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A summary of the status of TDS stock option plans at December 31, 2001, 2000 and 1999 and changes during the years then ended is presented in the table and narrative that follows. Weighted Weighted 

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At December 31, 2001, 1,031,000 options are exercisable, have exercise prices between $34.51 and $119.28 with a weighted average exercise price of $69.39, and a weighted average remaining contractual life of 7.3 years. The remaining 360,000 options are not exercisable, have exercise prices between $87.05 and $119.08 with a weighted average exercise price of $111.87, and a weighted average remaining contractual life of 8.6 years. 

The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in 2001, 2000 and 1999, respectively: risk-free interest rates of 4.9%, 5.2% and 5.2%; expected dividend yields of 0.7%, 0.5% and 0.6%; expected lives of 8.1 years, 7.6 years and 7.5 years and expected volatility of 32.3%, 29.4% and 27.3%. 

## 21 Employee Benefit Plans 

The Company sponsors a qualified noncontributory defined contribution pension plan. Effective January 1, 2001, the Company merged two previous plans into a new successor pension plan and combined the plan assets held for the previous two plans. The plan provides benefits for the employees of TDS, TDS Telecom and U.S. Cellular. 

(Employees of certain telephone subsidiaries are covered under other pension plans or receive direct pension 

payments.) Under this plan, pension costs are calculated separately for each participant and are funded currently. TDS also sponsors an unfunded non-qualified deferred supplemental executive retirement plan to supplement the benefits under these plans to offset the reduction of benefits caused by the limitation on annual employee compensation under the tax laws. 

Total pension costs were $8.8 million, $8.6 million and $8.8 million in 2001, 2000 and 1999, respectively. 

## Other Postretirement Benefits 

The Company sponsors two defined benefit postretirement plans that cover most of the employees of TDS, TDS Telecom and the subsidiaries of TDS Telecom. One plan provides medical benefits and the other plan provides life insurance benefits. Both plans are contributory, with retiree contributions adjusted annually. The medical plan anticipates future cost sharing changes that are consistent with the Company’s intent to increase retiree contributions by the health care cost trend rate. 

An amount not to exceed 25 percent of the total contribution to the pension plan may be contributed to fund the cost of the medical benefits annually. An additional contribution equal to a reasonable amortization of the past service cost may be made without regard to the 25 percent limitation. 

The following table reconciles the beginning and ending balances of the benefit obligation and the fair value of plan assets for the other postretirement benefit plans. 

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The following table sets forth the weighted average assump- tions used in accounting for the plans. 

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For measurement purposes, a 10.0% and 7.8% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2001 and 2000, respectively. The 2001 annual rate of increase is expected to remain at 10% in 2002 and then decrease to 5.75% by 2010 while the 2000 annual rate of increase was expected to decrease to 5.5% by 2002. 

Net periodic benefit cost for the years ended December 31, 2001, 2000 and 1999 include the following components. 

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The health care cost trend rate assumption has a significant effect on the amounts reported. A one-percentage-point increase or decrease in assumed health care cost trend rates would have the following effects. One Percentage Point 

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## 22 Commitments and Contingencies 

## Construction and Expansion 

The primary purpose of TDS’s construction and expansion expenditures is to provide for normal growth, to upgrade communications service, to expand into new communication areas and to take advantage of service-enhancing and cost-reducing technological developments. The U.S. Cellular capital additions budget totals approximately $620-$640 million for 2002, primarily to add additional cell sites to expand and enhance coverage, including adding digital service capabilities to its systems. The TDS Telecom capital additions budget totals approximately $170-$190 million for 

2002, including approximately $115-$125 million for the local telephone markets to provide for normal growth, and to upgrade plant and equipment to provide enhanced services, and approximately $55-$65 million for the competitive local exchange business to build switching and other network facilities to expand operations. 

## Pending Acquisitions 

At December 31, 2001, the Company had agreements to acquire a telephone company and certain PCS licenses for aggregate consideration of $90.4 million in cash. 

## Lease Commitments 

TDS and its subsidiaries have leases for certain cellular plant facilities, office space and data processing equipment, most of which are classified as operating leases. For the years 2001, 2000 and 1999, rent expense for noncancelable, long-term leases was $52.9 million, $48.0 million and $31.2 million, respectively, and rent expense under cancelable, short-term leases was $3.0 million, $5.4 million and $14.6 million, respectively. At December 31, 2001, the aggregate minimum rental commitments under noncancelable, long-term operating leases were as follows. 

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## Contingencies 

The Company is involved in legal proceedings before the Federal Communications Commission and various state and federal courts from time to time. Management does not believe that any of such proceedings should have a material adverse impact on the financial position, results of operations or cash flows of the Company. 

## Other Commitments 

On November 1, 2000, the United States Bankruptcy Court for the Western District of Wisconsin confirmed a plan of financial reorganization for Airadigm Communications, Inc., a Wisconsin-based wireless services provider. Under the terms of the plan of reorganization, TDS and an unrelated entity have committed to provide funding to meet certain obligations of Airadigm. Airadigm continues to operate as an independent company providing wireless services. Pursuant to the plan of reorganization, under certain circumstances and subject to the FCC’s rules and regulations, TDS and the unrelated entity, or their respective designees, may each acquire certain personal communications services licenses for areas of Wisconsin and 

