Rural Cellular Corporation ("RCC" or "the Company") (NASDAQ:RCCC) announces second quarter 2006 financial results and schedules teleconference.

On August 10th, 2006 at 9:00 AM CT, RCC will host its second quarter 2006 teleconference to discuss its second 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 August 18, 2006, dial (800) 405-2236 and 11067618# 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 June 30, 2006 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, 2005 and from time to time in its other filings with the Securities and Exchange Commission. -0- *T Consolidated Operating Three months ended Six months ended Data: June 30, June 30, --------------------- --------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Penetration (1) (2)....... 8.9% 9.9% 8.9% 9.9% Retention (3)............. 97.3% 97.3% 97.4% 97.4% Average monthly revenue per customer (4)......... $74 $64 $71 $61 Average monthly revenue per customer, less incollect cost (4)....... $67 $57 $65 $55 Local service revenue per customer (5)............. $53 $50 $52 $49 Acquisition cost per customer (6) $578 $520 $555 $487 Voice customers at period end Postpaid.............. 575,537 614,998 Prepaid............... 11,048 16,851 Wholesale............. 103,841 84,906 ---------- ---------- Total customers... 690,426 716,755 ========== ========== Direct marketed POPs (1) RCC Cellular.......... 5,828,000 5,651,000 Wireless Alliance..... 776,000 754,000 ---------- ---------- Total POPs........ 6,604,000 6,405,000 ========== ========== (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 ASSETS (Unaudited) (In thousands) June 30, December 31, 2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents.................. $101,781 $86,822 Short-term investments..................... 69,222 66,778 Accounts receivable, less allowance for doubtful accounts of $3,326 and $3,567.... 65,013 72,887 Inventories................................ 6,416 12,849 Other current assets....................... 4,673 4,280 ------------ ------------ Total current assets..................... 247,105 243,616 ------------ ------------ PROPERTY AND EQUIPMENT, net................. 246,545 277,408 LICENSES AND OTHER ASSET, net: Licenses................................... 548,513 548,513 Goodwill................................... 348,684 348,684 Customer lists............................. 20,018 29,301 Deferred debt issuance costs............... 24,306 27,022 Other assets............................... 5,854 6,138 ------------ ------------ Total licenses and other assets.......... 947,375 959,658 ------------ ------------ $1,441,025 $1,480,682 ============ ============ RURAL CELLULAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' DEFICIT (Unaudited) (In thousands, June 30, December 31, except per share data) 2006 2005 ------------ ------------ CURRENT LIABILITIES: Accounts payable........................... $34,986 $53,492 Advance billings and customer deposits..... 11,361 11,885 Accrued interest........................... 43,135 39,336 Other accrued expenses..................... 6,587 8,981 ------------ ------------ Total current liabilities................ 96,069 113,694 LONG-TERM LIABILITIES....................... 1,870,349 1,847,994 ------------ ------------ Total liabilities........................ 1,966,418 1,961,688 ------------ ------------ REDEEMABLE PREFERRED STOCK.................. 178,117 170,976 SHAREHOLDERS' DEFICIT: Class A common stock; $.01 par value; 200,000 shares authorized, 13,869 and 13,530 outstanding........................ 139 135 Class B common stock; $.01 par value; 10,000 shares authorized, 399 and 427 outstanding............................... 4 4 Additional paid-in capital................. 213,128 212,420 Accumulated deficit........................ (916,781) (862,742) Unearned compensation...................... - (1,799) ------------ ------------ Total shareholders' deficit.............. (703,510) (651,982) ------------ ------------ $1,441,025 $1,480,682 ============ ============ RURAL CELLULAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (In thousands, Three months ended Six months ended except per share data) June 30, June 30, 2006 2005 2006 2005 --------- --------- --------- --------- REVENUE: Service ..................... $96,939 $98,865 $192,909 $193,560 Roaming...................... 36,660 25,112 67,466 44,734 Equipment.................... 6,599 9,420 12,955 18,474 --------- --------- --------- --------- Total revenue.............. 140,198 133,397 273,330 256,768 --------- --------- --------- --------- OPERATING EXPENSES: Network costs, excluding depreciation................ 34,862 28,770 67,169 55,492 Cost of equipment sales...... 13,222 14,631 26,249 29,009 Selling, general and administrative.............. 36,707 37,984 70,957 73,474 Depreciation and amortization................ 30,631 23,959 60,058 46,926 Impairment of assets......... - 7,020 - 7,020 --------- --------- --------- --------- Total operating expenses... 115,422 112,364 224,433 211,921 --------- --------- --------- --------- OPERATING INCOME.............. 24,776 21,033 48,897 44,847 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest expense............. (53,623) (37,621) (99,963) (80,328) Interest and dividend income...................... 2,250 324 3,750 662 Other........................ 414 (5) 204 (24) --------- --------- --------- --------- Other expense, net......... (50,959) (37,302) (96,009) (79,690) --------- --------- --------- --------- LOSS BEFORE INCOME TAX BENEFIT...................... (26,183) (16,269) (47,112) (34,843) --------- --------- --------- --------- INCOME TAX BENEFIT............ (104) (104) (209) (209) --------- --------- --------- --------- NET LOSS...................... (26,079) (16,165) (46,903) (34,634) --------- --------- --------- --------- PREFERRED STOCK DIVIDEND...... (3,622) (3,432) (7,136) (6,767) --------- --------- --------- --------- LOSS APPLICABLE TO COMMON SHARES....................... $(29,701) $(19,597) $(54,039) $(41,401) ========= ========= ========= ========= LOSS PER BASIC AND DILUTED SHARE........................ $(2.11) $(1.59) $(3.85) $(3.36) ========= ========= ========= ========= WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER BASIC AND DILUTED SHARE................ 14,075 12,330 14,027 12,323 COMPREHENSIVE LOSS: LOSS APPLICABLE TO COMMON SHARES....................... $(29,701) $(19,597) $(54,039) $(41,401) --------- --------- --------- --------- Adjustments - derivative financial instruments....... - (171) - (343) --------- --------- --------- --------- TOTAL COMPREHENSIVE LOSS...... $(29,701) $(19,768) $(54,039) $(41,744) ========= ========= ========= ========= RURAL CELLULAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended (In Thousands) June 30, 2006 2005 --------- --------- OPERATING ACTIVITIES: Net loss......................................... $(46,903) $(34,634) Adjustments to reconcile to net cash provided by operating activities: Depreciation and customer list amortization.... 60,058 46,926 Loss on write-off of debt issuance costs....... 2,795 151 Mark-to-market adjustments - financial instruments................................... (726) - Gain on repurchase of senior exchangeable preferred stock............................... (173) (5,554) Non-cash junior exchangeable preferred stock dividends..................................... - 3,797 Impairment of assets........................... - 7,020 Stock based compensation....................... 467 109 Deferred income taxes.......................... (209) (209) Other.......................................... 1,442 2,493 Change in other operating elements: Accounts receivable.......................... 4,761 (5,228) Inventories.................................. 6,433 (1,687) Other current assets......................... (393) (677) Accounts payable............................. (10,475) (5,223) Advance billings and customer deposits....... (523) 409 Accrued senior and junior exchangeable preferred stock dividends................... 19,258 23,873 Accrued interest............................. 3,800 26 Other accrued expenses....................... (2,394) 1,189 --------- --------- Net cash provided by operating activities.. 37,218 32,781 --------- --------- INVESTING ACTIVITIES: Purchases of property and equipment.............. (23,670) (64,649) Purchases of short-term investments.............. (78,443) - Maturities of short-term investments............. 78,000 - Proceeds from sale of property and equipment..... 1,587 89 Other............................................ (45) (77) --------- --------- Net cash used in investing activities...... (22,571) (64,637) --------- --------- FINANCING ACTIVITIES: Proceeds from issuance of common stock related to employee stock purchase plan and stock options.. 2,058 408 Proceeds from issuance of 8 1/4% senior secured notes........................................... 166,600 - Retirement of senior secured floating rate notes. (160,000) - Repurchase of senior exchangeable preferred stock (5,518) (13,355) Other............................................ (2,828) (65) --------- --------- Net cash provided by (used in) financing activities................................... 312 (13,012) --------- --------- NET INCREASE (DECREASE) IN CASH................... 14,959 (44,868) CASH AND CASH EQUIVALENTS, at beginning of year... 86,822 85,339 --------- --------- CASH AND CASH EQUIVALENTS, at end of period....... $101,781 $40,471 ========= ========= *T