39 Telephone and Data Systems, Inc. Annual Report 2001 38 Telephone and Data Systems, Inc. Annual Report 2001 Year Ended December 31, 2001 2000 1999 (Dollars in thousands) Cash Flows from Continuing Operating Activities Income (loss) from continuing operations  $(168,248) $ 145,527 $ 291,326 Add (deduct) adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization 450,019 399,143 353,322 Deferred income taxes, net (266,406) (370) 175,047 Investment income (50,639) (38,723) (31,324) Minority share of income  41,156 51,425 65,117 (Gain) Loss on cellular and other investments 548,305 (15,716) (345,938) Noncash interest expense 10,176 16,448 18,297 Other noncash expense 19,362 34,742 29,011 Proceeds from litigation settlement — 42,457 — Changes in assets and liabilities from operations Change in accounts receivable (34,125) (14,619) (50,417) Change in materials and supplies (7,100) (18,786) (13,436) Change in accounts payable (7,828) 59,550 (22,421) Change in accrued taxes (1,151) 56,303 (17,051) Change in other assets and liabilities 12,284 38,041 28,299 545,805 755,422 479,832 Cash Flows from Continuing Investing Activities Capital expenditures (700,150) (456,019) (399,631) Acquisitions, net of cash acquired (392,842) (200,718) (31,323) Increase in notes receivable (9,763) (55,141) — Cash received from mergers 570,035 — 46,606 Proceeds from investment sales 487 72,973 73,394 Distributions from unconsolidated entities 16,644 34,834 26,061 Investments in and advances to unconsolidated entities  (46) (4,187) 5,497 Other investing activities (4,223) 2,599 (5,954) (519,858) (605,659) (285,350) Cash Flows from Continuing Financing Activities Change in notes payable (249,522) 499,000 (170,889) Issuance of long-term debt 489,656 2,209 9,902 Repayments of long-term debt (17,806) (17,096) (22,131) Prepayment of medium-term notes (65,500) — — Repurchase and conversion of LYONs (31,963) (99,356) — Repurchase of TDS Common Shares (39,441) (290,069) (69,014) Repurchase of U.S. Cellular Common Shares (40,862) (223,847) — Dividends paid (32,141) (30,472) (29,391) Other financing activities 3,357 4,440 9,001 15,778 (155,191) (272,522) Cash Flows from Discontinued Operations — (6,563) 143,911 Net Increase (Decrease) in Cash and Cash Equivalents 41,725 (11,991) 65,871 Cash and Cash Equivalents Beginning of period 99,019 111,010 45,139 End of period $ 140,744 $ 99,019 $ 111,010 Year Ended December 31, 2001 2000 1999 (Dollars in thousands, except per share amounts) Operating Revenues U.S. Cellular $ 1,894,830 $1,716,640 $1,576,429 TDS Telecom 693,712 610,216 545,917 2,588,542 2,326,856 2,122,346 Operating Expenses U.S. Cellular 1,577,618 1,424,327 1,320,587 TDS Telecom 574,769 482,463 431,366 2,152,387 1,906,790 1,751,953 Operating Income 436,155 420,066 370,393 Investment and Other Income (Expense) Interest and dividend income 14,246 15,637 8,708 Investment income 50,639 38,723 31,324 Amortization of costs related to minority investments (1,263) (10,258) (12,927) Gain (loss) on marketable securities and other investments (548,305) 15,716 345,938 Other income (expense), net 5,048 (8,082) (11,198) (479,635) 51,736 361,845 Income (Loss) Before Interest and Income Taxes (43,480) 471,802 732,238 Interest expense 103,710 100,559 99,984 Minority interest in income of subsidiary trust 24,810 24,810 24,810 Income (Loss) From Continuing Operations Before Income Taxes and  Minority Interest (172,000) 346,433 607,444 Income tax expense (benefit) (44,908) 149,481 251,001 Income (Loss) From Continuing Operations Before Minority Interest (127,092) 196,952 356,443 Minority share of income (41,156) (51,425) (65,117) Income (Loss) From Continuing Operations (168,248) 145,527 291,326 Discontinued Operations Gain (loss) on disposal of Aerial, net of tax (24,092) 2,125,787 — Loss from operations of Aerial, net of tax — — (111,492) (24,092) 2,125,787 (111,492) Income (Loss) Before Extraordinary Item and Cumulative Effect of  Accounting Change (192,340) 2,271,314 179,834 Extraordinary Item-loss on extinguishment of debt, net of minority interest (5,715) (30,471) — Cumulative effect of accounting change, net of tax and minority interest — (3,841) — Net Income (198,055) 2,237,002 179,834 Preferred Dividend Requirement (458) (504) (1,147) Net Income (Loss) Available to Common $ (198,513) $2,236,498 $ 178,687 Basic Weighted Average Shares Outstanding (000s) 58,661 59,922 61,436 Basic Earnings per Share Income (Loss) from Continuing Operations $ (2.87) $ 2.42 $ 4.72 Net Income (Loss) Available to Common (3.38) 37.32 2.91 Diluted Weighted Average Shares Outstanding (000s) 58,661 60,636 62,376 Diluted Earnings per Share Income (Loss) from Continuing Operations $ (2.87) $ 2.39 $ 4.65 Net Income (Loss) Available to Common (3.38) 36.88 2.87 Dividends per Share $ .54 $ .50 $ .46 The accompanying notes to consolidated financial statements are an integral part of these statements. The accompanying notes to consolidated financial statements are an integral part of these statements. Consolidated Statements of Operations Consolidated Statements of Cash Flows Telephone and Data Systems, Inc.