received 35,570,493 shares of VoiceStream common stock valued at $3,899.4 million at closing. TDS recognized a gain of approximately $2,125.8 million, net of $1,515.9 million in taxes, on this transaction. TDS had a basis in Aerial of $287.8 million, including deferred losses of $75.9 million from September 17, 1999 to May 4, 2000. In 2001, the gain on disposal of Aerial was reduced by $24.1 million, or $.41 per share, reflecting adjustments to estimates used during the closing in the calculation of income and other tax liabilities. Summarized income statement information relating to discontinued operations, excluding any corporate charges and intercompany interest expense, is as follows. The amounts used in computing Earnings per Share from Continuing Operations and the effect on income and the weighted average number of Common and Series A Common Shares of dilutive potential common stock are as follows. Summarized cash flow statement information relating to discontinued operations is as follows. U.S. Cellular retired Liquid Yield Option Notes (“LYONs”) with an aggregate carrying value of $25.4 million and $63.6 million during 2001 and 2000, respectively, for cash totaling $32.0 million and $99.4 million, respectively. These retirements resulted in an extraordinary loss of $5.7 million, net of minority interest of $1.2 million, or $.10 per basic and diluted share, in 2001, and $30.5 million, net of minority interest of $6.4 million, or $.51 per basic and diluted share in 2000. There were no income tax benefits due to the conversion feature associated with these LYONs. (1) The minority income adjustment reflects the additional minority share of  U.S. Cellular’s income computed as if all of U.S. Cellular’s issuable securities were outstanding. (1) Income from continuing operations and basic and diluted earnings per share were significantly affected by gains and losses from marketable securities  and other investments. In 2000, the gain on marketable securities and other investments was offset by income taxes on such gains resulting in a net loss. Information regarding the Company’s marketable equity securities is summarized as follows. Cash proceeds from the exchange of available-for-sale securities totaled $570.0 million in 2001 and $46.6 million in 1999. Gross realized losses from the exchange of available-for- sale securities totaled $548.8 million in 2001 and gross realized gains totaled $327.1 million in 1999. The merger of Deutsche Telekom AG and VoiceStream Wireless Corporation was completed in 2001. As a result of the merger, the Company’s 35,837,271 VoiceStream common shares (including 266,778 shares received as a dividend in 2001) were converted into 131,461,861 Deutsche Telekom AG ordinary shares and $570.0 million in cash, and the Company recognized a $644.9 million loss. The merger of VeriSign, Inc. and Illuminet Holdings, Inc. was also completed in 2001. As a result of the merger, the Company’s 2,628,748 Illuminet shares (including 138,736 shares acquired through the acquisition of Chorus in 2001) were converted into 2,444,735 VeriSign, Inc. shares, and the Company recognized a $96.1 million gain. 6 Marketable Equity Securities Notes to Consolidated Financial Statements (1) Preferred Shares convertible into 239,514 Common Shares in 2001 were not included in computing Diluted Earnings per Share because their effects were antidilutive. (2) Stock options convertible into 1,381,041 Common Shares in 2001 were not included in computing Diluted Earnings per Share because their effects were antidilutive. 4 Extraordinary Item Year Ended December 31, 2000 1999 (Dollars in thousands) Revenues $ 94,463 $ 225,501 Expenses 164,148 435,509 Operating (Loss) (69,685) (210,008) Minority share of loss 33,459 21,369 Other (expense) income (29,533) (6,504) Interest expense (8,605) (22,119) (Loss) Before Income Taxes (74,364) (217,262) Income tax (benefit) (36,624) (67,650) Net (Loss) (37,740) (149,612) Losses deferred after measurement date 37,740 38,120 Net (Loss) from Discontinued Operations $ — $ (111,492) Year Ended December 31, 2000 1999 (Dollars in thousands) Cash flows from operating activities $(55,851) $(62,633) Cash flows from investing activities (17,325) (32,351) Cash flows from financing activities 108,180 239,213 Cash provided (used) by discontinued operations 35,004 144,229 (Increase) in cash included in  Net Assets of Discontinued Operations (41,567) (318) Cash flows from discontinued operations $ (6,563) $ 143,911 Year Ended December 31, 2001 2000 1999 (Shares in thousands) Weighted Average Number of Common Shares used in Basic Earnings per Share 58,661 59,922 61,436 Effect of Dilutive Securities: Common Shares  outstanding if Preferred Shares converted  (1) — 206 550 Stock options  (2) — 498 377 Common Shares issuable — 10 13 Weighted Average Number of Common Shares used in Diluted Earnings per Share 58,661 60,636 62,376 December 31, 2001 2000 (Dollars in thousands) Deutsche Telekom AG $2,257,200 $ — 131,461,861 Ordinary Shares VoiceStream Wireless Corp. — 3,579,281 35,570,493 Common Shares Vodafone AirTouch plc 332,451 463,626 12,945,915 ADRs VeriSign, Inc. 92,998 — 2,444,735 Common Shares Illuminet Holdings, Inc. — 57,115 2,490,012 Common Shares Rural Cellular Corporation 16,006 21,312 719,396 equivalent Common Shares Other 1,575 570 Aggregate Fair Value 2,700,230 4,121,904 Original Cost 3,303,106 4,417,328 Gross Unrealized Holding (Losses) (602,876) (295,424) Tax (benefit) (236,331) (114,213) Unrealized Holding (Losses), net of tax (366,545) (181,211) Equity Method unrealized gains 397 — Minority Share of Unrealized  Holding Losses 14,028 2,867 Net Unrealized Holding (Losses) $ (352,120) $ (178,344) Year Ended December 31, 2001 2000 1999 Basic Earnings per Share Continuing Operations Excluding Gains $2.86 $ 2.57 $ 1.80 Gains (loss)  (1) (5.73) (.15) 2.92 (2.87) 2.42 4.72 Discontinued Operations Gain (loss) on disposal (.41) 35.47 — Loss from operations — — (1.81) Extraordinary Item-loss on extinguishment of debt (.10) (.51) — Cumulative effect of  accounting change — (.06) — $(3.38) $ 37.32 $ 2.91 Diluted Earnings per Share Continuing Operations Excluding Gains $2.86 $ 2.54 $ 1.78 Gains (loss)  (1) (5.73) (.15) 2.87 (2.87) 2.39 4.65 Discontinued Operations Gain (loss) on disposal (.41) 35.06 — Loss from operations — — (1.78) Extraordinary Item-loss on extinguishment of debt (.10) (.51) — Cumulative effect of  accounting change — (.06) — $(3.38) $ 36.88 $ 2.87 Year Ended December 31, 2001 2000 1999 (Dollars in thousands) Basic Earnings per Share Income (Loss) from Continuing Operations $(168,248) $ 145,527 $ 291,326 Preferred Dividend Requirement (458) (504) (1,147) Income (Loss) from  Continuing Operations  Available to Common used in Basic Earnings  per Share (168,706) 145,023 290,179 Discontinued Operations Gain (loss) on disposal (24,092) 2,125,787 — Loss from operations — — (111,492) Extraordinary item-loss on extinguishment of debt (5,715) (30,471) — Cumulative effect of  accounting change — (3,841) — Net Income (Loss) Available  to Common used in Basic Earnings per Share $(198,513) $2,236,498 $ 178,687 Diluted Earnings per Share Income (Loss) from Continuing Operations Available to Common used in Basic Earnings per Share $(168,706) $ 145,023 $ 290,179 Reduction in preferred dividends if Preferred Shares converted into Common Shares — 446 1,031 Minority income adjustment  (1) — (798) (937) Income (Loss) Available to Common from Continuing Operations used in Diluted Earnings per Share (168,706) 144,671 290,273 Discontinued Operations Gain (loss) on disposal (24,092) 2,125,787 — Loss from operations — — (111,492) Extraordinary item-loss on extinguishment of debt (5,715) (30,471) — Cumulative effect of  accounting change — (3,841) — Net Income (Loss) Available  to Common used in Diluted Earnings per Share $(198,513) $2,236,146 $ 178,781 5 Earnings Per Share Notes to Consolidated Financial Statements Telephone and Data Systems, Inc. 49 Telephone and Data Systems, Inc. Annual Report 2001 Telephone and Data Systems, Inc. Annual Report 2001 48