]
	4	.1.2	Amendment and Consent dated November 24, 2000 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(13	)[4.3.2]
	4	.1.3	Amendment and Consent dated May 4, 2001 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.3]
	4	.1.4	Amendment dated August 1, 2001 to Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.4]
	4	.1.5	Amendment dated January 23, 2002 to the Amended, Restated and Consolidated Revolving Credit and Term Loan Agreement		(17	)[4.1.5]
	4	.2	Indenture dated December 23, 1998 between Dobson/ Sygnet Communications Company, as Issuer, and United States Trust Company of New York, as Trustee.		(2	)[4.1]
	4	.3	Form of Common Stock Certificate.		(7	)[4.16]
	4	.4	Indenture dated June 22, 2000 by the Registrant and United States Trust Company of New York, as Trustee		(8	)[4]
	4	.5	Senior Debt Indenture dated as of July 18, 2001, between the Registrant and The Bank of New York, as Trustee		(14	)[4.2]
	4	.6.1	Subordinated Debt Indenture dated as of July 18, 2001 between the Registrant and The Bank of New York, as Trustee		(14	)[4.3]
	4	.6.2	Certificate of Trust for Dobson Financing Trust		(14	)[4.4]
	4	.7	Declaration of Trust for Dobson Financing Trust		(14	)[4.5]
	4	.8	Indenture dated as February 28, 1997 between the Registrant and United States Trust Company of New York, as Trustee		(5	)[4.6]
	4	.9	Credit agreement among the Agents and Lenders named therein and Sygnet Wireless Inc. (f/k/a Dobson/ Sygnet Operating Company) dated December 22, 1998		(3	)[4.4]
	4	.10	Form of Certificate of Designation of the Powers, Preferences and Relative, Optional and Other Special Rights of the Registrant’s Series AA Preferred Stock		(12	)[4.1]


Exhibit
Numbers			Description	Method of Filing

	4	.11	Form of Certificate of Designation of the Powers, Preferences and Relative, optional and Other Special Rights of the Registrant’s Series A Convertible Preferred Stock		(12	)[4.2]
	10	.1	Asset Exchange Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.1]
	10	.2	Transition Services Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.2]
	10	.3	Master Lease Agreement dated as of December 24, 2002, between Dobson Cellular Systems, Inc. and AT&T Wireless Services, Inc.		(22	)[10.3]
	10	.4	Cordova Option Agreement dated as of December 24, 2002, among AT&T Wireless Services, Inc., AT&T Wireless Services of Alaska, Inc. and Dobson Cellular Systems, Inc.		(22	)[10.4]
	10	.5	Registrant’s 2002 Employee Stock Purchase Plan		(19	)[10.1]
	10	.5.1*	Registrant’s 1996 Stock Option Plan, as amended.		(3	)[10.1.1]
	10	.5.2*	2000-1 Amendment to the DCC 1996 Stock Option Plan.		(7	)[10.1.3]
	10	.5.3*	Dobson Communications Corporation 2000 Stock Option Plan.		(7	)[10.1.4]
	10	.6	Registrant’s 2002 Stock Incentive Plan		(19	)[10.2]
	10	.7.1*	Letter dated June 3, 1996 from Registrant to Bruce R. Knooihuizen describing employment arrangement.		(5	)[10.3.2]
	10	.7.2*	Letter dated October 15, 1996 from Fleet Equity Partners to Justin L. Jaschke regarding director compensation.		(5	)[10.3.3]
	10	.7.3*	Letter dated October 28, 1997 from Registrant to R. Thomas Morgan describing employment arrangement.		(1	)[10.3.5]
	10	.7.4*	Letter dated August 25, 1998 from Registrant to Richard D. Sewell, Jr. describing employment arrangement.		(3	)[10.3.6]
	10	.7.5*	Consulting Agreement dated December 21, 1998 between Registrant and Albert H. Pharis, Jr.		(3	)[10.3.7]
	10	.7.6*	Consulting Agreement dated August 15, 1998 between the Registrant and Russell L. Dobson and Addendum thereto dated October 1, 1998.		(7	)[10.3.8]
	10	.8	General Purchase Agreement dated January 13, 1998 between Lucent Technologies, Inc. and Dobson Cellular Systems, Inc., as amended		(1	)[10.4.7]
	10	.8.1	Amendment No. 1 to General Purchase Agreement between Dobson Cellular Systems and Lucent Technologies, Inc.		(9	)[10.4.3]
	10	.9	Operating Agreement dated January 16, 1998, as amended, between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc.		(7	)[10.4.4]
	10	.9.1	Second Addendum to Operating Agreement between AT&T Wireless Services, Inc. and its Affiliates and Dobson Cellular Systems, Inc. and its Affiliates dated May 8, 2002		(18	)[10.5.1]
	10	.9.2	Fourth Addendum to Operating Agreement between AT&T Wireless Services, Inc. and its Affiliates and Dobson Cellular Systems, Inc. and its Affiliates dated July 11, 2003		(24	)[10.9.2]
	10	.10†	Purchase and License Agreement between Nortel Networks, Inc. and Dobson Communications Corporation, dated as of November 16, 2001.		(17	)[10.6]
	10	.10.1†	Amendment No. 1 to the Purchase and License Agreement between Nortel Networks, Inc. and Dobson Communications Corporation, dated August 5, 2002.		(20	)[10.6.1]
	10	.11	Second Amended and Restated Partnership Agreement of Gila River Cellular General Partnership dated September 30, 1997		(6	)[10.8]
	10	.12	Stockholder and Investor Rights Agreement dated January 31, 2000 among the Registrant and the Shareholders listed therein (without exhibits).		(7	)[10.7.2.3]


Exhibit
Numbers			Description	Method of Filing

	10	.12.1	Amendment No. 1 to Stockholder and Investor rights Agreement among AT&T Wireless Services, Inc., the Registrant, and certain other parties		(12	)[10.4]
	10	.13†	License Agreement dated October 8, 2001 between Dobson Communications Corporations and H.O. Systems, Inc.		(17	)[10.9]
	10	.14*	Form of Dobson Communications Corporation Director Indemnification Agreement.		(7	)[10.9]
	10	.15	Agreement and Plan of Reorganization and Corporation Separation between Dobson Communications Corporation and Logix Communications Enterprises dated January 24, 2000		(7	)[10.10]
	10	.16	Second Amended and Restated Limited Liability Company Agreement of ACC Acquisition LLC between AT&T Wireless JV Co. and Dobson JV Company dated as of February 25, 2000.		(10	)[10.1]
	10	.17	Amended and Restated Supplemental Agreement among AT&T Wireless, Dobson Communications Corporation, Dobson CC Limited Partnership, and other signatories thereto, dated February 25, 2000.		(10	)[10.1.1]
	10	.18	Amended and Restated Management Agreement between Dobson Cellular Systems, Inc. and ACC Acquisition LLC dated as of February 25, 2000.		(10	)[10.2]
	10	.19	Amended and Restated Operating Agreement dated February 25, 2000 by and between AT&T Wireless Services, Inc., on behalf of itself and its Affiliates (as defined therein) and ACC Acquisition L.L.C., on behalf of itself and its Affiliates (as defined therein).		(10	)[10.3]
	10	.19.1	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		(18	)[10.16.1]
	10	.20	Amended and Restated Operating Agreement dated February 25, 2000 by and between Dobson Cellular Systems, Inc., on behalf of itself and its Affiliates (as defined therein) and ACC Acquisition L.L.C., on behalf of itself and its Affiliates (as defined therein).		(10	)[10.4]
	10	.21.1	Stock Purchase Agreement Between AT&T Wireless Services, Inc. and Dobson Communications Corporation dated as of November 6, 2000.		(11	)[10.14]
	10	.21.2	Amendment No. 1 to Stock Purchase Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.1]
	10	.22	Exchange Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.2]
	10	.23	PCS Transfer Rights Agreement between the Registrant and AT&T Wireless Services, Inc. dated February 8, 2001		(12	)[10.3]
	10	.24	Asset Purchase Agreement dated October 29, 2001 by and between Dobson Cellular Systems, Inc., and Cellco Partnership, a Delaware general partnership, d/b/a/ Verizon Wireless		(15	)[10.22]
	10	.25	Asset Purchase Agreement dated December 6, 2001 by and between Dobson Cellular System, Inc, and Cellco Partnership, a Delaware general partnership, d/b/a/ Verizon Wireless		(16	)[10.1]
	10	.26†	InterCarrier Multi-Standard Roaming Agreement effective as of January 25, 2002 between Cingular Wireless, LLC, and its affiliates, and Dobson Cellular Systems, Inc., and its affiliates.		(17	)[10.23]
	10	.27	Master Services Agreement between Dobson Cellular Systems, Inc. and Convergys Information Management Group Inc. dated December 1, 2002.		(21	)[10.24]
	10	.28†	Roaming Agreement for GSM/ GPRS between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc. dated July 11, 2003.		(24	)[10.28]
	*10	.29†	GSM/ GPRS Operating Agreement between AT&T Wireless Services, Inc. and Dobson Cellular Systems, Inc. dated July 11, 2003, as amended.		(24	)[10.29]


Exhibit
Numbers			Description	Method of Filing

	*10	.30†	Roaming Agreement for GSM/ GPRS between AT&T Wireless Services, Inc. and American Cellular Corporation dated July 11, 2003.		(24	)[10.30]
	*10	.31†	GSM/ GPRS Operating Agreement between AT&T Wireless Services, Inc. and American Cellular Corporation dated July 11, 2003.		(24	)[10.31]
	*10	.32†	Second Amended and Restated TDMA Operating Agreement between AT&T Wireless Services, Inc. on behalf of itself and its affiliates and ACC Acquisition LLC, on behalf of itself, American Cellular Corporation and their respective affiliates dated July 11, 2003		(24	)[10.32]
	31	.1	Rule 13a-14(a) Certification by our Chairman and Chief Executive Officer.		(4	)
	31	.2	Rule 13a-14(a) Certification by our Chief Financial Officer.		(4	)
	32	.1	Section 1350 Certification by our Chairman and Chief Executive Officer.		(4	)
	32	.2	Section 1350 Certification by our Chief Financial Officer.		(4	)

* Management contract or compensatory plan or arrangement.

† Confidential treatment has been requested for a portion of this document.

(17) 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.

(18) Filed as an exhibit to the Registrant’s current report on Form 8-K on May 16, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(19) Filed as an exhibit to the Registrant’s current report on Form 8-K on June 14, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(20) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 20, 2002, as the exhibit number indicated in brackets and incorporated by reference herein.

(21) 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.

(22) Filed as an exhibit to the Registrant’s current report on Form 8-K on January 7, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(23) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(24) Filed as an exhibit to the Registrant’s current report on Form 8-K on July 28, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.


	•	a pledge of our ownership interest in DOC LLC;

	•	stock and partnership interests of certain of DOC LLC’s subsidiaries; and

	•	liens on substantially all of the assets of DOC LLC and its restricted subsidiaries, including FCC licenses, but only to the extent such licenses can be pledged under applicable law.


	•	a ratio of senior indebtedness to operating cash flow of initially not more than 6.00 to 1 at June 30, 2003, decreasing over time to 5.00 to 1;

	•	a ratio of operating cash flow to debt service requirements of not less than 1.50 to 1;

	•	a ratio of operating cash flow to interest expense of not less than 2.25 to 1; and

	•	a ratio of operating cash flow minus capital expenditures to the sum of debt service requirements and cash distributions of not less than 1.15 to 1.


	•	a ratio of senior indebtedness to operating cash flow of 5.75 to 1 at June 30, 2003, decreasing overtime to 2.50 to 1;

	•	a ratio of total indebtedness to operating cash flow of 7.50 to 1 at June 30, 2003, decreasing overtime to 4.00 to 1;

	•	a ratio of operating cash flow to debt service requirements of 1.20 to 1 at June 30, 2003, and thereafter;

	•	a ratio of operating cash flow to interest expense requirement of 1.80 to 1 at June 30, 2003, increasing over time to 2.50 to 1;

	•	a ratio of operating cash flow minus capital expenditures to the sum of debt service requirements and cash distributions of 1.00 to 1.


	†	Confidential treatment has been requested for a portion of this document.


	(1)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1997 as the exhibit number indicated in brackets and incorporated by reference herein.

	(2)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on January 7, 1999, as the exhibit number indicated in brackets and incorporated by reference herein.

	(3)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-4 (Registration No. 333-71633), as the exhibit number indicated in brackets and incorporated by reference herein.

	(4)	Filed herewith.

	(5)	Filed as an exhibit to the Registrant’s Registration Statement of Form S-4 (Registration No. 333-23769), as the exhibit number indicated in brackets and incorporated by reference herein.

	(6)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 15, 1997 and amended on November 6, 1997, as the exhibit number indicated in brackets and incorporated by reference herein.

	(7)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-90759), as the exhibit number indicated in brackets and incorporated by reference herein.

	(8)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on July 6, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

	(9)	Filed as an exhibit to the Registrants’ Registration Statement on Form S-4/ A (Registration No. 333-41512), as the exhibit number indicated in brackets and incorporated by reference herein.


(10)	Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on March 9, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

(11)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, as the exhibit number indicated in brackets and incorporated by reference herein.

(12)	Filed as an exhibit to the Registrant’s current report on Form 8-K/ A on February 22, 2001 as the exhibit number indicated in brackets and incorporated by reference herein.

(13)	Filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 as the exhibit number indicated in brackets and incorporated by reference herein.

(14)	Filed as an exhibit to the Registrant’s Registration Statement on Form S-3 (Registration No. 333-64916), as the exhibit number indicated in brackets and incorporated by reference herein.

(15)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 20, 2001, as the exhibit number indicated in brackets and incorporated by reference herein.

(16)	Filed as an exhibit to the Registrant’s current report on Form 8-K on December 20, 2001 as the exhibit number indicated in brackets and incorporated by reference herein.

(17)	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.

(18)	Filed as an exhibit to the Registrant’s current report on Form 8-K on May 16, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(19)	Filed as an exhibit to the Registrant’s current report on Form 8-K on June 14, 2002 as the exhibit number indicated in brackets and incorporated by reference herein.

(20)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 20, 2002, as the exhibit number indicated in brackets and incorporated by reference herein.

(21)	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.

(22)	Filed as an exhibit to the Registrant’s current report on Form 8-K on January 7, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(23)	Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.

(24)	Filed as an exhibit to the Registrant’s current report on Form 8-K on July 28, 2003, as the exhibit number indicated in brackets and incorporated by reference herein.