Rural Cellular Corporation (?RCC? or ?the Company?) (NASDAQ:RCCC) announces first quarter 2007 financial results and schedules teleconference.

On May 4, 2007 at 8:00 AM CT, RCC will host its first quarter 2007 teleconference to discuss its first quarter results. To participate in the call, please dial (800) 218-4007, give the operator your name and company affiliation. To access a replay of this call through May 18, 2007, dial (800) 405-2236 and 11088239# as the passcode. An audio replay of the teleconference can also be accessed by logging onto the Company's website at www.unicel.com. To access the audio stream, click on the Investor Relations section.

Refer to RCC's Form 10-Q filed with the Securities and Exchange Commission for the quarterly period ended March 31, 2007 for a comprehensive discussion regarding the Company's quarterly performance by logging onto the SEC web site at www.sec.gov, or by logging onto the Company's website at www.unicel.com and clicking on the Investor Relations section.

About the Company

Rural Cellular Corporation, based in Alexandria, Minnesota, provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 15 states. For additional information on the Company and its operations, please visit its Web site at www.unicel.com.

Forward-looking statements

Statements about RCC's future prospects are forward-looking and, therefore, involve certain risks and uncertainties, including but not limited to: competitive considerations, success of customer enrollment and retention initiatives, the ability to increase wireless usage and reduce customer acquisition costs, the ability to deploy new network technology on a timely basis, the ability to service debt, and other factors discussed in RCC's Report on Form 10-K for the year ended December 31, 2006 and from time to time in its other filings with the Securities and Exchange Commission.

Consolidated Operating Data: Three Months Ended March 31,
2007  2006 
Penetration (1) (2) 9.1% 9.2%
Retention (3) 98.1% 97.4%
Average monthly revenue per customer (4) $72  $69 
Local service revenue per customer (5) $52  $51 
Acquisition cost per customer (6) $478  $532 
 
Voice customers at period end
Postpaid 594,327  586,548 
Prepaid 8,937  11,886 
Wholesale 112,368  99,377 
Total customers 715,632  697,811 
 
Direct marketed POPs (1)
RCC Cellular 5,828,000  5,751,000 
Wireless Alliance 776,000  754,000 
Total POPs 6,604,000  6,505,000 

(1) Reflects 2000 U.S. Census Bureau data updated for December 2002.

(2) Represents the ratio of wireless voice customers, excluding wholesale customers, at the end of the period to population served (?POPs?).

(3) Determined for each period by dividing total postpaid wireless voice customers discontinuing service during such period by the average postpaid wireless voice customers for such period (customers at the beginning of the period plus customers at the end of the period, divided by two), dividing that result by the number of months in the period, and subtracting such result from one.

(4) Determined for each period by dividing the sum of service revenue (not including pass-through regulatory fees) and roaming revenue by the monthly average postpaid customers for such period.

(5) Determined for each period by dividing service revenue (not including pass-through regulatory fees) by the monthly average postpaid customers for such period.

(6) Determined for each period by dividing the sum of selling and marketing expenses, net cost of equipment sales, and depreciation of rental telephone equipment by the gross postpaid and prepaid wireless voice customers added during such period.

RURAL CELLULAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
ASSETS
(In thousands)

March 31,

2007

 December 31,

2006

 
CURRENT ASSETS:
Cash and cash equivalents $ 136,668  $ 72,495 
Short-term investments 48,470  110,716 
Accounts receivable, less allowance for doubtful accounts of $2,388 and $2,676 56,514  62,592 

Inventories

8,281  11,366 
Other current assets 4,851  4,265 
Total current assets 254,784  261,434 
 
PROPERTY AND EQUIPMENT, net 202,446  211,978 
 
LICENSES AND OTHER ASSETS:
Licenses, net 524,713  524,713 
Goodwill, net 348,684  348,684 
Customer lists, net 6,482  10,734 
Deferred debt issuance costs, net 20,597  21,910 
Other assets, net 4,623  5,195 
Total licenses and other assets 905,099  911,236 
$1,362,329  $1,384,648 
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
(in thousands, except per share data)

March 31,

2007

 December 31,

2006

 
CURRENT LIABILITIES:
Accounts payable $ 35,299  $ 38,580 
Advance billings and customer deposits 12,630  12,031 
Accrued interest 16,823  42,784 
Other accrued expenses 7,263  7,832 
Total current liabilities 72,015  101,227 
LONG-TERM LIABILITIES 1,877,335  1,862,919 
Total liabilities 1,949,350  1,964,146 
 
REDEEMABLE PREFERRED STOCK 189,458  185,658 
 
SHAREHOLDERS' DEFICIT:
Class A common stock; $.01 par value; 200,000 shares authorized, 15,098 and 15,048 outstanding 151  151 

Class B common stock; $.01 par value; 10,000 shares authorized, 398 and 398 outstanding

4  4 
Additional paid-in capital 229,144  228,149 
Accumulated deficit (1,005,778) (993,460)
Total shareholders' deficit (776,479) (765,156)
$1,362,329  $1,384,648 

RURAL CELLULAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
(in thousands, except per share data) Three Months Ended

March 31,

2007  2006 
REVENUE:
Service $ 97,874  $ 95,970 
Roaming 35,947  30,806 
Equipment 6,409  6,356 
Total revenue 140,230  133,132 
OPERATING EXPENSES:
Network costs, excluding depreciation 34,522  32,307 
Cost of equipment sales 12,872  13,027 
Selling, general and administrative 33,794  34,250 
Depreciation and amortization 22,210  29,427 
Total operating expenses 103,398  109,011 
OPERATING INCOME 36,832  24,121 
OTHER INCOME (EXPENSE):
Interest expense (47,643) (46,340)
Interest and dividend income 2,241  1,500 
Other (27) (210)
Other expense, net (45,429) (45,050)
LOSS BEFORE INCOME TAX BENEFIT (8,597) (20,929)
INCOME TAX BENEFIT (79) (105)
NET LOSS (8,518) (20,824)
PREFERRED STOCK DIVIDEND (3,800) (3,514)
LOSS APPLICABLE TO COMMON SHARES $(12,318) $(24,338)
BASIC AND DILUTED WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE 15,307  13,979 
 
NET LOSS PER BASIC AND DILUTED SHARE $(0.80) $(1.74)

RURAL CELLULAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
(in thousands) Three Months Ended

March 31,

2007  2006 
OPERATING ACTIVITIES:
Net loss $ (8,518) $(20,824)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and customer list amortization 22,210  29,427 
Loss on write-off of preferred exchangeable stock issuance costs -  42 
Mark-to-market adjustments ? financial instruments (13) (428)
Net gain on repurchase of senior exchangeable preferred stock -  (173)
Stock based compensation 414  63 
Deferred income taxes (79) (105)
Amortization of debt issuance costs 1,313  1,370 
Amortization of discount on investments (1,027) (250)
Other (480) 302 
Change in other operating elements:
Accounts receivable 3,422  9,750 
Inventories 3,085  4,632 
Other current assets (585) 247 
Accounts payable (457) (9,973)
Advance billings and customer deposits 599  (151)
Accrued senior and junior exchangeable preferred stock dividends 14,738  13,828 
Accrued interest (25,961) (22,217)
Other accrued expenses (569) (1,677)
Net cash provided by operating activities 8,092  3,863 
INVESTING ACTIVITIES:
Purchases of property and equipment (8,319) (12,804)
Purchases of short-term investments (20,497) (38,234)
Maturities of short-term investments 83,770  18,999 
Proceeds from sale of property and equipment 9  374 
Other 531  (208)
Net cash provided by (used in) investing activities 55,494  (31,873)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock related to employee stock purchase plan and stock options 587  1,888 
Repurchases of senior exchangeable preferred stock -  (5,518)
Net cash provided by (used in) financing activities 587  (3,630)
NET INCREASE (DECREASE) IN CASH 64,173  (31,640)
CASH AND CASH EQUIVALENTS, at beginning of year 72,495  86,822 
CASH AND CASH EQUIVALENTS, at end of period $136,668  $55,182