##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, DC 20549


Form 10-Q

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended June 30,
    2004                                            
|or        
|          
|o          |  | 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(Zip Code)                      
|(Address of principal executive
    offices)                       |  |                                      

(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 þ          No o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).     Yes þ          No o

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 July 30, 2004
|                                   |  |                                       
|Class A Common Stock, no par value |  |                                        | 85,138,881 | 
|Class B Common Stock, no par value |  |                                        | 6,792,323  | 



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WESTERN WIRELESS CORPORATION

FORM 10-Q

For the Quarter Ended June 30,
2004


TABLE OF CONTENTS

|                                   |  |                                                                                                                                            |    |      |    | 
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|                                   |  |                                                                                                                                            |    | Page
|                                   |  |                                                                                                                                            |    |     
|PART I 
    FINANCIAL INFORMATION |  |                                                                                                                                            |    |     
|Item 1.                            |  | Financial Statements
    (unaudited)                                                                                                       |    |      |    | 
|                                   |  | Condensed Consolidated
    Balance Sheets as of June 30, 2004 and December 31,
    2003                                                    |    |      | 2  | 
|                                   |  | Condensed Consolidated
    Statements of Operations and Comprehensive Income for the Three
    and Six Months Ended June 30, 2004 and 2003 |    |      | 3  | 
|                                   |  | Condensed Consolidated
    Statements of Cash Flows for the Six Months Ended June 30,
    2004 and 2003                                    |    |      | 5  | 
|                                   |  | Notes to Condensed
    Consolidated Financial Statements                                                                                   |    |      | 6  | 
|Item 2.                            |  | Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations                                              |    |      | 21 | 
|Item 3.                            |  | Quantitative and
    Qualitative Disclosures about Market Risk                                                                             |    |      |    | 
|Item 4.                            |  | Controls and
    Procedures                                                                                                                |    |      | 36 | 
|PART II 
    OTHER INFORMATION    |  |                                                                                                                                            |    |     
|Item 1.                            |  | Legal
    Proceedings                                                                                                                      |    |      | 37 | 
|Item 2.                            |  | Changes in Securities,
    Use of Proceeds and Issuer Purchases of Equity
    Securities                                                   |    |      | 37 | 
|Item 3.                            |  | Defaults Upon Senior
    Securities                                                                                                        |    |      | 37 | 
|Item 4.                            |  | Submission of Matters to
    a Vote of Security Holders                                                                                    |    |      | 37 | 
|Item 5.                            |  | Other
    Information                                                                                                                      |    |      | 38 | 
|Item 6.                            |  | Exhibits and Reports on
    Form 8-K                                                                                                       |    |      | 38 | 
|Signatures                         |  |                                                                                                                                            | 39 |     
|Exhibit Index                      |  |                                                                                                                                            | 40 |     
|EXHIBIT 12.1                      
|EXHIBIT 31.1                      
|EXHIBIT 31.2                      
|EXHIBIT 32.1                      
|EXHIBIT 32.2                      



1



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##### Table of Contents



WESTERN WIRELESS CORPORATION



CONDENSED CONSOLIDATED BALANCE
SHEETS


(Dollars in thousands)


|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |            |           |  
|--------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | --------- | ------------ | --------- | - | --------- | ---------- | --------- | -
|                                                                                                                      |                                                                                                                                                       | June 30,                                                                         |           | December 31,
|                                                                                                                      |                                                                                                                                                       | 2004                                                                             |           | 2003        
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |             
|                                                                                                                      |                                                                                                                                                       | (Unaudited)                                                                      |           |             
|ASSETS                                                                                                               
|Current assets:                                                                                                       |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      | Cash and cash equivalents                                                                                                                             |                                                                                  | $         | 140,015      |           |   | $         | 128,597    |          
|                                                                                                                      | Accounts receivable, net of allowance for
    doubtful accounts of $26,864 and $24,523, respectively                                                  |                                                                                  |           | 233,187      |           |   |           | 215,813    |          
|                                                                                                                      | Inventory                                                                                                                                             |                                                                                  |           | 24,252       |           |   |           | 30,182     |          
|                                                                                                                      | Marketable securities                                                                                                                                 |                                                                                  |           | 33,543       |           |   |           | 351        |          
|                                                                                                                      | Prepaid expenses and other current assets                                                                                                             |                                                                                  |           | 44,938       |           |   |           | 22,716     |          
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | Total current assets                                                             |           |              | 475,935   |   |           |            | 397,659   |  
|Property and equipment, net of accumulated
    depreciation of $1,037,508 and $932,915, respectively                  |                                                                                                                                                       |                                                                                  | 937,876   |              |           |   | 901,866   |           
|Licensing costs and other intangible assets, net
    of accumulated amortization of $26,754 and $27,512, respectively |                                                                                                                                                       |                                                                                  | 1,210,848 |              |           |   | 1,189,744 |           
|Investments in and advances to unconsolidated
    affiliates                                                          |                                                                                                                                                       |                                                                                  | 11,350    |              |           |   | 9,353     |           
|Other assets                                                                                                          |                                                                                                                                                       |                                                                                  | 29,193    |              |           |   | 23,062    |           
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | $                                                                                | 2,665,202 |              |           | $ | 2,521,684 |           
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                     
|LIABILITIES AND NET CAPITAL
    DEFICIENCY                                                                           
|Current liabilities:                                                                                                  |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      | Accounts payable                                                                                                                                      |                                                                                  | $         | 62,243       |           |   | $         | 100,651    |          
|                                                                                                                      | Accrued liabilities and other                                                                                                                         |                                                                                  |           | 251,141      |           |   |           | 203,753    |          
|                                                                                                                      | Construction accounts payable                                                                                                                         |                                                                                  |           | 55,526       |           |   |           | 31,061     |          
|                                                                                                                      | Current portion of long-term debt                                                                                                                     |                                                                                  |           | 106,423      |           |   |           | 47,318     |          
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | Total current liabilities                                                        |           |              | 475,333   |   |           |            | 382,783   |  
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|Long-term liabilities:                                                                                                |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      | Long-term debt, net of current portion                                                                                                                |                                                                                  |           | 2,127,646    |           |   |           | 2,172,893  |          
|                                                                                                                      | Deferred income taxes                                                                                                                                 |                                                                                  |           | 163,399      |           |   |           | 150,977    |          
|                                                                                                                      | Other long-term liabilities                                                                                                                           |                                                                                  |           | 40,376       |           |   |           | 39,565     |          
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | Total long-term liabilities                                                      |           |              | 2,331,421 |   |           |            | 2,363,435 |  
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|Minority interests in consolidated subsidiaries                                                                       |                                                                                                                                                       |                                                                                  | 20,751    |              |           |   | 22,083    |           
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|Commitments and contingencies (Note 5)                                                                                |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|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, 85,135,780 and 84,663,930 shares issued and
    outstanding, respectively |                                                                                  |           |              |           |   |           |            |          
|                                                                                                                      |                                                                                                                                                       | Class B, 6,792,323 and 6,792,721 shares
    issued and outstanding, respectively |           |              | 904,116   |   |           |            | 899,304   |  
|                                                                                                                      | Deferred compensation                                                                                                                                 |                                                                                  |           | (56          | )         |   |           | (112       | )        
|                                                                                                                      | Accumulated other comprehensive loss                                                                                                                  |                                                                                  |           | (9,493       | )         |   |           | (16,514    | )        
|                                                                                                                      | Deficit                                                                                                                                               |                                                                                  |           | (1,056,870   | )         |   |           | (1,129,295 | )        
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | Total net capital deficiency                                                     |           |              | (162,303  | ) |           |            | (246,617  | )
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           
|                                                                                                                      |                                                                                                                                                       | $                                                                                | 2,665,202 |              |           | $ | 2,521,684 |           
|                                                                                                                      |                                                                                                                                                       |                                                                                  |           |              |           |   |           |           

See accompanying notes to the condensed
consolidated financial statements

2



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##### Table of Contents



WESTERN WIRELESS CORPORATION



CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND


COMPREHENSIVE INCOME


(Dollars in thousands, except per share
data)


(Unaudited)


|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |         |         |  
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------- | ------- | ---------------- | ------- | ---- | ------ | ------- | ------- |  | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                                                                           |                                                                                                                                                        |                              |         |                 
|                                                                                           |                                                                                                                                                        | Three Months Ended           |         | Six Months Ended
|                                                                                           |                                                                                                                                                        | June 30,                     |         | June 30,        
|                                                                                           |                                                                                                                                                        |                              |         |                 
|                                                                                           |                                                                                                                                                        | 2004                         |         | 2003             |         | 2004 |        | 2003   
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |        
|Revenues:                                                                                  |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           | Subscriber revenues                                                                                                                                    |                              | $       | 367,986          |         |      | $      | 263,903 |         |  | $       | 716,475 |         |   | $       | 497,227 |        
|                                                                                           | Roamer revenues                                                                                                                                        |                              |         | 62,816           |         |      |        | 64,190  |         |  |         | 126,497 |         |   |         | 126,268 |        
|                                                                                           | Fixed line revenues                                                                                                                                    |                              |         | 11,197           |         |      |        | 14,640  |         |  |         | 24,080  |         |   |         | 29,691  |        
|                                                                                           | Equipment sales                                                                                                                                        |                              |         | 19,879           |         |      |        | 13,233  |         |  |         | 40,410  |         |   |         | 26,276  |        
|                                                                                           | Other revenues                                                                                                                                         |                              |         | 3,614            |         |      |        | 3,266   |         |  |         | 6,974   |         |   |         | 6,944   |        
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           |                                                                                                                                                        | Total revenues               |         |                  | 465,492 |      |        |         | 359,232 |  |         |         | 914,436 |   |         |         | 686,406 |  
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|Operating expenses:                                                                        |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           | Cost of service (exclusive of depreciation and
    accretion included below and stock-based compensation, net of
    $0, $0, $73 and $0, respectively) |                              |         | 125,483          |         |      |        | 104,846 |         |  |         | 246,857 |         |   |         | 199,481 |        
|                                                                                           | Cost of equipment sales                                                                                                                                |                              |         | 43,344           |         |      |        | 37,124  |         |  |         | 91,008  |         |   |         | 69,785  |        
|                                                                                           | General and administrative (exclusive of
    stock-based compensation, net of $4,773, $0, $6,447 and $0,
    respectively)                             |                              |         | 74,171           |         |      |        | 62,211  |         |  |         | 147,951 |         |   |         | 120,316 |        
|                                                                                           | Sales and marketing                                                                                                                                    |                              |         | 59,969           |         |      |        | 50,851  |         |  |         | 123,604 |         |   |         | 98,315  |        
|                                                                                           | Depreciation, amortization and accretion                                                                                                               |                              |         | 62,305           |         |      |        | 71,610  |         |  |         | 121,024 |         |   |         | 137,423 |        
|                                                                                           | Asset dispositions                                                                                                                                     |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         | 7,640   |        
|                                                                                           | Stock-based compensation, net                                                                                                                          |                              |         | 4,773            |         |      |        |         |         |  |         | 6,520   |         |   |         |         |        
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           |                                                                                                                                                        | Total operating expenses     |         |                  | 370,045 |      |        |         | 326,642 |  |         |         | 736,964 |   |         |         | 632,960 |  
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|Other income (expense):                                                                    |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           | Interest and financing expense, net                                                                                                                    |                              |         | (35,540          | )       |      |        | (37,439 | )       |  |         | (69,796 | )       |   |         | (75,918 | )      
|                                                                                           | Loss on extinguishment of debt                                                                                                                         |                              |         | (16,260          | )       |      |        |         |         |  |         | (16,260 | )       |   |         |         |        
|                                                                                           | Equity in net income of unconsolidated
    affiliates, net of tax                                                                                      |                              |         | 1,696            |         |      |        | 1,702   |         |  |         | 2,932   |         |   |         | 645     |        
|                                                                                           | Gain on sale of Croatian joint venture                                                                                                                 |                              |         |                  |         |      |        | 40,519  |         |  |         |         |         |   |         | 40,519  |        
|                                                                                           | Other, net                                                                                                                                             |                              |         | 9,455            |         |      |        | 7,802   |         |  |         | 2,653   |         |   |         | 6,778   |        
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           |                                                                                                                                                        | Total other income (expense) |         |                  | (40,649 | )    |        |         | 12,584  |  |         |         | (80,471 | ) |         |         | (27,976 | )
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|Minority interests in net (income) loss of
    consolidated subsidiaries                   |                                                                                                                                                        |                              | (2,116  | )                |         |      | 1,651  |         |         |  | (4,577  | )       |         |   | 4,043   |        
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|Income before provision for income taxes and
    cumulative change in accounting principle |                                                                                                                                                        |                              | 52,682  |                  |         |      | 46,825 |         |         |  | 92,424  |         |         |   | 29,513  |        
|Provision for income taxes                                                                 |                                                                                                                                                        |                              | (11,700 | )                |         |      | (6,745 | )       |         |  | (19,999 | )       |         |   | (11,235 | )      
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|Income before cumulative change in accounting
    principle                                |                                                                                                                                                        |                              | 40,982  |                  |         |      | 40,080 |         |         |  | 72,425  |         |         |   | 18,278  |        
|Cumulative change in accounting principle                                                  |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   | (2,231  | )      
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        
|                                                                                           |                                                                                                                                                        | Net income                   |         | $                | 40,982  |      |        | $       | 40,080  |  |         | $       | 72,425  |   |         | $       | 16,047  |  
|                                                                                           |                                                                                                                                                        |                              |         |                  |         |      |        |         |         |  |         |         |         |   |         |        



See accompanying notes to the condensed
consolidated financial statements


3



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##### Table of Contents



WESTERN WIRELESS CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND

COMPREHENSIVE
INCOME  (Continued)


(Unaudited)


|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |        |       |       | 
|-------------------------- | -------------------------------------------------- | -------------------------------- | --------------------------------------------------------- | ---------------- | ------ | ----- | ------ | ------ | ----- | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ----- | ----- | 
|                           |                                                    |                                  |                                                           |                 
|                           |                                                    | Three Months Ended               |                                                           | Six Months Ended
|                           |                                                    | June 30,                         |                                                           | June 30,        
|                           |                                                    |                                  |                                                           |                 
|                           |                                                    | 2004                             |                                                           | 2003             |        | 2004  |        | 2003  
|                           |                                                    |                                  |                                                           |                  |        |       |        |       
|Basic income per share:    |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           | Before cumulative change in accounting principle   |                                  | $                                                         | 0.45             |        |       | $      | 0.51   |       |       | $      | 0.79   |        |        | $      | 0.23   |      
|                           | Cumulative change in accounting principle          |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        | (0.03  | )    
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|Basic income per share     |                                                    | $                                | 0.45                                                      |                  |        | $     | 0.51   |        |       | $     | 0.79   |        |        | $      | 0.20   |       
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|Diluted income per share:  |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           | Before cumulative change in accounting principle   |                                  | $                                                         | 0.42             |        |       | $      | 0.49   |       |       | $      | 0.74   |        |        | $      | 0.23   |      
|                           | Cumulative change in accounting principle          |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        | (0.03  | )    
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|Diluted income per share   |                                                    | $                                | 0.42                                                      |                  |        | $     | 0.49   |        |       | $     | 0.74   |        |        | $      | 0.20   |       
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|Comprehensive income:      |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           | Net income                                         |                                  | $                                                         | 40,982           |        |       | $      | 40,080 |       |       | $      | 72,425 |        |        | $      | 16,047 |      
|                           | Unrealized income (loss) on marketable securities: |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |        |      
|                           |                                                    | Reclassification adjustment      |                                                           |                  |        |       |        |        | 75    |       |        |        |        |        |        |        | 151   |      
|                           |                                                    | Unrealized holding income (loss) |                                                           |                  | 588    |       |        |        | 2,426 |       |        |        | (929   | )      |        |        | 1,892 |      
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           |                                                    |                                  | Net unrealized income (loss) on marketable
    securities |                  |        | 588   |        |        |       | 2,501 |        |        |        | (929   | )      |        |       | 2,043 | 
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           | Unrealized income (loss) on hedges:                |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |        |      
|                           |                                                    | Reclassification adjustment      |                                                           |                  | (1,219 | )     |        |        |       |       |        |        | (760   | )      |        |        |       |      
|                           |                                                    | Unrealized gain (loss) on hedges |                                                           |                  | 7,224  |       |        |        | (344  | )     |        |        | 12,021 |        |        |        | 973   |      
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           |                                                    |                                  | Net unrealized income (loss) on hedges                    |                  |        | 6,005 |        |        |       | (344  | )      |        |        | 11,261 |        |        |       | 973   | 
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|                           | Foreign currency translation                       |                                  |                                                           | (770             | )      |       |        | 897    |       |       |        | (3,311 | )      |        |        | 948    |      
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       
|Total comprehensive income |                                                    | $                                | 46,805                                                    |                  |        | $     | 43,134 |        |       | $     | 79,446 |        |        | $      | 20,011 |       
|                           |                                                    |                                  |                                                           |                  |        |       |        |        |       |       |        |        |        |        |        |       



See accompanying notes to the 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,                                                                                        
|                                               |                                                                                       |                                                                                                 
|                                               |                                                                                       | 2004                                                                                             |                                           | 2003      
|                                               |                                                                                       |                                                                                                  |                                           |           
|Operating activities:                          |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               | Net income                                                                            |                                                                                                  | $                                         | 72,425     |         |          | $       | 16,047  |        
|                                               | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                                  |                                           |            |         |          |         |         |        
|                                               |                                                                                       | Cumulative change in accounting principle                                                        |                                           |            |         |          |         |         | 2,231   |        
|                                               |                                                                                       | Gain on sale of Croatian joint venture                                                           |                                           |            |         |          |         |         | (40,519 | )      
|                                               |                                                                                       | Stock-based compensation, net                                                                    |                                           |            | 6,520   |          |         |         |         |        
|                                               |                                                                                       | Depreciation, amortization and accretion                                                         |                                           |            | 123,390 |          |         |         | 139,208 |        
|                                               |                                                                                       | Deferred income taxes                                                                            |                                           |            | 12,422  |          |         |         | 9,845   |        
|                                               |                                                                                       | Asset dispositions                                                                               |                                           |            |         |          |         |         | 7,640   |        
|                                               |                                                                                       | Equity in net (income) loss of unconsolidated
    affiliates, net of cash distributions received |                                           |            | (1,917  | )        |         |         | 3,057   |        
|                                               |                                                                                       | Minority interests in net income (loss) of
    consolidated subsidiaries                         |                                           |            | 4,577   |          |         |         | (4,043  | )      
|                                               |                                                                                       | Adjustment of interest rate hedges to fair market
    value                                      |                                           |            | (3,753  | )        |         |         | (4,739  | )      
|                                               |                                                                                       | Loss on extinguishment of debt                                                                   |                                           |            | 16,260  |          |         |         |         |        
|                                               |                                                                                       | Non-cash interest                                                                                |                                           |            | 6,187   |          |         |         | 5,384   |        
|                                               |                                                                                       | Other, net                                                                                       |                                           |            | 1,700   |          |         |         | (2,259  | )      
|                                               |                                                                                       | Changes in operating assets and liabilities                                                      |                                           |            | (21,284 | )        |         |         | 6,475   |        
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               |                                                                                       |                                                                                                  | Net cash provided by operating activities |            |         | 216,527  |         |         |         | 138,327 |  
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|Investing activities:                          |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               | Purchase of property and equipment                                                    |                                                                                                  |                                           | (137,027   | )       |          |         | (99,839 | )      
|                                               | Additions to licensing costs and other intangible
    assets                          |                                                                                                  |                                           |            |         |          |         | (3,779  | )      
|                                               | Proceeds from sale of Croatian joint venture                                          |                                                                                                  |                                           |            |         |          |         | 69,630  |        
|                                               | International credit facility collateralization                                       |                                                                                                  |                                           | (17,331    | )       |          |         | (522    | )      
|                                               | Purchases of minority interests                                                       |                                                                                                  |                                           | (31,163    | )       |          |         |         |        
|                                               | Purchases of marketable securities                                                    |                                                                                                  |                                           | (34,121    | )       |          |         |         |        
|                                               | Other, net                                                                            |                                                                                                  |                                           | 1,996      |         |          |         | (496    | )      
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               |                                                                                       |                                                                                                  | Net cash used in investing activities     |            |         | (217,646 | )       |         |         | (35,006 | )
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|Financing activities:                          |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               | Additions to long-term debt                                                           |                                                                                                  |                                           | 1,312,998  |         |          |         | 139,504 |        
|                                               | Repayment of long-term debt                                                           |                                                                                                  |                                           | (1,284,054 | )       |          |         | (55,960 | )      
|                                               | Debt refinancing costs                                                                |                                                                                                  |                                           | (12,268    | )       |          |         |         |        
|                                               | Dividends paid to minority partners                                                   |                                                                                                  |                                           | (4,410     | )       |          |         |         |        
|                                               | Issuance of common stock, net                                                         |                                                                                                  |                                           | 2,470      |         |          |         | 437     |        
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|                                               |                                                                                       |                                                                                                  | Net cash provided by financing activities |            |         | 14,736   |         |         |         | 83,981  |  
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|Effect of exchange rate changes                |                                                                                       |                                                                                                  | (2,199                                    | )          |         |          | 2,967   |        
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|Change in cash and cash equivalents            |                                                                                       |                                                                                                  | 11,418                                    |            |         |          | 190,269 |        
|Cash and cash equivalents, beginning of period |                                                                                       |                                                                                                  | 128,597                                   |            |         |          | 62,429  |        
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        
|Cash and cash equivalents, end of period       |                                                                                       | $                                                                                                | 140,015                                   |            |         | $        | 252,698 |        
|                                               |                                                                                       |                                                                                                  |                                           |            |         |          |         |        

See accompanying notes to the condensed
consolidated financial statements

5



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##### Table of Contents



WESTERN WIRELESS CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS




|   |              
|-- | -------------
|1. | Organization:

Western Wireless Corporation (Western
Wireless, the Company, we,
our and us) provides wireless
communications services in the United States principally through
the ownership and operation of cellular systems. We provide
cellular operations primarily in rural areas in 19 western
states under the CellularONE® and Western
Wireless® brand names.

We own approximately 98% of Western Wireless
International Holding Corporation (WWI). WWI,
through its consolidated subsidiaries and equity investments, is
a provider of wireless communications services in seven
countries. WWI owns controlling interests in six of these
countries; Slovenia, Austria, Ireland, Bolivia, Haiti and Ghana.
WWI also has a non-controlling interest in Georgia.

The condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) that permit
reduced disclosures for interim periods. The condensed
consolidated balance sheet as of December 31, 2003 has been
derived from audited financial statements. The unaudited interim
condensed consolidated financial statements dated June 30,
2004 and 2003 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. 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 our annual audited financial
statements and footnotes thereto contained in the Companys
Form 10-K for the year ended December 31, 2003.



|   |                                                
|-- | -----------------------------------------------
|2. | Summary of Significant Accounting
    Policies:



| |                   
| | ------------------
| | Reclassifications:

Certain amounts in prior years financial
statements have been reclassified to conform to the 2004
presentation.



| |                             
| | ----------------------------
| | Principles of Consolidation:

The consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries and its
affiliate investments in which we have a greater than 50%
interest. All affiliate investments in which we have a
non-controlling interest, but have significant influence, are
accounted for using the equity method. All significant
intercompany accounts and transactions have been eliminated. As
of June 30, 2004, we consolidate six of WWIs
operating entities; Slovenia, Austria, Ireland, Bolivia, Haiti
and Ghana.

U.S. headquarters functions of WWI and
majority owned European, South American and Caribbean
consolidated subsidiaries are recorded as of the date of the
financial statements. Our consolidated Ghanaian entity and our
equity investment in Georgia are presented on a one-quarter lag.
We believe presenting financial information on a one-quarter lag
for certain entities is necessary to provide adequate time to
convert the results into United States Generally Accepted
Accounting Principles (GAAP) and ensure quality and
accurate information to the users of our financial statements.



| |                                      
| | -------------------------------------
| | Derivative Financial
    Instruments:

In January 2004, we entered into an interest rate
swap with a notional value of $200 million to hedge the
fair value of $200 million of our 9.250% Senior Notes
due July 2013 (2013 Notes). The interest rate swap
expires in July 2013 in conjunction with the 2013 Notes.
Semi-annually we will pay a floating rate of interest equal to
the six month LIBOR plus a fixed margin of 4.3975% and receive
fixed rate payments of 9.25% in return.

The terms of the interest rate swap agreement and
the 2013 Notes are such that effectiveness can be measured using
the short-cut method defined in Statement of Financial
Accounting Standards (SFAS)

6



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

No. 133, Accounting for Derivative
Instruments and Hedging Activities
(SFAS No. 133). This interest rate swap
agreement had no impact on our Condensed Consolidated Statement
of Operations and Comprehensive Income for the three and six
months ended June 30, 2004. The fair value of the interest
rate swap at June 30, 2004 was a liability to us of
$9.6 million with an offset classified as long-term debt in
our Condensed Consolidated Balance Sheets.

In May 2004, we canceled interest rate swaps with
an aggregate notional value of $200 million in conjunction
with the refinancing of our credit facility (see Note 4).
As a result of canceling these interest rate swaps, we recorded
a $3.2 million loss which is included in the loss on
extinguishment of debt on our Condensed Consolidated Statements
of Operations and Comprehensive Income. The $3.2 million
loss represents cash paid upon cancellation of the swaps and is
also included as a component of debt refinancing costs in our
Condensed Consolidated Statements of Cash Flows.

The refinancing of our credit facility also
resulted in certain of our interest rate hedges no longer
qualifying for hedge accounting under SFAS No. 133.
Accordingly the unrealized gain has been reclassified from
unrealized gains on hedges to realized gains on hedges as the
originally hedged transactions are probable of not occurring. As
a result of this reclassification, we recognized a gain of
$2.6 million included in other, net on our Condensed
Consolidated Statements of Operations and Comprehensive Income.
Total realized gains on hedges for the six months ended
June 30, 2004 were $4.4 million. Unrealized gains on
hedges are recorded by us as a component of accumulated other
comprehensive loss in our Condensed Consolidated Balance Sheets.



| |                                    
| | -----------------------------------
| | Stock-Based Compensation
    Plans:

As permitted under SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure, we have elected to continue to
follow the intrinsic value method under Accounting Principles
Board No. 25, Accounting for Stock Issued to
Employees, in accounting for our stock-based compensation
plans.

7



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table illustrates the effect on our
net income and basic and diluted income per share if we had
applied the fair value recognition provisions of
SFAS No. 123, Accounting for Stock-Based
Compensation, to our stock-based compensation plans:

|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |        |  
|------------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------- | - | ---------------- | - | ---- | - | ------ | - |  | - | ------- | - |  | - | ------ | -
|                          |                                                                                                |                                               |   |                 
|                          |                                                                                                | Three Months Ended                            |   | Six Months Ended
|                          |                                                                                                | June 30,                                      |   | June 30,        
|                          |                                                                                                |                                               |   |                 
|                          |                                                                                                | 2004                                          |   | 2003             |   | 2004 |   | 2003  
|                          |                                                                                                |                                               |   |                  |   |      |   |       
|                          |                                                                                                |                                              
|                          |                                                                                                | (Dollars in thousands, except per share data)
|Net income:               |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | As reported                                                                                    |                                               | $ | 40,982           |   |      | $ | 40,080 |   |  | $ | 72,425  |   |  | $ | 16,047 |  
|                          | Add: stock-based compensation expense included in
    reported net income                      |                                               |   | 4,773            |   |      |   |        |   |  |   | 6,520   |   |  |   |        |  
|                          | Deduct: stock-based compensation expense
    determined under fair value method for all awards |                                               |   | (7,112           | ) |      |   | (1,319 | ) |  |   | (10,803 | ) |  |   | (2,554 | )
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | Pro forma net income                                                                           |                                               | $ | 38,643           |   |      | $ | 38,761 |   |  | $ | 68,142  |   |  | $ | 13,493 |  
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|Basic income per share:   |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | As reported                                                                                    |                                               | $ | 0.45             |   |      | $ | 0.51   |   |  | $ | 0.79    |   |  | $ | 0.20   |  
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | Pro forma                                                                                      |                                               | $ | 0.42             |   |      | $ | 0.49   |   |  | $ | 0.74    |   |  | $ | 0.17   |  
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|Diluted income per share: |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | As reported                                                                                    |                                               | $ | 0.42             |   |      | $ | 0.49   |   |  | $ | 0.74    |   |  | $ | 0.20   |  
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       
|                          | Pro forma                                                                                      |                                               | $ | 0.39             |   |      | $ | 0.47   |   |  | $ | 0.70    |   |  | $ | 0.17   |  
|                          |                                                                                                |                                               |   |                  |   |      |   |        |   |  |   |         |   |  |   |       

The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option-pricing
model using the following weighted average assumptions:

|                                         |  |            |      |      |  |  |      |  
|---------------------------------------- |  | ---------- | ---- | ---- |  |  | ---- | -
|                                         |  |           
|                                         |  | Six Months
|                                         |  | Ended     
|                                         |  | June 30,  
|                                         |  |           
|                                         |  | 2004       |      | 2003
|                                         |  |            |      |     
|Weighted average risk free interest rate |  |            | 4.0  | %    |  |  | 4.1  | %
|Expected dividend yield                  |  |            | 0    | %    |  |  | 0    | %
|Expected volatility                      |  |            | 75.0 | %    |  |  | 75.0 | %
|Expected lives (in years)                |  |            | 6.5  |      |  |  | 7.5  |  

The Black-Scholes option pricing model requires
the input of highly subjective assumptions and does not
necessarily provide a reliable measure of fair value.



| |                                          
| | -----------------------------------------
| | Recently Issued Accounting
    Standards:

In June 2004, the Emerging Issues Task Force
(EITF) reached a consensus on Issue No. 03-01
The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments (EITF
No. 03-01), addressing the meaning of
other-than-temporary impairment and its application to debt and
equity securities within the scope of SFAS No. 115
Accounting for Certain Investments in Debt and Equity
Securities. The consensus reached states that an
investment is impaired if the fair value of the investment is
less than its cost and should be assessed for impairment in each
reporting period. Additionally, an investment that is impaired
should be deemed other-than-temporarily impaired unless a number
of criteria are met. Disclosure provisions in this statement are
effective for annual periods ending after December 15, 2003
and all other provisions are effective for reporting periods
beginning after June 15, 2004. The adoption of the

8



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

disclosure provisions had no material effect on
our financial position or results of operations and we do not
expect the adoption of the remaining provisions to have a
material effect on our financial position or results of
operations. Comparative information is not required.



|   |                       
|-- | ----------------------
|3. | Marketable Securities:

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

|                                      |                      |                        |        |              |  |   |      |     | 
|------------------------------------- | -------------------- | ---------------------- | ------ | ------------ |  | - | ---- | --- | 
|                                      |                      | June 30,               |        | December 31,
|                                      |                      | 2004                   |        | 2003        
|                                      |                      |                        |        |             
|                                      |                      |                       
|                                      |                      | (Dollars in thousands)
|Available-for-sale equity securities: |                      |                        |        |              |  |   |      |    
|                                      | Aggregate fair value |                        | $      | 33,543       |  |   | $    | 351 | 
|                                      | Historical cost      |                        |        | 34,772       |  |   |      | 651 | 
|                                      |                      |                        |        |              |  |   |      |    
|Unrealized holding losses, net        |                      | $                      | (1,229 | )            |  | $ | (300 | )  
|                                      |                      |                        |        |              |  |   |      |    

Our net unrealized holding losses are included as
a decrease to accumulated other comprehensive loss on our
Condensed Consolidated Balance Sheets. Realized gains and losses
are determined on the basis of specific identification.

The following table summarizes the fair value of
our investments with unrealized losses that are not deemed to be
other-than-temporarily impaired at June 30, 2004 (dollars
in thousands):

|                          |  |                     |        |                   |  |                           |     |            |  |            |     |            |  |   |     |  |  |   |        |  |  |   |       | 
|------------------------- |  | ------------------- | ------ | ----------------- |  | ------------------------- | --- | ---------- |  | ---------- | --- | ---------- |  | - | --- |  |  | - | ------ |  |  | - | ----- | 
|                          |  |                     |        |                   |  |                           |     |            |  |           
|                          |  |                     |        |                   |  | Total of Securities in   
|                          |  | Less Than 12 Months |        | 12 Months or More |  | Unrealized Loss Positions
|                          |  |                     |        |                   |  |                          
|                          |  |                     |        | Unrealized        |  |                           |     | Unrealized |  |            |     | Unrealized
|                          |  | Fair Value          |        | Losses            |  | Fair Value                |     | Losses     |  | Fair Value |     | Losses    
|                          |  |                     |        |                   |  |                           |     |            |  |            |     |           
|Description of Securities |  |                     |        |                   |  |                           |     |            |  |            |     |            |  |   |     |  |  |   |        |  |  |   |       | 
|Equity Securities         |  | $                   | 15,276 |                   |  | $                         | 860 |            |  | $          | 163 |            |  | $ | 488 |  |  | $ | 15,439 |  |  | $ | 1,348 | 

Our investments in equity securities which are in
an unrealized loss position are with a single issuer. We
evaluated the near-term prospects of the issuer in relation to
the severity and duration of the impairment. Based on that
evaluation and our ability and intent to hold these investments
for a reasonable period of time sufficient for a forecasted
recovery of fair value, we do not consider these investments to
be other-than-temporarily impaired at June 30, 2004.

9



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                
|-- | ---------------
|4. | Long-Term Debt:

|                                                   |            |                        |           |              |  |   |           |         | 
|-------------------------------------------------- | ---------- | ---------------------- | --------- | ------------ |  | - | --------- | ------- | 
|                                                   |            | June 30,               |           | December 31,
|                                                   |            | 2004                   |           | 2003        
|                                                   |            |                        |           |             
|                                                   |            |                       
|                                                   |            | (Dollars in thousands)
|Credit Facility:                                   |            |                        |           |              |  |   |           |        
|                                                   | Revolvers  |                        |           |              |  |   | $         | 350,000 | 
|                                                   | Term Loans |                        | $         | 1,200,000    |  |   |           | 822,000 | 
|9.250% Senior Notes Due 2013                       |            |                        | 600,000   |              |  |   | 600,000   |        
|4.625% Convertible Subordinated Notes Due
    2023 |            |                        | 115,000   |              |  |   | 115,000   |        
|tele.ring Term Loan                                |            |                        | 193,237   |              |  |   | 200,753   |        
|Slovenian Credit Facility                          |            |                        | 66,337    |              |  |   | 69,438    |        
|Bolivian Bridge Loan                               |            |                        |           |              |  |   | 34,700    |        
|Bolivian Credit Facility                           |            |                        | 50,000    |              |  |   |           |        
|Other                                              |            |                        | 9,495     |              |  |   | 28,320    |        
|                                                   |            |                        |           |              |  |   |           |        
|                                                   |            |                        | 2,234,069 |              |  |   | 2,220,211 |        
|Less current portion                               |            |                        | (106,423  | )            |  |   | (47,318   | )      
|                                                   |            |                        |           |              |  |   |           |        
|                                                   |            | $                      | 2,127,646 |              |  | $ | 2,172,893 |        
|                                                   |            |                        |           |              |  |   |           |        

The aggregate amounts of principal maturities as
of June 30, 2004 are as follows (dollars in thousands):

|                                    |            |   |           |           | 
|----------------------------------- | ---------- | - | --------- | --------- | 
|Six months ending December 31, 2004 |            | $ | 16,650    |          
|Year ending December 31,            |            |   |           |          
|                                    | 2005       |   |           | 111,034   | 
|                                    | 2006       |   |           | 190,833   | 
|                                    | 2007       |   |           | 67,594    | 
|                                    | 2008       |   |           | 82,618    | 
|                                    | Thereafter |   |           | 1,765,340 | 
|                                    |            |   |           |          
|                                    |            | $ | 2,234,069 |          
|                                    |            |   |           |          



| |                 
| | ----------------
| | Credit Facility:

At December 31, 2003, we had a
$1.55 billion credit facility with a consortium of lenders
(the Credit Facility) consisting of: (i) a
$350 million term loan; (ii) a $500 million term
loan; and (iii) two $350 million revolving loans.

On May 28, 2004 (the Agreement
Date), we refinanced the Credit Facility with a new credit
facility (the New Credit Facility). The aggregate
amount available under the New Credit Facility is
$1.50 billion consisting of: (i) a $225 million
term loan (Term Loan A); (ii) a
$975 million term loan (Term Loan B); and
(iii) a $300 million revolving loan (the
Revolving Credit Facility). Proceeds from the New
Credit Facility were used to repay $1.2 billion outstanding
under the Credit Facility. At June 30, 2004, the term loans
were fully drawn and we had approximately $300 million
available to borrow under the Revolving Credit Facility. For the
three and six months ended June 30, 2004, we recognized a
$16.3 million aggregate loss on the extinguishment of debt
related to the write-off of deferred financing costs and
cancellation of certain related interest rate swaps.

Under the terms of Term Loan A, we are
required to make quarterly payments on the outstanding principal
beginning September 30, 2004. These payments typically tend
to increase on the anniversary date of

10



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the initial payment, until paid in full in May,
2010. Under the terms of Term Loan B, we are required to
make small quarterly payments on the outstanding principal
balance beginning September 30, 2004, with the remainder of
the balance being paid in four equal quarterly payments starting
September 30, 2010 and ending in May 2011. Under the terms
of the Revolving Credit Facility, any outstanding principal
balance is payable in full in May, 2010. Principal payments
required under the New Credit Facility for the remainder of 2004
are $16.1 million.

The terms of the New Credit Facility contain
certain covenants which impose limitations on our operations and
activities, including, among other things, limitations on the
incurrence of indebtedness, the sale of assets, investments and
acquisitions, distribution of dividends or other distributions
and loans. Failure to comply with covenants would result in an
event of default and would allow the lenders to accelerate the
maturity. Subject to our leverage ratio at the time, the New
Credit Facility may require us to make mandatory prepayments
from proceeds of the issuance or incurrence of additional debt
after the Agreement Date and from excess cash flow beginning
with the fiscal year ended December 31, 2004. We are also
required to make prepayments from the proceeds of certain asset
dispositions. The New Credit Facility limits the amount we are
permitted to invest in our international subsidiaries to
$250 million through December 31, 2004 and
$200 million thereafter (so long as in each case
$100 million is available under the Revolving Credit
Facility), plus certain other amounts received, such as from the
sale of any WWI stock or assets, subject to certain conditions.
The New Credit Facility also limits payments of dividends or
other distributions to $200 million (so long as
$100 million is available under the Revolving Credit
Facility), subject to certain conditions. However, the New
Credit Facility allows for unlimited payments of dividends and
other distributions (so long as $100 million is available
under the Revolving Credit Facility) if our leverage ratio (as
defined in the agreement) is below a specified threshold.

Under the New Credit Facility, interest is
payable at an applicable margin in excess of a prevailing base
rate. The prevailing rate is based on the prime rate or the
Eurodollar rate. The applicable margin for the Revolving Credit
Facility and Term Loan A is determined quarterly based on
our leverage ratio and ranges from 1.75% to 2.50% for Eurodollar
advances and 0.75% to 1.50% for alternate base rate advances.
The applicable margin on Term Loan B is 3.00% for
Eurodollar advances and 2.00% for alternate base rate advances.
We typically borrow under the Eurodollar rate. The New Credit
Facility also provides for an annual fee ranging from 0.25% to
0.50% on any undrawn commitment under the Revolving Credit
Facility, payable quarterly.

The New Credit Facility requires us to enter into
interest rate hedge agreements to manage our interest rate
exposure under the New Credit Facility. At June 30, 2004,
we had interest rate caps, swaps and collars hedging the New
Credit Facility with a total notional amount of
$600.0 million. Generally, these instruments have initial
terms ranging from three to five years and effectively convert
variable rate debt to fixed rate.



| |                          
| | -------------------------
| | Bolivian Credit Facility:

In May 2004, NuevaTel S.A.
(NuevaTel), a subsidiary of WWI, finalized the terms
of a credit facility agreement (the Bolivian Credit
Facility) with the Overseas Private Investment Corporation
(OPIC). The entire commitment of $50 million
was drawn in one tranche, of which $34.7 million was
utilized to repay the principal amount of NuevaTels bridge
loan. The Bolivian Credit Facility proceeds will provide funding
for the expansion of NuevaTels network in Bolivia. Under
the terms of the Bolivian Credit Facility, all outstanding
principal is required to be repaid in predetermined quarterly
installments beginning on July 15, 2006 and ending on
April 15, 2014. Interest will accrue at 8.74% and is
required to be repaid on a quarterly basis beginning
July 15, 2004.

The Bolivian Credit Facility contains certain
restrictive covenants, including a debt service coverage ratio
which does not become effective until the third quarter of 2006.
Other covenants include, among other things, limitations on
NuevaTels ability to incur additional indebtedness, make
certain asset dispositions, make

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WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

restricted payments and enter into certain
mergers, sales or combinations. Substantially all of
NuevaTels assets are pledged as collateral for the
Bolivian Credit Facility. Western Wireless International
Corporation (WWIC), a subsidiary of WWI, has pledged
its shares in NuevaTel to OPIC as security for the Bolivian
Credit Facility and has entered into a sponsor support agreement
with OPIC pursuant to which WWIC has a maximum obligation to
OPIC of $11.6 million. WWIC has secured this obligation by
providing a letter of credit in favor of OPIC, secured by cash
collateral of $11.6 million.

At June 30, 2004, the outstanding amount of
principal and interest under the Bolivian Credit Facility was
$50.0 million and $0.6 million, respectively, and the
facility was fully drawn. Interest payments required under the
Bolivian Credit Facility for the remainder of 2004 are
approximately $1.7 million.



|   |                               
|-- | ------------------------------
|5. | Commitments and Contingencies:



| |       
| | ------
| | Haiti:

In accordance with the Rights Agreements entered
into in September 1998 by a wholly owned subsidiary of WWI with
two of the shareholders of Communication Cellulaire
d Haiti, S.A. (COMCEL), WWIs
Haitian subsidiary, these two minority shareholders had the
right to elect that WWIs wholly owned subsidiary purchase
all of their shares at fair market value, as defined in the
agreements, within the 30 day period after COMCELs
issuance of its December 31, 2003 financial statements. The
30 day period expired in April 2004, and the two minority
shareholders elected not to exercise their purchase option.

In February 2004, rebels in opposition to
President Jean-Bertrand Aristide gained control of several of
Haitis key cities ultimately resulting in Aristides
resignation. In March 2004, a multinational peacekeeping force,
including U.S. Marines, arrived in Haiti to secure key
areas and restore order in the country. COMCELs network
remained operational during this period of civil unrest with the
exception of temporary interruption in communications services
to some parts of the country. COMCELs operations were back
to normal throughout the second quarter of 2004.



|   |                         
|-- | ------------------------
|6. | Income Per Common Share:

SFAS 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 and convertible debt using the
treasury stock method or the if
converted method, as applicable.

In net income periods, certain options remain
anti-dilutive because the option exercise price is above the
average market price of our outstanding shares for the period.
For the six months ended June 30, 2004 and 2003, weighted
average shares issuable upon the exercise of stock options,
which were not included in the calculation because they were
anti-dilutive, were 758,000 and 2,315,000, respectively. For the
three months ended June 30, 2004 and 2003, weighted average
shares issuable upon the exercise of stock options, which were
not included in the calculation because they were anti-dilutive,
were 755,000 and 1,389,000 respectively. As of June 30,
2003, 1,141,000 weighted average shares issuable upon the
assumed conversion of the 4.625% Convertible Subordinated
Notes (2023 Notes) were excluded from the
calculation of diluted earnings per common share for the six
months ended June 30, 2003 because they were anti-dilutive.
Stock option exercises and the conversion of all or a portion of
the 2023 Notes could potentially dilute basic income per share
in the future.

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WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table sets forth the computation of
basic and diluted income per share:

|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |            |        | 
|----------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------- | - | ------------------------- | ------ | ---- | - | ---------- | ------ |  | - | ----------- | ------ |  | - | ---------- | ------ | 
|                                          |                                                                               |                                                                      |   |                          
|                                          |                                                                               | Three Months Ended June 30,                                          |   | Six Months Ended June 30,
|                                          |                                                                               |                                                                      |   |                          
|                                          |                                                                               | 2004                                                                 |   | 2003                      |        | 2004 |   | 2003      
|                                          |                                                                               |                                                                      |   |                           |        |      |   |           
|                                          |                                                                               |                                                                     
|                                          |                                                                               | (Dollars in thousands, except per share data)                       
|Basic income per share computation:       |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|Numerator:                                |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Income before cumulative change in accounting
    principle                   |                                                                      | $ | 40,982                    |        |      | $ | 40,080     |        |  | $ | 72,425      |        |  | $ | 18,278     |       
|                                          | Cumulative change in accounting principle                                     |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   | (2,231     | )     
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Net income                                                                    |                                                                      | $ | 40,982                    |        |      | $ | 40,080     |        |  | $ | 72,425      |        |  | $ | 16,047     |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|Denominator:                              |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Weighted average common shares outstanding                                    |                                                                      |   | 91,875,000                |        |      |   | 79,246,000 |        |  |   | 91,792,000  |        |  |   | 79,220,000 |       
|Basic income per share:                   |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Before cumulative change in accounting principle                              |                                                                      | $ | 0.45                      |        |      | $ | 0.51       |        |  | $ | 0.79        |        |  | $ | 0.23       |       
|                                          | Cumulative change in accounting principle                                     |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   | (0.03      | )     
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Basic income per share                                                        |                                                                      | $ | 0.45                      |        |      | $ | 0.51       |        |  | $ | 0.79        |        |  | $ | 0.20       |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|Diluted income per share
    computation: |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|Numerator:                                |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Income before cumulative change in accounting
    principle                   |                                                                      | $ | 40,982                    |        |      | $ | 40,080     |        |  | $ | 72,425      |        |  | $ | 18,278     |       
|                                          | Add back interest and financing expense on
    convertible subordinated notes |                                                                      |   | 1,377                     |        |      |   | 284        |        |  |   | 2,755       |        |  |   |            |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          |                                                                               | Adjusted income before cumulative change in
    accounting principle |   |                           | 42,359 |      |   |            | 40,364 |  |   |             | 75,180 |  |   |            | 18,278 | 
|                                          | Cumulative change in accounting principle                                     |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   | (2,231     | )     
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Adjusted net income                                                           |                                                                      | $ | 42,359                    |        |      | $ | 40,364     |        |  | $ | 75,180      |        |  | $ | 16,047     |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|Denominator:                              |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Weighted average common shares outstanding                                    |                                                                      |   | 91,875,000                |        |      |   | 79,246,000 |        |  |   | 91,792,000  |        |  |   | 79,220,000 |       
|                                          | Assumed exercise of stock options                                             |                                                                      |   | 2,256,000                 |        |      |   | 833,000    |        |  |   | 2,267,000   |        |  |   | 581,000    |       
|                                          | Assumed exercise of convertible subordinated notes                            |                                                                      |   | 7,440,000                 |        |      |   | 2,269,000  |        |  |   | 7,440,000   |        |  |   |            |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           
|                                          | Diluted weighted average shares outstanding                                   |                                                                      |   | 101,571,000               |        |      |   | 82,348,000 |        |  |   | 101,499,000 |        |  |   | 79,801,000 |       
|                                          |                                                                               |                                                                      |   |                           |        |      |   |            |        |  |   |             |        |  |   |           

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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                          |                                                  |                                               |   |                           |  |      |   |      |  |  |   |      |  |  |   |       |  
|------------------------- | ------------------------------------------------ | --------------------------------------------- | - | ------------------------- |  | ---- | - | ---- |  |  | - | ---- |  |  | - | ----- | -
|                          |                                                  |                                               |   |                          
|                          |                                                  | Three Months Ended June 30,                   |   | Six Months Ended June 30,
|                          |                                                  |                                               |   |                          
|                          |                                                  | 2004                                          |   | 2003                      |  | 2004 |   | 2003
|                          |                                                  |                                               |   |                           |  |      |   |     
|                          |                                                  |                                              
|                          |                                                  | (Dollars in thousands, except per share data)
|Diluted income per share: |                                                  |                                               |   |                           |  |      |   |      |  |  |   |      |  |  |   |      
|                          | Before cumulative change in accounting principle |                                               | $ | 0.42                      |  |      | $ | 0.49 |  |  | $ | 0.74 |  |  | $ | 0.23  |  
|                          | Cumulative change in accounting principle        |                                               |   |                           |  |      |   |      |  |  |   |      |  |  |   | (0.03 | )
|                          |                                                  |                                               |   |                           |  |      |   |      |  |  |   |      |  |  |   |      
|                          | Diluted income per share                         |                                               | $ | 0.42                      |  |      | $ | 0.49 |  |  | $ | 0.74 |  |  | $ | 0.20  |  
|                          |                                                  |                                               |   |                           |  |      |   |      |  |  |   |      |  |  |   |      



|   |                                                            
|-- | -----------------------------------------------------------
|7. | Acquisitions, Dispositions and Discontinued
    Operations:



| |                           
| | --------------------------
| | PCS Licenses Acquisitions:

In July 2004, we entered into purchase agreements
to purchase 10 Mhz domestic Federal Communications
Commission (FCC) personal communications services
(PCS) licenses in South Dakota, North Dakota, Kansas
and Minnesota along with cell sites and equipment for
$5.0 million. We anticipate closing will occur during the
fourth quarter of 2004.

In April 2004, we entered into a roaming
agreement and a series of related agreements with WirelessCo,
L.P. (Sprint PCS) and certain of its subsidiaries
whereby we agreed to purchase, for a nominal amount of cash,
certain domestic Federal Communications Commission licenses from
Sprint PCS to expand our wireless network in Montana. We have
agreed to provide discounted roaming services and to meet
certain buildout commitments. Sprint PCS has agreed to prefer
our Montana network for its customers and to purchase wireless
service from us for resale to Qwest Wireless LLC through 2009.
We anticipate closing will occur during the third quarter of
2004.



| |         
| | --------
| | Ireland:

In February 2004, WWI acquired an additional
17.87% ownership in Meteor, our Irish subsidiary, from two of
its partners for cash of approximately $30.2 million. As a
result of the transaction, WWI recorded $28.7 million in
additional license cost and a $1.5 million reduction of
minority interests in consolidated subsidiaries.

In July 2004, WWI acquired the remaining 1.17%
minority interest in Meteor from its minority partners for cash
of approximately $2.0 million. As a result of the
transaction, WWI recorded $2.0 million in additional
license costs. Meteor is now 100% owned by WWI.



| |         
| | --------
| | Austria:

In January 2004, WWI acquired an additional 0.25%
ownership of its Austrian subsidiary from an officer of the same
subsidiary for approximately $1.0 million. The acquisition
was in accordance with a put agreement entered into between the
subsidiary and the officer in the fourth quarter of 2001. The
officer still holds 0.25% ownership under the terms of the
agreement.



|   |                                                
|-- | -----------------------------------------------
|8. | Operating Segments and Related
    Information:

Operations of the Company are overseen by
domestic and international management teams each reporting to
the Chief Executive Officer of the Company. Our international
operations consist of consolidated subsidiaries and operating
entities around the world. Our Chief Executive Officer evaluates
international operations on a country by country basis.
Accordingly, our operating segments include domestic operations,
Austrian operations, and all other international segments. The
results of Slovenia, Ireland, Bolivia, Ghana and

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WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Haiti are aggregated into all other
international as provided for under SFAS No. 131
Disclosures about Segments of an Enterprise and Related
Information (SFAS No. 131) based on
their relative size along with having substantially similar
businesses. Certain allocations have been made between the
domestic and all other international segments reflecting certain
centralized back office costs and assets benefiting both
domestic and international operations. Adjusted EBITDA is the
measure of profitability utilized by our Chief Operating
Decision Maker and is presented herein in accordance with
SFAS No. 131.

Our domestic segment provides cellular services
in rural markets in the western United States. Our Austrian
segment provides both wireless and fixed line services in
Austria, while the all other international segment mainly
provides wireless services.

15



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The table below summarizes financial results for
each segment:

|                                 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |  |  |   |           | 
|-------------------------------- | ---------------------------------------- | ---------------------- | - | ---------- |  | ---------------- | - | ------------ |  |  | - | ------- |  |  | - | --------- | 
|                                 |                                          | Domestic               |   | Austrian   |  | All Other        |   |             
|                                 |                                          | Operations             |   | Operations |  | International(2) |   | Consolidated
|                                 |                                          |                        |   |            |  |                  |   |             
|                                 |                                          |                       
|                                 |                                          | (Dollars in thousands)
|Three months ended June 30, 2004 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |  |  |   |          
|                                 | Total revenues                           |                        | $ | 267,765    |  |                  | $ | 139,386      |  |  | $ | 58,341  |  |  | $ | 465,492   | 
|                                 | Depreciation, amortization and accretion |                        |   | 41,526     |  |                  |   | 4,502        |  |  |   | 16,277  |  |  |   | 62,305    | 
|                                 | Interest and financing expense, net      |                        |   | 18,502     |  |                  |   | 2,477        |  |  |   | 14,561  |  |  |   | 35,540    | 
|                                 | Adjusted EBITDA(1)                       |                        |   | 114,648    |  |                  |   | 39,038       |  |  |   | 8,839   |  |  |   | 162,525   | 
|                                 | Total capital expenditures               |                        |   | 48,126     |  |                  |   | 14,959       |  |  |   | 11,911  |  |  |   | 74,996    | 
|Six months ended June 30, 2004   |                                          |                        |   |            |  |                  |   |              |  |  |   |         |  |  |   |          
|                                 | Total revenues                           |                        | $ | 517,191    |  |                  | $ | 284,924      |  |  | $ | 112,321 |  |  | $ | 914,436   | 
|                                 | Depreciation, amortization and accretion |                        |   | 81,122     |  |                  |   | 8,471        |  |  |   | 31,431  |  |  |   | 121,024   | 
|                                 | Interest and financing expense, net      |                        |   | 38,402     |  |                  |   | 5,127        |  |  |   | 26,267  |  |  |   | 69,796    | 
|                                 | Adjusted EBITDA(1)                       |                        |   | 219,406    |  |                  |   | 74,869       |  |  |   | 10,741  |  |  |   | 305,016   | 
|                                 | Total capital expenditures               |                        |   | 94,716     |  |                  |   | 22,823       |  |  |   | 19,488  |  |  |   | 137,027   | 
|At June 30, 2004                 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |  |  |   |          
|                                 | Total assets                             |                        | $ | 1,912,680  |  |                  | $ | 268,344      |  |  | $ | 484,178 |  |  | $ | 2,665,202 | 

|                                 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |   |  |   |           | 
|-------------------------------- | ---------------------------------------- | ---------------------- | - | ---------- |  | ---------------- | - | ------------ |  |  | - | ------- | - |  | - | --------- | 
|                                 |                                          | Domestic               |   | Austrian   |  | All Other        |   |             
|                                 |                                          | Operations             |   | Operations |  | International(2) |   | Consolidated
|                                 |                                          |                        |   |            |  |                  |   |             
|                                 |                                          |                       
|                                 |                                          | (Dollars in thousands)
|Three months ended June 30, 2003 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |   |  |   |          
|                                 | Total revenues                           |                        | $ | 239,777    |  |                  | $ | 82,089       |  |  | $ | 37,366  |   |  | $ | 359,232   | 
|                                 | Depreciation, amortization and accretion |                        |   | 54,587     |  |                  |   | 2,586        |  |  |   | 14,437  |   |  |   | 71,610    | 
|                                 | Interest and financing expense, net      |                        |   | 22,252     |  |                  |   | 2,797        |  |  |   | 12,390  |   |  |   | 37,439    | 
|                                 | Adjusted EBITDA(1)                       |                        |   | 105,044    |  |                  |   | 1,810        |  |  |   | (2,654  | ) |  |   | 104,200   | 
|                                 | Total capital expenditures               |                        |   | 33,700     |  |                  |   | 8,090        |  |  |   | 6,301   |   |  |   | 48,091    | 
|Six months ended June 30, 2003   |                                          |                        |   |            |  |                  |   |              |  |  |   |         |   |  |   |          
|                                 | Total revenues                           |                        | $ | 461,254    |  |                  | $ | 156,004      |  |  | $ | 69,148  |   |  | $ | 686,406   | 
|                                 | Depreciation, amortization and accretion |                        |   | 104,749    |  |                  |   | 4,962        |  |  |   | 27,712  |   |  |   | 137,423   | 
|                                 | Asset dispositions                       |                        |   | 7,640      |  |                  |   |              |  |  |   |         |   |  |   | 7,640     | 
|                                 | Interest and financing expense, net      |                        |   | 46,032     |  |                  |   | 5,306        |  |  |   | 24,580  |   |  |   | 75,918    | 
|                                 | Adjusted EBITDA(1)                       |                        |   | 202,892    |  |                  |   | 4,920        |  |  |   | (9,303  | ) |  |   | 198,509   | 
|                                 | Total capital expenditures               |                        |   | 64,305     |  |                  |   | 17,057       |  |  |   | 18,477  |   |  |   | 99,839    | 
|At June 30, 2003                 |                                          |                        |   |            |  |                  |   |              |  |  |   |         |   |  |   |          
|                                 | Total assets                             |                        | $ | 1,952,292  |  |                  | $ | 171,044      |  |  | $ | 439,248 |   |  | $ | 2,562,584 | 



|    |                 
|--- | ----------------
|(1) | Adjusted EBITDA:

EBITDA is a non-GAAP financial measure generally
defined as net income (loss) before interest, taxes,
depreciation and amortization. We use the non-GAAP financial
measure Adjusted EBITDA which further excludes the
following items: (i) accretion; (ii) asset
dispositions; (iii) stock-based compensation, net;

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WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(iv) equity in net (income) loss of
unconsolidated affiliates, net of tax and other, net;
(v) (gain) loss on sale of joint venture;
(vi) loss on extinguishment of debt; (vii) minority
interests in net (income) loss of consolidated subsidiaries;
(viii) discontinued operations; and (ix) cumulative
change in accounting principle. Each of these items is presented
in our Condensed Consolidated Statements of Operations and
Comprehensive Income.

Other companies in the wireless industry may
define Adjusted EBITDA in a different manner or present other
varying financial measures, and, accordingly, the Companys
presentation may not be comparable to other similarly titled
measures of other companies. The Companys calculation of
Adjusted EBITDA is also not directly comparable to EBIT
(earnings before interest and taxes) or EBITDA.

We view Adjusted EBITDA as an operating
performance measure and as such, believe that the GAAP financial
measure most directly comparable to Adjusted EBITDA is net
income (loss). We have presented Adjusted EBITDA because this
financial measure, in combination with other financial measures,
is an integral part of our internal reporting system utilized by
management to assess and evaluate the performance of our
business. Adjusted EBITDA is also considered a significant
performance measure. It is used by management as a measurement
of our success in obtaining, retaining and servicing customers
by reflecting our ability to generate subscriber revenue while
providing a high level of customer service in a cost effective
manner. The components of Adjusted EBITDA include the key
revenue and expense items for which our operating managers are
responsible and upon which we evaluate our performance.

Adjusted EBITDA is consistent with certain
financial measures used in our New Credit Facility and our 2013
Notes. Such financial measures are key components of several
negative covenants including, among others, the limitation on
incurrence of indebtedness, the limitations on investments and
acquisitions and the limitation on distributions and dividends.

Adjusted EBITDA should not be construed as an
alternative to net income (loss), as determined in accordance
with GAAP, as an alternative to cash flows from operating
activities, as determined in accordance with GAAP, or as a
measure of liquidity. We believe Adjusted EBITDA is useful to
investors as a means to evaluate the Companys operating
performance prior to financing costs, deferred tax charges,
non-cash depreciation and amortization expense, and certain
other non-cash charges. Although Adjusted EBITDA may be defined
differently by other companies in the wireless industry, we
believe that Adjusted EBITDA provides some commonality of
measurement in analyzing operating performance of companies in
the wireless industry.

17



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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A reconciliation of net income (loss) to Adjusted
EBITDA is included in the following table:

|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | -------------------------------- | ------- | ---------- | - | ------------- | ------ | ------------ |  | - | ------- | ------ | - | - | ------- | ------- | -
|                  |                                                                                         |                                 
|                  |                                                                                         | Three Months Ended June 30, 2004
|                  |                                                                                         |                                 
|                  |                                                                                         | Domestic                         |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                       |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                  |         |            |   |               |        |             
|                  |                                                                                         |                                 
|                  |                                                                                         | (Dollars in thousands)          
|Net income (loss) |                                                                                         | $                                | 41,268  |            |   | $             | 30,912 |              |  | $ | (31,198 | )      |   | $ | 40,982  |        
|                  | Depreciation, amortization and accretion                                                |                                  |         | 41,526     |   |               |        | 4,502        |  |   |         | 16,277 |   |   |         | 62,305  |  
|                  | Asset dispositions                                                                      |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                  |         |            |   |               |        | 81           |  |   |         | 4,692  |   |   |         | 4,773   |  
|                  | Interest and financing expense, net                                                     |                                  |         | 18,502     |   |               |        | 2,477        |  |   |         | 14,561 |   |   |         | 35,540  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                  |         | (10,581    | ) |               |        | 1,065        |  |   |         | (1,635 | ) |   |         | (11,151 | )
|                  | (Gain) loss on sale of joint venture                                                    |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Loss on extinguishment of debt                                                          |                                  |         | 16,260     |   |               |        |              |  |   |         |        |   |   |         | 16,260  |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                  |         |            |   |               |        |              |  |   |         | 2,116  |   |   |         | 2,116   |  
|                  | Provision for income taxes                                                              |                                  |         | 7,673      |   |               |        | 1            |  |   |         | 4,026  |   |   |         | 11,700  |  
|                  | Discontinued operations                                                                 |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                                | 114,648 |            |   | $             | 39,038 |              |  | $ | 8,839   |        |   | $ | 162,525 |        
|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |        

|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | -------------------------------- | ------- | ---------- | - | ------------- | ------ | ------------ | - | - | ------ | ------- | - | - | ------- | ------- | -
|                  |                                                                                         |                                 
|                  |                                                                                         | Three Months Ended June 30, 2003
|                  |                                                                                         |                                 
|                  |                                                                                         | Domestic                         |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                       |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                  |         |            |   |               |        |             
|                  |                                                                                         |                                 
|                  |                                                                                         | (Dollars in thousands)          
|Net income (loss) |                                                                                         | $                                | 22,934  |            |   | $             | (4,373 | )            |   | $ | 21,519 |         |   | $ | 40,080  |        
|                  | Depreciation, amortization and accretion                                                |                                  |         | 54,587     |   |               |        | 2,586        |   |   |        | 14,437  |   |   |         | 71,610  |  
|                  | Asset dispositions                                                                      |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Interest and financing expense, net                                                     |                                  |         | 22,252     |   |               |        | 2,797        |   |   |        | 12,390  |   |   |         | 37,439  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                  |         | (2,339     | ) |               |        | 805          |   |   |        | (7,970  | ) |   |         | (9,504  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                  |         | 1,574      |   |               |        |              |   |   |        | (42,093 | ) |   |         | (40,519 | )
|                  | Loss on extinguishment of debt                                                          |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                  |         |            |   |               |        |              |   |   |        | (1,651  | ) |   |         | (1,651  | )
|                  | Provision for income taxes                                                              |                                  |         | 6,036      |   |               |        | (5           | ) |   |        | 714     |   |   |         | 6,745   |  
|                  | Discontinued operations                                                                 |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                                | 105,044 |            |   | $             | 1,810  |              |   | $ | (2,654 | )       |   | $ | 104,200 |        
|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |        

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WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | ------------------------------ | ------- | ---------- | - | ------------- | ------ | ------------ |  | - | ------- | ------ | - | - | ------- | ------- | -
|                  |                                                                                         |                               
|                  |                                                                                         | Six Months Ended June 30, 2004
|                  |                                                                                         |                               
|                  |                                                                                         | Domestic                       |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                     |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                |         |            |   |               |        |             
|                  |                                                                                         |                               
|                  |                                                                                         | (Dollars in thousands)        
|Net income (loss) |                                                                                         | $                              | 74,265  |            |   | $             | 58,937 |              |  | $ | (60,777 | )      |   | $ | 72,425  |        
|                  | Depreciation, amortization and accretion                                                |                                |         | 81,122     |   |               |        | 8,471        |  |   |         | 31,431 |   |   |         | 121,024 |  
|                  | Asset dispositions                                                                      |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                |         |            |   |               |        | 228          |  |   |         | 6,292  |   |   |         | 6,520   |  
|                  | Interest and financing expense, net                                                     |                                |         | 38,402     |   |               |        | 5,127        |  |   |         | 26,267 |   |   |         | 69,796  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                |         | (4,367     | ) |               |        | 2,104        |  |   |         | (3,322 | ) |   |         | (5,585  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Loss on extinguishment of debt                                                          |                                |         | 16,260     |   |               |        |              |  |   |         |        |   |   |         | 16,260  |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                |         |            |   |               |        |              |  |   |         | 4,577  |   |   |         | 4,577   |  
|                  | Provision for income taxes                                                              |                                |         | 13,724     |   |               |        | 2            |  |   |         | 6,273  |   |   |         | 19,999  |  
|                  | Discontinued operations                                                                 |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                              | 219,406 |            |   | $             | 74,869 |              |  | $ | 10,741  |        |   | $ | 305,016 |        
|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |        

|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | ------------------------------ | ------- | ---------- | - | ------------- | ------ | ------------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                  |                                                                                         |                               
|                  |                                                                                         | Six Months Ended June 30, 2003
|                  |                                                                                         |                               
|                  |                                                                                         | Domestic                       |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                     |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                |         |            |   |               |        |             
|                  |                                                                                         |                               
|                  |                                                                                         | (Dollars in thousands)        
|Net income (loss) |                                                                                         | $                              | 36,215  |            |   | $             | (8,095 | )            |   | $ | (12,073 | )       |   | $ | 16,047  |        
|                  | Depreciation, amortization and accretion                                                |                                |         | 104,749    |   |               |        | 4,962        |   |   |         | 27,712  |   |   |         | 137,423 |  
|                  | Asset dispositions                                                                      |                                |         | 7,640      |   |               |        |              |   |   |         |         |   |   |         | 7,640   |  
|                  | Stock-based compensation, net                                                           |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Interest and financing expense, net                                                     |                                |         | 46,032     |   |               |        | 5,306        |   |   |         | 24,580  |   |   |         | 75,918  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                |         | (4,352     | ) |               |        | 1,981        |   |   |         | (5,052  | ) |   |         | (7,423  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                |         | 1,574      |   |               |        |              |   |   |         | (42,093 | ) |   |         | (40,519 | )
|                  | Loss on extinguishment of debt                                                          |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                |         |            |   |               |        |              |   |   |         | (4,043  | ) |   |         | (4,043  | )
|                  | Provision for income taxes                                                              |                                |         | 9,845      |   |               |        | (4           | ) |   |         | 1,394   |   |   |         | 11,235  |  
|                  | Discontinued operations                                                                 |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                |         | 1,189      |   |               |        | 770          |   |   |         | 272     |   |   |         | 2,231   |  
|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                              | 202,892 |            |   | $             | 4,920  |              |   | $ | (9,303  | )       |   | $ | 198,509 |        
|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |        

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##### Table of Contents



WESTERN WIRELESS CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|    |                                                       
|--- | ------------------------------------------------------
|(2) | Revenues and Long-Lived Assets by Geographic
    Area:

Within the all other international segment,
revenues for the country of Ireland were $25.0 million and
$16.0 million for the three months ended June 30, 2004
and 2003, respectively, and $47.7 million and
$29.7 million for the six months ended June 30, 2004
and 2003, respectively. Long-lived assets attributable to
operations in Ireland, which are primarily comprised of
property, plant, equipment and intangible assets, net of
accumulated depreciation and amortization, were
$147.1 million and $139.0 million at June 30,
2004 and 2003, respectively.

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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 Securities
Litigation Reform Act of 1995.This
quarterly report on Form 10-Q, including Managements
Discussion and Analysis of Financial Condition and Results of
Operations, contains statements 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, which
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 all of which are difficult to
predict and many of which are beyond our control and which may
cause the actual results, events or developments to be
significantly 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, nationally,
internationally and in the regions and countries in which
Western Wireless Corporation operates; demographic changes;
technology changes; increased competition; changes in business
strategy or development plans; the high leverage of the Company
and our ability to access capital markets; the ability to
attract and retain qualified personnel; existing governmental
regulations and changes in, or the failure to comply with,
governmental regulations, including wireless number portability;
our ability to acquire and the cost of acquiring additional
spectrum licenses; product liability and other claims asserted
against the Company; and other factors included elsewhere in
this report, in the Companys filed public offering
prospectuses or its reports filed with the Securities and
Exchange Commission, including, without limitation, those
described under the caption, Risk Factors, contained
in our Form 10-K for the year ended December 31, 2003
and in our public offering prospectuses.

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.

Unless the context requires otherwise,
Western Wireless, the Company,
we, our and us include us
and our subsidiaries.

The following discussion and analysis of our
financial condition and results of operations is based upon our
condensed consolidated financial statements, which have been
prepared in accordance with United States Generally Accepted
Accounting Principles (GAAP). The discussion and
analysis should be read in conjunction with our consolidated
financial statements and notes thereto and other financial
information included herein and in our Form 10-K for the
year ended December 31, 2003. The preparation of financial
statements in conformity with GAAP requires us to make estimates
and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. On an
on-going basis, we evaluate our estimates. We base our estimates
on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the
results of which form the basis for making assumptions about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ from
these estimates.

Overview

We provide cellular communications services in 19
western states under the CellularONE® and Western
Wireless® brand names principally through the ownership and
operation of cellular wireless systems. Our domestic operations
are primarily in rural areas due to our belief that there are
certain strategic advantages to operating in these areas.
Additionally, we own personal communications services licenses
in 18 western states which we primarily use to support our
roaming partners.

A significant portion of our domestic revenues
have historically been derived from roaming. Our network
includes the four major technologies currently available in the
U.S. These technologies include analog and three digital
standards: Time Division Multiple Access (TDMA);
Code Division Multiple Access

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##### Table of Contents



(CDMA); and Global System for Mobile
Communications (GSM). All of the digital
technologies employed by us allow for enhanced capacity and data
services.


We own approximately 98% of Western Wireless
International Holding Corporation (WWI). WWI,
through its consolidated subsidiaries and equity investments, is
a provider of mobile communications services in seven countries.
WWI owns controlling interests in six of these countries:
Slovenia, Austria, Ireland, Bolivia, Haiti and Ghana. WWI also
has an equity interest in Georgia.

Results of Domestic Operations for the Three
and Six Months Ended June 30, 2004 and 2003

We had 1,324,200 domestic subscribers at
June 30, 2004 representing an increase of 10,900 and
33,800, compared to March 31, 2004 and December 31,
2003, respectively. We had 1,231,200 domestic subscribers at
June 30, 2003. This represented an increase of 15,100 and
33,400 compared to March 31, 2003 and December 31,
2002, respectively. The decrease in net subscriber additions in
the second quarter of 2004 compared to the same quarter last
year is due mainly to an increase in deactivations related to
wireless local number portability (WLNP). WLNP
allows subscribers to keep their wireless phone number when
switching to a different wireless service provider. WLNP rules
became fully effective for us in May 2004. Prior to May 2004,
only our McAllen, Texas Metropolitan Service Area and seven
counties within our Rural Service Area (RSA) markets
were subject to the WLNP rules. Subsequent to the full launch of
WLNP we have deactivated more customers due to WLNP than we have
activated. We believe the resulting increase in deactivations
from WLNP that we experienced during the second quarter of 2004
is mainly related to a one time spike resulting from pent up
subscriber demand for WLNP. In July 2004, we saw the customer
churn rate decrease and expect our customer churn rate in 2004
to be comparable to our 2003 customer churn rate. At
June 30, 2004, approximately 5% of our domestic subscribers
were with a single reseller.

The following table sets forth certain financial
data as it relates to our domestic operations:

|                    |                                          |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         |         |         | 
|------------------- | ---------------------------------------- | ------------------------ | ------- | ---------------------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                    |                                          |                          |         |                       
|                    |                                          | Three Months Ended       |         | Six Months Ended      
|                    |                                          | June 30,                 |         | June 30,              
|                    |                                          |                          |         |                       
|                    |                                          | 2004                     |         | 2003                   |         | 2004 |         | 2003   
|                    |                                          |                          |         |                        |         |      |         |        
|                    |                                          |                          |         |                       
|                    |                                          | (Dollars in thousands)   |         | (Dollars in thousands)
|Revenues:           |                                          |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         |        
|                    | Subscriber revenues                      |                          | $       | 198,663                |         |      | $       | 173,886 |         |   | $       | 385,339 |         |   | $       | 336,253 |        
|                    | Roamer revenues                          |                          |         | 53,758                 |         |      |         | 54,704  |         |   |         | 101,795 |         |   |         | 102,883 |        
|                    | Equipment sales                          |                          |         | 14,873                 |         |      |         | 10,648  |         |   |         | 29,085  |         |   |         | 20,464  |        
|                    | Other revenues                           |                          |         | 471                    |         |      |         | 539     |         |   |         | 972     |         |   |         | 1,654   |        
|                    |                                          |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         |        
|                    |                                          | Total revenues           |         | $                      | 267,765 |      |         | $       | 239,777 |   |         | $       | 517,191 |   |         | $       | 461,254 | 
|Operating expenses: |                                          |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         |        
|                    | Cost of service                          |                          | $       | 45,659                 |         |      | $       | 43,344  |         |   | $       | 88,646  |         |   | $       | 82,729  |        
|                    | Cost of equipment sales                  |                          |         | 25,668                 |         |      |         | 22,231  |         |   |         | 48,457  |         |   |         | 41,129  |        
|                    | General and administrative               |                          |         | 50,506                 |         |      |         | 40,575  |         |   |         | 97,506  |         |   |         | 79,552  |        
|                    | Sales and marketing                      |                          |         | 31,284                 |         |      |         | 28,583  |         |   |         | 63,176  |         |   |         | 54,952  |        
|                    | Depreciation, amortization and accretion |                          |         | 41,526                 |         |      |         | 54,587  |         |   |         | 81,122  |         |   |         | 104,749 |        
|                    | Asset dispositions                       |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         | 7,640   |        
|                    |                                          |                          |         |                        |         |      |         |         |         |   |         |         |         |   |         |        
|                    |                                          | Total operating expenses |         | $                      | 194,643 |      |         | $       | 189,320 |   |         | $       | 378,907 |   |         | $       | 370,751 | 
|Adjusted EBITDA     |                                          | $                        | 114,648 |                        |         | $    | 105,044 |         |         | $ | 219,406 |         |         | $ | 202,892 |        

For the definition of Adjusted EBITDA, and the
reconciliation of Adjusted EBITDA, which is a non-GAAP financial
measure, to net income, the most directly comparable GAAP
financial measure, see Adjustments to Reconcile Net Income
(Loss) to Adjusted EBITDA. Adjusted EBITDA is the measure
of profitability utilized by our Chief Operating Decision Maker
and is presented herein in accordance with
SFAS No. 131 Disclosures about Segments of an
Enterprise and Related Information
(SFAS No. 131).

22



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##### Table of Contents



Domestic Revenues

The increase in subscriber revenues for the three
and six months ended June 30, 2004 compared to the same
periods ended June 30, 2003 was partly due to an increase
in average monthly revenue per subscriber (defined as subscriber
revenues for the period divided by average subscribers for the
period and dividing that result by the number of months in the
period) (ARPU) and due partly to a growth in
year-over-year subscribers. ARPU was $50.22 for the three months
ended June 30, 2004, an increase from $47.37 for the same
period ended June 30, 2003. ARPU was $49.13 for the six
months ended June 30, 2004, an increase from $46.14 for the
same period ended June 30, 2003. The increase in ARPU
during the three and six months ended June 30, 2004
compared to the same periods ended June 30, 2003 was due
primarily to: (i) the inclusion in subscriber revenue of
amounts collected from customers for federal and state universal
service fund (USF) assessments beginning in the
third quarter of 2003, which contributed $1.69 and $1.66 to the
increase in ARPU for the three and six months ended
June 30, 2004, respectively; and (ii) a regulatory
charge to our subscribers beginning in May 2003, which is
intended to recover the cost of certain unfunded government
mandates such as WLNP and enhanced 911, which contributed $0.86
and $1.20 to the increase in ARPU for the three and six months
ended June 30, 2004, respectively. We expect factors such
as the inclusion of a full year of subscriber collections for
state and federal USF assessments along with the increase in our
regulatory charge, implemented in early 2004, to provide for an
overall higher ARPU in 2004 as compared to 2003.

The slight decrease in roamer revenues for the
three and six months ended June 30, 2004 compared to the
same periods ended June 30, 2003 was due to lower per
minute roaming revenue, partially offset by an increase in
roamer minutes of use (MOUs). During the three
months ended June 30, 2004, a $9.8 million decrease
related to lower per minute roaming revenue was partially offset
by an increase of $8.9 million related to increased roamer
MOUs when compared to the same period ended June 30, 2003.
During the six months ended June 30, 2004, a
$17.7 million decrease related to lower per minute roaming
revenue was partially offset by an increase of
$16.6 million related to increased roamer MOUs when
compared to the same period ended June 30, 2003. The lower
revenue per minute was primarily the result of scheduled rate
decreases charged between carriers. The increase in roaming
traffic is primarily due to the launching of GSM roaming
services in certain of our markets in late 2003 in addition to a
shifting in the carrier mix year-over-year.

In July 2004, we amended our TDMA roaming
agreement with AT&T Wireless Services, Inc. (AT&T
Wireless), our largest roaming partner, to provide that
AT&T Wireless will continue to prefer our network in a
significant majority of our markets for TDMA roaming services in
exchange for a lower per minute rate. This roaming agreement
will expire the earlier of June 15, 2006 or consummation of
the AT&T Wireless and Cingular merger, in which case the
roaming agreement with Cingular, which expires in March 2008,
will apply to the AT&T Wireless customers using our network.
Currently, we are unsure of the impact that the AT&T
Wireless and Cingular merger will have on us, if any. In April
2004, we entered into a roaming agreement and a series of
related agreements with WirelessCo, L.P. (Sprint
PCS) and certain of its subsidiaries whereby we agreed to
purchase, for a nominal amount of cash, certain domestic Federal
Communications Commission licenses from Sprint PCS to expand our
wireless network in Montana. We have agreed to provide
discounted roaming services and to meet certain buildout
commitments. Sprint PCS has agreed to prefer our Montana network
for its customers and to purchase wireless service from us for
resale to Qwest Wireless LLC through 2009. For 2004, we believe
the recent contractual rate reductions in the AT&T Wireless
roaming agreement and similar rate reductions in certain other
long-term roaming agreements will be mostly offset by growth in
minutes with GSM and CDMA roaming partners.

The increase in equipment sales for the three and
six months ended June 30, 2004 compared to the same periods
ended June 30, 2003 was due to an increase in the number of
handsets sold coupled with an increase in the average revenue
per handset sold. The increase in the average revenue per
handset sold was due to selling more handsets that support new
features in our Hello2Pix, Hello2Text
and Hello2Web offerings. These handsets typically
have a higher selling price. We expect to continue to sell a
higher mix of these feature rich handsets through the end of the
year and expect our average revenue per handset to increase in
2004 as compared to 2003.

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Domestic Operating Expenses

The increase in cost of service for the three and
six months ended June 30, 2004 compared to the same periods
ended June 30, 2003 was due to an increase in the volume of
subscriber and roamer MOUs partially offset by a decrease in
costs per MOU. Cost of service per MOU decreased to
$0.019 per MOU for the three months ended June 30,
2004 compared to $0.022 per MOU for the same period ended
June 30, 2003. Cost of service per MOU decreased to
$0.019 per MOU for the six months ended June 30, 2004
compared to $0.023 per MOU for the same period ended
June 30, 2003. The decreases in cost of service per MOU
were primarily attributable to a decrease in interconnection
costs on an overall and a per minute basis. In addition, we
experienced decreased per minute off-network roaming costs for
our customers as a result of lower contractual rates. We expect
total cost of service to continue to increase in 2004 as
compared to 2003 due to the addition of fixed costs to support
our new GSM roaming agreements and increased costs to support
the growth of MOUs on our network. We expect cost of service per
MOU to continue to gradually decline in 2004 as compared to 2003.

Cost of equipment sales increased for the three
and six months ended June 30, 2004 compared to the same
periods in 2003. The increases were the result of an increase in
the volume of handsets sold and an increase in the average per
unit cost of handsets sold. We have seen an increase in the
average per unit cost year-over-year due to the increased
technological requirements to support new features in our
Hello2Pix, Hello2Txt and
Hello2Web offerings. Although subscribers generally
are responsible for purchasing or otherwise obtaining their own
handsets, we have historically sold handsets below cost to
respond to competition and general industry practice and expect
to continue to do so in the future.

General and administrative costs increased for
the three and six months ended June 30, 2004 compared to
the same periods in 2003. The increases were primarily a result
of the inclusion of USF remittances in general and
administrative expense beginning in the third quarter of 2003,
along with increased costs to support a growing subscriber base.
Our general and administrative monthly cost per average
subscriber increased to $12.77 and $12.43 for the three and six
months ended June 30, 2004, respectively, compared to
$11.05 and $10.92 for the same periods in 2003. For the three
and six months ended June 30, 2004, the inclusion of the
USF remittances contributed $1.68 and $1.63, respectively, to
the year-over-year increase. We anticipate monthly general and
administrative cost per average subscriber to increase for 2004
compared to 2003 driven by a full year of USF remittances being
included in 2004 compared to only six months being included in
2003.

Sales and marketing costs increased for the six
months ended June 30, 2004 compared to the same period in
2003 primarily due to increased fixed selling costs to support
19 additional stores that have opened since June 30, 2003.
In addition we have increased our advertising costs, and
increased variable incentive costs related to growth in
24 month contracts. The increase in sales and marketing
costs for the three months ended June 30, 2004 compared to
the same period in 2003 was due to the increase in fixed selling
costs previously discussed, partially offset by decreases in
agent related costs as a higher percentage of our sales mix was
through our owned and operated retail stores in the second
quarter of 2004 compared to the same period in 2003. Cost per
gross subscriber addition (CPGA) (determined by
dividing the sum of sales and marketing costs and cost of
equipment sales, reduced by equipment sales, by the number of
gross subscriber additions) increased to $410 for the six months
ended June 30, 2004 compared to $390 for the same period
ended June 30, 2003. CPGA increased to $400 for the three
months ended June 30, 2004 compared to $395 for the same
period ended June 30, 2003. The increase in CPGA for the
six months ended June 30, 2004 compared to the same period
in 2003 was primarily due to the year-over-year increase in
fixed selling expenses discussed above. The increase in CPGA for
the three months ended June 30, 2004 was primarily due to
increases in fixed selling expenses, partially offset by
reductions in agent related costs and a reduction in retention
costs on a per gross add basis. Retention costs related to
digital handset subsidies incurred in retaining existing
subscribers are included in subscriber acquisition costs. For
the six months ended June 30, 2004, these retention costs
increased CPGA by $58 compared to $61 for the same period in
2003. For the three months ended June 30, 2004, these
retention costs increased CPGA by $58 compared to $68 for the
same period in 2003. We expect CPGA to decrease during the
remaining six months of 2004 to a level that is consistent with
2003.

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Depreciation, amortization and accretion expense
decreased for the three and six months ended June 30, 2004
compared to the same periods in 2003. The decrease was due
primarily to an increase in fully depreciated assets such as
analog radios. The increase in fully depreciated assets was
partially offset by depreciation related to new asset additions.

The asset dispositions loss for the six months
ended June 30, 2003 resulted from recording a
$7.6 million impairment charge related to the sale of our
Arizona 6 RSA. The sales price of this RSA reflected that future
cash flows would be less than the carrying value of the license.
Accordingly, we recorded an impairment related to this RSA in
our Condensed Consolidated Statements of Operations and
Comprehensive Income. This transaction closed during the third
quarter of 2003.

Domestic Adjusted EBITDA

Domestic Adjusted EBITDA (see definition at
Adjustments to Reconcile Net Income (Loss) to Adjusted
EBITDA) increased for the three and six months ended
June 30, 2004 compared to the same periods ended
June 30, 2003 primarily as a result of an increase in
subscriber revenues partially offset by increases in operating
expenses. Our operating margin (domestic Adjusted EBITDA as a
percentage of service revenues) decreased slightly to 45.3% for
the three months ended June 30, 2004 compared to 45.8% for
the three months ended June 30, 2003. Our operating margin
decreased to 45.0% for the six months ended June 30, 2004
compared to 46.0% for the six months ended June 30, 2003.
The inclusion of USF collections in revenues for the three and
six months ended June 30, 2004 reduced our operating margin
by approximately 1.2%. We expect domestic Adjusted EBITDA to
continue to increase at a moderate pace in 2004 as compared to
2003.

Results of International Operations for the
Three and Six Months Ended June 30, 2004 and 2003

The following discussions include, the results of
WWI and, where meaningful, the results of our international
operating segments for the three and six months ended
June 30, 2004 and 2003. WWI has operating segments
consisting of each country in which it operates; however,
Austria is our only reportable segment under the guidance of
SFAS No. 131. Operating results related to Austria are
separately disclosed where meaningful.

U.S. headquarter functions of WWI and
majority owned European, South American and Caribbean
consolidated subsidiaries are recorded as of the date of the
financial statements. Our consolidated Ghanaian entity and our
Georgian entity, which is accounted for using the equity method,
are presented on a one-quarter lag.

Our international consolidated operations offer
postpaid and prepaid mobile services in Slovenia, Austria,
Ireland, Bolivia and Haiti and fixed line service in Austria and
Ghana. We had 1,446,800 consolidated international subscribers
at June 30, 2004, which represented an increase of 107,400
and 252,600, or 8% and 21%, compared to March 31, 2004 and
December 31, 2003, respectively. Of these consolidated
international subscribers, Austria had 776,700 subscribers at
June 30, 2004, which represented an increase of 49,900 and
142,500, or 7% and 22%, compared to March 31, 2004 and
December 31, 2003, respectively. As of June 30, 2004
and 2003, approximately 45% and 38%, respectively, of our
consolidated international subscribers were postpaid customers.
As of June 30, 2004 and 2003, approximately 79% and 71%,
respectively, of our Austrian subscribers were postpaid
customers. As of June 30, 2004, we had 140,900 fixed lines,
of which Austria represented 98%.

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The following table sets forth certain financial
data as it relates to our international operations:

|                    |                                          |                          |        |                        |         |      |      |        |         |   |        |         |         |   |        |         |         | 
|------------------- | ---------------------------------------- | ------------------------ | ------ | ---------------------- | ------- | ---- | ---- | ------ | ------- | - | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                    |                                          |                          |        |                       
|                    |                                          | Three Months Ended       |        | Six Months Ended      
|                    |                                          | June 30,                 |        | June 30,              
|                    |                                          |                          |        |                       
|                    |                                          | 2004                     |        | 2003                   |         | 2004 |      | 2003  
|                    |                                          |                          |        |                        |         |      |      |       
|                    |                                          |                          |        |                       
|                    |                                          | (Dollars in thousands)   |        | (Dollars in thousands)
|Revenues:           |                                          |                          |        |                        |         |      |      |        |         |   |        |         |         |   |        |        
|                    | Subscriber revenues                      |                          | $      | 169,323                |         |      | $    | 90,017 |         |   | $      | 331,136 |         |   | $      | 160,974 |        
|                    | Roamer revenues                          |                          |        | 9,058                  |         |      |      | 9,486  |         |   |        | 24,702  |         |   |        | 23,385  |        
|                    | Fixed line revenues                      |                          |        | 11,197                 |         |      |      | 14,640 |         |   |        | 24,080  |         |   |        | 29,691  |        
|                    | Equipment sales                          |                          |        | 5,006                  |         |      |      | 2,585  |         |   |        | 11,325  |         |   |        | 5,812   |        
|                    | Other revenues                           |                          |        | 3,143                  |         |      |      | 2,727  |         |   |        | 6,002   |         |   |        | 5,290   |        
|                    |                                          |                          |        |                        |         |      |      |        |         |   |        |         |         |   |        |        
|                    |                                          | Total revenues           |        | $                      | 197,727 |      |      | $      | 119,455 |   |        | $       | 397,245 |   |        | $       | 225,152 | 
|Operating expenses: |                                          |                          |        |                        |         |      |      |        |         |   |        |         |         |   |        |        
|                    | Cost of service                          |                          | $      | 79,824                 |         |      | $    | 61,502 |         |   | $      | 158,211 |         |   | $      | 116,752 |        
|                    | Cost of equipment sales                  |                          |        | 17,676                 |         |      |      | 14,893 |         |   |        | 42,551  |         |   |        | 28,656  |        
|                    | General and administrative               |                          |        | 23,665                 |         |      |      | 21,636 |         |   |        | 50,445  |         |   |        | 40,764  |        
|                    | Sales and marketing                      |                          |        | 28,685                 |         |      |      | 22,268 |         |   |        | 60,428  |         |   |        | 43,363  |        
|                    | Depreciation, amortization and accretion |                          |        | 20,779                 |         |      |      | 17,023 |         |   |        | 39,902  |         |   |        | 32,674  |        
|                    | Stock-based compensation                 |                          |        | 4,773                  |         |      |      |        |         |   |        | 6,520   |         |   |        |         |        
|                    |                                          |                          |        |                        |         |      |      |        |         |   |        |         |         |   |        |        
|                    |                                          | Total operating expenses |        | $                      | 175,402 |      |      | $      | 137,322 |   |        | $       | 358,057 |   |        | $       | 262,209 | 
|Adjusted EBITDA     |                                          | $                        | 47,877 |                        |         | $    | (844 | )      |         | $ | 85,610 |         |         | $ | (4,383 | )      

For the definition of Adjusted EBITDA, and the
reconciliation of Adjusted EBITDA, which is a non-GAAP financial
measure, to net income (loss), the most directly comparable GAAP
financial measure, see Adjustments to Reconcile Net Income
(Loss) to Adjusted EBITDA. Adjusted EBITDA is the measure
of profitability utilized by our Chief Operating Decision Maker
and is presented herein in accordance with
SFAS No. 131.

Because our subsidiary WWI has operations in
Austria, Ireland and Slovenia in which the functional currency
is the euro, or is linked to the euro, fluctuations in exchange
rates may have a significant impact on its financial results of
operations. The results of operations for the three and six
months ended June 30, 2004 as compared to the same periods
in 2003 reflect the effects of a 6% and 10%, respectively,
average appreciation of the euro as compared to the
U.S. dollar. The appreciation of the euro had a comparable
increase to both revenues and operating expenses. Our European
subsidiaries, in aggregate, represented approximately 85% of
total consolidated international revenues for the three and six
months ended June 30, 2004. We cannot predict future
fluctuations in currency exchange rates, and accordingly cannot
predict the potential impact of any such fluctuations on
WWIs results of operations.

International Revenues

Total subscriber revenues increased for the three
and six months ended June 30, 2004 compared to the same
periods in 2003 primarily due to an increase in the number of
average subscribers across most of our markets, increased ARPU,
and the strengthening of the euro compared to the
U.S. dollar. International ARPU was $40.51 and $41.79 for
the three and six months ended June 30, 2004, respectively,
compared to $34.52 and $32.65 for the same periods in 2003.
Austrian ARPU was $53.32 and $55.95 for the three and six months
ended June 30, 2004, respectively, compared to $48.40 and
$45.45 for the same periods in 2003. The increases in total
international and Austrian ARPU were mainly due to an increase
in postpaid subscribers, primarily in Austria, who generally
generate higher service revenue than prepaid subscribers and the
strengthening of the euro compared to the U.S. dollar. The
strengthening of the euro compared to the U.S. dollar
accounted for $1.77 and $2.97 of the increase in international
and Austrian ARPU, respectively, for the three month period
ended June 30, 2004 and $3.09 and $5.13 of the increase in
international and

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Austrian ARPU, respectively, for the six months
ended June 30, 2004. We anticipate growth in subscriber
revenues in 2004, as compared to 2003, exclusive of changes in
currency exchange rates, due to anticipated continued
year-over-year subscriber growth, primarily in Austria and
Ireland, and modest growth in ARPU as a result of an increased
number of postpaid subscribers.


Total fixed line revenues decreased for the three
and six months ended June 30, 2004 compared to the same
periods in 2003 as a result of fewer fixed line customers due to
limited marketing activity in Austria, partially offset by the
strengthening of the euro compared to the U.S. dollar. For
this reason, we expect fixed line revenues, exclusive of changes
in currency exchange rates, to decline in 2004 compared to the
same period in 2003.

Total equipment sales increased for the three and
six months ended June 30, 2004 compared to the same periods
in 2003 primarily due to selling more handsets as a result of
adding more subscribers, mainly in Austria. In addition,
equipment sales were favorably impacted by the strengthening of
the euro compared to the U.S. dollar. An increase in the
average sales price per handset in Austria also added to the
increase in total international equipment sales for the three
and six month periods ended June 30, 2004. We anticipate
modest continued growth in international equipment sales in
2004, as compared to 2003, exclusive of changes in currency
exchange rates, primarily as a result of increased mobile
subscriber additions.

International Operating Expenses

Operating expenses represent the expenses
incurred by our consolidated international markets and
headquarters administration in the United States.

Total cost of service increased for the three and
six months ended June 30, 2004 compared to the same periods
in 2003. This was due primarily to a 60% and 61% increase in the
number of average subscribers across all of our markets during
the three and six months ended June 30, 2004, respectively.
In addition, the euro strengthened compared to the
U.S. dollar. Average monthly cost of service per average
international subscriber declined to $19.10 and $19.97 for the
three and six months ended June 30, 2004, respectively,
compared to $23.58 and $23.68 for the same periods in 2003.
Average monthly cost of service per average Austrian subscriber
declined to $24.35 and $25.78 for the three and six months ended
June 30, 2004, respectively, from $34.25 and $34.05 for the
same periods in 2003. The decreases in total international and
Austrian average monthly cost of service per average subscriber
were mainly due to increased cost efficiencies as a result of a
growing subscriber base. The strengthening of the euro partially
offset efficiency increases and increased average monthly cost
of service on a per average international subscriber basis by
$1.28 and $2.39 for the three and six months ended June 30,
2004, respectively, compared to the same periods in 2003. The
strengthening of the euro partially offset efficiency increases
and increased average monthly cost of service on a per average
Austrian subscriber basis by $2.10 and $3.84 for the three and
six months ended June 30, 2004, respectively, compared to
the same periods in 2003. We expect cost of service dollars to
continue to increase in 2004 compared to 2003 due to a growing
subscriber base, but continue to decline on a per average
international subscriber basis, exclusive of changes in currency
exchange rates, due to increased cost efficiencies.

The increase in total cost of equipment sales for
the three and six months ended June 30, 2004 compared to
the same periods in 2003 was largely due to the increase in the
number of handsets sold in Austria as a result of higher
subscriber additions and the strengthening of the euro compared
to the U.S. dollar. The strengthening of the euro compared
to the U.S. dollar partially offset an actual decline in
the average per unit cost of handsets in Austria for the three
and six months ended June 30, 2004 compared to the same
periods in 2003. Although subscribers generally are responsible
for purchasing or otherwise obtaining their own handsets, WWI
has historically sold handsets below cost to respond to
competition and general industry practice and expects to
continue to do so in the future.

Total general and administrative expenses
increased for the three and six months ended June 30, 2004
compared to the same periods in 2003 due primarily to an
increase in the number of average subscribers across most of our
markets and the strengthening of the euro compared to the
U.S. dollar. General and administrative monthly cost per
average international subscriber declined to $5.66 and $6.37 for
the three and

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six months ended June 30, 2004,
respectively, from $8.30 and $8.27 for the same periods in 2003.
General and administrative monthly cost per average Austrian
subscriber declined to $5.47 and $6.31 for the three and six
months ended June 30, 2004, respectively, from $8.88 and
$9.02 for the same periods in 2003. The decreases in total
international and Austrian general and administrative monthly
cost per average international and Austrian subscriber were
mainly due to increased cost efficiencies resulting from a
growing subscriber base, partially offset by the strengthening
of the euro to the U.S. dollar. The strengthening of the
euro increased general and administrative monthly cost by $0.36
and $0.54 on a per average international subscriber and per
average Austrian subscriber basis, respectively, for the three
month period ended June 30, 2004 compared to the same
period in 2003. The strengthening of the euro increased general
and administrative monthly cost by $0.69 and $1.02 on a per
average international subscriber and per average Austrian
subscriber basis, respectively, for the six month period ended
June 30, 2004 compared to the same period in 2003. We
expect total general and administrative dollars to continue to
increase in 2004 compared to 2003 as a result of a growing
subscriber base, but decline slightly on a per average
international subscriber basis, exclusive of changes in currency
exchange rates, due to increased cost efficiencies, related to a
larger subscriber base.


Total sales and marketing costs increased for the
three and six months ended June 30, 2004 compared to the
same periods in 2003 primarily due to: (i) increased agent
and indirect commissions and retailer and dealer subsidies
attributable to higher subscriber additions; (ii) customer
retention programs, mainly in Austria and Ireland;
(iii) increased advertising, mainly in Austria and Ireland;
and (iv) the strengthening of the euro compared to the
U.S. dollar. International CPGA was $199 and $186 for the
six months ended June 30, 2004 and 2003, respectively. The
year-over-year increase was primarily a result of the
strengthening of the euro compared to the U.S. dollar. The
strengthening of the euro increased CPGA by $20 for the six
months ended June 30, 2004 compared to the same period in
2003. Austrian CPGA increased to $307 for the six months ended
June 30, 2004 from $299 for the same period in 2003. The
strengthening of the euro compared to the U.S. dollar
increased Austrian CPGA $33, offsetting an actual decline in
Austrian CPGA of $25 due to advertising costs being spread over
a larger number of gross subscriber additions. We expect sales
and marketing dollars, including equipment subsidies, to
continue to increase in 2004 compared to 2003, exclusive of
changes in currency exchange rates, due to increased agent and
indirect commissions, retailer and dealer subsidies, and
advertising to support the expansion of our networks in Ireland
and to remain competitive in Austria. For these reasons, we
expect CPGA to increase in 2004 as compared to the same period
in 2003, exclusive of changes in currency exchange rates.

Total depreciation, amortization and accretion
expense increased for the three and six months ended
June 30, 2004 compared to the same periods in 2003 due
primarily to network expansion in Austria and Ireland and the
strengthening of the euro compared to the U.S. dollar. As
WWI continues to add wireless infrastructure to service its
growing international subscriber base, we anticipate
depreciation, amortization and accretion expense will increase
in future periods.

The change in total stock-based compensation for
the three and six months ended June 30, 2004 compared to
the same periods in 2003 was primarily a result of a revaluation
of WWIs stock appreciation rights based on current market
conditions and employee vesting.

International Adjusted EBITDA

International Adjusted EBITDA (see definition at
Adjustments to Reconcile Net Income (Loss) to Adjusted
EBITDA) for our international consolidated subsidiaries
improved by $48.7 million and $90.0 million for the
three and six months ended June 30, 2004, respectively,
compared to the same periods in 2003. The year-over-year
increases were mainly due to an increase in Austrian Adjusted
EBITDA to $39.0 million and $74.9 million for the
three and six months ended June 30, 2004, respectively,
from $1.8 million and $4.9 million for the same
periods in 2003. The increase in Austrian Adjusted EBITDA is due
mainly to growth in postpaid subscribers. We expect
international Adjusted EBITDA to continue to improve in 2004 as
a result of continued subscriber growth and cost efficiencies in
existing markets, primarily Austria.

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Adjustments to Reconcile Net Income (Loss) to
Adjusted EBITDA

EBITDA is a non-GAAP financial measure generally
defined as net income (loss) before interest, taxes,
depreciation and amortization. We use the non-GAAP financial
measure Adjusted EBITDA which further excludes the
following items: (i) accretion; (ii) asset
dispositions; (iii) stock-based compensation, net;
(iv) equity in net (income) loss of unconsolidated
affiliates, net of tax and other, net; (v) (gain) loss on
sale of joint venture; (vi) loss on extinguishment of debt;
(vii) minority interests in net (income) loss of
consolidated subsidiaries; (viii) discontinued operations;
and (ix) cumulative change in accounting principle. Each of
these items is presented in our Condensed Consolidated
Statements of Operations and Comprehensive Income.

Other companies in the wireless industry may
define Adjusted EBITDA in a different manner or present other
varying financial measures, and, accordingly, the Companys
presentation may not be comparable to other similarly titled
measures of other companies. The Companys calculation of
Adjusted EBITDA is also not directly comparable to EBIT
(earnings before interest and taxes) or EBITDA.

We view Adjusted EBITDA as an operating
performance measure and as such, believe that the GAAP financial
measure most directly comparable to Adjusted EBITDA is net
income (loss). We have presented Adjusted EBITDA because this
financial measure, in combination with other financial measures,
is an integral part of our internal reporting system utilized by
management to assess and evaluate the performance of our
business. Adjusted EBITDA is also considered a significant
performance measure. It is used by management as a measurement
of our success in obtaining, retaining and servicing customers
by reflecting our ability to generate subscriber revenue while
providing a high level of customer service in a cost effective
manner. The components of Adjusted EBITDA include the key
revenue and expense items for which our operating managers are
responsible and upon which we evaluate our performance.

Adjusted EBITDA is consistent with certain
financial measures used in our domestic credit facility and the
indenture for our senior notes. Such financial measures are key
components of several negative covenants including, among
others, the limitation on incurrence of indebtedness, the
limitations on investments and acquisitions and the limitation
on distributions and dividends.

Adjusted EBITDA should not be construed as an
alternative to net income (loss), as determined in accordance
with GAAP, as an alternative to cash flows from operating
activities, as determined in accordance with GAAP, or as a
measure of liquidity. We believe Adjusted EBITDA is useful to
investors as a means to evaluate the Companys operating
performance prior to financing costs, deferred tax charges,
non-cash depreciation and amortization expense, and certain
other non-cash charges. Although Adjusted EBITDA may be defined
differently by other companies in the wireless industry, we
believe that Adjusted EBITDA provides some commonality of
measurement in analyzing operating performance of companies in
the wireless industry.

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A reconciliation of net income (loss) to Adjusted
EBITDA is included in the following table:

|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | -------------------------------- | ------- | ---------- | - | ------------- | ------ | ------------ |  | - | ------- | ------ | - | - | ------- | ------- | -
|                  |                                                                                         |                                 
|                  |                                                                                         | Three Months Ended June 30, 2004
|                  |                                                                                         |                                 
|                  |                                                                                         | Domestic                         |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                       |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                  |         |            |   |               |        |             
|                  |                                                                                         |                                 
|                  |                                                                                         | (Dollars in thousands)          
|Net income (loss) |                                                                                         | $                                | 41,268  |            |   | $             | 30,912 |              |  | $ | (31,198 | )      |   | $ | 40,982  |        
|                  | Depreciation, amortization and accretion                                                |                                  |         | 41,526     |   |               |        | 4,502        |  |   |         | 16,277 |   |   |         | 62,305  |  
|                  | Asset dispositions                                                                      |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                  |         |            |   |               |        | 81           |  |   |         | 4,692  |   |   |         | 4,773   |  
|                  | Interest and financing expense, net                                                     |                                  |         | 18,502     |   |               |        | 2,477        |  |   |         | 14,561 |   |   |         | 35,540  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                  |         | (10,581    | ) |               |        | 1,065        |  |   |         | (1,635 | ) |   |         | (11,151 | )
|                  | (Gain) loss on sale of joint venture                                                    |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Loss on extinguishment of debt                                                          |                                  |         | 16,260     |   |               |        |              |  |   |         |        |   |   |         | 16,260  |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                  |         |            |   |               |        |              |  |   |         | 2,116  |   |   |         | 2,116   |  
|                  | Provision for income taxes                                                              |                                  |         | 7,673      |   |               |        | 1            |  |   |         | 4,026  |   |   |         | 11,700  |  
|                  | Discontinued operations                                                                 |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                                | 114,648 |            |   | $             | 39,038 |              |  | $ | 8,839   |        |   | $ | 162,525 |        
|                  |                                                                                         |                                  |         |            |   |               |        |              |  |   |         |        |   |   |         |        

|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | -------------------------------- | ------- | ---------- | - | ------------- | ------ | ------------ | - | - | ------ | ------- | - | - | ------- | ------- | -
|                  |                                                                                         |                                 
|                  |                                                                                         | Three Months Ended June 30, 2003
|                  |                                                                                         |                                 
|                  |                                                                                         | Domestic                         |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                       |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                  |         |            |   |               |        |             
|                  |                                                                                         |                                 
|                  |                                                                                         | (Dollars in thousands)          
|Net income (loss) |                                                                                         | $                                | 22,934  |            |   | $             | (4,373 | )            |   | $ | 21,519 |         |   | $ | 40,080  |        
|                  | Depreciation, amortization and accretion                                                |                                  |         | 54,587     |   |               |        | 2,586        |   |   |        | 14,437  |   |   |         | 71,610  |  
|                  | Asset dispositions                                                                      |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Interest and financing expense, net                                                     |                                  |         | 22,252     |   |               |        | 2,797        |   |   |        | 12,390  |   |   |         | 37,439  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                  |         | (2,339     | ) |               |        | 805          |   |   |        | (7,970  | ) |   |         | (9,504  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                  |         | 1,574      |   |               |        |              |   |   |        | (42,093 | ) |   |         | (40,519 | )
|                  | Loss on extinguishment of debt                                                          |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                  |         |            |   |               |        |              |   |   |        | (1,651  | ) |   |         | (1,651  | )
|                  | Provision for income taxes                                                              |                                  |         | 6,036      |   |               |        | (5           | ) |   |        | 714     |   |   |         | 6,745   |  
|                  | Discontinued operations                                                                 |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |         |  
|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                                | 105,044 |            |   | $             | 1,810  |              |   | $ | (2,654 | )       |   | $ | 104,200 |        
|                  |                                                                                         |                                  |         |            |   |               |        |              |   |   |        |         |   |   |         |        

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|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | ------------------------------ | ------- | ---------- | - | ------------- | ------ | ------------ |  | - | ------- | ------ | - | - | ------- | ------- | -
|                  |                                                                                         |                               
|                  |                                                                                         | Six Months Ended June 30, 2004
|                  |                                                                                         |                               
|                  |                                                                                         | Domestic                       |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                     |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                |         |            |   |               |        |             
|                  |                                                                                         |                               
|                  |                                                                                         | (Dollars in thousands)        
|Net income (loss) |                                                                                         | $                              | 74,265  |            |   | $             | 58,937 |              |  | $ | (60,777 | )      |   | $ | 72,425  |        
|                  | Depreciation, amortization and accretion                                                |                                |         | 81,122     |   |               |        | 8,471        |  |   |         | 31,431 |   |   |         | 121,024 |  
|                  | Asset dispositions                                                                      |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Stock-based compensation, net                                                           |                                |         |            |   |               |        | 228          |  |   |         | 6,292  |   |   |         | 6,520   |  
|                  | Interest and financing expense, net                                                     |                                |         | 38,402     |   |               |        | 5,127        |  |   |         | 26,267 |   |   |         | 69,796  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                |         | (4,367     | ) |               |        | 2,104        |  |   |         | (3,322 | ) |   |         | (5,585  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Loss on extinguishment of debt                                                          |                                |         | 16,260     |   |               |        |              |  |   |         |        |   |   |         | 16,260  |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                |         |            |   |               |        |              |  |   |         | 4,577  |   |   |         | 4,577   |  
|                  | Provision for income taxes                                                              |                                |         | 13,724     |   |               |        | 2            |  |   |         | 6,273  |   |   |         | 19,999  |  
|                  | Discontinued operations                                                                 |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |         |  
|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                              | 219,406 |            |   | $             | 74,869 |              |  | $ | 10,741  |        |   | $ | 305,016 |        
|                  |                                                                                         |                                |         |            |   |               |        |              |  |   |         |        |   |   |         |        

|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|----------------- | --------------------------------------------------------------------------------------- | ------------------------------ | ------- | ---------- | - | ------------- | ------ | ------------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                  |                                                                                         |                               
|                  |                                                                                         | Six Months Ended June 30, 2003
|                  |                                                                                         |                               
|                  |                                                                                         | Domestic                       |         | Austrian   |   | All Other     |        |             
|                  |                                                                                         | Operations                     |         | Operations |   | International |        | Consolidated
|                  |                                                                                         |                                |         |            |   |               |        |             
|                  |                                                                                         |                               
|                  |                                                                                         | (Dollars in thousands)        
|Net income (loss) |                                                                                         | $                              | 36,215  |            |   | $             | (8,095 | )            |   | $ | (12,073 | )       |   | $ | 16,047  |        
|                  | Depreciation, amortization and accretion                                                |                                |         | 104,749    |   |               |        | 4,962        |   |   |         | 27,712  |   |   |         | 137,423 |  
|                  | Asset dispositions                                                                      |                                |         | 7,640      |   |               |        |              |   |   |         |         |   |   |         | 7,640   |  
|                  | Stock-based compensation, net                                                           |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Interest and financing expense, net                                                     |                                |         | 46,032     |   |               |        | 5,306        |   |   |         | 24,580  |   |   |         | 75,918  |  
|                  | Equity in net (income) loss of unconsolidated
    affiliates, net of tax and other, net |                                |         | (4,352     | ) |               |        | 1,981        |   |   |         | (5,052  | ) |   |         | (7,423  | )
|                  | (Gain) loss on sale of joint venture                                                    |                                |         | 1,574      |   |               |        |              |   |   |         | (42,093 | ) |   |         | (40,519 | )
|                  | Loss on extinguishment of debt                                                          |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Minority interests in net (income) loss of
    consolidated subsidiaries                |                                |         |            |   |               |        |              |   |   |         | (4,043  | ) |   |         | (4,043  | )
|                  | Provision for income taxes                                                              |                                |         | 9,845      |   |               |        | (4           | ) |   |         | 1,394   |   |   |         | 11,235  |  
|                  | Discontinued operations                                                                 |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |         |  
|                  | Cumulative change in accounting principle                                               |                                |         | 1,189      |   |               |        | 770          |   |   |         | 272     |   |   |         | 2,231   |  
|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |        
|Adjusted EBITDA   |                                                                                         | $                              | 202,892 |            |   | $             | 4,920  |              |   | $ | (9,303  | )       |   | $ | 198,509 |        
|                  |                                                                                         |                                |         |            |   |               |        |              |   |   |         |         |   |   |         |        

Consolidated Other Income (Expense)

Interest and financing expense decreased to
$35.5 million and $69.8 million for the three and six
months ended June 30, 2004 compared to $37.4 million
and $75.9 million for the same periods ended June 30,
2003. The decrease in interest expense was primarily due to a
reduction in our average domestic debt outstanding. For the
three months ended June 30, 2004 and 2003, the weighted
average domestic interest rate paid to third parties was 6.3%
and 6.0%, respectively. For the six months ended June 30,
2004 and 2003, the weighted average domestic interest rate paid
to third parties was 6.5% and 6.1%, respectively. For the three
months

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ended June 30, 2004 and 2003, the
international weighted average interest rate paid to third
parties by consolidated WWI entities was 6.1% and 6.7%,
respectively. For the six months ended June 30, 2004 and
2003, the international weighted average interest rate paid to
third parties by consolidated WWI entities was 6.0% and 6.9%,
respectively.


The $16.3 million loss on extinguishment of
debt for the three and six months ended June 30, 2004 was
due to the write-off of deferred financing costs and certain
interest rate swap cancellation costs associated with the
refinancing of our domestic credit facility.

The $40.5 million gain on sale of Croatian
joint venture for the three and six months ended June 30,
2003 was related to the sale of WWIs investment in VIP-Net
in Croatia. Our proceeds were $69.6 million.

Consolidated Provision for Income
Taxes

The $5.0 million and $8.8 million
increases in the provision for income taxes for the three and
six months ended June 30, 2004, respectively, compared to
the same periods a year ago was primarily due to an increase in
income taxes payable related to our operations in Haiti and
estimated alternative minimum tax expense for 2004.

Consolidated Net Income

On a consolidated basis, our net income increased
by $56.4 million for the six months ended June 30,
2004 compared to the same period in 2003 mainly due to increased
Adjusted EBITDA in our domestic and international businesses
(see Domestic Adjusted EBITDA and
International Adjusted EBITDA) coupled with lower
depreciation and amortization expense in our domestic business.
These improvements were partially offset by a loss on
extinguishment of debt in 2004 and a gain on the sale of our
Croatian joint venture in 2003. For the three months ended
June 30, 2004, our net income increased $0.9 million
compared to the same period in 2003. The increase was due to
increased Adjusted EBITDA in our domestic and international
business (see Domestic Adjusted EBITDA and
International Adjusted EBITDA) coupled with lower
depreciation and amortization expense in our domestic business.
These items were partially offset by the loss on extinguishment
of debt in 2004 and a gain on the sale of our Croatian joint
venture in 2003.

Consolidated Liquidity and Capital
Resources

At December 31, 2003, we had a
$1.55 billion credit facility with a consortium of lenders
(the Credit Facility) consisting of: (i) a
$350 million term loan; (ii) a $500 million term
loan; and (iii) two $350 million revolving loans.

On May 28, 2004, we refinanced the Credit
Facility with a new credit facility (the New Credit
Facility). The aggregate amount available under the New
Credit Facility is $1.50 billion consisting of: (i) a
$225 million term loan (Term Loan A);
(ii) a $975 million term loan (Term
Loan B); and (iii) a $300 million revolving
loan (the Revolving Credit Facility). Proceeds from
the New Credit Facility were used to repay $1.2 billion
outstanding under the Credit Facility. At June 30, 2004,
the term loans were fully drawn and we had approximately
$300 million available to borrow under the Revolving Credit
Facility. For the three and six months ended June 30, 2004,
we recognized a $16.3 million aggregate loss on the
extinguishment of debt on the Credit Facility related to the
write-off of deferred financing costs and cancellation of
certain related interest rate swaps. Principal payments required
under the New Credit Facility for the remainder of 2004 are
$16.1 million.

In May 2004, NuevaTel S.A.
(NuevaTel), a subsidiary of WWI, finalized the terms
of a credit facility agreement (the Bolivian Credit
Facility) with the Overseas Private Investment Corporation
(OPIC). The entire commitment of $50 million
was drawn in one tranche, of which $34.7 million was
utilized to repay the principal amount of NuevaTels bridge
loan. The Bolivian Credit Facility proceeds will provide funding
for the expansion of NuevaTels network in Bolivia.

Western Wireless International Corporation
(WWIC), a subsidiary of WWI, has pledged its shares
in NuevaTel to OPIC as security for the Bolivian Credit Facility
and has entered into a sponsor support

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agreement with OPIC pursuant to which WWIC will
have a maximum obligation to OPIC of $11.6 million. In May
2004, WWIC secured this obligation by providing a letter of
credit in favor of OPIC, secured by cash collateral of
$11.6 million.


At June 30, 2004, the outstanding amount of
principal and interest under the Bolivian Credit Facility was
$50.0 million and $0.6 million, respectively, and the
facility was fully drawn. Interest payments required under the
Bolivian Credit Facility for the remainder of 2004 are
approximately $1.7 million.

tele.ring, our Austrian subsidiary, has a
185 million euro term loan facility (the tele.ring
Term Loan). As of June 30, 2004, $193.2 million
was outstanding under the tele.ring Term Loan and there were no
amounts available to borrow. There are no contractual principal
and interest payments required to be made under the tele.ring
Term Loan for the remainder of 2004.

Western Wireless International d.o.o. (Vega) has
a credit facility agreement with a consortium of banks (the
Slovenian Credit Facility) that is denominated and
repayable in euros and Slovenian Tolars. As of June 30,
2004, $66.3 million was outstanding under the Slovenian
Credit Facility and there were no amounts available to borrow.
Principal and interest payments and funding of related
collateral accounts required under the Slovenian Credit Facility
for the remainder of 2004, using current exchange rates, are
approximately $7.5 million.

None of our international loan facilities have
recourse to Western Wireless Corporation. WWI and certain of its
subsidiaries have severally guaranteed the Bolivian Credit
Facility and the Slovenian Credit Facility.

In July 2004, we filed a Form S-3 as a shelf
registration statement (Shelf Registration
Statement) with the Securities and Exchange Commission.
Under the Shelf Registration Statement, we may sell, from time
to time, in one or more offerings, shares of our Class A
common stock, shares of our preferred stock or debt securities
in an aggregate amount of up to $500 million. Unless we
indicate otherwise in a prospectus supplement, we expect to use
the net proceeds from the sale of the securities offered under
the Shelf Registration Statement for general corporate purposes,
which may include, repayment or refinancing of indebtedness,
working capital, capital expenditures, acquisitions and
repurchase and redemptions of securities.

In February 2004, WWI acquired an additional
17.87% ownership in Meteor, our Irish subsidiary, from two of
its partners for cash of approximately $30.2 million. In
July 2004, WWI acquired the remaining 1.17% minority interest in
Meteor from its minority partners for cash of approximately
$2.0 million. Meteor is now 100% owned by WWI.

For the remainder of 2004, we anticipate spending
approximately $110 million in domestic capital expenditures
that will: (i) support the growth in MOUs on our network;
(ii) complete our domestic CDMA overlay; and
(iii) expand our GSM coverage.

For the remainder of 2004, WWIs business
plans include capital expenditures of approximately
$83 million, which is primarily related to the expansion of
their networks in Austria and Ireland. In addition, WWI has debt
service requirements of approximately $13 million as well
as working capital needs of approximately $14 million in
Ireland and Slovenia. In 2004, WWI continues to explore
additional new debt financing and re-financing options. WWI
plans to fund its needs through cash flow from operations in
Austria, Bolivia, Haiti and Ghana, proceeds from its potential
refinancing activities, in combination with, to the extent
necessary, up to approximately $50 million in additional
contributions and advances from Western Wireless. The New Credit
Facility limits the amount we are permitted to invest in our
international subsidiaries to $250 million until
December 31, 2004 and $200 million thereafter (so long
as in each case $100 million is available under the
Revolving Credit Facility), plus certain other amounts received,
such as from the sale of any WWI stock or assets, subject to
certain conditions.

We believe that domestic operating cash flow,
operating cash flow from certain international markets, and
available international loan facilities will be adequate to fund
our projected 2004 domestic and international capital
requirements. Our domestic business plans do not indicate a need
to increase our net borrowings under the New Credit Facility,
even though borrowing capacity is expected to exist. If we do
not achieve planned

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domestic operating cash flow targets, quarterly
covenants and borrowing limitations contained in the New Credit
Facility and the 2013 Notes may trigger a limitation on the
available borrowing capacity under the New Credit Facility. Our
operating cash flow is dependent upon, among other things:
(i) the amount of revenue we are able to generate from our
customers; (ii) the amount of operating expenses required
to provide our services; (iii) the cost of acquiring and
retaining customers; and (iv) our ability to grow our
customer base. In order to comply with debt covenants or in the
event that the borrowing capacity under the New Credit Facility
is limited, we may be required to curtail capital spending,
reduce expenses, or otherwise modify our planned operations
and/or seek additional debt or equity at the domestic or
international level and/or restructure or refinance our existing
financing arrangements. Our ability to raise additional capital,
if necessary, is subject to a variety of factors, including:
(i) the commercial success of our operations; (ii) the
volatility and demand of the capital markets, conditions in the
economy generally and the telecommunications industry
specifically; and (iii) other factors we cannot presently
predict with certainty. There can be no assurance that such
funds will be available to us or if such funding will be
available on acceptable terms.


As part of our overall business strategy, we
regularly evaluate opportunities and alternatives, including
acquisitions, dispositions, investments, and sources of capital,
consummation of any of which could have a material effect on our
business, financial condition, liquidity or results of
operations. In this regard, we are investigating a spin-off or
divestiture of our international operations. Although we are
giving serious consideration to a spin-off of our international
operations, no decision has been made as to whether to proceed
with such a transaction. Any such decision would be subject to
numerous conditions, including, among others, approval by our
board of directors of the terms and conditions of such a
transaction, favorable market and financing conditions, the tax
effects of such a transaction and any required governmental and
third-party approvals.

The following table summarizes our contractual
cash obligations, utilizing current exchange rates, as of
June 30, 2004:

|                                  |                                    |                        |           |              |  |                          |         |         |  |            |         |         |  |   |        |         |  |   |           |           | 
|--------------------------------- | ---------------------------------- | ---------------------- | --------- | ------------ |  | ------------------------ | ------- | ------- |  | ---------- | ------- | ------- |  | - | ------ | ------- |  | - | --------- | --------- | 
|                                  |                                    |                        |           |              |  |                         
|                                  |                                    |                        |           | Six Months   |  | Year Ending December 31,
|                                  |                                    |                        |           | Ending       |  |                         
|                                  |                                    |                        |           | December 31, |  | 2005 -                   |         | 2007 -  |  |           
|                                  |                                    | Total                  |           | 2004         |  | 2006                     |         | 2008    |  | Thereafter
|                                  |                                    |                        |           |              |  |                          |         |         |  |           
|                                  |                                    |                       
|                                  |                                    | (Dollars in thousands)
|Domestic long-term debt(1)        |                                    | $                      | 1,910,625 |              |  | $                        | 16,175  |         |  | $          | 70,282  |         |  | $ | 98,250 |         |  | $ | 1,725,918 |          
|International long-term debt (1)  |                                    |                        | 323,444   |              |  |                          | 475     |         |  |            | 231,585 |         |  |   | 51,962 |         |  |   | 39,422    |          
|Operating lease obligations       |                                    |                        | 260,067   |              |  |                          | 33,905  |         |  |            | 96,606  |         |  |   | 42,417 |         |  |   | 87,139    |          
|Purchase obligations(2)           |                                    |                        | 129,568   |              |  |                          | 127,496 |         |  |            | 2,072   |         |  |   |        |         |  |   |           |          
|Other contractual obligations (3) |                                    |                        | 39,335    |              |  |                          | 15,889  |         |  |            | 7,485   |         |  |   | 1,063  |         |  |   | 14,898    |          
|                                  |                                    |                        |           |              |  |                          |         |         |  |            |         |         |  |   |        |         |  |   |           |          
|                                  | Total contractual cash obligations |                        | $         | 2,663,039    |  |                          | $       | 193,940 |  |            | $       | 408,030 |  |   | $      | 193,692 |  |   | $         | 1,867,377 | 
|                                  |                                    |                        |           |              |  |                          |         |         |  |            |         |         |  |   |        |         |  |   |           |          



---



|    |                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents principal repayments on our long-term
    debt. Our long-term debt also requires that we make interest
    payments. These obligations do not include scheduled interest
    payments.
|   
|(2) | Represents open purchase order commitments at
    June 30, 2004, mainly related to infrastructure, handsets
    and annual maintenance contracts.                                                
|   
|(3) | Mainly includes our asset retirement and license
    purchase obligations and international site sharing costs.
    Excludes non-cash deferred revenue.                                          

Net cash provided by operating activities was
$216.5 million for the six month period ended June 30,
2004 as compared to $138.3 million for the same period in
2003. The increase in net cash provided by operating activities
was primarily a result of an improvement in net income to
$72.4 million for the six months ended June 30, 2004
from $16.0 million for the six months ended June 30,
2003.

Net cash used in investing activities was
$217.6 million for the six month period ended June 30,
2004 as compared to $35.0 million for the same period in
2003. The year-over-year increase was primarily due to:
(i) the purchase of an additional 17.87% ownership in
Meteor in February of 2004; (ii) an increase in capital

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expenditures in our domestic business;
(iii) the inclusion in the second quarter of 2003 of
proceeds from the sale of our Croatian joint venture; and
(iv) an increase in purchases of marketable securities
during the six months ended June 30, 2004.


Net cash provided by financing activities was
$14.7 million for the six month period ended June 30,
2004 as compared to $84.0 million for the same period in
2003. The year-over-year decrease was primarily due to:
(i) a reduction in net long-term debt borrowings;
(ii) an increase in debt refinancing costs; and
(iii) payment of a dividend to minority owners of
WWIs Haitian subsidiary.

Recently Issued Accounting
Standards:

In June 2004, the Emerging Issues Task Force
(EITF) reached a consensus on Issue No. 03-01
The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments (EITF
No. 03-01), addressing the meaning of
other-than-temporary impairment and its application to debt and
equity securities within the scope of SFAS No. 115
Accounting for Certain Investments in Debt and Equity
Securities. The consensus reached states that an
investment is impaired if the fair value of the investment is
less than its cost and should be assessed for impairment in each
reporting period. Additionally, an investment that is impaired
should be deemed other-than-temporarily impaired unless a number
of criteria are met. Disclosure provisions in this statement are
effective for annual periods ending after December 15, 2003
and all other provisions are effective for reporting periods
beginning after June 15, 2004. The adoption of the
disclosure provisions had no material effect on our financial
position or results of operations and we do not expect the
adoption of the remaining provisions to have a material effect
on our financial position or results of operations. Comparative
information is not required.






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

Market Risk Management

We are exposed to various market financial risks,
including changes in interest rates and foreign currency rates.
As part of our risk management program, we utilize interest rate
caps, swaps and collars to hedge a portion of our variable rate
interest risk.

Interest Rate Risk

Our New Credit Facility is comprised of variable
rate debt that at June 30, 2004 had an outstanding balance
of $1.2 billion. The fair value of such debt approximates
the carrying value. Of this variable rate debt,
$600 million was hedged using interest rate caps, swaps and
collars. The caps, swaps and collars in effect at June 30,
2004 expire at various dates between June 2005 and January 2007.
The hedges in effect at June 30, 2004 fixed LIBOR between
2.00% and 7.00%. Based on our domestic unhedged variable rate
obligations outstanding at June 30, 2004 a hypothetical
increase or decrease of 10% in the LIBOR rate would have
increased or decreased our domestic interest expense for the six
months ended June 30, 2004 by approximately
$0.7 million.

Our domestic operations have an interest rate
swap with a total notional value of $200 million which
converts fixed rate debt to variable rate debt. The interest
rate swap was entered into as a hedge of the fair value of
$200 million of the 2013 Notes. The interest rate swap
expires on the 2013 Notes maturity date and is callable at
the option of the issuer beginning July 15, 2008 with an
optional termination date of January 8, 2009, exercisable
by the issuer or us. On a semi-annual basis, we will pay a
floating rate of interest equal to the six month LIBOR plus a
fixed spread of 4.3975% and receive semi-annual fixed rate
payments of 9.25% in return. The fair value of the interest rate
swap was a liability to us of $9.6 million as of
June 30, 2004. Assuming a hypothetical increase or decrease
of 10% in interest rates, the fair value of the interest rate
swap and 2013 Notes would have changed by approximately
$6.9 million at June 30, 2004.

Our international operations also have variable
rate debt that at June 30, 2004 had an outstanding balance
of approximately $0.3 billion. The fair value of such debt
approximates the carrying value. Of this variable rate debt at
June 30, 2004, $60 million was hedged using an
interest rate swap, which fixes the interest rate at

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4.94% through November 2009. Based on WWIs
unhedged variable rate obligations outstanding at June 30,
2004, a 10% increase or decrease in each borrowings
average variable interest rate would, respectively, increase or
decrease WWIs interest expense for the six months then
ended by approximately $0.2 million.


The potential increases or decreases discussed
above are based on certain simplifying assumptions, including a
constant level of variable rate debt for all maturities and an
immediate, across-the-board increase or decrease in the level of
interest rates with no other subsequent changes for the
remainder of the period.

Foreign Currency Risk

Currently, 13% of our total international
revenues are denominated in U.S. dollars. Certain of our
international subsidiaries have functional currencies other than
the U.S. dollar and their assets and liabilities are
translated into U.S. dollars at exchange rates in effect at
the balance sheet date. Income and expense items are translated
at the average exchange rates prevailing during the period. A
10% appreciation in the U.S. dollar would have resulted in
an approximately $1.3 million increase in income before
provision for income taxes and cumulative change in accounting
principle for the six months ended June 30, 2004. Such a
change in income before provision for income taxes and
cumulative change in accounting principle would have resulted
from applying a different exchange rate to translate and revalue
the financial statements of our international subsidiaries with
functional currencies other than the U.S. dollar.

At June 30, 2004, our Slovenian operations,
whose functional currency is the Slovenian tolar, had variable
rate debt of approximately $59.0 million and
$7.3 million denominated and repayable in euros and
Slovenian tolars, respectively, and our Austrian operations,
whose functional currency is the euro, had variable rate debt,
including accrued interest, of approximately $207.1 million
denominated and repayable in euros. The fair value of such debt
approximates the carrying amount on our Condensed Consolidated
Balance Sheets. A 10% appreciation in the euro as compared to
the Slovenian tolar would have resulted in an approximately
$5.9 million decrease in income before provision for income
taxes and cumulative change in accounting principle during the
six months ended June 30, 2004. Such a change in income
before provision for income taxes and cumulative change in
accounting principle would have been the result of an unrealized
foreign exchange loss. A 10% appreciation in the euro and
Slovenian tolar as compared to the U.S. dollar would have
resulted in an approximately $30.4 million increase in debt
outstanding at June 30, 2004 with an offsetting currency
translation adjustment.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

(A) Evaluation of Disclosure Controls and
Procedures

As of the end of the period covered by this
report, we carried out an evaluation, under the supervision and
with the participation of our management, including our Chairman
and Chief Executive Officer along with our Executive Vice
President and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon
that evaluation, our Chairman and Chief Executive Officer along
with our Executive Vice President and Chief Financial Officer
concluded that our disclosure controls and procedures are
effective in timely alerting them to material information
relating to us (including our consolidated subsidiaries)
required to be included in our periodic Securities and Exchange
Commission filings.

(B) Changes in Internal Control over
Financial Reporting

We are conducting a review and evaluation of our
internal controls. Based on the results of this review, we have
initiated revisions and enhancements to improve our internal
control over financial reporting. Other than such improvements,
there have been no changes in our internal control over
financial reporting that occurred during our last fiscal quarter
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

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PART II  OTHER
INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

As previously disclosed, we are defending two
lawsuits filed against us in King County Superior Court in
Washington by certain former holders of minority interests in
three of our subsidiaries. The lawsuits relate to our
acquisition of the remaining minority interests in these three
subsidiaries. The plaintiffs alleged a variety of contractual
and other claims and sought an unspecified amount of damages.
During the course of discovery, the plaintiffs have asserted
claims for damages in excess of $100 million. We believe
that these claims are without merit and are contesting these
claims vigorously. Although litigation is subject to inherent
uncertainties, we believe that this litigation will not have a
material adverse impact on us.

In May 2003, the Federal Communications
Commission (the FCC) released a Notice of Apparent
Liability for Forfeiture proposing that we be held liable for a
$200,000 fine for allegedly failing to comply with the
FCCs environmental rules by not obtaining proper
authorization prior to constructing and operating an antenna
tower in North Dakota. We are contesting this proposed finding
and are currently assessing any other options available to us.
We believe the final outcome with the FCC will not have a
material impact on our financial position, results of operations
or cash flows.

There are no other material, pending legal
proceedings to which we or any of our subsidiaries 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, Use of Proceeds, and
    Issuer Purchases of Equity 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 26, 2004. 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 2005 and until their
respective successors are elected and qualified.

|                     |  |     |             |          |  |  |           | 
|-------------------- |  | --- | ----------- | -------- |  |  | --------- | 
|                     |  | For |             | Withheld
|                     |  |     |             |         
|John W. Stanton      |  |     | 144,964,315 |          |  |  | 2,053,040 | 
|John L. Bunce        |  |     | 144,488,139 |          |  |  | 2,529,216 | 
|Mitchell R. Cohen    |  |     | 144,487,867 |          |  |  | 2,529,488 | 
|Daniel J. Evans      |  |     | 146,051,723 |          |  |  | 965,632   | 
|Theresa E. Gillespie |  |     | 144,892,579 |          |  |  | 2,124,776 | 
|Jonathan M. Nelson   |  |     | 146,327,306 |          |  |  | 690,049   | 
|Peggy V. Phillips    |  |     | 146,324,441 |          |  |  | 692,914   | 
|Mikal J. Thomsen     |  |     | 144,930,105 |          |  |  | 2,087,250 | 
|Peter H. van Oppen   |  |     | 145,184,767 |          |  |  | 1,832,588 | 

2. To ratify the selection of
PricewaterhouseCoopers LLP as our independent auditors for 2004.

|         |  |  |             | 
|-------- |  |  | ----------- | 
|For:     |  |  | 145,576,611 | 
|Against: |  |  | 1,428,895   | 
|Abstain: |  |  | 11,849      | 

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3. To approve the Western Wireless
Corporation 2004 Employee Stock Purchase Plan

|         |  |  |             | 
|-------- |  |  | ----------- | 
|For:     |  |  | 135,144,165 | 
|Against: |  |  | 1,311,496   | 
|Abstain: |  |  | 104,477     | 




Item 5.                      Other
Information

None






|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) Exhibits

|        |      |             |  |                                                                                                                                                                                                                                                                                              
|------- | ---- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      | Description
|        |      |            
|        | 12.1 |             |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                           
|        | 31.1 |             |  | Certification of John W. Stanton, Chairman and
    Chief Executive Officer of Western Wireless Corporation,
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    (Rule 13a-14(a))                                                                                               
|        | 31.2 |             |  | Certification of M. Wayne Wisehart, Executive
    Vice President and Chief Financial Officer of Western Wireless
    Corporation, pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 (Rule 13a-14(a))                                                                             
|        | 32.1 |             |  | Certification of John W. Stanton, Chairman and
    Chief Executive Officer of Western Wireless Corporation,
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code)                      
|        | 32.2 |             |  | Certification of M. Wayne Wisehart, Executive
    Vice President and Chief Financial Officer of Western Wireless
    Corporation, pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of
    Section 1350, Chapter 63 of Title 18, United
    States Code)

(b) Reports on Form 8-K

A Form 8-K was furnished May 4, 2004
for the purpose of reporting, under Items 7 and 9, the
Companys financial and operating results for the quarter
and year ended March 31, 2004.

A Form 8-K was filed June 7, 2004 for
the purpose of reporting under Items 5 and 7, the
completion of a $1.5 billion credit facility.

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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/ M. WAYNE WISEHART

| |                            
| | ---------------------------
| |                            
| | M. Wayne Wisehart          
| | Executive Vice President   
| | and Chief Financial Officer



| |     |                
| | --- | ---------------
| | By: | /s/ SCOTT SOLEY

| |                              
| | -----------------------------
| |                              
| | Scott Soley                  
| | Vice President and Controller
| | (Chief Accounting Officer)   

Dated: August 6, 2004

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EXHIBIT INDEX

|        |      |             |  |                                                                                                                                                                                                                                                                                          
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      | Description
|        |      |            
|        | 12.1 |             |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                       
|        | 31.1 |             |  | Certification of John W. Stanton, Chairman and
    Chief Executive Officer of Western Wireless Corporation,
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    (Rule 13a-14(a))                                                                                           
|        | 31.2 |             |  | Certification of M. Wayne Wisehart, Executive
    Vice President and Chief Financial Officer of Western Wireless
    Corporation, pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 (Rule 13a-14(a))                                                                         
|        | 32.1 |             |  | Certification of John W. Stanton, Chairman and
    Chief Executive Officer of Western Wireless Corporation,
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code)                  
|        | 32.2 |             |  | Certification of M. Wayne Wisehart, Executive
    Vice President and Chief Financial Officer of Western Wireless
    Corporation, pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code)

40