Exhibit 13 HickoryTech and Subsidiaries Management's Discussion and Analysis BUSINESSESHickory Tech
Corporation (HickoryTech) operates in five business sectors. Its largest and
oldest business (since 1898) has been the operation of independent local exchange
carriers (ILECs) or traditional wireline telephone service. This business is
HickoryTech's Telephone Sector. In 1998, HickoryTech began its competitive
local exchange carrier (CLEC) business, competing for the telephone dial tone,
data and long distance calling business in other ILECs' territories.
HickoryTech identifies this business as its Communications Services Sector.
Also in 1998, HickoryTech acquired its first wholly owned cellular service
license and in 1999 acquired an additional cellular service license. This
business is HickoryTech's Wireless Services Sector. Since 1964, HickoryTech has
provided computer data processing and software, predominantly to other
telecommunications companies and for its own operations. This business is
HickoryTech's Information Solutions Sector. HickoryTech acquired its Enterprise
Solutions Sector in 1990. Since then, HickoryTech has operated as a leading
telecommunications and data equipment distributor from a base in
Minneapolis/St. Paul, Minnesota. THE COMPANYThe nine
subsidiaries of HickoryTech and the business sectors they operate in are: TELEPHONEMankato Citizens Telephone CompanyMid-Communications, Inc.Amana Colonies Telephone CompanyHeartland Telecommunications Company of Iowa, Inc.Cable Network, Inc. COMMUNICATIONS SERVICESCrystal Communications, Inc. WIRELESS SERVICESMinnesota Southern Wireless Company INFORMATION SOLUTIONSNational Independent Billing, Inc. ENTERPRISE SOLUTIONSCollins Communications Systems Co. Publicly, all subsidiaries operate and do business
as "HickoryTech". CORPORATE
DEVELOPMENTS 2000 In
October, acquired approximately 5,000 dial-up internet customer accounts in
southern Minnesota from Internet Connections. During 2000, HickoryTech grew internally by 2,200
ILEC access lines, 4,500 CLEC access lines, 5,400 wireless customers, 1,300
internet customers and 6,200 long distance customers, a total of 18.5% growth
internally in customer counts. 1999 In
May, sold its 6.4% equity interest in Midwest Wireless Communications, LLC, a
rural cellular provider in southern Minnesota. In June, acquired 170,000 population equivalents
(pops) cellular license surrounding metropolitan Minneapolis/St.Paul. 1998 In
January, initiated long distance and internet services and established Crystal Communications
as a startup company to offer competitive telephone service as a CLEC. In May, acquired 16,000 customer, 230,000 pops,
cellular business in southern Minnesota, Minnesota RSA 10. In September, sold Digital Techniques Inc. subsidiary
(telecommunications equipment in Dallas, TX).  FORWARD-LOOKING STATEMENTSThis Management's
Discussion and Analysis and other sections of this Annual Report contain
forward-looking statements that are based on current expectations, estimates
and projections about the industry in which HickoryTech operates, management's
beliefs and assumptions. Such forward-looking statements are subject to
important risks and uncertainties that could cause HickoryTech's future actual
results to differ significantly from such statements. HickoryTech is developing
several internal growth businesses, including its Communications Services
Sector, its Wireless Services Sector and its SuiteSolution product in its
Information Solutions Sector, and in this Annual Report is making certain forward-looking
statements about these growth businesses. These statements are not guarantees
of future performance and involve certain risks, uncertainties and
probabilities, which are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements, whether as a result of new information, future
events or otherwise. You are cautioned not to place undue reliance on these
forward looking statements, which speak only as of the date on which they were
made. HickoryTech undertakes no obligation to update any of its forward-looking
statements for any reason.  CONSOLIDATED
RESULTS OF OPERATIONS

2000 Compared to 1999


  2000
  consolidated operating revenues were $102.1 million, a $5.0 million or 5.2%
  increase over 1999. HickoryTech's acquisition of Metro A-2 contributed
  $3,569,000 to consolidated operating revenues for the full year 2000 and
  $2,730,000 for the partial year 1999. Without the effect of the acquisition
  of Metro A-2, consolidated operating revenues in 2000 would have increased
  4.5% over 1999.
  2000
  consolidated net income of $7.7 million represents a $7.0 million or 47.5%
  decrease from 1999. The 2000 net income includes a $161,000 after-tax gain
  related to final payment received from the 1998 sale of Digital Techniques,
  Inc. The 2000 net income also includes a $233,000 after-tax extraordinary
  loss related to the early extinguishment of debt and a $20,000 after-tax loss
  from a cumulative effect of a change in accounting principle. The 1999 net
  income includes a $5.2 million after-tax gain from the sale of HickoryTech's
  equity interest in Midwest Wireless Communications. Without the effect of
  gains and other one-time items in either year, consolidated net income would
  have decreased 17.5% from 1999. This decrease is the planned effect of
  internal customer growth. Management expects initial customer acquisition
  costs will give way to long-term shareholder value increases.

1999 Compared to 1998


  1999
  consolidated operating revenues were $97.1 million, a $2.5 million or 2.6%
  increase over 1998. Digital Techniques, Inc. (DTI), which contributed
  $5,580,000 to consolidated operating revenues in 1998, was sold in September
  1998. The wireless acquisition of RSA 10 added $7,907,000 in partial year
  revenues for 1998 and $14,078,000 for the full year 1999. The second wireless
  acquisition, Metro A-2, provided $2,730,000 in partial year revenues for
  1999. Without the effect of selling DTI, consolidated operating revenues in
  1999 would have increased 9.1% over 1998. Without the effect of selling DTI
  and the acquisitions of cellular licenses in both 1999 and 1998, consolidated
  operating revenues in 1999 would have decreased 1% from 1998, primarily in
  the Information Solutions and Enterprise Solutions Sectors.
  1999 consolidated
  net income of $14.7 million represents a $1.1 million or 8.4% increase over
  1998. The 1999 net income includes a $5.2 million after-tax gain from the
  sale of HickoryTech's equity interest in Midwest Wireless Communications.
  1998 consolidated net income of $13.5 million includes $811,000 of after-tax
  gains (from sale of DTI and unrelated securities). Without the effect of
  gains in either year, consolidated net income would have decreased 25.7% from
  1998, primarily the planned effect of internal customer growth, and the
  resultant increases in customer acquisition costs.

OVERALL SUMMARY OF OPERATIONS

Year Ended December 31,
  2000
  1999
  1998(Dollars in thousands)Operating Income/(Loss)Telephone
  $25,885
  $23,867
  $22,274Communications
  Services
  (5,208)
  (4,149)
  (1,581)Wireless Services
  2,226
  3,347
  1,839Information
  Solutions
  706
  (486)
  1,776Enterprise
  Solutions
  (308)
  1,137
  2,396Corporate
  (958)
  (2,097)
  (2,012)22,343
  21,619
  24,692Other Income
  434
  953
  1,445Interest Expense
  (9,803)
  (6,513)
  (4,596)Income Taxes
  (5,177)
  (6,606)
  (8,826)Net Income Before Gains/Losses*
  $7,797
  $9,453
  $12,715

* Excludes after-tax extraordinary loss of $233,000
and after-tax cumulative loss on accounting change of $20,000 in 2000 and net
of tax gains from sale of assets of $161,000 in 2000, $5,213,000 in 1999 and
$811,000 in 1998.

TELEPHONE
Telephone Sector revenues represented 53% of 2000 consolidated operating
revenues after eliminations. They were earned primarily by providing customers
access to the Telephone Sector's 67,120 ILEC access line local network and by
providing interexchange access for long-distance network carriers. The
Telephone Sector also earns revenue through use of its fiber optic transport
network, network tandem switching and directory advertising. Total Telephone
Sector revenues after eliminations have grown 10.8% compounded annually over a
five-year period from 1995 to 2000. Without the acquisition of Heartland in
1997, the five-year compound annual growth rate would have been 6.2%.

TELEPHONE

(Dollars in
  Thousands)
  2000
  1999
  1998Revenues Before EliminationsLocal Service
  $13,091
  $12,260
  $11,460Network Access
  32,765
  29,760
  28,696Other
  11,660
  12,135
  8,93957,516
  54,155
  49,095Cash Operating Expenses
  23,359
  22,727
  19,237Non-Cash Operating Expenses
  8,272
  7,561
  7,58431,631
  30,288
  26,821Operating Income
  $25,885
  $23,867
  $22,274Net Income
  $15,184
  $14,431
  $13,790Earnings Before Interest,Taxes, Depreciation andAmortization (EBITDA) (1)
  $34,157
  $31,428
  $29,858Capital Expenditures
  $15,336
  $12,935
  $7,572

From
the table above, Telephone revenues before eliminations increased 6.2% in 2000
and 10.3% in 1999. Local service rates were increased in February 2000, which
contributed $744,000 to Telephone revenues in 2000. Without the local service
rate increase, Telephone revenues before eliminations would have increased 4.8%
in 2000.

Local service revenue increased in the Telephone
Sector by 6.8% for 2000 over 1999 and 7.0% for 1999 over 1998. Without the
impact of the local service rate increase, 2000 local service revenue would
have increased 0.7% over 1999. The revenue increases were mitigated with
promotion and packaging of vertical services (caller identification, call
waiting, three-way calling, etc.) which supplement basic line charges in
efforts to sustain high customer penetrations. Access line growth was 3.3% in
2000 and 5.9% in 1999, which in addition to the local service rate increase in
2000, was the primary source of 2000 and 1999 revenue growth.

Network
access revenue increased 10.1% in 2000 and 3.7% in 1999. Access minutes in 2000
increased 1.9% over 1999 and in 1999 increased by 3.3% over 1998. Access revenues
in 2000 were enhanced by high demand for dedicated lines, high speed circuits
and other non-usage based network connections. The negative effects of network
access pricing, a common industry trend, will erode the increases in volume of
switched minutes of use, minimizing future increases in network access revenue.

Other revenues, which include directory advertising,
billing and collections revenue and intercompany services for the
Communications Services Sector, decreased 3.9% in 2000. The intercompany services
are primarily related to engineering assistance provided to construct the CLEC
telephone network and the use of the Telephone Sector's telephone switch by the
Communications Services Sector. These revenues are eliminated from operating
revenues on the Consolidated Statements of Income.

Cash operating expenses increased 2.8% in 2000 and
18.1% in 1999. The increases in 2000 were due to normal inflation, and in 1999
were due to the activity associated with the services to the Communications
Services Sector noted above. The Telephone Sector is striving for cost
efficiencies and technological improvement to maintain its cash operating
margins.

The Telephone Sector capital expenditures in 2000
and 1999 include $4,036,000 and $5,523,000, respectively, for the building of
new fiber optic routes outside of this sector's service territory. 2000 capital
expenditures also include $1,073,000 for high-speed internet network and
$1,513,000 in host switch additions. The remainder of the 2000 and 1999 capital
expenditures of $8,714,000 and $7,412,000, respectively, are comparable to
those in 1998 and consists primarily of additional service connections and
network upgrades.

COMMUNICATIONS SERVICESCommunications
Services Sector revenues represented approximately 6% of 2000 consolidated
operating revenues after eliminations. They are earned primarily by providing
competitive local telephone service (CLEC) and by reselling long distance
service.

HickoryTech
is investing in new business development with this sector. As a result of this
investment, this sector's local service and long distance activities operated
at negative EBITDA of $4,533,000 in 2000, $3,864,000 in 1999, and $1,550,000 in
1998. The sector also invested $18,889,000 in 2000 and $10,912,000 in 1999 in
capital expenditures. Access lines served in this sector have grown from 344 at
the end of 1998 to 3,704 at the end of 1999 to 8,283 at the end of 2000. Long
distance customers served in this sector have grown from 6,012 at the end of
1998 to 12,146 at the end of 1999 to 18,366 at the end of 2000. HickoryTech is
implementing a network overbuild plan, as opposed to reselling existing
services. While the customer acquisition costs may be high initially for this
growth plan, management believes the long-term benefits will be comparable to
its Telephone Sector operations.

COMMUNICATIONS
SERVICES

(Dollars in
  Thousands)
  2000
  1999
  1998Revenues Before EliminationsLong Distance
  $4,457
  $2,738
  $1,271Local Service
  2,573
  907
  3607,030
  3,645
  1,631Cash Operating Expenses
  11,563
  7,509
  3,181Non-Cash Operating Expenses
  675
  285
  3112,238
  7,794
  3,212Operating Loss
  $(5,208)
  $(4,149)
  $(1,581)Net Loss
  $(3,125)
  $(2,523)
  $(655)Earnings Before Interest,Taxes, Depreciation
  andAmortization
  (EBITDA)(1)
  $(4,533)
  $(3,864)
  $(1,550)Capital Expenditures
  $18,889
  $10,912
  $270

The
significant increases in operating revenues and expenses in 2000 and 1999 were
the result of the Communications Services Sector expanding its CLEC operations
from one community in Minnesota as of December 31, 1998 to eight communities in
Minnesota and six communities in Iowa as of December 31, 2000. Additional
expansion in the communities currently served as well as expansions to new
communities is planned for 2001.

WIRELESS SERVICESWireless
Services Sector revenues represented approximately 19% of 2000 consolidated
operating revenues after eliminations. They are earned primarily by providing
wireless and prepaid cellular telephone service to subscribers in seven
counties in south central Minnesota, reselling paging and long distance
services and by providing roaming service to customers and to other service
providers. The Wireless Services Sector is the result of wireless service area
license acquisitions in May 1998 and June 1999.

HickoryTech sees a unique opportunity to increase
customer penetration levels and deploy wireless digital service options to its
wireline customers in a bundled offering. While the customer acquisition costs
may be high initially for this growth plan, management believes it is building
long-term shareholder value. Customers served in this sector have grown from
15,955 at the end of 1998 to 20,309 at the end of 1999 to 25,698 at the end of
2000.

In
the three years ended 2000, the Wireless Services Sector invested $12,956,000
in capital expenditures to improve its service area coverage and expand its
cellular businesses.

WIRELESS SERVICES

(Dollars in
  Thousands)
  2000
  1999
  1998Revenues Before EliminationsService
  $8,829
  $6,706
  $4,013Roaming
  10,081
  10,102
  3,89418,910
  16,808
  7,907Cash Operating Expenses
  12,407
  10,257
  4,778Non-Cash Operating Expenses
  4,277
  3,204
  1,29016,684
  13,461
  6,068Operating Income
  $2,226
  $3,347
  $1,839Net Income
  $1,227
  $1,931
  $1,099Earnings Before Interest,Taxes, Depreciation
  andAmortization
  (EBITDA)(1)
  $6,503
  $6,551
  $3,129Capital Expenditures
  $4,981
  $4,251
  $3,724

From
the table above, Wireless revenues increased 12.5% in 2000. The increase is due
entirely to an increase in service revenue as a result of the growth in the
customer base served by this sector. Service revenue increased 31.7% while
customers served increased 26.5% in 2000. Roaming revenues remained
approximately the same in 2000 compared with 1999 as reduced rates for roaming
offset increases in the volume of roaming minutes. Cash operating expenses
increased 21.0% in 2000 due to the increase in customers served.

From 1998 to 1999, the table above reflects an
approximate doubling of all line items due to the full year operations of the
southern Minnesota RSA 10 cellular business and the June 1999acquisition of the Metro A-2 cellular business. Roaming
revenues increased significantly in 1999 due to the cellular operations of the
Metro A-2 acquisition.

INFORMATION SOLUTIONSInformation
Solutions Sector (formerly Billing/Data Services Sector) revenues represented
approximately 4% of 2000 consolidated operating revenues after eliminations.
They are earned by providing information management solutions for HickoryTech
subsidiaries, other local telephone companies, long distance resellers, CLECs,
wireless companies, municipalities and utilities.

The
Information Solutions Sector's principal activity is the provision of monthly
batch processing of computerized data. The sector has completed development of
a wireless telecommunications billing and customer care solution software
package and is developing a complementary wireline system. Plans are to deploy
the new systems in 2001 to all HickoryTech sectors, and to follow with sales or
turnkey installations to external customers thereafter.

INFORMATION
SOLUTIONS

(Dollars in
  Thousands)
  2000
  1999
  1998Revenues Before EliminationsUnaffiliated
  Customers
  $4,287
  $4,368
  $7,962Intercompany
  4,668
  3,146
  2,5718,955
  7,514
  10,533Cash Operating Expenses
  7,869
  7,746
  8,494Non-Cash Operating Expenses
  380
  254
  2638,249
  8,000
  8,757Operating Income/(Loss)
  $706
  $(486)
  $1,776Net Income/(Loss)
  $427
  $(221)
  $1,184Earnings Before Interest,Taxes, Depreciation
  andAmortization
  (EBITDA)(1)
  $1,086
  $(232)
  $2,039Capital Expenditures
  $123
  $148
  $247

From
the table above, Information Solutions Sector revenues before eliminations
increased 19.2% in 2000 and decreased 28.7% in 1999. The sector's focus in 2000
and 1999 was split between the development of the new SuiteSolution (formerly
WRITE2k) billing and customer care software package and introducing the product
to the market, as well as continued service to the existing customer base. The current
customer base revenue primarily is driven by service bureau processing to long
distance resellers, CLECs and local telephone companies. In 1998, the service
to a large CLEC began to decline, and in 1999, this CLEC took its service
in-house and did not utilize the sector's services. The revenues attributable
to this customer were $3,241,000 in 1998 and less than $100,000 in 1999.

Operating expenses in the Information Solutions Sector
have declined in 2000 and 1999 as compared to 1998 due to cost cutting, mainly
reduced contract programming, and the completion of amortization of capitalized
software development costs related to software developed prior to
SuiteSolution. At December 31, 2000, $1,569,000 was recorded on the balance
sheet for the development of SuiteSolution. This will be amortized over the
life of the SuiteSolution products once production is completed.



ENTERPRISE SOLUTIONSEnterprise
Solutions Sector revenues represented approximately 18% of 2000 consolidated
operating revenues after eliminations. Revenues are earned primarily by the
sale, installation and service of business telephone systems and data
communications equipment primarily in metropolitan Minneapolis/St. Paul,
Minnesota. The customers in this sector's market are the individual
commercial/business end users of telecommunications service with ongoing
service needs. This sector's products consist of telecommunication platforms
such as Nortel and Octel on the voice side of its business, and Cisco and Bay
(Nortel) equipment on the data side of its business. This sector's expertise is
the quality installation and maintenance of wide area and local
telecommunications networks for end user customers.

ENTERPRISE
SOLUTIONS

(Dollars in
  Thousands)
  2000
  1999
  1998Revenues Before EliminationsInstallation
  $8,688
  $12,470
  $13,543Service
  9,823
  10,106
  9,598DTI
  --
  --
  5,58018,511
  22,576
  28,721Cash Operating Expenses
  18,482
  21,120
  25,975Non-Cash Operating Expenses
  337
  319
  35018,819
  21,439
  26,325Operating Income/(Loss)
  $(308)
  $1,137
  $2,396Net Income/(Loss)
  $(250)
  $565
  $1,323Earnings Before Interest,Taxes, Depreciation
  andAmortization
  (EBITDA)(1)
  $29
  $1,456
  $2,746Capital Expenditures
  $157
  $269
  $345

From
the table above, revenues for 2000 decreased 18.0% from 1999 while revenues for
1999 decreased 21.4% from 1998. The Digital Techniques, Inc. (DTI) operations
were sold in September 1998. Without the revenues of DTI in 1998, revenues in
1999 would have decreased $565,000 or 2.4%. The Enterprise Solutions Sector
experienced lower volumes of business from customers during the second half of
1999 due to concerns of Y2K issues. In 2000, the lower volumes of business
continued. Management believes this lower business volume reflects customer
delays due to industry-wide concerns regarding technological changes, including
the role of switch versus server-based communications, and general economic
concerns.

TOTAL COSTS AND EXPENSESTotal consolidated costs and expenses
after eliminations increased 5.8% in 2000. Depreciation and amortization
increased $2,421,000 in 2000 and $2,122,000 in 1999 due primarily to the higher
pace of capital investment in the Communications Services Sector and wireless
acquisitions in 1999 and 1998. Costs and expenses other than depreciation and
amortization were $65,532,000 in 2000, compared with $63,603,000 in 1999. The
primary reasons for the changes, as explained in the earlier sector
discussions, were the costs of customer additions in the cellular telephone businesses
and the growth of the Communications Services Sector. The Communications
Services Sector's growth costs include
the hiring of staff and of marketing expenses prior to revenue streams and
paying interconnection fees to incumbent carriers for transferring customers to
the CLEC telephone network.

OTHER INCOME AND INTEREST EXPENSEOther income
(primarily interest and equity in LLC income) was $519,000 lower in 2000 than
1999 and $492,000 lower in 1999 than 1998. Included in other income in 1999 and
1998 was HickoryTech's 6.4% equity interest in Midwest Wireless Communications,
LLC. HickoryTech sold this equity interest in May 1999. This equity interest in
LLC income contributed $445,000 to other income in 1999 and $1,026,000 in 1998.

Interest expense increased by $3,290,000 in 2000 due
to the increase in total outstanding debt from $111 million at December 31,
1999 to $149 million at December 31, 2000, and by an increase in weighted
average interest rate from 6.65% in 1999 to 8.17% in 2000. The debt level increased
in 2000 to fund internal growth. Interest expense increased by $1,917,000 in
1999 over 1998 due to the increase in debt of $36 million utilized for cellular
telephone business acquisition and capital expenditures in the startup
activities of the Communications Services Sector.

GAIN ON SALE OF ASSETSThe 2000 gain
on sale of assets of $271,000 is related to final payment received from the
1998 sale of DTI. The 1999 gain on sale of assets of $9.2 million is the result
of HickoryTech selling its minority interest in Midwest Wireless
Communications, LLC. HickoryTech received proceeds of $12.8 million on the
transaction. The 1998 gain on sale of assets is recognition of two separate
transactions. In 1998, HickoryTech received proceeds of $4.25 million from
selling 100% of its ownership in DTI, resulting in a pre-tax gain of $0.3
million. Also in 1998, HickoryTech recorded a pre-tax gain of $1.0 million on
proceeds of $1.5 million from the sale of its stock investment in Illuminet
Holdings, Inc.

INCOME TAXESThe effective
tax rate in 2000 was 39.9%, versus 41.9% in 1999 and 40.7% in 1998. These
effective tax rates differ from the U.S. statutory rate primarily due to state
income taxes.

EXTRAORDINARY LOSS ON DEBT
EXTINGUISHMENTIn June 2000,
HickoryTech increased its revolving credit facility and used the proceeds to
repay $40,000,000 of senior unsecured notes. As a result of the extinguishment
of the senior unsecured notes, HickoryTech recorded an extraordinary loss of
$233,000, net of income tax benefit of $158,000. This action was taken to align
the capital financing of HickoryTech more suitably with its current business
plan.

CUMULATIVE EFFECT OF ACCOUNTING CHANGEIn December 1999, the
SEC issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition
in Financial Statements," which provides additional guidance in applying
generally accepted accounting principles for revenue recognition.
Implementation of SAB No. 101 required HickoryTech to defer revenues resulting
from up-front fees and to also defer the associated direct costs.

These
deferred revenues and costs are now recognized ratably over the customer
relationship period. As permitted by SAB No. 101, HickoryTech accounted for the
change in accounting policy prospectively as a cumulative effect of accounting
change retroactively to January 1, 2000. The cumulative effect of accounting
change was a loss of $20,000, net of a tax benefit of $14,000. For additional
information, see Note 9 of Notes to Consolidated Financial Statements.

FINANCIAL CONDITION, RESOURCES AND COMMITMENTS

REVIEW OF CASH FLOWSHickoryTech's
net working capital of $8,882,000 at December 31, 2000, is an increase of
$3,837,000 from 1999. The increase is primarily due to an increase in inventory
and a decrease in accounts payable. The ratio of current assets to current
liabilities is 1.5 to 1.0 at December 31, 2000.

Cash flows from operations continue to be a steady
source of funds for HickoryTech, primarily coming from the Telephone Sector.
Cash provided from operations was $22,908,000 in 2000, $23,175,000 in 1999 and
$21,058,000 in 1998. Cash flows from operations in 2000 were primarily
attributable to net income plus depreciation and amortization, partially offset
by increases in inventory in the Telephone Sector and decreases in accounts
payable relating to timing of payments. Cash flows from operations in 1999 were
enhanced by increases in accounts payable.

Cash flows used in investing activities were
$51,238,000 in 2000, $54,471,000 in 1999 and $49,555,000 in 1998. Capital expenditures
relating to ongoing businesses were $39,662,000 in 2000, $28,531,000 in 1999
and $12,190,000 in 1998. Capital expenditures were incurred to construct
additional network facilities to provide CLEC services and to buildout fiber
optic and wireless networks. In 2000, cash used in investing activities
included a $10,000,000 investment in Rural Telephone Finance Cooperative (RTFC)
which was required as part of HickoryTech's new revolving credit facility
entered into in September 2000. Cash used in investing activities included
$38,767,000 and $40,353,000 for cellular acquisitions in 1999 and 1998,
respectively. Proceeds from sale of assets also provided $12,971,000 in 1999
and $5,483,000 in 1998.

Cash flows from financing activities were
$26,812,000 in 2000, $32,871,000 in 1999 and $28,411,000 in 1998 resulting from
net borrowings. Dividend payments were $6,085,000, $6,048,000 and $6,001,000 in
2000, 1999 and 1998 respectively.

DIVIDENDSHickoryTech paid dividends of
$6,085,000 in 2000. This was a dividend of $0.44 per share. The dividend per
share rate was the same as in 1999 and 1998. HickoryTech's reinvested growth in
equity has come about while annually paying cash dividends to shareholders.
Paying at the existing level of dividends is not expected to negatively impact
the liquidity of HickoryTech.

LIQUIDITY
AND CAPITAL RESOURCES

During 2000, HickoryTech's bank credit facility was
expanded to $225 million in order to fund capital expenditures. In 1999,
HickoryTech's acquisition of the Minneapolis/St. Paul Metro A-2 cellular
business was funded with debt, using its revolving credit facility.
HickoryTech's 1998 acquisition of the southern Minnesota RSA 10 cellular
business was funded by HickoryTech's original $45 million revolving credit
facility.

HickoryTech uses variable interest rate financial
instruments as of December 31, 2000. The revolving credit facility had a
weighted average interest rate of 8.17% in 2000, and 8.69% at December 31,
2000. HickoryTech continually monitors the interest rates on its bank loans. A
higher level of interest expense is likely to occur in 2001 because of expanded
use of the revolving credit facility for additional capital expenditures and
potentially higher weighted average rates than HickoryTech experienced in 2000.
Based on HickoryTech's banking relationships, HickoryTech continues to have
access to multiple forms of financing. HickoryTech's financial strength
continues to be supported by its 2000 current ratio (1.5 to 1), its EBITDA and
its proven access to debt markets.

On July 21, 2000, HickoryTech announced plans to
sell its local telephone exchange in Amana, Iowa. Refer to Note 2 of Notes to
Consolidated Financial Statements for further discussion of this disposition.

On October 9, 2000, HickoryTech completed the acquisition
of the dial-up internet customer accounts of Internet Connections. Refer to
Note 2 of Notes to Consolidated Financial Statements for further discussion of
this acquisition.

HickoryTech has not conducted a public equity
offering. It operates with original equity capital, retained earnings and
recent additions to indebtedness in the form of bank term and revolving lines
of credit. HickoryTech believes its 2000 level of debt to total capital is
acceptable for ongoing operations.

RECENT ACCOUNTING DEVELOPMENTEffective
January 1, 2001, HickoryTech will be required to adopt Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Management is evaluating the impact
of SFAS No. 133 and does not expect that adoption will have a material impact
on its financial position or its results of operations.

REGULATED INDUSTRYSTATE-HickoryTech's Minnesota ILEC subsidiaries increased
local rates, effective February 2000, adding approximately $744,000 of revenues
in 2000. The Minnesota telephone subsidiaries also increased local rates in
February 1998, adding approximately $1,328,000 of revenues in 1998. The
Minnesota Department of Public Service has the authority to investigate rates
and profits of telephone companies in Minnesota. The Minnesota state telephone
industry is regulated by law so that companies with less than 50,000 customers
have their prices regulated instead of their profits. HickoryTech's two
Minnesota ILEC subsidiaries fall under this reduced level of regulation.
HickoryTech's subsidiaries' local service
rates are lower than the rates of most neighboring telephone companies. This
relieves HickoryTech of substantial regulatory oversight. In the state of Iowa,
HickoryTech's operations fall below the 15,000 access line minimum level for
regulation by the Iowa Utilities Board. No regulatory matters in Iowa affect
HickoryTech's current operation.



INTERSTATE-The Telephone Sector's four
local exchange telephone companies have had their interstate access rates
established based on a nationwide pool of companies known as the National
Exchange Carriers Association (NECA). These access charges reflect the FCC
rules and changes in regulation as they apply to the other companies which are
in the NECA pools, and ultimately establish the prices that the Telephone
Sector can charge for interstate access. There has been a decline in the level
of interstate access charges in the last several years, and HickoryTech
foresees a continuation of this trend. The FCC instituted rule making in 1998
to amend access charge rules. The FCC proposal includes modifications of ILEC
transport rate structure, reallocation of costs in the transport
interconnection charge and amendments to universal service funds. None of the
Telephone Sector's four local exchange telephone companies receive any payments
from the FCC Universal Service Fund. HickoryTech does participate in funding of
this Universal Service Fund through a portion of the access charges collected
from interexchange carriers and contributed to pools designed for reimbursing
high cost telecommunications areas. FCC rule making on this matter is an
outstanding issue, therefore it is not possible to determine the impacts, if
any, on HickoryTech's results of operations.

In September 1999, by order of the FCC, HickoryTech
moved its two Iowa companies from "average schedule" status for
interstate traffic to a pure "cost basis" form of revenue recognition
and tariffs. This means that for the two Iowa companies, interstate access
revenues are determined based on the specific company's cost of service rather
than nationwide averages of other companies. In its initial stages, the switch
from "average schedule" to "cost basis" for Iowa's
interstate revenue has reduced company revenues by less than $200,000 on an
annualized basis.

HickoryTech's Communications Services Sector
operates in Minnesota and Iowa with less regulatory oversight than
HickoryTech's Telephone Sector. A CLEC petitions regulators for authority to
operate in certain geographic areas, submits tariffs to describe services and
the rates at which it will provide service, and submits interconnection
agreements it has reached with other carriers for regulatory review. However,
there is no regulatory oversight of the prices charged or the rate of return
earned by the CLEC. This is also the case with HickoryTech's Wireless Services
Sector.

COMPETITIONFOR HickoryTech's Telephone Sector,
competition can come from television service providers with coaxial cables to
the home, national CLECs, fixed-point wireless service providers or alternative
sources of dedicated private lines, data and internet services. Regulatory
decisions, new technology and the convergence of other industries with the
telecommunications industry are causes of increasing competition in all of
HickoryTech's sectors. The Telephone Sector is responding by marketing its
products and engineering its infrastructure to be an active participant in the
new environment. In Iowa, the Telephone Sector has experienced CLEC competition
from others, but its impact has been minimal. In Minnesota, although other
competitive telephone service providers have petitioned for the right to serve
in the Telephone Sector's territories, none have delivered service yet. Due to
its experience and existing infrastructure, the competition in
telecommunications has created many opportunities for the company.
HickoryTech's CLEC initiatives are in rural markets where minimal CLEC
competition from outside entities will exist.

HickoryTech operates businesses in several different
markets. HickoryTech monitors the technological changes and competitive and
regulatory environment of the telecommunications business and develops
strategies to address these changes. HickoryTech evaluates the way it conducts
business in order to further improve customer responsiveness and quality.
HickoryTech shares the RSA 10 wireless market with at least one competitor and
has equal market share with it. There is one operating PCS carrier in
HickoryTech's southern Minnesota wireless markets. There are natural
competitors in HickoryTech's Enterprise Solutions Sector and the Information
Solutions Sector, offering different stature and products. HickoryTech has a
unique niche in these markets, and no extraordinary threat of competition is
perceived.

BUSINESS OUTLOOKHickoryTech
operates in several different markets, primarily in the service business.
Management reacts to the competitive market forces of its customers that have
fluctuations in their own volume of telecommunications services required, and
this translates into fluctuations in volume of business for HickoryTech.
HickoryTech monitors the technological changes and competitive and regulatory
environment of the telecommunications business and addresses these changes in
ways unique to the telecommunications business.

HickoryTech has consistently maintained high EBITDA(1)
margins by running its telephone operations efficiently while prudently
diversifying into other profitable niches in telecommunications. The diversification
into sectors other than the Telephone Sector provides greater opportunities for
internal growth. The diversification of HickoryTech reduces the dependence of
HickoryTech on any one market, business, economy or regulatory environment. In
order to achieve HickoryTech's continuous growth objectives, it will rely on
the maturation of the business plans for its existing five sectors and
continued research of the many telephone industry acquisition candidates.

(1) - EBITDA
represents operating income plus depreciation and amortization expense. EBITDA,
which is not a measure of financial performance or liquidity under generally
accepted accounting principles, is provided because such information is used by
certain investors when analyzing the financial position and performance of
HickoryTech. Because of the variety of methods used by companies and analysts
to calculate EBITDA, and the fact that EBITDA calculations may not accurately
measure a company's ability to meet debt service requirements, caution should
be used in relying on any EBITDA presentation. HickoryTech sees value in
disclosing its calculation of EBITDA for the financial community and in
displaying the change in EBITDA. HickoryTech believes an increasing EBITDA
depicts increased ability to attract financing and increased valuation of
HickoryTech's business.





HickoryTech
2000 Report To Shareholders

FINANCIAL STATEMENTS

REPORT OF MANAGEMENT

Management of
Hickory Tech Corporation (HickoryTech) is responsible for the consolidated
financial statements and the other financial information contained in this
Annual Report. The financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. They
are considered by management to present fairly HickoryTechs financial
position, results of operations and cash flows. In preparing the financial
statements, management is required to objectively include amounts based on
estimates and judgments that it believes are reasonable under the circumstances.

To provide
reasonable assurance that assets are safeguarded against loss and that
accounting records are reliable for preparing financial statements, HickoryTech
management maintains a system of internal controls. The Audit Committee of the
Board of Directors, which is composed of directors who are not officers or
employees, meets regularly with the independent accountants and management to
review the scope of internal controls, the manner in which they perform their
responsibilities, audit activities and financial reporting. The Audit Committee
provides a direct method of access from the Board of Directors to the
independent accountants and assures the objectivity of this reports financial
information. The Audit Committee reviews and approves financial disclosures
prior to releasing to the public.

HickoryTechs
financial statements have been examined by PricewaterhouseCoopers LLP,
independent accountants. Management has made available to the independent
accountants all HickoryTech financial records and related data. Their
examinations, which included consideration of the internal controls, culminated
in their report which appears on this page.



Robert
  D. Alton
  David
  A. ChristensenChairman,
  President and Chief Executive Officer
  Vice
  President and Chief Financial OfficerREPORT OF INDEPENDENT
ACCOUNTANTS

To the
Shareholders and Board of Directors of
Hickory Tech Corporation

In our opinion,
the accompanying consolidated balance sheets and the related consolidated
statements of income, cash flows and shareholders equity present fairly, in
all material respects, the financial position of Hickory Tech Corporation and
subsidiaries (HickoryTech) at December 31, 2000 and December 31, 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of HickoryTechs management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

PricewaterhouseCoopers LLP

Minneapolis,
Minnesota
February 2, 2001

HickoryTech
and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31

(Dollars in Thousands, Except Per Share Amounts)

2000
  1999
  1998OPERATING
  REVENUES:Telephone
  $54,365
  $50,219
  $48,352Communications
  Services
  6,070
  3,098
  1,631Wireless
  Services
  18,910
  16,808
  7,907Information
  Solutions
  4,287
  4,368
  7,962Enterprise
  Solutions
  18,511
  22,576
  28,721TOTAL
  OPERATING REVENUES
  102,143
  97,069
  94,573COSTS
  AND EXPENSES:Cost
  of Sales
  12,510
  15,987
  19,356Operating
  Expenses
  53,022
  47,616
  40,800Depreciation
  11,088
  9,319
  8,021Amortization
  of Intangibles
  3,180
  2,528
  1,704TOTAL
  COSTS AND EXPENSES
  79,800
  75,450
  69,881OPERATING
  INCOME
  22,343
  21,619
  24,692OTHER
  INCOME (EXPENSE):Gain
  on Sale of Assets
  271
  9,207
  1,278Equity
  in Net Income of Investees
  23
  530
  1,155Interest
  and Other Income
  411
  423
  290Interest
  Expense
  (9,803)
  (6,513)
  (4,596)TOTAL
  OTHER INCOME (EXPENSE)
  (9,098)
  3,647
  (1,873)INCOME
  BEFORE INCOME TAXES, EXTRAORDINARY ITEM, AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE
  13,245
  25,266
  22,819INCOME
  TAXES
  5,287
  10,600
  9,293INCOME
  BEFORE EXTRAORDINARY ITEM ANDCUMULATIVE EFFECT OF ACCOUNTING CHANGE
  7,958
  14,666
  13,526EXTRAORDINARY
  LOSS ON DEBT EXTINGUISHMENT,NET OF TAX BENEFIT OF $158
  (233)
  -
  -CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE, NET OF TAX BENEFIT OF $14
  (20)
  -
  -NET
  INCOME
  $7,705
  $14,666
  $13,526Basic
  Earnings Per Share:Income
  Before Extraordinary Item and Cumulative Effect ofAccounting Change
  $0.58
  $1.07
  $0.99Extraordinary
  Item and Cumulative Effect of Accounting Change
  (0.02)
  -
  -Net
  Income
  $0.56
  $1.07
  $0.99Dividends
  Per Share
  $0.44
  $0.44
  $0.44Weighted
  Average Common Shares Outstanding
  13,832,502
  13,746,053
  13,637,058Diluted
  Earnings Per Share:Income
  Before Extraordinary Item and Cumulative Effect ofAccounting Change
  $0.57
  $1.06
  $0.99Extraordinary
  Item and Cumulative Effect of Accounting Change
  (0.02)
  -
  -Net
  Income
  $0.55
  $1.06
  $0.99Weighted
  Average Common and Equivalent Shares Outstanding
  13,923,015
  13,772,495
  13,664,106The
accompanying notes are an integral part of the consolidated financial
statements.

HickoryTech
2000 Report To Shareholders

CONSOLIDATED BALANCE SHEETS
As of December 31

(Dollars
in Thousand)ASSETS

2000
  1999CURRENT
  ASSETS:Cash
  and Cash Equivalents
  $1,190
  $2,708Accounts
  Receivable, Net of Allowance for Doubtful Accounts of $961 in 2000 and
  $413 in 199916,137
  16,824Income
  Taxes Receivable
  670
  1,002Inventories
  4,585
  2,482Deferred
  Income Taxes
  1,404
  1,222Other
  1,423
  598TOTAL
  CURRENT ASSETS
  25,409
  24,836INVESTMENTS
  10,361
  873PROPERTY,
  PLANT AND EQUIPMENT, NET
  116,690
  88,186OTHER
  ASSETS:Intangible
  Assets, Net
  100,603
  100,231Miscellaneous
  2,424
  678TOTAL
  OTHER ASSETS
  103,027
  100,909TOTAL
  ASSETS
  $255,487
  $214,804LIABILITIES AND SHAREHOLDERS EQUITYCURRENT
  LIABILITIES:Cash
  Overdraft
  $
  $3,552Accounts
  Payable
  10,791
  12,170Accrued
  Interest
  108
  948Advanced
  Billings and Deposits
  4,411
  2,909Current
  Maturities of Long-Term Debt
  1,217
  212TOTAL
  CURRENT LIABILITIES
  16,527
  19,791LONG-TERM
  DEBT, Net of Current Maturities
  147,433
  111,149DEFERRED
  INCOME TAXES
  9,417
  6,657OTHER
  DEFERRED LIABILITIES
  4,753
  2,731TOTAL
  LIABILITIES
  178,130
  140,328SHAREHOLDERS
  EQUITY:Common
  Stock, no par value, $.10 stated valueShares
  authorized: 100,000,000Shares
  outstanding:  2000, 13,878,568;  1999, 13,787,416
  1,388
  1,379Additional
  Paid-In Capital
  5,473
  4,221Retained
  Earnings
  70,496
  68,876TOTAL
  SHAREHOLDERS EQUITY
  77,357
  74,476TOTAL
  LIABILITIES AND SHAREHOLDERS EQUITY
  $255,487
  $214,804The
accompanying notes are an integral part of the consolidated financial
statements.

HickoryTech
and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31

(Dollars in Thousands)

2000
  1999
  1998CASH
  FLOWS FROM OPERATING ACTIVITIES:Net
  Income
  $7,705
  $14,666
  $13,526Adjustments
  to Reconcile Net Income to Net Cash Provided by Operating Activities:Depreciation
  and Amortization
  14,268
  11,847
  9,725Gain
  Resulting from Sale of Assets
  (271)
  (9,207)
  (1,278)Extraordinary
  Loss on Debt Extinguishment
  391
  
  Cumulative
  Effect of Accounting Change
  34
  
  Provision
  for Losses on Accounts Receivable
  548
  (205)
  157Deferred
  Income Taxes
  2,577
  2,744
  972Stock-Based
  Compensation
  660
  890
  392Employee
  Retirement Benefits and Deferred Compensation
  202
  (520)
  272Equity
  in Net Income of Investees
  (23)
  (530)
  (1,155)Cash Provided
  From Operations Before Changesin Assets and Liabilities
  26,091
  19,685
  22,611Changes
  in Operating Assets and Liabilities Net ofEffects of Acquisitions and Dispositions:Receivables
  699
  1,033
  (5,909)Inventories
  (2,102)
  27
  (109)Accounts
  Payable and Accrued Expenses
  (2,319)
  2,401
  3,907Advanced
  Billings and Deposits
  739
  (138)
  1,144Other
  Deferred Liabilities
  (584)
  72
  (1)Other
  384
  95
  (585)Net
  Cash Provided by Operating Activities
  22,908
  23,175
  21,058CASH
  FLOWS FROM INVESTING ACTIVITIES:Additions
  to Property, Plant and Equipment
  (39,662)
  (28,531)
  (12,190)Additions
  to Capitalized Software Development Costs
  (1,450)
  (251)
  Increase
  in Investments
  (10,363)
  (86)
  (288)Redemption
  of Investments
  700
  193
  605Acquisitions,
  Net of Cash Acquired
  (885)
  (38,767)
  (40,353)Deposit
  on Pending Acquisition
  
  
  (2,812)Proceeds
  from Sale of Assets
  422
  12,971
  5,483Net
  Cash Used in Investing Activities
  (51,238)
  (54,471)
  (49,555)CASH
  FLOWS FROM FINANCING ACTIVITIES:Cash
  Overdraft
  (3,552)
  3,552
  Payment
  of Debt Issuance Costs
  (1,300)
  (463)
  Proceeds
  from Issuance of Debt
  
  
  38Repayments
  of Debt
  (40,452)
  (681)
  (461)Borrowings
  on Line of Credit
  78,600
  52,000
  43,500Repayments
  on Line of Credit
  (1,100)
  (16,000)
  (9,000)Proceeds
  from Issuance of Common Stock
  701
  511
  335Dividends
  Paid
  (6,085)
  (6,048)
  (6,001)Net
  Cash Provided by Financing Activities
  26,812
  32,871
  28,411NET
  (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
  (1,518)
  1,575
  (86)CASH
  AND CASH EQUIVALENTS AT BEGINNING OF YEAR
  2,708
  1,133
  1,219CASH
  AND CASH EQUIVALENTS AT END OF YEAR
  $1,190
  $2,708
  $1,133SUPPLEMENTAL
  DISCLOSURE OF CASH FLOW INFORMATION:Cash
  Paid for Interest
  $10,643
  $6,535
  $4,361Cash
  Paid for Income Taxes
  $2,205
  $8,548
  $8,831The
accompanying notes are an integral part of the consolidated financial
statements.

HickoryTech
2000 Report To Shareholders

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Years Ended December 31

(Dollars in Thousands)

Common Stock
  AdditionalPaid-In
  Capital
  Retained
  Earnings
  TotalShareholdersEquityShares
  AmountBALANCE
  AT DECEMBER 31, 1997
  4,534,119
  $454
  $2,375
  $52,733
  $55,5623-for-1
  Stock Split
  9,068,238
  908
  (908)
  
  Stock
  Award Plan
  28,036
  2
  257
  
  259Employee
  Stock Purchase Plan
  24,666
  2
  203
  
  205Directors
  Stock Retainer Plan
  3,155
  
  41
  
  41Stock
  Options Exercised
  4,002
  
  37
  
  37Net
  Income
  
  
  
  13,526
  13,526Dividends
  Paid
  
  
  
  (6,001)
  (6,001)BALANCE
  AT DECEMBER 31, 1998
  13,662,216
  1,366
  2,005
  60,258
  63,629Stock
  Award Plan
  71,654
  8
  1,607
  
  1,615Employee
  Stock Purchase Plan
  31,753
  3
  368
  
  371Directors
  Stock Retainer Plan
  2,914
  
  37
  
  37Stock
  Options Exercised
  12,313
  1
  121
  
  122Dividend
  Reinvestment Plan
  6,566
  1
  83
  
  84Net
  Income
  
  
  
  14,666
  14,666Dividends
  Paid
  
  
  
  (6,048)
  (6,048)BALANCE
  AT DECEMBER 31, 1999
  13,787,416
  1,379
  4,221
  68,876
  74,476Stock
  Award Plan
  29,788
  3
  496
  
  499Employee
  Stock Purchase Plan
  28,464
  3
  287
  
  290Directors
  Stock Retainer Plan
  2,967
  
  50
  
  50Stock
  Options Exercised
  15,384
  2
  181
  
  183Dividend
  Reinvestment Plan
  14,549
  1
  238
  
  239Net
  Income
  
  
  
  7,705
  7,705Dividends
  Paid
  
  
  
  (6,085)
  (6,085)BALANCE
  AT DECEMBER 31, 2000
  13,878,568
  $1,388
  $5,473
  $70,496
  $77,357



The accompanying notes are an integral
part of the consolidated financial statements.

HickoryTech
and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ACCOUNTING POLICIESThe accounting policies of Hickory Tech
Corporation (HickoryTech) are in conformity with generally accepted accounting
principles and, where applicable, conform to the accounting principles as
prescribed by federal and state telephone utility regulatory authorities. HickoryTech
presently gives accounting recognition to the actions of regulators where
appropriate, as prescribed by Statement of Financial Accounting Standards
(SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation.

Basis of Consolidation- The consolidated financial statements of HickoryTech include Hickory Tech
Corporation and its subsidiaries. HickoryTech operates in the following five
business segments:  (i) Telephone
Sector, (ii) Communications Services Sector, (iii) Wireless Services Sector,
(iv) Information Solutions Sector (formerly Billing/Data Services Sector) and
(v) Enterprise Solutions Sector (formerly Communications Products Sector). An
investment in an unconsolidated partnership for the Information Solutions
Sector is accounted for using the equity method. All intercompany transactions
have been eliminated from the consolidated financial statements.

Revenue Recognition- Revenues are generally recognized when services are earned, rendered or
products are delivered to customers.  Customers
are billed as of monthly cycle dates. Telephone Sector revenues are derived
from charges for network access to HickoryTechs local exchange telephone
network, from subscriber line charges and from contractual arrangements for
services such as billing and collection and directory advertising.  Interstate network access revenues are
realized under pooling arrangements with other telephone companies and are
divided among the companies based on respective costs and investments to
provide the services. Management believes that recorded amounts represent
reasonable estimates of the final distribution from these pools. Up-front fees
primarily include installation and activation fees associated with provisioning
communications services to subscribers and carriers. During 1998 and 1999,
up-front fees were recognized upon the completion of the related provisioning
service. During 2000, this revenue was deferred and is being recognized over
the corresponding customer relationship period (see Note 9). Revenue in the
Enterprise Solutions Sector earned on major installation and change contracts
is recognized on the percentage of completion method.

Estimates- The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and disclosure of contingent assets and liabilities. The
estimates and assumptions used in the accompanying consolidated financial
statements are based upon management's evaluation of the relevant facts and
circumstances as of the date of the financial statements. Actual results may
differ from these estimates.

Reclassifications- Certain expenses reported as cost of sales in 1999 and 1998 have been
reclassified to operating expenses to conform to the 2000 presentation. These
reclassifications reduced cost of sales and increased other operating expenses
for 1999 and 1998 by $7,068,000 and $4,912,000, respectively. These
reclassifications had no effect on previously reported operating income, net
income or cash flows. Cost of sales, as reclassified, relates to the Enterprise
Solutions Sector.

Property, Plant and Equipment- Property, plant and equipment are recorded at original cost of acquisition or
construction.   Major replacements and
betterments are capitalized. Repairs of all property, plant and equipment are
charged to expense as incurred. When regulated incumbent local exchange carrier
(ILEC) telephone assets are sold or retired, the assets and related accumulated
depreciation are removed from the accounts and any gains or losses on
disposition are amortized with the remaining net investment in telephone plant.

The components of property, plant and
equipment are summarized as follows:

(Dollars in Thousands)
  2000
  1999ILEC Telephone Plant (Telephone Sector)
  $143,601
  $128,342CLEC Telephone Plant(Comm. Services Sector)
  31,052
  12,162Wireless Plant (Wireless Services
  Sector)
  20,945
  15,964Other Property and Equipment
  7,764
  8,511Total
  203,362
  164,979Less Accumulated Depreciation
  86,672
  76,793Property, Plant and Equipment, Net
  $116,690
  $88,186Depreciation for
financial statement purposes is determined using the straight-line method based
on the lives of the various classes of depreciable assets. The composite
depreciation rates on ILEC telephone plant for the three years ended December
31, 2000, were 6.0%, 6.0%, and 6.2%. All other property, plant and equipment is
depreciated over estimated useful lives of three to twenty years, and buildings
are depreciated over their estimated useful lives of thirty-nine years.

Cash Equivalents- Cash equivalents include short-term investments with original maturities of
three months or less.

Investments- Investments include $10 million of non-interest bearing Rural Telephone
Finance Cooperative (RTFC) Subordinated Capital Certificates (SCCs) accounted
for under the cost method of accounting. 
This method requires HickoryTech to periodically evaluate whether a
non-temporary decrease in value of the investment has occurred, and if so, to
write this investment down to its net realizable value.

Investments also
include investments accounted for using the equity method of accounting.  Other investments are carried at lower of
cost or net realizable value.

Inventories- Inventories, which consist of equipment for resale, materials and supplies,
are stated at the lower of average cost or market.

Income Taxes- HickoryTech accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes, which requires an asset and liability approach
to financial accounting and reporting for income taxes. Accordingly, deferred
tax assets and liabilities arise from the differences between the tax basis of
an asset or liability and its reported amount in the financial statements.
Deferred tax amounts are determined by using the tax rates expected to be in
effect when the taxes will actually be paid or refunds received, as provided
under currently enacted tax law. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense or benefit is the tax payable or refundable, respectively,
for the period plus or minus the change in deferred tax assets and liabilities
during the period.

Intangible Assets- The components of HickoryTechs intangible assets, along with the periods in
which each component is being amortized, are shown in the following table. FCC
licenses consist of the cost of acquiring the cellular licenses of RSA10 and
Metro A-2. Goodwill consists of costs in excess of net assets acquired.
Customers include the value assigned to customer lists acquired. Amortization
expense is computed using the straight-line method based on the estimated
useful life of the asset. HickoryTech reviews its intangibles whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. HickoryTech estimates the future cash flows expected to result
from the asset, and if the sum of the expected net undiscounted future cash
flows is less than the carrying amount of the intangible, HickoryTech
recognizes an impairment loss by reducing the amortized cost of the intangible
to its estimated fair value. To date, HickoryTech has not recognized impairment
losses on any intangibles.



(Dollars in Thousands)
  2000
  1999
  
  LivesFCC
  Licenses
  $70,093
  $70,093
  
  40 yearsGoodwill
  33,245
  33,245
  
  40 yearsCustomers
  1,734
  880
  
  5 - 8 yearsSoftware
  1,701
  251
  
  3 - 5 yearsOther
  Intangibles
  2,221
  1,014
  
  5 - 8 yearsTotal
  108,994
  105,483Less
  AccumulatedAmortization
  8,391
  5,252Intangible
  Assets, Net
  $100,603
  $100,231Capitalized Software Costs- Capitalized software costs consist of costs to develop software by
HickoryTechs Information Solutions Sector for internal use by the Telephone
Sector, the Communications Services Sector and the Wireless Services Sector as
well as for external sales to the communications industry. Software costs are
capitalized in accordance with SFAS No. 86, Accounting for the Costs of
Computer Software to Be Sold, Leased or Otherwise Marketed. HickoryTech begins
to capitalize costs related to internally developed software once technological
feasibility has been established and continues capitalization until the product
becomes available for general release to customers. There were capitalized
software costs of $1,701,000 and $251,000 at December 31, 2000 and 1999,
respectively.  Amortization expense
relating to the capitalized software costs was $133,000 in 2000. There was no
amortization expense relating to capitalized software costs in 1999 as the
product was not available for general release to customers. Capitalized
software costs are amortized on a product-by-product basis over the estimated
economic life of the product.

Comprehensive Income- SFAS No. 130 requires that a full set of general purpose financial statements
include the reporting of comprehensive income. Comprehensive income is
comprised of foreign currency items, minimum pension liability adjustments and
unrealized gains and losses on certain investments in debt and equity
securities. During the years ended December 31, 2000, 1999 and 1998,
comprehensive income was comprised solely of net income.

Advertising Expense- Advertising is expensed as incurred. Advertising expense charged to
operations was $1,050,000, $669,000 and $456,000 in 2000, 1999 and 1998,
respectively.

Per Share Amounts- Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year. Shares
used in the earnings per share assuming dilution calculation are based on the
weighted average number of shares of common stock outstanding during the year
increased by potentially dilutive common shares. Potentially dilutive common
shares include stock options and stock issued under the employee stock purchase
plan (ESPP).

2000
  1999
  1998Weighted
  AverageShares
  Outstanding
  13,832,502
  13,746,053
  13,637,058Stock
  Options
  89,305
  24,770
  25,389Stock
  Subscribed (ESPP)
  1,208
  1,672
  1,659Total
  DilutiveShares
  Outstanding
  13,923,015
  13,772,495
  13,664,106

Options to
purchase 15,750 shares in 2000, 63,500 shares in 1999 and 33,000 shares in 1998
were not included in the computation of earnings per share assuming dilution
because their effect on earnings per share would have been antidilutive.

Dividends per
share is based on the quarterly dividend per share as declared by the
HickoryTech Board of Directors.

NOTE 2 - ACQUISITIONS AND
DISPOSITIONSOn October 9, 2000, HickoryTech completed
the acquisition of the dial-up internet customer accounts, along with certain
assets and liabilities, of Internet Connections, a Mankato internet service
provider, in exchange for $870,000 in cash. Internet Connections had
approximately 5,000 internet customers in southern Minnesota and the Twin
Cities area. The acquisition was accounted for under the purchase method of
accounting. HickoryTech paid for the acquisition with available funds.
HickoryTech allocated $840,000 of the purchase price to customers (intangible
asset), $100,000 to other intangible assets and $70,000 to net liabilities. The
operations of the Internet Connections dial-up internet business are included in
the Telephone Sector.  Customers will be
amortized over a period of eight years.

On July 21,
2000, HickoryTech announced plans to sell its local telephone exchange in
Amana, Iowa.  The Amana operation, known
as Amana Colonies Telephone Company (ACTC), serves approximately 1,500 access
lines in the seven communities of the Amana Colonies in east central Iowa.  The sale is subject to approval by the
Federal Communications Commission. 
HickoryTech expects that the sale will occur in the second quarter of 2001.  The operations of ACTC are included in the
Telephone Sector.  ACTC recorded
revenues of $1,539,000 in 2000, $1,525,000 in 1999 and $1,794,000 in 1998.

On June 1, 1999,
HickoryTech acquired the Metro A-2 cellular property.  The property surrounds the metropolitan Twin Cities area and is
located in five Minnesota counties and in one Wisconsin county. The population
of the serving area is 170,000. The acquisition was accounted for under the
purchase method of accounting. Accordingly, the purchase price has been
allocated to the assets acquired based upon their fair values. The total
purchase price was approximately $41,500,000. HickoryTech allocated $36,600,000
of the purchase price to the FCC license acquired and $4,900,000 to the
cellular network and cellular tower sites. HickoryTech financed $30,000,000 of
the acquisition from its revolving credit facility and paid the remainder of
the purchase price with available funds. The operations of the Metro A-2
acquisition are included in the Wireless Services Sector.

On May 12, 1999,
HickoryTech sold its 6.4% equity interest in Midwest Wireless Communications,
LLC (MWC), a rural cellular telecommunications provider in southern Minnesota,
to MWC. HickoryTech recorded a pre-tax gain on the sale of $9,207,000 ($5,213,000
net of tax). The investment was accounted for under the equity method and was
included with Investments prior to its sale in May 1999.  The equity interest was reflected in the
operations of the Telephone Sector.

NOTE 3 - FINANCIAL INSTRUMENTSThe carrying value of financial
instruments recorded on the balance sheet, except debt instruments,
approximates its fair value due to the short maturity of these instruments. The
fair value of HickoryTechs long-term debt, after deducting current maturities,
is estimated to be $145,635,000 at December 31, 2000 and $110,414,000 at
December 31, 1999, compared to carrying values of $147,433,000 and
$111,149,000, respectively. The fair value estimates are based on the overall
weighted rates and maturity compared to rates and terms currently available in
the long-term financing markets.

NOTE 4 - BUSINESS SEGMENTSHickoryTechs operations are conducted in
five business segments as follows: (i) Telephone Sector, (ii) Communications
Services Sector, (iii) Wireless Services Sector, (iv) Information Solutions
Sector (formerly Billing/Data Services Sector) and (v) Enterprise Solutions
Sector (formerly Communications Products Sector). The Telephone Sector provides
telephone services to Mankato and adjacent areas of south central Minnesota, to
the Amana Colonies in east central Iowa and to eleven communities in northwest
Iowa. The Telephone Sector also operates fiber optic cable transport facilities
in Minnesota. The Communications Services Sector offers an alternative choice
for local telecommunications service, known as CLEC (Competitive Local Exchange
Carrier) service in the telecommunications industry, to customers in Minnesota
and Iowa not currently in HickoryTechs Telephone Sectors service area. In
addition, the Communications Services Sector resells long distance service to
Minnesota and Iowa subscribers. The Wireless Services Sector provides cellular
telephone service to seven counties in south central Minnesota and a service
area around the Minneapolis/St. Paul, Minnesota metropolitan area. The
Information Solutions Sector provides data processing and related services to
HickoryTechs other sectors and to other external telephone companies,
municipalities and utilities. The Enterprise Solutions Sector designs, sells, installs
and services business telephone systems and data communications equipment
primarily in metropolitan Minneapolis/St. Paul, Minnesota.

Business segment
information for the years 2000, 1999 and 1998 is as follows.

BUSINESS SEGMENT DATA
Years Ended December 31

(Dollars in Thousands)

CorporateComm.
  Wireless
  Information
  Enterprise
  andTelephone
  Services
  Services
  Solutions
  Solutions
  Eliminations
  Consolidated2000Revenue
  from Unaffiliated Customers
  $54,365
  $6,070
  $18,910
  $4,287
  $18,511
  $
  $102,143Intersegment
  Revenues
  3,151
  960
  
  4,668
  
  (8,779)
  Total
  57,516
  7,030
  18,910
  8,955
  18,511
  (8,779)
  102,143Depreciation
  and Amortization
  8,272
  675
  4,277
  380
  337
  327
  14,268Operating
  Income/(Loss)
  25,885
  (5,208)
  2,226
  706
  (308)
  (958)
  22,343Equity
  in Net Income of Investees
  
  
  
  23
  
  
  23Interest
  Expense
  32
  
  2
  
  1
  9,768
  9,803Income
  Taxes
  10,558
  (2,172)
  907
  295
  (174)
  (4,127)
  5,287Extraordinary
  Loss on Debt Extinguishment
  
  
  
  
  
  (233)
  (233)Cumulative
  Effect of Accounting Change
  (20)
  
  
  
  
  
  (20)Net
  Income/(Loss)
  15,184
  (3,125)
  1,227
  427
  (250)
  (5,758)
  7,705Identifiable
  Assets
  106,624
  31,468
  86,108
  4,585
  9,989
  16,713
  255,487Investment
  in Equity Method Investees
  
  
  
  87
  
  
  87Capital
  Expenditures
  15,336
  18,889
  4,981
  123
  157
  176
  39,6621999Revenue
  from Unaffiliated Customers
  $50,219
  $3,098
  $16,808
  $4,368
  $22,576
  $
  $97,069Intersegment
  Revenues
  3,936
  547
  
  3,146
  
  (7,629)
  Total
  54,155
  3,645
  16,808
  7,514
  22,576
  (7,629)
  97,069Depreciation
  and Amortization
  7,561
  285
  3,204
  254
  319
  224
  11,847Operating
  INCOME/(Loss)
  23,867
  (4,149)
  3,347
  (486)
  1,137
  (2,097)
  21,619Equity
  in Net Income of Investees
  445
  
  
  85
  
  
  530Interest
  Expense
  41
  
  1
  
  
  6,471
  6,513Income
  Taxes
  10,005
  (1,765)
  1,350
  (157)
  392
  775
  10,600Net
  Income/(Loss)
  14,431
  (2,523)
  1,931
  (221)
  565
  483
  14,666Identifiable
  Assets
  95,655
  12,426
  85,136
  4,041
  10,939
  6,607
  214,804Investment
  in Equity Method Investees
  
  
  
  764
  
  
  764Capital
  Expenditures
  12,935
  10,912
  4,251
  148
  269
  16
  28,5311998Revenue
  from Unaffiliated Customers
  $48,352
  $1,631
  $7,907
  $7,962
  $28,721
  $
  $94,573Intersegment
  Revenues
  743
  
  
  2,571
  
  (3,314)
  Total
  49,095
  1,631
  7,907
  10,533
  28,721
  (3,314)
  94,573Depreciation
  and Amortization
  7,584
  31
  1,290
  263
  350
  207
  9,725Operating
  Income/(Loss)
  22,274
  (1,581)
  1,839
  1,776
  2,396
  (2,012)
  24,692Equity
  in Net Income of Investees
  1,026
  
  
  129
  
  
  1,155Interest
  Expense
  165
  
  1
  
  
  4,430
  4,596Income
  Taxes
  9,544
  (655)
  780
  840
  904
  (2,120)
  9,293Net
  Income/(Loss)
  13,790
  (922)
  1,099
  1,184
  1,323
  (2,948)
  13,526Identifiable
  Assets
  94,029
  2,381
  43,314
  4,568
  13,432
  3,705
  161,429Investment
  in Equity Method Investees
  3,304
  
  
  680
  
  
  3,984Capital
  Expenditures
  7,572
  270
  3,724
  247
  345
  32
  12,190

NOTE 5 - STOCK COMPENSATION
PLANSUnder
the terms of an employee stock purchase plan, participating employees may
acquire shares of common stock through payroll deductions of not more than 10%
of their compensation. The price at which the shares can be purchased is 85% of
the lower fair market value for such shares as measured on two specified dates
in each plan year. As of December 31, 2000, there were 900,000 common shares
reserved for this plan and 686,582 shares still available for issuance. At
December 31, 2000, employees had subscribed to purchase approximately
22,000 shares in the current plan year ending August 31, 2001.

Under the terms of a corporate retainer
stock plan for directors, participating directors may acquire shares of common
stock in exchange for their quarterly retainers. The price at which the shares
can be purchased is 100% of the fair market value for such shares on the date
of purchase. As of December 31, 2000, there were 300,000 common shares reserved
for this plan and 271,488 shares still available for future grants.

HickoryTech also offers a directors
stock option plan to attract and retain outside directors. The plan provides
for each outside director to receive fully vested options to purchase 3,000
shares of common stock of HickoryTech at an exercise price equal to the fair
market value on the date of grant if HickoryTech meets pre-established
financial objectives. The options may be exercised no later than ten years
after the date of grant. As of December 31, 2000, there were 300,000 common
shares reserved for this plan and 211,000 shares available for grant.

HickoryTechs stock award plan provides
for the granting of incentive stock options, non-qualified stock options and
stock awards. The plan provides for stock awards based on the attainment of
certain financial targets and for individual achievements. In addition, for one
component of the plan, HickoryTech utilizes a trust account for the funding of
a long-term performance award. In 2000, HickoryTech issued 12,038 shares to the
trust in exchange for $170,000. The stock options issued under this plan may be
exercised no later than ten years after the date of grant, with one-third of
the options vesting each year. As of December 31, 2000, there were 1,750,000
common shares reserved for this plan and 1,303,826 shares available for grant.

HickoryTech has elected to apply
Accounting Principles Board Opinion No. 25 and related interpretations in
accounting for its employee and directors stock compensation plans. If
HickoryTech had elected to recognize compensation cost based on the fair value
of the options as prescribed by SFAS No. 123, the following results would have
occurred using the Black-Scholes option-pricing model with the following listed
assumptions:



(Dollars in Thousands, Except Per Share Amounts)2000
  1999
  1998Pro Forma Net Income
  $7,280
  $14,514
  $13,366Pro Forma Basic EPS
  $0.53
  $1.06
  $0.98Pro Forma Diluted EPS
  $0.52
  $1.06
  $0.98Volatility
  30.6%
  24.8%
  20.7%Dividend Yield
  3.1%
  3.9%
  3.3%Risk-Free Interest Rates
  6.4%
  5.5%
  5.6%Expected Life in Years
  7
  7
  7A summary of the stock option activity of the
plans is as follows:Shares2000
  1999
  1998Outstanding atBeginning of
  Year
  226,781
  153,984
  126,984Granted
  137,750
  100,000
  39,000Exercised
  (15,384)
  (12,313)
  (4,002)Forfeited
  (5,366)
  (14,890)
  (7,998)Outstanding at End of Year
  343,781
  226,781
  153,984Exercisable at End of Year
  214,736
  119,083
  86,802Weighted Average Fair Value of Options
   Granted During the Year
  $4.66
  $2.59
  $3.00

Weighted
  AverageExercise
  Price2000
  1999
  1998Outstanding atBeginning of Year
  $11.07
  $10.72
  $9.97Granted
  14.66
  11.36
  13.38Exercised
  11.81
  9.88
  9.39Forfeited
  11.87
  10.40
  12.39Outstanding at End of Year
  $12.46
  $11.07
  $10.72Exercisable
  at End of Year
  $11.81
  $10.99
  $10.22The
following table provides certain information with respect to stock options
outstanding at December 31, 2000:Range of 
  Exercise Prices
  Stock
  Options Outstanding
  Weighted
  Average Exercise Price
  Weighted
  Average Remaining Contractual Life$9.00-$12.00
  154,131
  $10.24
  6.3 years$12.00-$16.00
  173,900
  13.74
  8.8 years$16.00-$21.00
  15,750
  20.12
  9.9 years343,781
  $12.46
  7.7 yearsThe
following table provides certain information with respect to stock options
exercisable at December 31, 2000:Range of 
  Exercise Prices
  Stock
  Options Exercisable
  Weighted
  Average 
  Exercise Price$9.00-$12.00
  110,632
  $10.11$12.00-$16.00
  104,104
  13.62$16.00-$21.00
  
  214,736
  $11.81All
stock options granted in 2000, 1999 and 1998 had an exercise price equal to the
fair market value of Hickory Techs common stock on the date of grant.Other
stock award activity is as follows:2000
  1999
  1998Stock Awards Granted
  17,750
  23,903
  20,223Weighted Average Fair Value of Stock
  Awards
  Granted During the Year
  $14.76
  $12.55
  $12.04NOTE 6 - DEBT AND OTHER
OBLIGATIONSLong-term debt consists of the following:


(Dollars in Thousands)
  2000
  1999Senior Notes to Institutional Investors,7.11% Repaid June 2000
  
  $
  $40,000Revolving Credit Facility
  
  148,000
  70,500Notes Payable to Rural Utilities
  Service, 2% Due November 2003
  
  585
  773Notes Payable to Rural Telephone Bank,
  4%  Due April 2007
  
  65
  88Total
  
  148,650
  111,361Less Current Maturities
  
  1,217
  212Long–Term Debt
  
  $147,433
  $111,149

In September
2000, HickoryTech amended and increased its $125,000,000 unsecured revolving
credit facility with a syndicate of banks to a $225,000,000 credit facility.
The credit facility is comprised of a $125,000,000 revolving credit component
and a $100,000,000 term loan component. 
The available line of credit on the $125,000,000 revolving credit
component decreases in increments beginning in March 2004 with a final maturity
date in September 2008.  The term loan
requires equal quarterly principal payments of $250,000 during the period March
2001 to December 2008, and $23,000,000 of principal payments per quarter in
2009. The weighted average interest rate associated with this credit facility
varies with LIBOR and certain other rates and was 8.69% at December 31, 2000.
The $100,000,000 term loan component has a provision whereby HickoryTech
periodically receives patronage capital refunds depending on the amount of
interest paid. This patronage refund is recorded as an offset to interest
expense and amounted to $399,000 in 2000. As of December 31, 2000, HickoryTech
had drawn $148,000,000 on this credit facility, comprised of $100,000,000 in
term loan and $48,000,000 in revolving credit, and had $77,000,000 of available
use of the revolving credit component. The credit facility is collateralized by
property, plant and equipment of certain HickoryTech subsidiaries and contains
covenants relating to cash flow and capitalization.

At December 31,
1999, HickoryTech had a $90,000,000 unsecured revolving credit facility with an
interest rate that varied with LIBOR rates and was 7.85% at year-end.
HickoryTech had drawn $70,500,000 on this credit facility at December 31, 1999.
This credit facility was increased to $125,000,000 and then subsequently to
$225,000,000 in 2000.

In June 2000,
HickoryTech amended and increased its $90,000,000 unsecured revolving credit
facility with a syndicate of banks to $125,000,000. Proceeds from the increased
credit facility were used to repay $40,000,000 of senior unsecured notes dated
April 1997. As a result of the extinguishment of the senior unsecured notes,
HickoryTech recorded an extraordinary loss of $233,000, net of an income tax
benefit of $158,000.

As of December
31, 2000, HickoryTech had $650,000 of outstanding debt remaining with the Rural
Utilities Service and the Rural Telephone Bank for the financing of telephone
property, plant and equipment of Mid-Communications, Inc.

Annual
requirements for principal payments for the four years subsequent to 2001 are
as follows: 2002 - $1,222,000; 2003 - $1,211,000; 2004 - $1,000,000 and 2005 -
$1,000,000.

HickoryTech owns
most of its major facilities, but does lease certain office space, land and
equipment under principally noncancelable operating leases.  Rental expense was $2,295,000 in 2000,
$1,619,000 in 1999 and $1,140,000 in 1998. At December 31, 2000, future minimum
lease obligations for the next five years are as follows: 2001 - $1,425,000;
2002 - $787,000; 2003 - $564,000; 2004 - $351,000 and 2005 - $48,000.

NOTE 7 - EMPLOYEE RETIREMENT
BENEFITS

Employees who
meet certain service requirements are covered under a defined contribution
retirement savings plan, which includes IRS Section 401(k) provisions.
HickoryTech contributes up to 6.0% of the employees eligible compensation,
based on the employee's voluntary contribution. HickoryTech also offers an
employee profit sharing provision with the plan for all employees who are
eligible to participate in the employee retirement savings plan and are not
covered by other types of incentive pay plans. Under this provision,
HickoryTech contributes up to 2.0% of the eligible employee group compensation
into retirement savings plan accounts if the HickoryTech sectors achieve
specific earnings targets. HickoryTech contributions and costs for the
retirement savings plan were $1,018,000 in 2000, $1,007,000 in 1999 and
$871,000 in 1998.

In addition to
providing retirement savings benefits, HickoryTech provides postretirement
health care and life insurance benefits for certain employees. HickoryTech is
not currently funding these postretirement benefits, but has accrued these
liabilities.

(Dollars in Thousands)
  2000
  1999Change in Benefit ObligationBenefit Obligation at Beginning of Year
  
  $1,448
  $1,229Net Periodic Benefit Cost
  
  369
  334Benefits Paid
  
  (105)
  (115)Benefit Obligation at End of Year
  
  $1,712
  $1,448Accumulated Postretirement Benefit Obligation
  
  $2,693
  $2,707Unrecognized Transition Obligation
  
  (720)
  (780)Unrecognized Prior Service Cost
  
  130
  142Unrecognized Cumulative Net Loss
  
  (391)
  (621)Accrued Benefit Cost
  
  $1,712
  $1,448

(Dollars in Thousands)
  2000
  1999
  1998Components of Net Periodic Benefit CostService Cost
  $117
  $92
  $80Interest Cost
  186
  173
  172Amortization of Unrecognized:Transition Obligation
  60
  60
  60Prior Service Cost
  (12)
  (12)
  (12)Cumulative Net Loss
  18
  21
  17Net Periodic Benefit Cost
  $369
  $334
  $317The health care
cost trend rate used in determining the accumulated postretirement benefit
obligations was 8%, decreasing to 6% in the year 2004 and then decreasing to 5%
for the years thereafter.  An increase
of one percentage point in the assumed health care cost trend would increase
the accumulated postretirement benefit obligation at December 31, 2000 by
$450,000 and the net periodic postretirement benefit cost for the year then
ended by $63,000. A decrease of one percentage point in the assumed health care
cost trend would decrease the accumulated postretirement benefit obligation at
December 31, 2000 by $362,000 and the net periodic postretirement benefit cost
for the year then ended by $49,000.

A weighted average discount rate of 7.50%
was used to develop net periodic postretirement benefit cost and the actuarial
present value of accumulated benefit obligations.

NOTE 8 - INCOME TAXESThe
income tax provision (benefit) for the years ended December 31, 2000, 1999 and
1998 include the following components:

(Dollars in Thousands)
  2000
  1999
  1998Current Income Taxes:Federal
  $1,936
  $5,995
  $6,175State
  601
  1,861
  1,917Deferred Income Taxes:Federal
  1,967
  2,094
  984State
  611
  650
  305Investment Tax Credit
  
  
  (88)Total Income Taxes
  $5,115
  $10,600
  $9,293

Deferred tax
liabilities and assets are comprised of the following:

(Dollars in Thousands)
  2000
  1999Tax Liabilities:Depreciation and Fixed Assets
  $6,256
  $5,611Intangible Assets
  5.206
  3,111Gross Deferred Tax Liability
  11,462
  8,722Tax Assets:Deferred Compensation and Postretirement Benefits
  1,905
  1,684Receivables and Inventories
  767
  720Accrued Liabilities
  309
  651Investments
  137
  228Other
  331
  4Gross Deferred Tax Asset
  3,449
  3,287Net
  Deferred Tax Liability
  8,013
  5,435Current Deferred Tax Asset
  1,404
  1,222Net Non-Current Deferred Tax Liability
  $9,417
  $6,657The differences
which cause the effective tax rate to vary from the statutory federal income
rates are as follows:

2000
  1999
  1998Statutory Tax Rate
  35.0%
  35.0%
  35.0%Effect of:State Income Taxes Net of Federal Tax Benefit
  6.4
  6.3
  6.8Amortization of Investment Tax Credit
  
  
  (0.4)Other, Net
  (1.5)
  0.6
  (0.7)Effective Tax Rate
  39.9%
  41.9%
  40.7%

NOTE 9 - CHANGE IN ACCOUNTING
PRINCIPLEIn December 1999, the SEC issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements, which, as amended by SAB No. 101A and SAB No. 101B, provides
additional guidance in applying generally accepted accounting principles for
revenue recognition. Implementation of SAB No. 101 required HickoryTech to
defer revenues resulting from up-front fees, including installation and
activation fees, and to also defer the associated direct costs. These deferred
revenues and costs are now recognized ratably over the corresponding customer
relationship period. These customer relationship periods range from one to
seven years. Prior to implementation of SAB No. 101 in the fourth quarter of
2000, HickoryTech recognized revenues resulting from up-front fees and the
corresponding direct costs in the period that installation and activation
services were provided. As permitted by SAB No. 101, HickoryTech accounted for
the change in accounting principle prospectively as a cumulative effect of
accounting change retroactively to January 1, 2000. The cumulative effect of
accounting change was a loss of $20,000, net of a tax benefit of $14,000. For
the year ended December 31, 2000, HickoryTech deferred up-front fees and direct
costs as follows:

Telephone
  Comm. Services
  WirelessUp-Front Fees
  $655,000
  $49,000
  $121,000Direct Costs
  $617,000
  $39,000
  $121,000The following
reflects pro forma results of operations if SAB No. 101 had been applied
retroactively for the years ended December 31:

2000
  1999
  1998Income Before Extraordinary Item
  $7,958
  $14,663
  $13,524Net Income
  $7,725
  $14,663
  $13,524Basic Earnings Per Share:Income Before Extraordinary Item
  $0.58
  $1.07
  $0.99Net
  Income
  $0.56
  $1.07
  $0.99Fully Diluted Earnings Per Share:Income Before Extraordinary Item
  $0.57
  $1.06
  $0.99Net
  Income
  $0.55
  $1.06
  $0.99NOTE 10 - QUARTERLY FINANCIAL
INFORMATION (Unaudited)(Dollars in
Thousands, Except Per Share Amounts)

2000
  (as reported)Total
  4th
  3rd
  2nd
  1stOperating Revenues
  $102,143
  $26,002
  $25,861
  $26,205
  $24,075Operating Income
  22,343
  5,259
  5,895
  5,747
  5,442Income Before Extraordinary
  Item and Cumulative Effect
  7,958
  1,498
  2,086
  2,291
  2,083Net Income
  7,705
  1,478
  2,086
  2,058
  2,083Fully Diluted Earnings Per Share*
  $0.57
  $0.10
  $0.15
  $0.17
  $0.15Dividends Per Share
  $0.44
  $0.11
  $0.11
  $0.11
  $0.11



2000  (as restated for SAB No. 101)Total
  4th
  3rd
  2nd
  1stOperating Revenues
  $102,143
  $26,678
  $25,610
  $26,028
  $23,827Operating Income
  22,343
  5,298
  5,884
  5,732
  5,429Income Before
  Extraordinary Item and Cumulative Effect
  7,958
  1,522
  2,078
  2,283
  2,075Net Income
  7,705
  1,502
  2,078
  2,050
  2,075Fully Diluted Earnings Per Share*
  $0.57
  $0.10
  $0.15
  $0.17
  $0.15Dividends Per Share
  $0.44
  $0.11
  $0.11
  $0.11
  $0.11

1999Total
  4th
  3rd
  2nd
  1stOperating Revenues
  $97,069
  $24,862
  $24,860
  $25,188
  $22,159Operating Income
  21,619
  5,513
  5,400
  5,438
  5,268Net Income
  14,666
  2,117
  2,106
  7,644
  2,799Fully Diluted Earnings Per Share
  $1.06
  $0.15
  $0.15
  $0.56
  $0.20Dividends Per Share
  $0.44
  $0.11
  $0.11
  $0.11
  $0.11* 2000 EPS
excludes extraordinary item and cumulative effect.

HickoryTech 2000 Report To Shareholders

SELECTED FINANCIAL AND OPERATING DATA

(Dollars
in Thousands, Except Per Share Amounts)

FOR THE YEAR:
  2000
  1999
  1998
  1997
  1996Operating Revenues (A)Telephone
  $54,365
  $50,219
  $48,352
  $42,835
  $34,334Communications Services
  6,070
  3,098
  1,631
  
  Wireless Services
  18,910
  16,808
  7,907
  
  Information Solutions
  4,287
  4,368
  7,962
  9,474
  9,573Enterprise Solutions
  18,511
  22,576
  28,721
  24,153
  22,655Total Operating Revenues
  $102,143
  $97,069
  $94,573
  $76,462
  $66,562Net Income
  $7,705
  $14,666
  $13,526
  $15,479
  $10,419Net Income Before Gains/Losses (B)
  $7,797
  $9,453
  $12,715
  $11,774
  $10,419PER SHARE:Fully Diluted Earnings Per ShareBefore
  Gains/Losses (B) (C)
  $0.56
  $0.68
  $0.93
  $0.85
  $0.70Dividends Per Share (C)
  $0.44
  $0.44
  $0.44
  $0.40
  $0.37AT YEAR END:Total Assets
  $255,487
  $214,804
  $161,429
  $112,384
  $71,263Shareholders Equity
  $77,357
  $74,476
  $63,629
  $55,562
  $52,736Total Debt, Long-Term and Current
  $148,650
  $111,361
  $76,042
  $41,964
  $1,089Debt
  Ratio (D)
  65.8%
  59.9%
  54.4%
  43.0%
  2.0%CUSTOMER DATA (year end):ILEC
  Access Lines (E)
  67,120
  64,969
  61,346
  59,223
  44,583CLEC
  Access Lines (F)
  8,283
  3,704
  344
  
  Wireless Customers (G)
  25,698
  20,309
  15,955
  
  Internet Customers (H)
  12.129
  5,835
  3,195
  
  Long
  Distance Subscribers (I)
  18,366
  12,146
  6,012
  
  OTHER DATA:Employees (year end)
  552
  502
  479
  452
  425Capital Expenditures
  $39,662
  $28,531
  $12,190
  $12,135
  $10,100Shares Outstanding (C) (year end)
  13,878,568
  13,787,416
  13,662,216
  13,602,357
  14,370,687Share Price (J) (year end)
  $20.5000
  $15.0000
  $12.6250
  $11.6875
  $9.1250Shareholders (K)
  3,300
  N/A
  N/A
  N/A
  N/A

(A)
  Acquisitions of Amana Colonies Telephone
  Company in 1994, Heartland Telecommunications Company of Iowa and Datacomm
  Products in 1997, Minnesota Southern Wireless Company in 1998 and Metro A-2
  (partial Minneapolis/St. Paul area) cellular telephone business in 1999 and
  the disposition of HickoryTechs subsidiary, Digital Techniques, Inc. (DTI),
  in 1998 have affected HickoryTechs revenue growth.(B)
  Excludes one-time after-tax gains in 2000 of
  $161,000 or $0.01 per share from sale of DTI; in 1999 of $5.2 million or
  $0.38 per share from the sale of a cellular partnership interest; in 1998 of
  $811,000 or $0.06 per share from the sale of DTI and unrelated securities; in
  1997 of $3.7 million or $0.27 per share from the sale of DirecTV assets. 2000
  also excludes $253,000 or $0.02 per share from the extraordinary loss and
  cumulative effect charge.(C)
  All per share calculations and shares
  outstanding have been restated for the 1998 3-for-1 stock split.(D)
  Debt Ratio = Total Debt /  (Total Debt + Ending Shareholders
  Equity).(E)
  ILEC Lines refer to the local exchange
  telephone access lines in the Telephone Sector. ILEC Lines include ISDN (High
  Speed Data) lines of 2,198 in 2000 and 1,683 in 1999.(F)
  CLEC Lines refer to the competitive local
  exchange telephone access lines in the Communications Services Sector.(G)
  Wireless Customers refer to the cellular
  service subscribers in the Wireless Services Sector.(H)
  Internet Customers are serviced within the
  Telephone Sector. 2000 includes 4,834 customers acquired from Internet
  Connections.(I)
  Long Distance services are provided by the
  Telephone Sector and the Communications Services Sector.(J)
  Price is the last day closing price for 2000
  and 1999 and the last five-day closing price average for the years 1996
  through 1998.(K)
  Number of Shareholders is approximate total of
  Company registrations and street name accounts. Data prior to 2000 is not
  available.