Telephone and Data Systems, Inc. 15 Long-Term Debt Long-term debt is as follows. December 31, 2001 2000 (Dollars in thousands) Telephone and Data Systems, Inc. (Parent) 7.60% Series A Notes, due in 2041 $ 500,000 $ — Medium-term notes, averaging 9.1%  9.2% due in 2007 22,000 87,500 8.0% to 10.0% due 2021-2025 151,700 151,700 673,700 239,200 7.0% notes, maturing in 2006 200,000 200,000 Purchase contracts, averaging 7.2%,  due through 2003 1,283 300 Total Parent 874,983 439,500 Subsidiaries U.S. Cellular 6.0% zero coupon convertible redeemable debentures (LYONs),  maturing in 2015 310,941 437,169 Unamortized discount (170,785) (251,352) 140,156 185,817 7.25% notes, maturing in 2007 250,000 250,000 Other, 9.0% due 2005-2010 13,000 13,000 TDS Telecom RUS, RTB and FFB Mortgage Notes, various rates averaging  5.6% in 2001 and 5.5% in 2000,  due through 2031 279,287 290,195 Other long-term notes, various rates  averaging 7.2% in 2001 and  7.1% in 2000, due through 2006 9,631 6,945 Other  Long-term notes, 7.3% to 8.0%, due through 2009 8,168 3,169 Total Subsidiaries 700,242 749,126 Total long-term debt 1,575,225 1,188,626 Less: Current portion of long-term debt 67,461 15,639 Total long-term debt,  excluding current portion $1,507,764 $ 1,172,987 Telephone and Data Systems, Inc. (Parent) TDS sold $500 million principal amount of 7.6% unsecured Series A Notes in 2001 with proceeds to the Company of $484.2 million. The notes are due in 2041. Interest is payable quarterly. The notes are redeemable beginning December 2006 at 100% of the principal amount plus accrued and unpaid interest.  54 Telephone and Data Systems, Inc. Annual Report 2001 Telephone and Data Systems, Inc. Annual Report 2001 55 U.S. Cellular’s 7.25% unsecured senior notes are due 2007 and interest is payable semi-annually. U.S. Cellular may redeem the notes beginning 2004 at principal amount plus accrued interest. U.S. Cellular’s 6.0% yield to maturity zero coupon convertible redeemable unsecured notes (LYONs) are due in 2015. There is no periodic payment of interest. Each note is convertible at the option of the holder at any time at a conversion rate of 9.475 U.S. Cellular Common Shares per $1,000 of notes. Upon notice of conversion, U.S. Cellular may elect to deliver its Common Shares or cash equal to the market value of the Common Shares. U.S. Cellular may redeem the notes for cash at the issue price plus accrued original issue discount through the date of redemption. Holders have the right to exercise their conversion option prior to the redemption date. During 2001, holders converted $55.1 million carrying value of LYONs. U.S. Cellular delivered $32.0 million in cash and 644,000 U.S. Cellular Common Shares for these conversions. During 2000, holders converted $126.2 million carrying value of LYONs. U.S. Cellular delivered $99.4 million in cash and 1,416,000 U.S. Cellular Common Shares for these conversions. The LYONs converted for cash resulted in an extraordinary loss. See Note 4 — Extraordinary Item for a description of these transactions. Subsidiaries — U.S. Cellular The 7.0% unsecured notes are due August 2006. Interest is payable semi-annually. The notes are redeemable at any time at the option of the Company, at a redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued but unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi- annual basis at the Treasury Rate plus .25%. The Medium-Term Notes (“MTNs”) mature at various times from 2007 to 2025. Interest is payable semi-annually. The MTNs may be redeemed by the Company at par value plus accrued but unpaid interest. TDS redeemed MTNs aggregating $65.5 million in 2001. As of December 31, 2001, MTNs aggregating $29.0 million may be redeemed at anytime, and MTNs aggregating $22.0 million, $65.5 million, $17.2 million and $40.0 million have initial redemption dates in 2002, 2003, 2005, and 2006, respectively. The Company has notified the holders of the MTNs currently redeemable and redeemable in 2002 ($51.0 million in aggregate) of its intent to redeem these notes. These notes are reflected as current portion of long- term debt on the balance sheet. TDS Telecom’s RUS, RTB and FFB Mortgage Notes issued under certain loan agreements with the Rural Utilities Service (“RUS”), Rural Telephone Bank (“RTB”) and Federal Financing Bank (“FFB”), agencies of the United States of America, are to be repaid in equal monthly or quarterly installments covering principal and interest beginning six months to three years after dates of issue and expiring through 2031. Substantially all telephone plant is pledged under RUS and RTB mortgage notes and various other obligations of the telephone subsidiaries. Subsidiaries — TDS Telecom Consolidated The annual requirements for principal payments on long-term debt are approximately $67.5 million, $17.2 million, $18.2 million, $21.7 million and $219.2 million for the years 2002 through 2006, respectively. The carrying value and estimated fair value of the Com- pany’s Long-term Debt were $1,575.2 million and $1,559.7 million at December 31, 2001, and $1,188.6 million and $1,367.9 million at December 31, 2000, respectively. The fair value of the Company’s Long-term Debt was estimated using market prices for the 7.6% Series A Notes and the 6.0% zero coupon convertible debentures, and discounted cash flow analysis for the remaining debt. The following table summarizes the minority shareholders’ and partners’ interests in the equity of consolidated subsidiaries. The Board of Directors of U.S. Cellular from time to  time has authorized the repurchase of U.S. Cellular Common Shares not owned by TDS. U.S. Cellular may use repurchased shares to fund acquisitions, for the conversion of LYONs and for other corporate purposes. U.S. Cellular repurchased 643,000 Common Shares in 2001 for $29.9 million and 3,524,000 Common Shares in 2000 for $234.8 million and reissued 644,000 Common Shares in 2001 and 1,311,000 Common Shares in 2000 for the conversion of U.S. Cellular’s zero coupon convertible debt. 16 Minority Interest in Subsidiaries December 31, 2001 2000 (Dollars in thousands) U.S. Cellular Public shareholders $409,000 $386,096 Subsidiaries’ partners and shareholders 46,432 34,933 455,432 421,029 Other minority interests 12,266 10,081 $467,698 $431,110 The 8.5% and 8.04% Subordinated Debentures are redeemable by TDS, in whole or in part, from time to time, on or after November 18, 2002, and March 31, 2003, respectively, or, in whole but not in part, at any time in the event of certain income tax circumstances. If the Subordinated Debentures are redeemed, TDS Capital I and II must redeem preferred securities on a pro rata basis having an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed. In the event of the dissolution, winding up or termination of TDS Capital I and II, the holders of preferred securities will be entitled to receive, for each preferred security, a liquidation amount of $25 plus accrued and unpaid distributions thereon to the date of payment, unless, in connection with the dissolution, winding up or termination, Subordinated Debentures are distributed to the holders of the preferred securities. Payments due on the obligations of TDS Capital I and II under preferred securities issued by TDS Capital I and II are fully and unconditionally guaranteed by TDS to the extent each trust has funds available therefor. However, TDS’s obligations are subordinate and junior in right of payment to certain other indebtedness of TDS. TDS has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period, at any time, for up to 20 consecutive quarters. If interest payments on the Subordinated Debentures are so deferred, distributions on the preferred securities will also be deferred. During any deferral, distributions will continue to accrue with interest thereon. In addition, during any such deferral, TDS may not declare or pay any dividend or other distribution on, or redeem or purchase, any of its common stock. TDS Capital II, a subsidiary trust of TDS (“Capital II”), has outstanding 6,000,000 8.04% Company-Obligated Mandatorily Redeemable Preferred Securities. The sole asset of TDS Capital II is $154.6 million principal amount of TDS’s 8.04% Subordinated Debentures due March 31, 2038. TDS Capital I, a subsidiary trust of TDS (“Capital I”), has outstanding 6,000,000 8.5% Company-Obligated Mandatorily Redeemable Preferred Securities. The sole asset of TDS Capital I is $154.6 million principal amount of TDS’s 8.5% Subordinated Debentures due December 31, 2037. 17 Company-Obligated Mandatorily Redeemable Preferred Securities  of Subsidiary Trust Holding Solely Company Subordinated Debentures Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements