##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

(Mark One)

|    |  |                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2001

Or

|      |  |                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from      to

Commission File Number    000-28160

WESTERN WIRELESS CORPORATION

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Washington                                                     |  | 91-1638901                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer Identification No.)

|                                             |  |           
|-------------------------------------------- |  | ----------
|3650 131st Avenue S.E.,
Bellevue, Washington |  | 98006     
|                                             |  |           
|(Address of principal executive offices)     |  | (Zip Code)

(425) 586-8700

---

(Registrants telephone number, including area code)




---

(Former name, former address and former fiscal year, if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [   ]

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

|                                   |  |                                          |  | 
|---------------------------------- |  | ---------------------------------------- |  | 
|Title                              |  | Shares Outstanding as of August 10, 2001
|                                   |  |                                         
|Class A Common Stock, no par value |  | 71,679,679                              
|                                  
|                                  
|                                  
|                                  
|Class B Common Stock, no par value |  | 7,030,397                               





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TABLE OF CONTENTS



|                               |                                                                                               |                                                                        |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Condensed Consolidated Balance Sheets                                 
|                               |                                                                                               | Condensed Consolidated Statements of Operations and Comprehensive Loss
|                               |                                                                                               | Condensed Consolidated Statements of Cash Flows                       
|                               |                                                                                               | Notes to Condensed Consolidated Financial Statements                  
|                               | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION   
|                               | Item 1. Legal Proceedings                                                                    
|                               | Item 2. Changes in Securities                                                                
|                               | Item 3. Defaults Upon Senior Securities                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other Information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    



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##### Table of Contents



Western Wireless Corporation
Form 10-Q
For the Quarter Ended June 30, 2001

Table of Contents

|                               |  |                                                                                                                                           |  |     
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                                                           |  | Page
|                               |  |                                                                                                                                           |  |     
|PART I - FINANCIAL INFORMATION |  |                                                                                                                                          
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Item 1.                        |  | Financial Statements                                                                                                                      |  |     
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000                                                           |  | 3   
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Statements of Operations and Comprehensive Loss
for the Three and Six Months Ended June 30, 2001 and June 30, 2000 |  | 4   
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2001 and June 30, 2000                                  |  | 5   
|                              
|                              
|                              
|                              
|                               |  | Notes to Condensed Consolidated Financial Statements                                                                                      |  | 6   
|                              
|                              
|                              
|                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                     |  | 13  
|                              
|                              
|                              
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                |  | 21  
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|PART II - OTHER INFORMATION    |  |                                                                                                                                          
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Item 1.                        |  | Legal Proceedings                                                                                                                         |  | 22  
|                              
|                              
|                              
|                              
|Item 2.                        |  | Changes in Securities                                                                                                                     |  | 22  
|                              
|                              
|                              
|                              
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                           |  | 22  
|                              
|                              
|                              
|                              
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                       |  | 22  
|                              
|                              
|                              
|                              
|Item 5.                        |  | Other Information                                                                                                                         |  | 22  
|                              
|                              
|                              
|                              
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                                          |  | 22  

2



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##### Table of Contents












WESTERN WIRELESS CORPORATION
Condensed Consolidated Balance Sheets(Dollars in thousands)

|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |          |   |          |  
|------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------------- | -------- | ----------- | -------- | ------------ | -------- | - | -------- | -
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          | June 30,    |          | December 31,
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          | 2001        |          | 2000        
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          | (Unaudited) |          |             
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |             
|ASSETS                                                                                                              |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Current assets:                                                                                                     |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Cash and cash equivalents                                                                                                                                                                                               |   | $                            | 70,958   |             |          | $            | 23,278   |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Accounts receivable, net of allowance for doubtful accounts
of $16,195 and $15,801, respectively                                                                                                                        |   |                              | 122,005  |             |          |              | 112,110  |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Inventory                                                                                                                                                                                                               |   |                              | 21,954   |             |          |              | 17,249   |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Marketable securities                                                                                                                                                                                                   |   |                              | 20,288   |             |          |              | 40,802   |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Prepaid expenses and other current assets                                                                                                                                                                               |   |                              | 27,419   |             |          |              | 15,284   |  
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                    |                                                                                                                                                                                                                         |   | Total current assets         |          |             | 262,624  |              |          |   | 208,723  |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Property and equipment, net of accumulated depreciation
of $442,587 and $367,855, respectively                      |                                                                                                                                                                                                                         |   | 681,794                      |          |             |          | 581,745      |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Licensing costs and other intangible assets, net of accumulated
amortization of $134,025 and $115,695, respectively |                                                                                                                                                                                                                         |   | 1,179,740                    |          |             |          | 1,166,922    |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Investments in and advances to unconsolidated affiliates                                                            |                                                                                                                                                                                                                         |   | 31,314                       |          |             |          | 34,883       |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Other assets                                                                                                        |                                                                                                                                                                                                                         |   | 17,847                       |          |             |          | 4,196        |         
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                    |                                                                                                                                                                                                                         | $ | 2,173,319                    |          |             | $        | 1,996,469    |         
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|LIABILITIES AND NET CAPITAL DEFICIENCY                                                                              |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Current liabilities:                                                                                                |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Accounts payable                                                                                                                                                                                                        |   | $                            | 25,625   |             |          | $            | 19,554   |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Accrued liabilities and other                                                                                                                                                                                           |   |                              | 162,750  |             |          |              | 111,853  |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Construction accounts payable                                                                                                                                                                                           |   |                              | 60,343   |             |          |              | 30,710   |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | WWI bridge loan                                                                                                                                                                                                         |   |                              | 16,980   |             |          |              |          |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Payable to VoiceStream Wireless                                                                                                                                                                                         |   |                              |          |             |          |              | 24,500   |  
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                    |                                                                                                                                                                                                                         |   | Total current liabilities    |          |             | 265,698  |              |          |   | 186,617  |  
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|Long-term debt                                                                                                      |                                                                                                                                                                                                                         |   | 2,057,541                    |          |             |          | 1,926,393    |         
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|Minority interest in consolidated subsidiaries                                                                      |                                                                                                                                                                                                                         |   | 31,784                       |          |             |          | 22,152       |         
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|Commitments and contingencies (Note 8)                                                                              |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|
|Net capital deficiency:                                                                                             |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Preferred stock, no par value, 50,000,000 shares authorized;
no shares issued and outstanding                                                                                                                           |   |                              |          |             |          |              |          |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Common stock, no par value, 300,000,000 shares authorized; Class A,
71,664,508 and 71,054,977 shares issued and outstanding,
respectively; Class B, 7,022,638 and 7,060,059 shares issued
and outstanding, respectively |   |                              | 668,316  |             |          |              | 665,084  |  
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Deferred compensation                                                                                                                                                                                                   |   |                              | (2,979   | )           |          |              | (5,703   | )
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Accumulated other comprehensive loss                                                                                                                                                                                    |   |                              | (21,931  | )           |          |              | (9,875   | )
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                    | Deficit                                                                                                                                                                                                                 |   |                              | (825,110 | )           |          |              | (788,199 | )
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                    |                                                                                                                                                                                                                         |   | Total net capital deficiency |          |             | (181,704 | )            |          |   | (138,693 | )
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         
|                                                                                                                    |                                                                                                                                                                                                                         | $ | 2,173,319                    |          |             | $        | 1,996,469    |         
|                                                                                                                    |                                                                                                                                                                                                                         |   |                              |          |             |          |              |         

See accompanying notes to condensed consolidated financial statements

3



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##### Table of Contents






WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Loss(Dollars in thousands, except per share data)
(Unaudited)

|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |   |            |   |         |  
|----------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ------------------------------ | -------------------------- | ---------- | --------------------------- | ------- | ------------------------- | ---------- | ---- | ------- | ---- | ---------- | ------ | ------- | - | ---------- | - | ------- | -
|                                                                                          |  |                                                                         |                                |                            |            | Three months ended June 30, |         | Six months ended June 30,
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                          
|                                                                                          |  |                                                                         |                                |                            |            | 2001                        |         | 2000                      |            | 2001 |         | 2000
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |     
|Revenues:                                                                                 |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Subscriber revenues                                                     |                                | $                          | 158,157    |                             |         | $                         | 133,865    |      |         | $    | 310,089    |        |         | $ | 256,463    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Roamer revenues                                                         |                                |                            | 68,101     |                             |         |                           | 54,503     |      |         |      | 129,713    |        |         |   | 99,152     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | International revenues                                                  |                                |                            | 16,881     |                             |         |                           | 5,186      |      |         |      | 29,698     |        |         |   | 5,188      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Equipment sales and other revenues                                      |                                |                            | 9,423      |                             |         |                           | 8,449      |      |         |      | 19,536     |        |         |   | 16,386     |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  |                                                                         |                                | Total revenues             |            |                             | 252,562 |                           |            |      | 202,003 |      |            |        | 489,036 |   |            |   | 377,189 |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Operating expenses:                                                                       |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Cost of service                                                         |                                |                            | 59,562     |                             |         |                           | 44,608     |      |         |      | 114,529    |        |         |   | 79,149     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Cost of equipment sales                                                 |                                |                            | 20,718     |                             |         |                           | 10,304     |      |         |      | 37,131     |        |         |   | 20,227     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | General and administrative                                              |                                |                            | 52,320     |                             |         |                           | 39,195     |      |         |      | 103,513    |        |         |   | 76,629     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Sales and marketing                                                     |                                |                            | 39,229     |                             |         |                           | 29,858     |      |         |      | 81,571     |        |         |   | 58,006     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Depreciation and amortization                                           |                                |                            | 52,685     |                             |         |                           | 30,176     |      |         |      | 95,304     |        |         |   | 59,919     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Stock based compensation                                                |                                |                            | 6,251      |                             |         |                           | 5,470      |      |         |      | 12,247     |        |         |   | 8,500      |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  |                                                                         |                                | Total operating expenses   |            |                             | 230,765 |                           |            |      | 159,611 |      |            |        | 444,295 |   |            |   | 302,430 |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Operating income                                                                          |  |                                                                         | 21,797                         |                            |            |                             | 42,392  |                           |            |      | 44,741  |      |            |        | 74,759  |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Other income (expense):                                                                   |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Interest and financing expense, net                                     |                                |                            | (40,806    | )                           |         |                           | (33,952    | )    |         |      | (82,918    | )      |         |   | (65,665    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Equity in net income (loss) of unconsolidated
affiliates                |                                |                            | 543        |                             |         |                           | (691       | )    |         |      | (2,412     | )      |         |   | (486       | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Other, net                                                              |                                |                            | (619       | )                           |         |                           | (1,022     | )    |         |      | (290       | )      |         |   | (899       | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  |                                                                         |                                | Total other expense        |            |                             | (40,882 | )                         |            |      | (35,665 | )    |            |        | (85,620 | ) |            |   | (67,050 | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Minority interest in consolidated subsidiaries                                            |  |                                                                         | 5,058                          |                            |            |                             | 195     |                           |            |      | 9,548   |      |            |        | 345     |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Net income (loss) before extraordinary item
and cumulative change in accounting principle |  |                                                                         | (14,027                        | )                          |            |                             | 6,922   |                           |            |      | (31,331 | )    |            |        | 8,054   |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Extraordinary loss on early extinquishment of debt                                        |  |                                                                         |                                |                            |            |                             | (12,377 | )                         |            |      |         |      |            |        | (12,377 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cumulative change in accounting principle                                                 |  |                                                                         |                                |                            |            |                             |         |                           |            |      | (5,580  | )    |            |        |         |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  |                                                                         |                                | Net loss                   |            | $                           | (14,027 | )                         |            | $    | (5,455  | )    |            | $      | (36,911 | ) |            | $ | (4,323  | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Basic income (loss) per share:                                                            |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Before extraordinary item and cumulative change in
accounting principle |                                | $                          | (0.18      | )                           |         | $                         | 0.09       |      |         | $    | (0.40      | )      |         | $ | 0.10       |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Extraordinary loss on early extinguishment of debt                      |                                |                            |            |                             |         |                           | (0.16      | )    |         |      |            |        |         |   | (0.16      | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Cumulative change in accounting principle                               |                                |                            |            |                             |         |                           |            |      |         |      | (0.07      | )      |         |   |            |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Basic loss per share                                                                      |  | $                                                                       | (0.18                          | )                          |            | $                           | (0.07   | )                         |            | $    | (0.47   | )    |            | $      | (0.06   | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Diluted income (loss) per share:                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Before extraordinary item and cumulative change in
accounting principle |                                | $                          | (0.18      | )                           |         | $                         | 0.09       |      |         | $    | (0.40      | )      |         | $ | 0.10       |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Extraordinary loss on early extinguishment of debt                      |                                |                            |            |                             |         |                           | (0.16      | )    |         |      |            |        |         |   | (0.15      | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Cumulative change in accounting principle                               |                                |                            |            |                             |         |                           |            |      |         |      | (0.07      | )      |         |   |            |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Diluted loss per share                                                                    |  | $                                                                       | (0.18                          | )                          |            | $                           | (0.07   | )                         |            | $    | (0.47   | )    |            | $      | (0.05   | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Weighted average shares outstanding:                                                      |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Basic                                                                   |                                |                            | 78,635,000 |                             |         |                           | 77,848,000 |      |         |      | 78,487,000 |        |         |   | 77,789,000 |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  | Diluted                                                                 |                                |                            | 78,635,000 |                             |         |                           | 80,287,000 |      |         |      | 78,487,000 |        |         |   | 80,309,000 |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Comprehensive loss:                                                                       |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Net loss                                                                |                                | $                          | (14,027    | )                           |         | $                         | (5,455     | )    |         | $    | (36,911    | )      |         | $ | (4,323     | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Unrealized gain (loss) on marketable securities:                        |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |   |            |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  |                                                                         | Reclassification adjustment    |                            |            |                             |         |                           |            |      |         |      |            | (1,984 | )       |   |            |   |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  |                                                                         | Unrealized holding gain (loss) |                            |            | 1,667                       |         |                           |            |      |         |      |            | (3,795 | )       |   |            |   |        
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  |                                                                         |                                | Net unrealized gain (loss) |            |                             | 1,667   |                           |            |      |         |      |            |        | (5,779  | ) |            |   |         |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|                                                                                          |  | Foreign currency translation                                            |                                |                            | (4,811     | )                           |         |                           | (1,130     | )    |         |      | (5,185     | )      |         |   | (6,296     | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Unrealized gain (loss) on hedges                                        |                                |                            | 80         |                             |         |                           |            |      |         |      | (1,092     | )      |         |   |            |  
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  
|Total comprehensive loss                                                                  |  | $                                                                       | (17,091                        | )                          |            | $                           | (6,585  | )                         |            | $    | (48,967 | )    |            | $      | (10,619 | )
|                                                                                          |  |                                                                         |                                |                            |            |                             |         |                           |            |      |         |      |            |        |         |  

See accompanying notes to condensed consolidated financial statements

4



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##### Table of Contents






WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Cash Flows(Dollars in thousands)
(Unaudited)

|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |            |   |          |  
|---------------------------------------------- | ------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------- | -------- | ------------------------- | -------- | ------- | ---------- | - | -------- | -
|                                               |                                                                                 |   |                                                                                                   |          | Six months ended June 30,
|                                               |                                                                                 |   |                                                                                                   |          |                          
|                                               |                                                                                 |   |                                                                                                   |          | 2001                      |          | 2000   
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |        
|Operating activities:                          |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                              
|                                              
|                                              
|                                              
|                                               | Net loss                                                                        |   | $                                                                                                 | (36,911  | )                         |          | $       | (4,323     | )
|                                              
|                                              
|                                              
|                                              
|                                               | Adjustments to reconcile net loss to net cash
provided by operating activities: |   |                                                                                                   |          |                           |          |         |            |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Extraordinary loss on early extinguishment of debt                                                |          |                           |          |         |            |   | 12,377   |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Cumulative change in accounting principle                                                         |          |                           | 5,580    |         |            |   |          |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Depreciation and amortization                                                                     |          |                           | 96,696   |         |            |   | 61,656   |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Stock based compensation                                                                          |          |                           | 12,247   |         |            |   | 8,500    |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Equity in net loss of unconsolidated affiliates                                                   |          |                           | 2,412    |         |            |   | 486      |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Minority interest in consolidated subsidiary                                                      |          |                           | (9,548   | )       |            |   | (345     | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Loss on hedges                                                                                    |          |                           | 7,380    |         |            |   |          |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Gain on sale of marketable securities                                                             |          |                           | (8,006   | )       |            |   |          |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Other, net                                                                                        |          |                           | 2,478    |         |            |   | 1,569    |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                 |   | Changes in operating assets and liabilities, net of effects
from consolidating acquired interests |          |                           | (21,227  | )       |            |   | 3,337    |  
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                               |                                                                                 |   | Net cash provided by operating activities                                                         |          |                           | 51,101   |         |            |   | 83,257   |  
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|Investing activities:                          |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of property and equipment                                              |   |                                                                                                   | (155,284 | )                         |          |         | (127,649   | )
|                                              
|                                              
|                                              
|                                              
|                                               | Additions to licensing costs and other intangible assets                        |   |                                                                                                   | (25,138  | )                         |          |         | (22,362    | )
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisition of wireless properties, net of cash acquired                        |   |                                                                                                   |          |                           |          |         | (92,339    | )
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from sale of marketable securities                                     |   |                                                                                                   | 26,636   |                           |          |         | (6,329     | )
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of marketable securities                                               |   |                                                                                                   | (3,896   | )                         |          |         |            |  
|                                              
|                                              
|                                              
|                                              
|                                               | Receipts from unconsolidated subsidiaries                                       |   |                                                                                                   | 2,962    |                           |          |         | 3,438      |  
|                                              
|                                              
|                                              
|                                              
|                                               | Payments to VoiceStream Wireless                                                |   |                                                                                                   | (24,500  | )                         |          |         |            |  
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of WWI minority interest                                               |   |                                                                                                   | (14,140  | )                         |          |         |            |  
|                                              
|                                              
|                                              
|                                              
|                                               | Other                                                                           |   |                                                                                                   |          |                           |          |         | 1,557      |  
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                               |                                                                                 |   | Net cash used in investing activities                                                             |          |                           | (193,360 | )       |            |   | (243,684 | )
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|Financing activities:                          |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from issuance of common stock, net                                     |   |                                                                                                   | 3,581    |                           |          |         | 1,691      |  
|                                              
|                                              
|                                              
|                                              
|                                               | Additions to long-term debt                                                     |   |                                                                                                   | 608,461  |                           |          |         | 1,280,000  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Repayment of long-term debt                                                     |   |                                                                                                   | (440,000 | )                         |          |         | (1,150,000 | )
|                                              
|                                              
|                                              
|                                              
|                                               | WWI minority interest contributions                                             |   |                                                                                                   | 19,978   |                           |          |         |            |  
|                                              
|                                              
|                                              
|                                              
|                                               | Other                                                                           |   |                                                                                                   | (2,081   | )                         |          |         |            |  
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                               |                                                                                 |   | Net cash provided by financing activities                                                         |          |                           | 189,939  |         |            |   | 131,691  |  
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|                                              
|Change in cash and cash equivalents            |                                                                                 |   | 47,680                                                                                            |          |                           |          | (28,736 | )         
|                                              
|Cash and cash equivalents, beginning of period |                                                                                 |   | 23,278                                                                                            |          |                           |          | 42,735  |           
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           
|Cash and cash equivalents, end of period       |                                                                                 | $ | 70,958                                                                                            |          |                           | $        | 13,999  |           
|                                               |                                                                                 |   |                                                                                                   |          |                           |          |         |           

See accompanying notes to condensed consolidated financial statements

5



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##### Table of Contents






WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

1. Organization:

Western Wireless Corporation (the Company) provides wireless
communications services in the United States principally through the ownership
and operation of cellular systems. The Company provides cellular operations
primarily in rural areas in 19 western states under the Cellular One®
(Cellular One) brand name.

At June 30, 2001, the Company owned 98% of Western Wireless International
Corporation (WWI) who, through operating joint ventures, is a provider of wireless
communications services worldwide.

The condensed consolidated balance sheets as of December 31, 2000, have
been derived from audited financial statements. The unaudited interim
condensed consolidated financial statements dated June 30, 2001, are presented
herein, and reflect all adjustments, which are, in the opinion of management,
necessary for a fair presentation of the financial position, results of
operations and cash flows for the periods presented. All such adjustments are
of a normal recurring nature. Results of operations for interim periods
presented herein are not necessarily indicative of results of operations for
the entire year. For further information, refer to the Companys annual
audited financial statements and footnotes thereto for the year ended December
31, 2000, contained in the Companys Form 10-K dated March 30, 2001.

2. Summary of Significant Accounting Policies:

Supplemental cash flow disclosure:

Cash paid for interest was $75.4 million and $60.6 million for the six
months ended June 30, 2001 and 2000, respectively.

Reclassifications:

Certain amounts in prior years financial statements have been
reclassified to conform to the 2001 presentation.

Recently issued accounting standards:

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations (effective July 1, 2001) and SFAS No. 142, Goodwill and Other
Intangible Assets (effective for the Company on January 1, 2002). SFAS No.
141 prohibits pooling-of-interests accounting for acquisitions. SFAS No. 142
specifies that goodwill and some intangible assets will no longer be amortized,
but instead will be subjected to periodic impairment testing. The Company is
in the process of evaluating the financial impact of adoption of SFAS No. 142.

On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133 (SFAS No. 133), Accounting for Derivative Instruments and
Hedging Activities. The Company records all derivative instruments on the
balance sheet at fair value. On the date derivative contracts are entered into,
the Company designates the derivative as either: (i) a hedge of the fair value
of a recognized asset or liability or of an unrecognized firm commitment (fair
value hedge), (ii) a hedge of a forecasted transaction or of the variability of
cash flows to be received or paid related to a recognized asset or liability
(cash flow hedge) or (iii) a hedge of a net investment in a foreign operation
(net investment hedge). Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income (loss), depending
on whether a derivative is designated as part of a hedge transaction and, if it
is, depending on the type of hedge transaction. For fair value hedge
transactions, changes in the fair value of the derivative instrument are
generally offset in the statement of operations by changes in the fair value of
the item being hedged. For cash flow hedge transactions, changes in the fair
value of the derivative instrument are reported in other comprehensive income
(loss). For net investment hedge transactions, changes in the fair value are
recorded as a component of the foreign currency translation account, which is
also included in other comprehensive income (loss). The gains and losses on
cash flow hedge transactions that are reported in other comprehensive income
(loss) are reclassified to earnings in the periods in which earnings are
impacted by the variability of the cash flows of the hedged item or the
forecasted transactions are realized. The impact of ineffective hedges is
recognized in results of operations in the periods in which the hedges are
deemed to be ineffective. The impact of the adoption of SFAS No. 133 was a
cumulative change in accounting principal loss of $5.6 million.

6



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##### Table of Contents



WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

3. Marketable Securities:

Marketable securities are classified as available-for-sale and are stated
at fair market value. Information regarding the Companys marketable
securities is summarized as follows:

(Dollars in thousands)

|                                      |                      |   |          |        |              |   |       |        | 
|------------------------------------- | -------------------- | - | -------- | ------ | ------------ | - | ----- | ------ | 
|                                      |                      |   | June 30, |        | December 31,
|                                      |                      |   | 2001     |        | 2000        
|                                      |                      |   |          |        |             
|Available-for-sale equity securities: |                      |   |          |        |              |   |       |       
|                                     
|                                     
|                                     
|                                     
|                                      | Aggregate fair value |   | $        | 20,288 |              |   | $     | 40,802 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Historical cost      |   |          | 18,960 |              |   |       | 33,694 | 
|                                      |                      |   |          |        |              |   |       |       
|Unrealized holding gain               |                      | $ | 1,328    |        |              | $ | 7,108 |       
|                                      |                      |   |          |        |              |   |       |       

The Companys net unrealized holding gains and losses are included as an
increase to accumulated other comprehensive income (loss). Realized gains and
losses are determined on the basis of specific identification.

4. Prepaid Expenses and Other Current Assets:

(Dollars in thousands)

|                                                         |  |          |        |              |  |   |        | 
|-------------------------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                                                         |  | June 30, |        | December 31,
|                                                         |  | 2001     |        | 2000        
|                                                         |  |          |        |             
|VAT receivable                                           |  | $        | 7,647  |              |  | $ | 1,020  | 
|                                                        
|                                                        
|                                                        
|                                                        
|WWI marketing costs                                      |  |          | 3,009  |              |  |   |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Rent                                                     |  |          | 2,029  |              |  |   |        | 
|                                                        
|                                                        
|                                                        
|                                                        
|Receivables from unconsolidated international affiliates |  |          | 1,882  |              |  |   | 4,167  | 
|                                                        
|                                                        
|                                                        
|                                                        
|Taxes                                                    |  |          | 1,715  |              |  |   | 1,218  | 
|                                                        
|                                                        
|                                                        
|                                                        
|Deposits                                                 |  |          |        |              |  |   | 3,878  | 
|                                                        
|                                                        
|                                                        
|                                                        
|Other                                                    |  |          | 11,137 |              |  |   | 5,001  | 
|                                                         |  |          |        |              |  |   |        | 
|                                                         |  | $        | 27,419 |              |  | $ | 15,284 | 
|                                                         |  |          |        |              |  |   |        | 

5. Property and Equipment:

(Dollars in thousands)

|                                 |  |          |          |              |  |   |          |  
|-------------------------------- |  | -------- | -------- | ------------ |  | - | -------- | -
|                                 |  | June 30, |          | December 31,
|                                 |  | 2001     |          | 2000        
|                                 |  |          |          |             
|Land, buildings and improvements |  | $        | 29,477   |              |  | $ | 23,847   |  
|                                
|                                
|                                
|                                
|Wireless communications systems  |  |          | 837,806  |              |  |   | 671,605  |  
|                                
|                                
|                                
|                                
|Furniture and equipment          |  |          | 114,730  |              |  |   | 121,037  |  
|                                 |  |          |          |              |  |   |          |  
|                                 |  |          | 982,013  |              |  |   | 816,489  |  
|                                
|                                
|                                
|                                
|Less accumulated depreciation    |  |          | (442,587 | )            |  |   | (367,855 | )
|                                 |  |          |          |              |  |   |          |  
|                                 |  |          | 539,426  |              |  |   | 448,634  |  
|                                
|                                
|                                
|                                
|Construction in progress         |  |          | 142,368  |              |  |   | 133,111  |  
|                                 |  |          |          |              |  |   |          |  
|                                 |  | $        | 681,794  |              |  | $ | 581,745  |  
|                                 |  |          |          |              |  |   |          |  

Depreciation expense was $43.8 million and $23.8 million for the three
months ended June 30, 2001 and 2000, respectively; and $78.1 million and $48.4
million for the six months ended June 30, 2001 and 2000, respectively.

Over time, the Company expects that it will require fewer analog radios as
its subscriber base migrates to digital service. As a result of this planned
migration, the Company has reevaluated the estimated remaining life of analog
equipment, and has accordingly adjusted its depreciation schedule. The
remaining estimated impact of this change is approximately
$20 million spread over the
next three years.

7



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##### Table of Contents

\

WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

6. Accrued Liabilities:

(Dollars in thousands)

|                               |  |          |         |              |  |   |         | 
|------------------------------ |  | -------- | ------- | ------------ |  | - | ------- | 
|                               |  | June 30, |         | December 31,
|                               |  | 2001     |         | 2000        
|                               |  |          |         |             
|Payroll and benefits           |  | $        | 19,958  |              |  | $ | 17,623  | 
|                              
|                              
|                              
|                              
|Interest expense               |  |          | 24,620  |              |  |   | 17,025  | 
|                              
|                              
|                              
|                              
|Property taxes                 |  |          | 6,352   |              |  |   | 6,716   | 
|                              
|                              
|                              
|                              
|Other taxes                    |  |          | 15,189  |              |  |   | 18,018  | 
|                              
|                              
|                              
|                              
|Interconnect charges           |  |          | 10,220  |              |  |   | 7,547   | 
|                              
|                              
|                              
|                              
|Stock appreciation rights      |  |          | 24,763  |              |  |   | 14,999  | 
|                              
|                              
|                              
|                              
|Software and maintenance costs |  |          | 5,619   |              |  |   | 3,738   | 
|                              
|                              
|                              
|                              
|Licensing costs                |  |          | 3,613   |              |  |   | 5,142   | 
|                              
|                              
|                              
|                              
|Unearned revenue               |  |          | 7,132   |              |  |   | 5,313   | 
|                              
|                              
|                              
|                              
|FMV of interest rate hedges    |  |          | 15,072  |              |  |   |         | 
|                              
|                              
|                              
|                              
|Other                          |  |          | 30,212  |              |  |   | 15,732  | 
|                               |  |          |         |              |  |  
|                               |  | $        | 162,750 |              |  | $ | 111,853 | 
|                               |  |          |         |              |  |  

7. Debt:

Long-Term Debt:

(Dollars in thousands)

|                                           |            |   |           |           |              |   |           |           | 
|------------------------------------------ | ---------- | - | --------- | --------- | ------------ | - | --------- | --------- | 
|                                           |            |   | June 30,  |           | December 31,
|                                           |            |   | 2001      |           | 2000        
|                                           |            |   |           |           |             
|Credit Facility:                           |            |   |           |           |              |   |           |          
|                                          
|                                          
|                                          
|                                          
|                                           | Revolvers  |   | $         | 500,000   |              |   | $         | 390,000   | 
|                                          
|                                          
|                                          
|                                          
|                                           | Term Loans |   |           | 1,100,000 |              |   |           | 1,100,000 | 
|                                          
|                                          
|                                          
|                                          
|10-1/2% Senior Subordinated Notes Due 2006 |            |   | 200,000   |           |              |   | 200,000   |          
|                                          
|                                          
|                                          
|                                          
|10-1/2% Senior Subordinated Notes Due 2007 |            |   | 200,000   |           |              |   | 200,000   |          
|                                          
|                                          
|                                          
|                                          
|Icelandic Credit Facility                  |            |   | 23,874    |           |              |   | 23,766    |          
|                                          
|                                          
|                                          
|                                          
|Bolivian Bridge Loan                       |            |   | 21,112    |           |              |   |           |          
|                                          
|                                          
|                                          
|                                          
|Other                                      |            |   | 12,555    |           |              |   | 12,627    |          
|                                           |            |   |           |           |              |  
|                                           |            | $ | 2,057,541 |           |              | $ | 1,926,393 |          
|                                           |            |   |           |           |              |  

The aggregate amounts of principal maturities as of June 30, 2001, are as follows:

(Dollars in thousands):

|                                    |  |   |           | 
|----------------------------------- |  | - | --------- | 
|Six months ending December 31, 2001 |  |   |           | 
|                                   
|                                   
|                                   
|                                   
|Year ending December 31,            |  |   |           | 
|                                   
|                                   
|                                   
|                                   
|2002                                |  | $ | 26,608    | 
|                                   
|                                   
|                                   
|                                   
|2003                                |  |   | 113,288   | 
|                                   
|                                   
|                                   
|                                   
|2004                                |  |   | 165,493   | 
|                                   
|                                   
|                                   
|                                   
|2005                                |  |   | 263,134   | 
|                                   
|                                   
|                                   
|                                   
|Thereafter                          |  |   | 1,489,018 | 
|                                    |  |   |          
|                                    |  | $ | 2,057,541 | 
|                                    |  |   |          

8



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##### Table of Contents



WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

WWI Bridge Loan:

In April 2001, Meteor Mobile Communications Limited (MMC), a subsidiary
in which WWI holds a 77.8% interest, entered into a bridge loan facility
agreement (the Irish Bridge Loan) with Toronto Dominion Bank to provide
funding for the development and operation of MMCs network in Ireland. The
aggregate amount available under the Irish Bridge Loan at inception was
approximately 37 million euro increasing quarterly up to 75 million euro in
January 2002. Under the terms of the Irish Bridge Loan, all outstanding
principal shall be repaid by March 31, 2002, unless a term out option is
exercised, under which the maturity date is then extended to June 30, 2002.
Interest is payable at EURIBOR plus an applicable margin, which at inception is
3.75%, increasing to 4.75% in October 2001 and 6.0% in April 2002. The Irish
Bridge Loan contains certain covenants, including quarterly tests of minimum
subscribers, minimum service revenue, maximum cash flow loss and the transfer
of assets from MMC to WWI. At June 30, 2001 there was approximately $17.0
million outstanding under the Irish Bridge Loan, and based on certain
covenants, there were no available borrowings.

8. Commitments and contingencies:

Purchase Commitments:

In order to ensure an adequate supply and availability of certain wireless
system equipment requirements and service needs, the Company and its
subsidiaries have committed to purchase from various suppliers, wireless
communications equipment and services. Information regarding these commitments
as of June 30, 2001, is as follows:

(Dollars in thousands)

|                      |  |              |        
|--------------------- |  | ------------ | -------
|Aggregate commitments |  | $            | 388,000
|                     
|                     
|                     
|                     
|Ordered               |  | $            | 260,000
|                     
|                     
|                     
|                     
|Awaiting delivery     |  | $            | 112,000
|                     
|                     
|                     
|                     
|Expiration Dates      |  | July 2002 to
|                     
|                     
|                     
|                     
|                      |  | March 2004  

Ivory Coast:

An equity method
investment of WWI, Cora de
Comstar (49%) (Cora), has operated under a provisional operating license since
the company was formed in 1995. When the provisional license was issued to
Cora, the government established certain conditions by which the provisional
license would become a long-term license. Cora has satisfied these conditions
but the government has not issued the long-term license, despite making
multiple commitments to do so. On July 6, 2001, the government announced its
intention to require Cora and two other wireless companies in the Ivory Coast
to each pay a license fee of 40 billion CFA, or approximately $53 million, in
order to obtain their long-term licenses. The government has yet to issue a
formal decree on this matter. The Company believes that this requirement
violates the terms of the provisional license and is a breach of Coras
contract with the government. Cora and the other operators are currently in
discussions with the government to resolve this matter.

9



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##### Table of Contents



WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

9.     Income (Loss) per Common Share:

Statement of Financial Accounting Standards No. 128, Earnings Per Share,
requires two presentations of income per share  basic and diluted. Basic
income per share is calculated using the weighted average number of shares
outstanding during the period. Diluted income per share is computed on the
basis of the weighted average number of common shares outstanding plus the
dilutive effect of outstanding stock options using the treasury stock method.

Income (loss) per share is calculated using the weighted average number of
shares of outstanding stock during the period. For those years presented with
net losses, any stock options outstanding are anti-dilutive, thus basic and
diluted loss per share are equal.

The components of basic and diluted income (loss) per share are as
follows:

(Dollars in thousands, except per share data)

|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |         |      |            | 
|-------------------------------- | ----------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---------------- | ------- | ------------------ | ---------- | ---------------- | ------- | ---- | ---------- | ------- | ------- | ----- | ---------- | ------ | ------- | ---- | ---------- | 
|                                 |                                                                                           |                                                                                           |                  |         | Three months ended |            | Six months ended
|                                 |                                                                                           |                                                                                           |                  |         | June 30,           |            | June 30,        
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                 
|                                 |                                                                                           |                                                                                           |                  |         | 2001               |            | 2000             |         | 2001 |            | 2000   
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |        
|Numerator:                       |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|                                
|                                
|                                
|                                
|                                 | Net income (loss) before
extraordinary item and
cumulative change in
accounting principle |                                                                                           | $                | (14,027 | )                  |            | $                | 6,922   |      |            | $       | (31,331 | )     |            | $      | 8,054   |     
|                                
|                                
|                                
|                                
|                                 | Extraordinary loss on early
extinguishment of debt                                        |                                                                                           |                  |         |                    |            |                  | (12,377 | )    |            |         |         |       |            |        | (12,377 | )   
|                                
|                                
|                                
|                                
|                                 | Cumulative change in
accounting principle                                                 |                                                                                           |                  |         |                    |            |                  |         |      |            |         | (5,580  | )     |            |        |         |     
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Net loss                         |                                                                                           | $                                                                                         | (14,027          | )       |                    | $          | (5,455           | )       |      | $          | (36,911 | )       |       | $          | (4,323 | )      
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Denominator:                     |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|                                
|                                
|                                
|                                
|                                 | Weighted-average shares:                                                                  |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |         |     
|                                
|                                
|                                
|                                
|                                 |                                                                                           |                                                                                           | Basic            |         |                    | 78,635,000 |                  |         |      | 77,848,000 |         |         |       | 78,487,000 |        |         |      | 77,789,000 | 
|                                
|                                
|                                
|                                
|                                 | Effect of dilutive securities:                                                            |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |         |     
|                                
|                                
|                                
|                                
|                                 |                                                                                           |                                                                                           | Dilutive options |         |                    |            |                  |         |      | 2,439,000  |         |         |       |            |        |         |      | 2,520,000  | 
|                                
|                                
|                                
|                                
|                                 | Weighted-average shares:                                                                  |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |         |     
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|                                 |                                                                                           |                                                                                           | Diluted          |         |                    | 78,635,000 |                  |         |      | 80,287,000 |         |         |       | 78,487,000 |        |         |      | 80,309,000 | 
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Basic income (loss) per share:   |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|                                
|                                
|                                
|                                
|                                 | Net income (loss) before
extraordinary item and
cumulative change in
accounting principle |                                                                                           | $                | (0.18   | )                  |            | $                | 0.09    |      |            | $       | (0.40   | )     |            | $      | 0.10    |     
|                                
|                                
|                                
|                                
|                                 | Extraordinary loss on early
extinguishment of debt                                        |                                                                                           |                  |         |                    |            |                  | (0.16   | )    |            |         |         |       |            |        | (0.16   | )   
|                                
|                                
|                                
|                                
|                                 | Cumulative change in
accounting principle                                                 |                                                                                           |                  |         |                    |            |                  |         |      |            |         | (0.07   | )     |            |        |         |     
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Basic loss per share             |                                                                                           | $                                                                                         | (0.18            | )       |                    | $          | (0.07            | )       |      | $          | (0.47   | )       |       | $          | (0.06  | )      
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Diluted income (loss) per share: |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|                                
|                                
|                                
|                                
|                                 |                                                                                           | Net income (loss) before
extraordinary item and
cumulative change in
accounting principle |                  | $       | (0.18              | )          |                  | $       | 0.09 |            |         | $       | (0.40 | )          |        | $       | 0.10 |           
|                                
|                                
|                                
|                                
|                                 | Extraordinary loss on early
extinguishment of debt                                        |                                                                                           |                  |         |                    |            |                  | (0.16   | )    |            |         |         |       |            |        | (0.15   | )   
|                                
|                                
|                                
|                                
|                                 | Cumulative change in
accounting principle                                                 |                                                                                           |                  |         |                    |            |                  |         |      |            |         | (0.07   | )     |            |        |         |     
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        
|Diluted loss per share           |                                                                                           | $                                                                                         | (0.18            | )       |                    | $          | (0.07            | )       |      | $          | (0.47   | )       |       | $          | (0.05  | )      
|                                 |                                                                                           |                                                                                           |                  |         |                    |            |                  |         |      |            |         |         |       |            |        |        

10



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WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

10. Acquisitions:

tele.ring:

On June 29,
2001, the Company completed the
acquisition of tele.ring, a provider of GSM mobile, Internet, and fixed-line
services in Austria, from a subsidiary of Vodafone Group Plc (Vodafone) as
described below.

The acquisition was accomplished pursuant to the terms of an agreement
dated May 4, 2001, among Mannesmann Eurokom GmbH (MEU), an indirect
wholly-owned subsidiary of Vodafone, EKOM Telecommunications Holding AG, a
wholly-owned subsidiary of MEU, and EHG Einkaufs und Handels GmbH (EHG), an
indirect wholly-owned subsidiary of Western Wireless International Corporation
(WWI), a wholly-owned subsidiary of WWC. In accordance with the agreement,
EHG acquired for ten Euros 100% of the stock of tele.ring Telekom Service GmbH
(tele.ring GmbH) and 100% of the partnership interests in tele.ring Telekom
Service GmbH & Co KEG (tele.ring KEG; tele.ring GmbH and tele.ring KEG are
herein collectively referred to as tele.ring). EHG was also granted the
option to acquire for one Euro 100% of the stock of Mannesmann 3G Mobilfunk
GmbH (an indirect wholly-owned subsidiary of Vodafone), holder of an Austrian
UMTS license. After repayment of existing tele.ring debt (which was all
intra-company debt due to Vodafone), tele.rings balance sheet had a net
working capital position of approximately zero as of the closing of the
acquisition.

Under the terms of the transaction, an affiliate of Vodafone agreed to
make available to tele.ring a term loan financing of 250 million euro for
purposes of funding anticipated working capital and capital financing cash
needs. The loan repayment dates are July 1, 2004, 2005 and 2006 respectively
unless liquidation of tele.ring has been commenced on or before October 1,
2001.

During the period from June 29, 2001 through October 1, 2001, should EHG
(or tele.ring) elect to terminate tele.ring operations and liquidate tele.ring
(the Liquidation Option), Vodafone would be required to provide an additional
financing of 80 million euro to tele.ring to pay closing and liquidation costs.
After the liquidation was completed, tele.ring would have the ability to
acquire 100% of the shares of the financing entity set up to fund operations
(250 million euro as described above) and liquidation costs (an additional 80
million euro as described above), for one euro and therefore would effectively
have no repayment obligation of those funds.

If less than 330 million euro in costs are incurred in liquidating
tele.ring (if EHG (or tele.ring) elects on or prior to October 1, 2001 to
liquidate tele.ring), the difference would be shared with Vodafone on a basis
that has been agreed to by the parties. If EHG (or tele.ring) elects, on or
prior to October 1, 2001, to liquidate tele.ring and liquidation costs exceed
330 million euro, tele.ring would be responsible for this excess amount.

After October 1, 2001, the Liquidation Option expires and tele.ring is at
full risk for repayment of the 250 million euro loan, Vodafone has no further
liquidation cost obligation and tele.ring is at risk for its future operations.

WWI agreed that during the first 180 days after the closing date, it would
retain at least a majority of the issued and outstanding voting shares of
tele.ring and that it would not dispose of more than 20% of the value of the
fixed assets of tele.ring on the balance sheet of tele.ring as of the closing,
other than in a liquidation. Should WWI elect to sell, directly or indirectly,
51% of the issued voting shares of tele.ring, EHG or the direct parent company
of EHG, or sell substantially all of the assets of tele.ring (in a sale which
is not combined with any other business or material assets owned or controlled
by WWI and used in the telecommunications business), more than 180 days but
less than 366 days after the closing of the transaction, WWI would share
equally with Vodafone all of the proceeds of the sale, net of all fees and
reasonable expenses. If WWI elects to sell tele.ring, directly or indirectly,
more than 365 days after the closing of the transaction, WWI would retain all
profits and tele.ring would be required to repay the 250 million euro loan.

The Company will not consolidate the balance sheet or results of
operations for tele.ring until the expiration of the Liquidation Option
described above, subject to the continuation of operations in Austria.

Cellular One Group:

On July 18, 2001, the Company announced it completed the acquisition of
Southwestern Bell Mobile Systems ownership interest in Cellular One Group,
which owns, licenses and promotes nationwide the Cellular One brand and related
trademarks, services marks and designs. The purchase price was $9 million.
Southwestern Bell is a subsidiary of Cingular Wireless, LLC. As a result of
this transaction, subsidiaries of the Company own 100% of the Cellular One
Group.

11. Related Party Transactions:

In April 2001, Bradley J. Horwitz, Executive Vice President of the Company
and President of WWI exercised a put agreement exchanging a 2.02% interest in
WWI for approximately $14.1 million. Mr. Horwitz still holds the right to put
his remaining interest in WWI to the Company. The Company now owns
approximately 98% of the outstanding shares of WWI.

11



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##### Table of Contents



WESTERN WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements(Unaudited)

12. Segment Information:

Operations of the Company consist of both domestic and international
operations. The Company mainly provides cellular services in rural markets in
the western United States. The Companys international operations consist
mainly of consolidated joint ventures throughout the world. Certain
centralized back office costs and assets benefit all of the Companys
operations. These costs are allocated to both segments in a manner, which
reflects the relative time devoted to each of the segments.

The domestic cellular operations comprise the majority of the Companys
total revenues, expenses and total assets as presented in the table below:

(Dollars in thousands)

|                                                         |  |            |           |               |  |              |         |   |  |   |           |  
|-------------------------------------------------------- |  | ---------- | --------- | ------------- |  | ------------ | ------- | - |  | - | --------- | -
|                                                         |  | Domestic   |           | International |  |              |         |  
|                                                         |  | Operations |           | Operations    |  | Consolidated
|                                                         |  |            |           |               |  |             
|Three months ended June 30, 2001                         |  |            |           |               |  |              |         |   |  |   |           |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total revenues                                           |  | $          | 235,681   |               |  | $            | 16,881  |   |  | $ | 252,562   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Operating income (loss)                                  |  |            | 46,850    |               |  |              | (25,053 | ) |  |   | 21,797    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest expense                                         |  |            | (34,980   | )             |  |              | (5,826  | ) |  |   | (40,806   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Equity in net income (loss) of unconsolidated
affiliates |  |            | 1,332     |               |  |              | (789    | ) |  |   | 543       |  
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  |            | 14,524    |               |  |              | (28,551 | ) |  |   | (14,027   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Total capital expenditures                               |  |            | 63,336    |               |  |              | 26,903  |   |  |   | 90,239    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Six months ended June 30, 2001                           |  |            |           |               |  |              |         |   |  |   |           |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total revenues                                           |  | $          | 459,338   |               |  | $            | 29,698  |   |  | $ | 489,036   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Operating income (loss)                                  |  |            | 99,004    |               |  |              | (54,263 | ) |  |   | 44,741    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest expense                                         |  |            | (72,904   | )             |  |              | (10,014 | ) |  |   | (82,918   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Equity in net income (loss) of unconsolidated
affiliates |  |            | 767       |               |  |              | (3,179  | ) |  |   | (2,412    | )
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative change in accounting principle                |  |            | (6,600    | )             |  |              | 1,020   |   |  |   | (5,580    | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  |            | 20,883    |               |  |              | (57,794 | ) |  |   | (36,911   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Total assets                                             |  |            | 1,836,412 |               |  |              | 336,907 |   |  |   | 2,173,319 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total capital expenditures                               |  |            | 88,438    |               |  |              | 66,846  |   |  |   | 155,284   |  

(Dollars in thousands)

|                                                         |  |            |           |               |  |              |         |   |  |   |           |  
|-------------------------------------------------------- |  | ---------- | --------- | ------------- |  | ------------ | ------- | - |  | - | --------- | -
|                                                         |  | Domestic   |           | International |  |              |         |  
|                                                         |  | Operations |           | Operations    |  | Consolidated
|                                                         |  |            |           |               |  |             
|Three months ended June 30, 2000                         |  |            |           |               |  |              |         |   |  |   |           |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total revenues                                           |  | $          | 196,817   |               |  | $            | 5,186   |   |  | $ | 202,003   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Operating income (loss)                                  |  |            | 47,839    |               |  |              | (5,447  | ) |  |   | 42,392    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest expense                                         |  |            | (33,940   | )             |  |              | (12     | ) |  |   | (33,952   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Equity in net income (loss) of unconsolidated
affiliates |  |            | 674       |               |  |              | (1,365  | ) |  |   | (691      | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  |            | 1,304     |               |  |              | (6,759  | ) |  |   | (5,455    | )
|                                                        
|                                                        
|                                                        
|                                                        
|Total capital expenditures                               |  |            | 69,878    |               |  |              | 8,918   |   |  |   | 78,796    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Six months ended June 30, 2000                           |  |            |           |               |  |              |         |   |  |   |           |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total revenues                                           |  | $          | 372,001   |               |  | $            | 5,188   |   |  | $ | 377,189   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Operating income (loss)                                  |  |            | 82,803    |               |  |              | (8,044  | ) |  |   | 74,759    |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest expense                                         |  |            | (63,566   | )             |  |              | (2,099  | ) |  |   | (65,665   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Equity in net income (loss) of unconsolidated
affiliates |  |            | 278       |               |  |              | (764    | ) |  |   | (486      | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  |            | 6,454     |               |  |              | (10,777 | ) |  |   | (4,323    | )
|                                                        
|                                                        
|                                                        
|                                                        
|Total assets                                             |  |            | 1,417,312 |               |  |              | 112,364 |   |  |   | 1,529,676 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total capital expenditures                               |  |            | 118,689   |               |  |              | 8,960   |   |  |   | 127,649   |  

12



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##### Table of Contents






Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary statement for purposes of the Safe Harbor provisions of the
Private Litigation Reform Act of 1995.Statements contained herein that
are not based on historical fact, including without limitation statements
containing the words believes, may, will, estimate, continue,
anticipates, intends, expects and words of similar import,
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, events or developments to be materially
different from any future results, events or developments expressed or
implied by such forward-looking statements. Such factors include, among
others, the following: general economic and business conditions, both
nationally and in the regions in which Western Wireless Corporation (the
Company) operates; technology changes; competition; changes in business
strategy or development plans; the high leverage of the Company; the
ability to attract and retain qualified personnel; existing governmental
regulations and changes in, or the failure to comply with, governmental
regulations; liability and other claims asserted against the Company; and
other factors referenced in the Companys filings with the Securities and
Exchange Commission.Given these uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements.The Company
disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future results, events or
developments.

The following is a discussion and analysis of the consolidated financial
condition and results of operations of the Company and should be read in
conjunction with the Companys condensed consolidated financial statements and
notes thereto and other financial information included herein and in the
Companys annual report on Form 10-K for the year ended December 31, 2000.

Overview

Western Wireless Corporation (the Company) provides cellular
communications services in 19 western states under the Cellular One brand name
principally through the ownership and operation of cellular wireless systems.
The operations are primarily in rural areas due to the Companys belief that
there are certain strategic advantages to operating in these areas. The
Company owns FCC licenses to provide such services in 18 Metropolitan Service
Areas (MSA) and 88 Rural Service Areas (RSA).

During 2001, the Company began migrating certain portions of its domestic
wireless network from analog to a CDMA digital platform; focusing first on
MSAs. The Company will continue to offer analog and TDMA digital services, but
believes that most wireless carriers in the United States will ultimately
utilize GSM and CDMA based digital technology in the future. At June 30,
2001, the Company had launched digital service in 8 of its 18 MSAs. The
Company has focused on migrating its high minute of use subscribers to the new
CDMA digital platform by offering them free or discounted handsets.

At June 30, 2001, the Company owned approximately 98% of Western Wireless
International Corporation (WWI), the balance was owned by Bradley Horwitz,
Executive Vice President of the Company and President of WWI. WWI, through
operating joint ventures, is a provider of wireless communications services
worldwide.

WWI owns wireless licenses in ten foreign countries with a controlling
interest in seven of these countries. As of June 30, 2001, WWI interests,
excluding Austria (see footnote 5 below), covered a proportionate population of
approximately 33 million and had approximately 250,000 proportionate
subscribers. An operational status by country follows:

|                            |  |                    |  |                          |  |           |  |             |  |           |  |  |  |  |  |  |  |  |  | 
|--------------------------- |  | ------------------ |  | ------------------------ |  | --------- |  | ----------- |  | --------- |  |  |  |  |  |  |  |  |  | 
|Consolidated Investments(1) |  | Equity Investments |  | Transitional Investments
|                            |  |                    |  |                         
|Country                     |  | Status             |  | Country                  |  | Status    |  | Country     |  | Status   
|                            |  |                    |  |                          |  |           |  |             |  |          
|Ireland (2)                 |  | Operating          |  | Ivory Coast              |  | Operating |  | Austria (5) |  | Operating
|                           
|                           
|                           
|                           
|Bolivia (3)                 |  | Operating          |  | Croatia                  |  | Operating |  |             |  |           |  |  |  | 
|                           
|                           
|                           
|                           
|Iceland (3)                 |  | Operating          |  | Georgia                  |  | Operating |  |             |  |           |  |  |  | 
|                           
|                           
|                           
|                           
|Ghana (3)                   |  | Operating          |  |                          |  |           |  |             |  |           |  |  |  |  |  |  |  | 
|                           
|                           
|                           
|                           
|Haiti (3)                   |  | Operating          |  |                          |  |           |  |             |  |           |  |  |  |  |  |  |  | 
|                           
|                           
|                           
|                           
|Slovenia (4)                |  | Under Construction |  |                          |  |           |  |             |  |           |  |  |  |  |  |  |  | 



---

|(1) |  | U.S. headquarters functions and majority owned European
consolidated joint ventures are recorded as of the date of the
financial statements. Consolidated joint ventures in Africa,
South America and the Caribbean along with all non-controlling
equity joint ventures are recorded on a one-quarter lag.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Ireland launched services in February 2001.                                                                                                                                                                                                                                                                
|   
|   
|   
|   
|(3) |  | WWI acquired additional interests in Bolivia, Iceland,
Ghana and Haiti during 2000. The Company plans to bring the
results of Iceland current in 2001 to be consistent with its
other European consolidated joint ventures.                                                                                
|   
|   
|   
|   
|(4) |  | The Slovenian license was awarded in November 2000 and
granted in January 2001.                                                                                                                                                                                                                            

13



---



##### Table of Contents



|(5) |  | On June 29, 2001 WWI acquired 100% of the shares of
tele.ring Telekom Service Gmbh (tele.ring), a provider of GSM
mobile, Internet, and fixed-line services in Austria, from a
subsidiary of Vodafone Group Plc. tele.ring. The Company
will not consolidate the balance sheet or results of operations
for tele.ring until the expiration of the Liquidation Option,
subject to continuation of operations in Austria (see Footnote
10 of the Companys consolidated financial results).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of Operations for the Three Months Ended June 30, 2001 and 2000

The Company had 1,116,500 subscribers at June 30, 2001, representing an
increase of 30,000 or 2.8% from March 31, 2001. The Company had 930,500
subscribers at June 30, 2000, representing an increase of 55,800 or 6.4% from
March 31, 2000.

The following table sets forth certain financial data as it relates to the
Companys operations:

(Dollars in thousands)

|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |         | 
|----------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------ | ------- | --------------------------- | ------- | -------- | ----- | ----- | - | - | ------- | -------- | ------- | 
|                                                                                          |                                    |                          |         | Three Months Ended June 30,
|                                                                                          |                                    |                          |         |                            
|                                                                                          |                                    |                          |         | 2001                        |         | % change |       | 2000 
|                                                                                          |                                    |                          |         |                             |         |          |       |      
|Revenues:                                                                                 |                                    |                          |         |                             |         |          |       |       |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Subscriber revenues                |                          | $       | 158,157                     |         |          |       | 18.1  | % |   | $       | 133,865  |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Roamer revenues                    |                          |         | 68,101                      |         |          |       | 24.9  | % |   |         | 54,503   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | International revenues             |                          |         | 16,881                      |         |          |       | 225.5 | % |   |         | 5,186    |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Equipment sales and other revenues |                          |         | 9,423                       |         |          |       | 11.5  | % |   |         | 8,449    |        
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                    | Total revenues           |         | $                           | 252,562 |          |       |       |   |   |         | $        | 202,003 | 
|                                                                                         
|Operating expenses:                                                                       |                                    |                          |         |                             |         |          |       |       |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Cost of service                    |                          | $       | 59,562                      |         |          |       | 33.5  | % |   | $       | 44,608   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Cost of equipment sales            |                          |         | 20,718                      |         |          |       | 101.1 | % |   |         | 10,304   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | General and administrative         |                          |         | 52,320                      |         |          |       | 33.5  | % |   |         | 39,195   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Sales and marketing                |                          |         | 39,229                      |         |          |       | 31.4  | % |   |         | 29,858   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Depreciation and amortization      |                          |         | 52,685                      |         |          |       | 74.6  | % |   |         | 30,176   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Stock based compensation           |                          |         | 6,251                       |         |          |       | 14.3  | % |   |         | 5,470    |        
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        
|                                                                                          |                                    | Total operating expenses |         | $                           | 230,765 |          |       |       |   |   |         | $        | 159,611 | 
|                                                                                         
|Other expense                                                                             |                                    | $                        | (40,882 | )                           |         |          | (14.6 | %)    |   | $ | (35,665 | )       
|                                                                                         
|Net income (loss) before extraordinary item and
cumulative change in accounting principle |                                    | $                        | (14,027 | )                           |         |          | N.M   |       |   | $ | 6,922   |         
|                                                                                         
|Other data:                                                                               |                                    |                          |         |                             |         |          |       |       |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | EBITDA  Domestic                  |                          | $       | 95,010                      |         |          |       | 19.6  | % |   | $       | 79,462   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | EBITDA  International             |                          |         | (14,277                     | )       |          |       | N.M   |   |   |         | (1,424   | )      
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        
|                                                                                          |                                    | Total EBITDA             |         | $                           | 80,733  |          |       |       |   |   |         | $        | 78,038  | 
|                                                                                         
|Cash flows provided by (used in):                                                         |                                    |                          |         |                             |         |          |       |       |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Operating activities               |                          | $       | 58,901                      |         |          |       |       |   |   | $       | 56,580   |        
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        
|                                                                                          | Investing activities               |                          | $       | (133,803                    | )       |          |       |       |   |   | $       | (159,281 | )      
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        
|                                                                                          | Financing activities               |                          | $       | 104,630                     |         |          |       |       |   |   | $       | 100,632  |        
|                                                                                          |                                    |                          |         |                             |         |          |       |       |   |   |         |          |        

Revenues

The increase in subscriber revenues is primarily due to the 22% growth in
the number of the Companys average subscribers for the quarter ended June 30,
2001, compared to the quarter ended June 30, 2000. ARPU was $47.86 for the
three months ended June 30, 2001, a $1.58 decline from $49.44 for the three
months ended June 30, 2000. Management believes that the Company will continue
to experience a gradual decline in ARPU for the remainder of 2001.

The increase in roamer revenues is attributed to an increase in roaming
traffic on the Companys network partially offset by a decrease in the rates
charged between carriers. A significant portion of the increase is driven by
the growth in roamer minutes with digital carriers as a result of the Companys
strategy, implemented in 1998, to become the roaming partner of choice for
other carriers. Roamer revenue as a percentage of total revenues for the three
months ended June 30, 2001, was flat at 27%, compared to the three months ended
June 30, 2000. On June 1, 2001, the Company signed an extension of its roaming
agreement with AT&T Wireless Services, Inc. (AT&T Wireless), its largest
roaming partner, through June 15, 2002. While the extension with AT&T Wireless
is at a lower per minute rate than the prior agreement, management believes
year-over-year roamer minutes will continue to increase and that year-over-year
roamer revenues will experience a slight increase for the remainder of 2001.

14



---



##### Table of Contents



International revenues for the three months ended June 30, 2001, are
comprised of $13.7 million in service revenues, $2.0 million in equipment
revenues and $1.2 million in international long distance and other revenues.
Service revenues were primarily derived from operations in Ireland, Bolivia,
Iceland and Haiti. International revenues will continue to increase with
continued growth in existing markets.

Equipment sales and other revenues for the three months ended June 30,
2001, which consists primarily of wireless handset and accessory sales to
customers, remained flat, compared to the three months ended June 30, 2000. As
the Company converts more of its cell site capacity from analog to digital, the
Company will sell more digital, dual-mode and tri-mode handsets. The Company
expects that it will sell these handsets at a higher price than analog
handsets.

Operating Expenses

Domestic cost of service increased $6.7 million for the three months ended
June 30, 2001, compared to the same period one year ago. The increase is
mainly attributable to the increased costs of maintaining the Companys
expanding domestic wireless network to support an increase in the number of
subscriber and roamer minutes of use. Domestic cost of service per minute of
use (MOU) decreased to $0.04 per MOU for the three months ended June 30, 2001
from $0.06 per MOU for the three months ended June 30, 2000. The decrease in
domestic cost of service per MOU is due mainly to fixed cost components
increasing at a slower rate than variable costs on a per minute basis. The
Company expects domestic cost of service dollars to continue to increase in
future periods as a result of the growing subscriber base and the increase in
other carriers customers roaming on its network. Domestic cost of service per
MOU is expected to continue to gradually decline as greater economies of scale
continue to be realized.

International cost of service contributed $8.3 million to the second
quarter increase in the Companys consolidated cost of service. The increase
is due partly to the consolidation of markets that were previously accounted
for as equity investments. In addition, the Company has launched service in
Ireland and Bolivia since the second quarter of 2000. International cost of
service is expected to continue to increase with continued subscriber growth in
operating markets.

Domestic general and administrative costs for the three months ended June
30, 2001, increased $8.6 million compared to the three months ended June 30,
2000. The increase in the Companys general and administrative costs is due
partly to the increase in costs associated with supporting a larger subscriber
base. For the three months ended June 30, 2001, the Companys domestic general
and administrative monthly cost per average subscriber increased to $13.19 from
$12.91 in the same period in 2000. The slight increase in domestic general and
administrative cost per average subscriber is mainly a result of stabilization
costs incurred as a result of deploying a new billing system in early 2001.
Management anticipates cost efficiencies to develop on a per domestic
subscriber basis by the end of the year.

International general and administrative expense contributed $4.5 million
to the change in the Companys consolidated general and administrative expense
for the three months ended June 30, 2001, compared to the three months ended
June 30, 2000. The increase is primarily due to growth in operations related
to Ireland and Bolivia, as well as pre-operating costs in Slovenia. Management
anticipates that as the Companys international operations continue to grow the
general and administrative costs associated with supporting these operations
will increase.

Domestic sales and marketing costs for the three months ended June 30,
2001, increased $1.3 million compared to the three months ended June 30, 2000.
Domestic sales and marketing cost per net subscriber added, including the loss
on equipment sales, increased to $1,334 for the three months ended June 30,
2001, compared to $659 for the same period in 2000. This increase is primarily
due to a growth in disconnected subscribers causing the increase in costs to be
spread over fewer domestic net subscriber additions. The growth in
disconnected subscribers is a result of an increase in the churn rate
(representing customer attrition) applied to the larger subscriber base.
Management believes churn is a trailing indicator. Some factors impacting
churn are latent billing system issues from the conversion in the first quarter
of 2001 and network capacity issues. Management believes churn will gradually
decline over the remainder of the year with the launch of CDMA technology in
certain of its MSAs and continued maturity of its billing system.

International sales and marketing expense contributed $8.1 million to the
change in the Companys consolidated sales and marketing expense for the three
months ended June 30, 2001, compared to the three months ended June 30, 2000.
The increase is primarily derived from subscriber acquisition costs in Ireland
and Bolivia. International sales and marketing expense is expected to continue
to increase with continued growth in subscriber additions in existing markets
and with the launch of Slovenia by the end of the year.

Cost of equipment sales for the Company increased due partly to the
increase in handsets sold for the three months ended June 30, 2001, compared to
the same period in 2000. In addition, free and discounted handsets associated
with the migration of existing customers from analog service to digital service
contributed to the increase in the cost of equipment sales. The Company
expects that the cost for its handsets will be higher for the remainder of 2001
as it begins to sell more digital, dual-mode and tri-mode handsets, which
typically have a higher cost than analog handsets. Further, management plans on
continuing to incent its existing subscriber base to migrate to the Companys
digital platforms by offering them free or discounted handsets. Although
subscribers generally are responsible for purchasing or otherwise obtaining
their own handsets, the Company has historically sold handsets below cost to
respond to competition and general industry practice and expects to continue to
do so in the future.

15



---



##### Table of Contents



The increase in depreciation and amortization expenses is mainly
attributable to additional wireless communication system assets in both the
Companys domestic and international segments. As the Company continues to
expand its wireless footprint, upgrade its systems, and expand its
international segment, management anticipates depreciation and amortization expenses will increase in future periods.

Over time, the Company expects that it will require fewer analog radios as
its subscriber base migrates to digital service. As a result of this planned
migration, the Company has reevaluated the estimated remaining life of analog
equipment, and has accordingly adjusted its depreciation schedule. The
remaining estimated impact of this change is approximately $20 million spread
over the next three years.

The increase in stock-based compensation results mainly from stock
appreciation rights (SARs) issued by WWI.

Net Income (Loss) Before Extraordinary Item and Cumulative Change in
Accounting Principle

The change to a net loss before cumulative change in accounting principle
during the three months ended June 30, 2001 from net income before
extraordinary item during the three months ended June 30, 2000, is primarily
due to increased operating losses from the Companys international segment.

Other Expense

Interest and financing expense increased to $40.8 million for the three
months ended June 30, 2001, compared to $34.0 million for the same period in
2000 due to an increase in average long-term debt, partially offset by a
decrease in the Companys domestic weighted average interest rate. Long-term
debt was incurred primarily to fund the Companys acquisition of wireless
properties and to fund international projects through WWI. For the three
months ended June 30, 2001, the weighted average interest rate paid to third
parties was 8.1% and 8.3% for the domestic and international operations,
respectively. The domestic weighted average interest rate paid to third
parties was 9.4% for the three months ended June 30, 2000.

EBITDA

EBITDA represents operating income before depreciation, amortization and
stock based compensation for the Companys operations. Management believes
EBITDA provides meaningful additional information on the Companys operating
results and on its ability to service its long-term debt and other fixed
obligations, and to fund the Companys continued growth. EBITDA is considered
by many financial analysts to be a meaningful indicator of an entitys ability
to meet its future financial obligations, and growth in EBITDA is considered to
be an indicator of future profitability, especially in a capital-intensive
industry such as wireless telecommunications. EBITDA should not be construed
as an alternative to operating income (loss) as determined in accordance with
United States generally accepted accounting principals, as an alternate to cash
flows from operating activities (as determined in accordance with generally
accepted accounting principals), or as a measure of liquidity. Since all
companies do not calculate EBITDA in the same manner, the Companys
presentation may not be comparable to other similarly titled measures of other
companies.

Domestic EBITDA for the Company increased to $95.0 million for the three
months ended June 30, 2001, from $79.5 million for the same period in 2000.
Domestic EBITDA increased partly as a result of increased revenues due to the
increased subscriber base and the related cost efficiencies gained on a per
subscriber basis, as well as from increased roaming revenues.

International EBITDA for the Companys consolidated subsidiaries, which
represents pre-operating costs in Slovenia and operations in existing markets,
went from a negative $1.4 million for the three months ended June 30, 2000, to
a negative $14.3 million for the three months ended June 30, 2001 due to the
consolidation of subsidiaries which were unconsolidated in 2000 and the launch
of operations in Bolivia and Ireland in the fourth and second quarters,
respectively. Second quarter 2000 results included Ireland and Bolivia
start-up costs, as well as Ghana and Haiti on-going operations and WWI
headquarter functions. Management expects international EBITDA to continue to
decrease in 2001 as a result of continued growth in existing markets.

16



---



##### Table of Contents



Results of Operations for the Six Months Ended June 30, 2001 and 2000

The Company had 1,116,500 subscribers at June 30, 2001, representing an
increase of 67,000 or 6.4% from December 31, 2000. The Company had 930,500
subscribers at June 30, 2000, representing an increase of 95,800 or 11.5% from
December 31, 1999.

The following table sets forth certain financial data as it relates to the
Companys operations:

(Dollars in thousands)

|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |          |  
|----------------------------------------------------------------------------------------- | ---------------------------------- | - | ------------------------- | -------- | -------- |  | ----- | ---- | - | - | ------- | -------- | -
|                                                                                          |                                    |   | Six Months Ended June 30,
|                                                                                          |                                    |   |                          
|                                                                                          |                                    |   | 2001                      |          | % change |  | 2000 
|                                                                                          |                                    |   |                           |          |          |  |      
|Revenues:                                                                                 |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Subscriber revenues                |   | $                         | 310,089  |          |  |       | 20.9 | % |   | $       | 256,463  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Roamer revenues                    |   |                           | 129,713  |          |  |       | 30.8 | % |   |         | 99,152   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | International revenues             |   |                           | 29,698   |          |  |       | N.M  |   |   |         | 5,188    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Equipment sales and other revenues |   |                           | 19,536   |          |  |       | 19.2 | % |   |         | 16,386   |  
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                          | Total revenues                     |   | $                         | 489,036  |          |  |       |      |   |   | $       | 377,189  |  
|                                                                                         
|Operating expenses:                                                                       |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Cost of service                    |   | $                         | 114,529  |          |  |       | 44.7 | % |   | $       | 79,149   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Cost of equipment sales            |   |                           | 37,131   |          |  |       | 83.6 | % |   |         | 20,227   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | General and administrative         |   |                           | 103,513  |          |  |       | 35.1 | % |   |         | 76,629   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Sales and marketing                |   |                           | 81,571   |          |  |       | 40.6 | % |   |         | 58,006   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Depreciation and amortization      |   |                           | 95,304   |          |  |       | 59.1 | % |   |         | 59,919   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Stock based compensation           |   |                           | 12,247   |          |  |       | 44.1 | % |   |         | 8,500    |  
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                          | Total operating expenses           |   | $                         | 444,295  |          |  |       |      |   |   | $       | 302,430  |  
|                                                                                         
|Other expense                                                                             |                                    | $ | (85,620                   | )        |          |  | (27.7 | %)   |   | $ | (67,050 | )       
|                                                                                         
|Net income (loss) before extraordinary item and cumulative change in accounting principle |                                    | $ | (31,331                   | )        |          |  | N.M   |      |   | $ | 8,054   |         
|                                                                                         
|Other data:                                                                               |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | EBITDA  Domestic                  |   | $                         | 185,972  |          |  |       | 27.5 | % |   | $       | 145,875  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | EBITDA  International             |   |                           | (33,680  | )        |  |       | N.M  |   |   |         | (2,697   | )
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                          | Total EBITDA                       |   | $                         | 152,292  |          |  |       |      |   |   | $       | 143,178  |  
|                                                                                         
|Cash flows provided by (used in):                                                         |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Operating activities               |   | $                         | 51,101   |          |  |       |      |   |   | $       | 83,257   |  
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                          | Investing activities               |   | $                         | (193,360 | )        |  |       |      |   |   | $       | (243,684 | )
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         
|                                                                                          | Financing activities               |   | $                         | 189,939  |          |  |       |      |   |   | $       | 131,691  |  
|                                                                                          |                                    |   |                           |          |          |  |       |      |   |   |         |         

Revenues

The increase in subscriber revenues is primarily due to the 23% growth in
the number of the Companys average subscribers for the six months ended June
30, 2001, compared to the six months ended June 30, 2000. ARPU was $47.72 for
the six months ended June 30, 2001, a slight decline from $48.43 for the six
months ended June 30, 2000. Management believes that the Company will continue
to experience a gradual decline in ARPU for the remainder of 2001.

The increase in roamer revenues is attributed to an increase in roaming
traffic on the Companys network partially offset by a decrease in the rates
charged between carriers. A significant portion of the increase is driven by
the growth in roamer minutes with digital carriers as a result of the Companys
strategy, implemented in 1998, to become the roaming partner of choice for
other carriers. Roamer revenue as a percentage of total revenues for the six
months ended June 30, 2001, increased slightly to 26.5%, compared to 26.3% for
the six months ended June 30, 2000. On June 1, 2001, the Company signed an
extension of its roaming agreement with AT&T Wireless Services, Inc. (AT&T
Wireless), its largest roaming partner, through June 15, 2002. While the
extension with AT&T Wireless is at a lower per minute rate than the prior
agreement, management believes year-over-year roamer minutes will continue to
increase and that year-over-year roamer revenues will experience a slight
increase in the remainder of 2001.

International revenues for the six months ended June 30, 2001, are
comprised of $23.5 million in service revenues, $4.3 million in equipment
revenues and $1.9 million in international long distance and other revenues.
Service revenues were primarily derived from operations in Ireland, Bolivia,
Iceland and Haiti. International revenues will continue to increase with
continued growth in existing markets.

Equipment sales and other revenues for the six months ended June 30, 2001,
which consists primarily of wireless

17



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##### Table of Contents



handset and accessory sales to customers, increased primarily due to an increase in gross subscriber additions. As the
Company converts more of its cell site capacity from analog to digital, the
Company will sell more digital, dual-mode and tri-mode handsets. The Company
expects that it will sell these handsets at a higher price than analog
handsets.

Operating Expenses

Domestic cost of service increased $19.7 million for the six months ended
June 30, 2001, compared to the same period one year ago. The increase is
mainly attributable to the increased costs of maintaining the Companys
expanding domestic wireless network to support an increase in the number of
subscriber and roamer minutes of use. Domestic cost of service per minute of
use (MOU) decreased to $0.05 per MOU for the six months ended June 30, 2001
from $0.06 per MOU for the six months ended June 30, 2000. The decrease in
domestic cost of service per MOU is due mainly to fixed cost components
increasing at a slower rate than variable costs on a per minute basis. The
Company expects domestic cost of service dollars to continue to increase in
future periods as a result of the growing subscriber base and the increase in
other carriers customers roaming on its network. Domestic cost of service per
MOU is expected to continue to gradually decline as greater economies of scale
continue to be realized.

International cost of service contributed $15.7 million to the increase in
the Companys consolidated cost of service for the six months ended June 30,
2001. The increase is due partly to the consolidation of markets that were
previously accounted for as equity investments. In addition, the Company has
launched service in Ireland and Bolivia since the second quarter of 2000.
International cost of service is expected to increase with continued subscriber
growth in operating markets.

Domestic general and administrative costs for the six months ended June
30, 2001, increased $13.6 million compared to the six months ended June 30,
2000. The increase in the Companys general and administrative costs is due to
the increase in costs associated with supporting a larger subscriber base. For
the six months ended June 30, 2001, the Companys domestic general and
administrative monthly cost per average subscriber decreased to $13.04 from
$13.43 in the same period in 2000. The domestic general and administrative
cost per average subscriber decrease is mainly a result of efficiencies gained
from the growing subscriber base. Management anticipates cost efficiencies to
continue on a per domestic subscriber basis in future periods.

International general and administrative expense contributed $13.3 million
to the change in the Companys consolidated general and administrative expense
for the six months ended June 30, 2001, compared to the six months ended June
30, 2000. The increase is primarily due to growth in operations related to
Ireland and Bolivia, as well as pre-operating costs in Slovenia. Management
anticipates that as the Companys international operations continue to grow the
general and administrative costs associated with supporting these operations
will increase.

Domestic sales and marketing costs for the six months ended June 30, 2001,
increased $4.7 million compared to the six months ended June 30, 2000.
Domestic sales and marketing cost per net subscriber added, including the loss
on equipment sales, increased to $1,129 for the six months ended June 30, 2001,
compared to $748 for the same period in 2000. This increase is primarily due
to a growth in disconnected subscribers causing the increase in costs to be
spread over fewer domestic net subscriber additions. The growth in
disconnected subscribers is a result of an increase in the churn rate
(representing customer attrition) applied to the larger subscriber base.
Management believes churn is a trailing indicator. Some factors impacting
churn are latent billing system issues from the conversion in the first quarter
2001 and network capacity issues. Management believes churn will gradually
decline over the remainder of the year with the launch of CDMA technology in
certain of its MSAs and continued maturity of its billing system.

International sales and marketing expense contributed $18.9 million to the
change in the Companys consolidated sales and marketing expense for the six
months ended June 30, 2001, compared to the six months ended June 30, 2000.
The increase is primarily derived from the growth in subscriber acquisition
costs in Ireland and Bolivia. International sales and marketing expense is
expected to continue to increase with continued growth in subscriber additions
in existing markets and with the launch of Slovenia by the end of the year.

Cost of equipment sales for the Company increased due partly to the
increase in handsets sold for the six months ended June 30, 2001, compared to
the same period in 2000. In addition, free and discounted handsets associated
with the migration of existing customers from analog service to digital service
contributed to the increase in the cost of equipment sales. The Company
expects that the cost for its handsets will be higher for the remainder of 2001
as it begins to sell more digital, dual-mode and tri-mode handsets, which
typically have a higher cost than analog handsets. Further, management plans on
continuing to incent its existing subscriber base to migrate to the Companys
digital platforms by offering them free or discounted handsets. Although
subscribers generally are responsible for purchasing or otherwise obtaining
their own handsets, the Company has historically sold handsets below cost to
respond to competition and general industry practice and expects to continue to
do so in the future.

The increase in depreciation and amortization expenses is mainly
attributable to additional wireless communication system assets in both the
Companys domestic and international segments. As the Company continues to
expand its wireless footprint, upgrade its systems, and expand its
international segment, management anticipates depreciation and amortization
expenses will increase in future periods.

18



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##### Table of Contents



Over time, the Company expects that it will require fewer analog radios as
its subscriber base migrates to digital service. As a result of this planned
migration, the Company has reevaluated the estimated remaining life of analog
equipment, and has accordingly adjusted its depreciation schedule. The
remaining estimated impact of this change is approximately $20 million spread
over the next three years.

The increase in
stock-based compensation results mainly from SARs issued by WWI.

Net Income (Loss) before Extraordinary Item and Cumulative Change in
Accounting Principle

The change to a net loss before cumulative change in accounting principle
during the six months ended June 30, 2001, from net income before extraordinary
item during the six months ended June 30, 2000, is mainly due to increased
operating losses from the Companys international segment. International
operating losses were partially offset by an increase in operating income from
the Companys domestic business.

Other Expense

Interest and financing expense increased to $82.9 million for the six
months ended June 30, 2001, compared to $65.7 million for the same period in
2000, due to an increase in average long-term debt, partially offset by a
decrease in the Companys domestic weighted average interest rate. Long-term
debt was incurred primarily to fund the Companys acquisition of wireless
properties and to fund international projects through WWI. For the six months
ended June 30, 2001, the weighted average interest rate paid to third parties
was 8.4% and 8.2% for the domestic and international operations, respectively.
The domestic weighted average interest rate paid to third parties was 9.0% for
the six months ended June 30, 2000.

EBITDA

EBITDA represents operating income before depreciation, amortization and
stock based compensation for the Companys operations. Management believes
EBITDA provides meaningful additional information on the Companys operating
results and on its ability to service its long-term debt and other fixed
obligations, and to fund the Companys continued growth. EBITDA is considered
by many financial analysts to be a meaningful indicator of an entitys ability
to meet its future financial obligations, and growth in EBITDA is considered to
be an indicator of future profitability, especially in a capital-intensive
industry such as wireless telecommunications. EBITDA should not be construed
as an alternative to operating income (loss) as determined in accordance with
United States generally accepted accounting principals, as an alternate to cash
flows from operating activities (as determined in accordance with generally
accepted accounting principals), or as a measure of liquidity. Since all
companies do not calculate EBITDA in the same manner, the Companys
presentation may not be comparable to other similarly titled measures of other
companies.

Domestic EBITDA for the Company increased to $186.0 million for the six
months ended June 30, 2001, from $145.9 million for the same period in 2000.
Domestic EBITDA increased as a result of increased revenues due to the
increased subscriber base and the related cost efficiencies gained on a per
subscriber basis, as well as from increased roaming revenues.

International EBITDA for the Companys consolidated subsidiaries, which
mainly represents pre-operating costs in Slovenia and operations in existing
markets, went from a negative $2.7 million for the six months ended June 30,
2000, to a negative $33.7 million for the six months ended June 30, 2001, due
to the consolidation of subsidiaries which were unconsolidated in 2000 and the
launch of operations in Bolivia and Ireland in the fourth and second quarters,
respectively. Results for the six months ended June 30, 2000, included Ireland
and Bolivia start-up costs, as well as Ghana and Haiti on-going operations and
WWI headquarter functions. Management expects international EBITDA to continue
to decrease in 2001 as a result of continued growth in existing markets.

Liquidity and Capital Resources

The Company has a $2.1 billion credit facility with a consortium of
lenders (the Credit Facility). The Credit Facility provides for $1.0 billion
in revolving loans and $1.1 billion in term loans. As of June 30, 2001, $1.6
billion was outstanding under the Credit Facility. Based on certain covenants,
the Company, at June 30, 2001, had approximately $500 million available to
borrow under the Credit Facility. Substantially all the assets of the Company
are pledged as security for such indebtedness. The terms of the Credit
Facility restrict, among other things, the sale of assets, distribution of
dividends or other distributions and loans.

In June 2001, under the terms of the transaction to acquire tele.ring from
a subsidiary of Vodafone Group Plc (Vodafone), an affiliate of Vodafone
agreed to make available to tele.ring a term loan financing of 250 million euro
for purposes of funding anticipated working capital and capital financing cash
needs. An additional 80 million euro is available under certain
conditions to fund the termination of operations (see footnote 10 in
the Company's condensed consolidated financial statements).

19



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##### Table of Contents



In April 2001, Meteor Mobile Communications Limited (MMC), a subsidiary
of WWI, entered into a bridge loan facility agreement (the Irish Bridge Loan)
to provide funding for the development and operation of MMCs network in
Ireland. The aggregate amount available under the Irish Bridge Loan at
inception is approximately 37 million euro increasing quarterly up to 75
million euro in January 2002, based on certain covenants. Currently, MMC has
drawn approximately $17 million and based on certain covenants there is no
available borrowing capacity.

Effective October 2000, NuevaTel, S.A. (NuevaTel), a subsidiary of WWI,
entered into a bridge loan facility agreement to provide funding for the build
out and implementation of NuevaTels network in Bolivia. The aggregate amount
available under the Bridge Loan is $37.5 million. The amount available to draw
is contingent upon the issuance of purchase orders to an equipment provider.
At June 30, 2001, NuevaTel had drawn approximately $21 million against this
bridge loan facility.

For the remainder of 2001, the Company expects to spend approximately $160
million for the continued expansion of its domestic cellular infrastructure.

Funding for WWI
consolidated joint ventures, including Austria, is expected to be
approximately $175 million for the remainder of 2001. Of this
amount, approximately $110 million relates to capital, $55 million relates to
working capital and $10 million relates to the purchase of an
additional interest in MMC. Funding for consolidated WWI joint ventures will come
from debt at the operating joint venture level, including the
tele.ring term loan, and equity from the Company and owners of
minority interests in WWI consolidated entities.

The Company will utilize domestic operating cash flow, the Credit
Facility, and other sources of funding, as discussed above, for purposes of funding its domestic
and international activities. In addition, wherever viable, the Company
intends to seek financing at the international joint venture level.

Net cash provided by operating activities was $51.1 million for the six
months ended June 30, 2001. Adjustments to the $36.9 million net loss to
reconcile to net cash used in operating activities included: (i) $96.7 million
of depreciation and amortization; (ii) $9.5 million minority interest in losses
of consolidated subsidiaries; (iii) $7.4 million loss on hedges; (iv) $8.0
million gain on sale of marketable securities; (v) $5.6 million cumulative
change in accounting principle; and (vi) $12.2 million for stock based
compensation. Net cash provided by operating activities was $83.3 million for
the six months ended June 30, 2000.

Net cash used in investing activities was $193.4 million for the six
months ended June 30, 2001. Investing activities for such period consisted
primarily of: (i) $155.3 million in purchase of property and equipment of
which $66.8 million was related to WWI; (ii) $25.1 million in additions to
license costs and other intangibles; (iii) $26.6 million in proceeds from the
sale of marketable securities; (iv) $24.5 million payment to VoiceStream
Wireless; and (v) $14.1 million purchase of minority interest in WWI. Net cash
used in investing activities was $243.7 million for the six months ended June
30, 2000.

Net cash provided by financing activities was $189.9 million for the six
months ended June 30, 2001. Financing activities for such period consisted
primarily of: (i) a net addition to long-term debt of $168.5 million for the
continued expansion of the Companys cellular infrastructure and to fund
international joint ventures through WWI; and (ii) $20.0 million in minority
interest contributions. Net cash provided by financing activities was $131.7
million for the six months ended June 30, 2000.

In the ordinary course of business, the Company continues to evaluate
acquisition opportunities, joint ventures and other potential business
transactions. Such acquisitions, joint ventures and business transactions may
be material. Such transactions may also require the Company to seek additional
sources of funding through the issuance of additional debt and/or additional
equity at the parent or subsidiary level. There can be no assurance that such
funds will be available to the Company on acceptable or favorable terms.

20



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##### Table of Contents






Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys earnings are affected by changes in short-term interest
rates mainly as a result of its borrowings under the Credit Facility. Credit
Facility interest payments are determined by the outstanding indebtedness and
the spot LIBOR rate at the beginning of the period in which interest is
computed. LIBOR is adjusted for an applicable margin based on the Companys
financial ratios. The Company also has fixed rate debt under the Senior Notes
at 10.5%. As part of its risk management program, the Company utilizes
interest rate caps, swaps and collars to hedge variable rate interest risk on
the Credit Facility. The following table provides information as of June 30,
2001, about the Companys long-term debt and derivative financial instruments
that are sensitive to changes in interest rates (in millions):

Expected maturity date

|                                                                                                                                                      |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | - | ---- |  | ---- | - | ---- | ---- | ---- | - | ----- | ----- | ---------- | - | ----- | ----- | ---------- | - | ---- | ----- |  |  | - | ------- |  | - | ----- | ------- |  | - | ---- | ------- | 
|                                                                                                                                                      |               |   | 2001 |  | 2002 |   | 2003 |      | 2004 |   | 2005  |       | Thereafter |   | Total |       | Fair Value
|                                                                                                                                                      |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |           
|Liabilities:                                                                                                                                          |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Maturities of long-term debt:                                                                                                                         |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Variable Rate |   |      |  |      |   | $    | 26.6 |      |   | $     | 113.3 |            |   | $     | 165.5 |            |   | $    | 263.1 |  |  | $ | 1,089.0 |  |   | $     | 1,657.5 |  |   | $    | 1,657.5 | 
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Fixed Rate    |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   | 400.0   |  |   |       | 400.0   |  |   |      | 420.0   | 
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Interest Rate                                                                                                                                         |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                      | Derivatives:  |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |         | 
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Financial
instruments related
to debt                                                                                                                 |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Interest rate caps:                                                                                                                                   |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Notional amounts
outstanding at the
beginning of the
year                                                                                             |               | $ | 7.5  |  |      | $ | 25.0 |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  | $ | 32.5  |         |  | $ | 0.0  |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|The interest rate caps
effectively lock $32.5
million of the Companys
Credit Facility and
Icelandic Credit Facility
borrowings between 6.7%
and 7.5% |              
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Interest rate collars:                                                                                                                                |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Notional amounts
outstanding at the
beginning of the
year                                                                                             |               |   |      |  |      |   |      |      |      | $ | 245.0 |       |            | $ | 55.0  |       |            |   |      |       |  |  |   |         |  | $ | 300.0 |         |  | $ | (7.6 | )      
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|The interest rate collars
effectively lock $300.0
million of the Companys
Credit Facility borrowings
between 6.5% and 7.5%                           |              
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Interest rate swaps:                                                                                                                                  |               |   |      |  |      |   |      |      |      |   |       |       |            |   |       |       |            |   |      |       |  |  |   |         |  |   |       |         |  |   |      |        
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|Notional amounts
outstanding at the
beginning of the
year                                                                                             |               |   |      |  |      |   |      |      |      | $ | 70.0  |       |            | $ | 200.0 |       |            | $ | 25.0 |       |  |  |   |         |  | $ | 295.0 |         |  | $ | (7.1 | )      
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|                                                                                                                                                     
|The interest rate swaps
effectively lock $295.0
million of the Companys
Credit Facility borrowings
between 5.0% and 6.8%                             |              

21



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##### Table of Contents






PART II  OTHER INFORMATION




Item 1. Legal Proceedings

There are no material, pending legal proceedings to which the Company or
any of its subsidiaries or affiliates is a party or of which any of their
property is subject which, if adversely decided, would have a material adverse
effect on the Company.




Item 2. Changes in Securities

None.




Item 3. Defaults Upon Senior Securities

None.




Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders was held on May 15, 2001. The
following matters were voted upon at the meeting and received the number of
votes indicated:



| | 1. |  | To elect nine directors to serve until the Annual
Meeting of Shareholders for 2002 and until their respective
successors are elected and qualified.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|                     |  |     |             |          |  |  |         | 
|-------------------- |  | --- | ----------- | -------- |  |  | ------- | 
|                     |  | For |             | Withheld
|                     |  |     |             |         
|John W. Stanton      |  |     | 133,370,851 |          |  |  | 602,380 | 
|                    
|                    
|                    
|                    
|John L. Bunce        |  |     | 133,664,236 |          |  |  | 308,995 | 
|                    
|                    
|                    
|                    
|Mitchell R. Cohen    |  |     | 133,646,113 |          |  |  | 327,118 | 
|                    
|                    
|                    
|                    
|Daniel J. Evans      |  |     | 133,658,942 |          |  |  | 314,289 | 
|                    
|                    
|                    
|                    
|Theresa E. Gillespie |  |     | 133,481,281 |          |  |  | 491,950 | 
|                    
|                    
|                    
|                    
|Jonathan M. Nelson   |  |     | 133,661,961 |          |  |  | 311,270 | 
|                    
|                    
|                    
|                    
|Terence M. OToole   |  |     | 133,469,831 |          |  |  | 503,400 | 
|                    
|                    
|                    
|                    
|Mikal J. Thomsen     |  |     | 133,415,178 |          |  |  | 558,053 | 
|                    
|                    
|                    
|                    
|Peter H. van Oppen   |  |     | 133,370,777 |          |  |  | 602,454 | 



| | 2. |  | To ratify the selection of Arthur Andersen LLP as the Companys
independent auditors for 2001.
| | -- |  | ----------------------------------------------------------------------------------------------

|         |  |  |             | 
|-------- |  |  | ----------- | 
|For:     |  |  | 133,732,609 | 
|        
|        
|        
|        
|Against: |  |  | 211,130     | 
|        
|        
|        
|        
|Abstain: |  |  | 29,492      | 




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | None.                                                                                                                                                                                               
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Reports on Form 8-K                                                                                                                                                                                 
|
| |     |  | A Form 8-K was filed on May 11, 2001, reporting the Companys
financial and operating results for the first quarter ended March
31, 2001.                                                           
|
| |     |  | A Form 8-K was filed on May 11, 2001, reporting that Western
Wireless International Corporation has entered into an agreement to
purchase the stock of an Austrian subsidiary of Vodafone Group plc.
|
| |     |  | A Form 8-K was filed on June 8, 2001, reporting that the Company has
entered into an agreement to extend its roaming agreement with AT&T
Wireless Services, Inc. through June 15, 2002.             

22



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Western Wireless Corporation



|By: /s/ THERESA E. GILLESPIE | By: /s/ SCOTT SOLEY
|---------------------------- | -------------------

| | 
| | 

|Theresa E. Gillespie | Scott Soley
|-------------------- | -----------

|Executive Vice President | Vice President and Controller
(Chief Accounting Officer)
|------------------------ | --------------------------------------------------------

Dated: August 14, 2001