North Pittsburgh Systems, Inc. Reports First Quarter 2006 Earnings
May 10 2006 - 1:46PM
Business Wire
North Pittsburgh Systems, Inc. (NASDAQ:NPSI) today announced net
income of $5,586,000, or $.37 per share, on operating revenues of
$26,723,000 for the first quarter of 2006. This compares to net
income of $4,689,000, or $.31 per share, on operating revenues of
$27,214,000 for the comparable period last year. NPSI's President,
Harry R. Brown, stated that the 19.1% increase in earnings was
attributable primarily to a decrease in depreciation expense, an
increase in earnings recorded from the Company's investments in
three wireless partnerships and an increase in income recorded from
the Company's temporary investments. Mr. Brown reported that
operating revenues decreased $491,000, or 1.8%, during first
quarter 2006 as compared to first quarter 2005. He said that the
decrease in revenues was partially attributable to a $294,000
decline in revenue generated from Primary Rate Interface (PRI)
circuits provisioned to Internet Service Providers in the Company's
edge-out markets and the associated decline in local reciprocal
compensation revenues that the Company earns from terminating the
PRI traffic. Access revenues also decreased $344,000 from the prior
year first quarter, mostly due to a decrease in overall access
minutes of use on the Company's network. These revenue decreases
were partially offset by the Company's ability to continue to
penetrate its Competitive Local Exchange Carrier's (CLEC) edge-out
markets and to the further expansion of broadband service
offerings. Operating expenses for first quarter 2006 decreased
$889,000, or 4.4%, from the comparable prior year period. Mr. Brown
noted that the decrease in operating expenses was predominantly due
to a $1,756,000 decrease in depreciation expense. During 2005, the
Company conducted a comprehensive review of the useful life
estimates of certain main categories of its Incumbent Local
Exchange Carrier (ILEC)'s telephone plant and equipment. Pursuant
to that review, effective October 1, 2005, the Company increased
its useful life estimates for certain classes of its plant and
equipment in order to more closely align the remaining depreciable
lives of these assets with their true economic lives. These changes
in useful life estimates had the impact of decreasing the Company's
quarterly depreciation expense by approximately $1,955,000. The
decrease in depreciation expense was partially offset by increases
in the direct costs associated with the growth in access lines and
access line equivalents in the Company's CLEC edge-out markets,
such as fees paid for leasing unbundled network elements in the
portions of the CLEC edge-out markets that the Company does not
wholly provision over its own facilities, and fees paid to
terminate the increased local, toll and Internet traffic generated
by the Company's growing customer base. In addition, combined labor
and benefit expenses increased approximately $400,000 during first
quarter 2006. Other income (net) for the first quarter of 2006
improved $1,113,000 from the prior year period due principally to a
$748,000 increase in equity income recorded from the Company's
partnership investments (which consist primarily of limited partner
interests in three wireless partnerships). In addition, the Company
benefited from a $333,000 increase in interest income earned on
higher cash and temporary investment balances and a $59,000
decrease in interest expense as a result of the Company's continued
debt reduction. Turning to operations, Mr. Brown reported that as
of March 31, 2006, the Company had a total of 69,187 access lines
in its ILEC territory, 61,434 CLEC access line equivalents
(including 2,477 DSL subscribers) and a total of 14,850 DSL
subscribers across all subsidiaries. He noted that although ILEC
access lines had decreased 3.7% over the past twelve-month period
ended March 31, 2006, total CLEC access line equivalents and
consolidated DSL subscribers had grown 3.5% and 18.4%,
respectively, over that same twelve-month period. Mr. Brown
concluded his remarks by commenting that the first quarter of 2006
marked the launch of a new construction effort in the Company's
ILEC territory to drive fiber optic capacity closer to homes and
businesses. He noted that these investments, which will enable the
Company to significantly increase its broadband capacity, would
serve as the platform for the Company's next generation of voice,
data and broadband-based applications. North Pittsburgh Systems,
Inc. has total assets of $160 million and operates an integrated
high-technology telecommunications business in Western Pennsylvania
providing competitive and local exchange services, long distance
and Internet services through its subsidiaries, North Pittsburgh
Telephone Company, Penn Telecom, Inc. and Pinnatech, Inc.
(Nauticom). In addition to historical information, this information
may contain forward-looking statements regarding events,
performance, financial trends and accounting policies that may
affect the Company's future operating results, financial position
or cash flows. Such forward-looking statements are based on
assumptions and estimates and involve risks and uncertainties.
Various factors could affect future results and could cause actual
results to differ materially from those expressed in or implied by
the forward-looking statements. Factors that could cause such a
difference include, but are not limited to: a change in economic
conditions; government and regulatory policies (at both the federal
and state levels); unanticipated higher capital spending for, or
delays in, the deployment of new technologies; the pricing and
availability of equipment, materials and inventories; changes in
the competitive environment; and the Company's ability to continue
to penetrate its edge-out markets. This information should be read
in conjunction with the Company's periodic reports filed with the
Securities and Exchange Commission, the most recent of which is the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2006. -0- *T NORTH PITTSBURGH SYSTEMS, INC.
SUMMARIZED FINANCIAL INFORMATION (Unaudited) (Amounts in Thousands
- Except Per Share Data) For the Three Months Ended March 31
-------------------- 2006 2005(a) --------- --------- Total
operating revenues $ 26,723 $ 27,214 Total operating expenses
19,395 20,284 --------- --------- Net operating income 7,328 6,930
Other income, net 2,260 1,147 --------- --------- Income from
continuing operations before income taxes 9,588 8,077 Provision for
income taxes 4,002 3,319 --------- --------- Income from continuing
operations 5,586 4,758 Loss from discontinued operations(a) - (69)
--------- --------- Net income $ 5,586 $ 4,689 ========= =========
Common shares outstanding 15,005 15,005 ========= ========= Basic
and diluted earnings per share $ .37 $ .31 ========= =========
Dividends per share $ .19 $ .18 ========= ========= March 31 Dec.
31 2006 2005 --------- --------- Cash and temporary investments $
56,088 $ 55,567 Total assets 160,309 159,200 Total debt 20,826
21,597 Total shareholders' equity 102,256 99,517 (a) During the
fourth quarter of 2005, the Company sold its business
telecommunications equipment operations, which engaged primarily in
selling and maintaining Nortel key systems and private branch
exchanges. The results of these operations have been classified as
discontinued operations, with prior year period amounts
reclassified to conform to the current year's presentation. These
reclassifications did not affect net income amounts. *T
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