Telephone and Data Systems, Inc. Report of Management Management of Telephone and Data Systems, Inc. has the responsibility for preparing the accompanying consolidated financial statements and for their integrity and objectivity. The statements were prepared in accordance with generally accepted accounting principles applied on a consistent basis, and in management’s opinion are fairly presented. The financial statements include amounts that are based on management’s best estimates and judgments. Management also prepared the other information in the annual report and is responsible for its accuracy and consistency with the financial statements. Management of TDS has established and maintains a system of internal control that provides reasonable assurance as to the integrity and reliability of the financial statements, the protection of assets from unauthorized use or disposition, and the prevention and detection of fraudulent financial reporting.  The system of internal control provides for appropriate  division of responsibility and is documented by written policies and procedures that are communicated to employees with significant roles in the financial reporting process and updated as necessary. Management monitors the system of internal control for compliance, considers recommendations for improvements and updates such policies and procedures as necessary. Monitoring includes an internal auditing program to independently assess the effectiveness of the internal controls and recommend possible improvements thereto. Management believes that TDS’s system of internal control is adequate to accomplish the objectives discussed herein. The concept of reasonable assurance recognizes that the costs of a system of internal accounting controls should not exceed, in management’s judgment, the benefits to be derived. The consolidated financial statements of TDS have been audited by Arthur Andersen LLP, Independent Public Accountants. Report of Independent Public Accountants Consolidated Quarterly Information (Unaudited) In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position  of Telephone and Data Systems, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. As explained in Note 1 of Notes to Consolidated Financial Statements, effective January 1, 2000, the Company changed certain of its accounting principles for revenue recognition as a result of the adoption of Staff Accounting Bulletin No. 101 “Revenue Recognition in Financial Statements.” We have audited the accompanying consolidated balance sheets of Telephone and Data Systems, Inc. (a Delaware corporation) and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, common stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.  To the Stockholders and Board of Directors  of Telephone and Data Systems, Inc.: We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 62 Telephone and Data Systems, Inc. Annual Report 2001 63 Telephone and Data Systems, Inc. Annual Report 2001 Net Income Available to Common from Continuing Operations for 2001 and 2000 included significant gains and losses from marketable securities and other investments. The table above summarizes the effect of the gains and losses on Net Income Available to Common from Continuing Operations and Diluted Earnings per Share from Continuing Operations. Management believes U.S. Cellular’s operating results reflect seasonality in both service revenues, which tend to increase more slowly in the first and fourth quarters, and operating expenses, which tend to be higher in the fourth quarter due to increased marketing activities and customer growth. This seasonality may cause operating income to vary from quarter to quarter. Arthur Andersen LLP Chicago, Illinois January 25, 2002 2000 Operating Revenues $ 538,327 $ 585,654 $605,511 $ 597,364 Operating Income 91,511 126,398 123,971 78,186 Gain (Loss) on Marketable Securities and Other Investments 17,851 (50,000) 57,743 (9,878) Net Income Available to Common from Continuing Operations From Operations 29,030 50,826 46,653 27,740 From Gains (losses) 6,361 (30,260) 20,428 (5,755) 35,391 20,566 67,081 21,985 Net Income (Loss) Available to Common $ 31,550 $2,142,894 $ 46,168 $ 15,886 Weighted Average Shares Outstanding (000s) 61,078 60,306 59,537 58,768 Basic Earnings per Share from Continuing Operations $ .58 $ .34 $ 1.13 $ .37 Diluted Earnings per Share  from Continuing Operations From Operations .47 .83 .77 .46 From Gains (losses) .10 (.49) .34 (.09) .57 .34 1.11 .37 Basic Earnings per Share – Net Income (Loss) .52 35.53 .78 .27 Diluted Earnings per Share – Net Income (Loss) $ .51 $ 35.23 $ .76 $ .27 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 (Dollars in thousands, except per share amounts) 2001 Operating Revenues $600,369 $ 642,301 $ 675,009 $670,863 Operating Income 90,490 122,243 118,419 105,003 Gain (Loss) on Marketable Securities and Other Investments — (644,929) — 96,624 Net Income (Loss) Available to Common from Continuing Operations From Operations 31,104 46,652 52,832 37,065 From Gains (losses) — (385,223) — 48,864 31,104 (338,571) 52,832 85,929 Net Income (Loss) Available to Common $ 28,116 $(339,832) $ 51,384 $ 61,819 Weighted Average Shares Outstanding (000s) 58,718 58,683 58,711 58,561 Basic Earnings per Share from Continuing Operations $ .53 $ (5.77) $ .90 $ 1.47 Diluted Earnings per Share  from Continuing Operations From Operations .52 .80 .89 .63 From Gains (losses) — (6.57) — .83 .52 (5.77) .89 1.46 Basic Earnings per Share – Net Income (Loss) .48 (5.79) .88 1.06 Diluted Earnings per Share – Net Income (Loss) $ .47 $ (5.79) $ .87 $ 1.05