North Pittsburgh Systems, Inc. (NASDAQ:NPSI) today announced net
income of $16,398,000, or $1.09 per share, on operating revenues of
$25,713,000 for the second quarter of 2006. This compares to net
income of $6,459,000, or $.43 per share, on operating revenues of
$28,741,000 for the comparable period last year. NPSI's President,
Harry R. Brown, noted that significant items that were not routine
in nature impacted both the second quarter of 2006 and second
quarter of 2005. During the second quarter of 2006, the Company's
North Pittsburgh Telephone Company subsidiary received a payment of
$19,622,000 from the Rural Telephone Bank (RTB) for the redemption
of its RTB stock and recognized a gain on the full amount of the
proceeds received, which, on an after tax basis, contributed
$11,479,000 to the net income recorded during the 2006 second
quarter, or $.76 per share. The second quarter of 2006 was also
favorably affected by a reduction of approximately $1,536,000
($899,000 after tax, or $.06 per share) in depreciation expense
that resulted from an increase in October 2005 in the estimates of
the remaining useful lives of certain assets. With respect to the
prior year period, the second quarter of 2005 was favorably
impacted by a settlement agreement reached with a carrier. The
$2,404,000 settlement, which covered the exchange of traffic
between the Company's Incumbent Local Exchange Carrier (ILEC) and
the carrier over a multi-year period of time, resulted in a
$1,604,000 increase in revenues and an $800,000 decrease in
operating expenses; on an after tax basis, the settlement
contributed $1,406,000 to the net income recorded during the 2005
second quarter, or $0.09 per share. Mr. Brown reported that
operating revenues decreased $3,028,000, or 10.5%, during second
quarter 2006 as compared to the second quarter 2005. He noted that
a main contributor to the decrease was the impact of the
aforementioned 2005 carrier settlement, which resulted in a
$1,604,000 increase in operating revenues during the second quarter
of 2005. He said that the decrease in revenues was also partially
attributable to several other sources, including a $280,000 decline
in revenue generated from Primary Rate Interface circuits
provisioned to Internet Service Providers (ISPs), a $751,000
decrease in access revenues (exclusive of the prior year settlement
discussed separately above), mostly due to a decrease in overall
access minutes of use on the Company's network and an
uncharacteristically high level of adjustments that during 2006
have processed through the National Exchange Carrier Association
pooling arrangements in which the Company's ILEC participates, and
a $270,000 decrease in toll revenues. 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 second quarter 2006 increased $456,000, or
2.4%, from the comparable prior year period. Mr. Brown noted that
for comparative purposes, the second quarter of 2005 benefited from
the aforementioned carrier settlement, which resulted in a
cumulative $800,000 reduction in traffic terminating costs from the
amount that had been estimated and accrued over a multi-year
period. The Company also experienced increases in the direct costs
associated with the growth in access lines in the Company's CLEC
edge-out markets and fees paid to terminate the increased local,
toll and Internet traffic generated by the Company's customer base.
In addition, combined labor and benefit expenses increased
approximately $220,000 over the prior year second quarter, and
operational support system expenses increased by approximately
$200,000 in conjunction with the Company migrating to a new billing
system at one of its subsidiaries. These increases in operating
expenses were partially offset by a $1,650,000 decrease in
depreciation expense. During 2005, the Company conducted a
comprehensive review of the useful life estimates of certain main
categories of its 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
second quarter 2006 depreciation expense by approximately
$1,536,000 from the amount which would have been recorded if there
had been no change in the estimated useful life of these assets.
Other income (net) for the second quarter of 2006 improved
$20,522,000 from the prior year period due principally to the
aforementioned $19,622,000 gain realized from the RTB stock
redemption. In addition, equity income recorded from the Company's
partnership investments (which consist primarily of limited partner
interests in three wireless partnerships) increased by $433,000
over the prior year comparable period and the Company also
benefited from a $362,000 increase in interest income earned from
higher rates on higher average invested balances and a $59,000
decrease in interest expense resulting from continued debt
reduction. For the first six months of 2006, net income increased
$10,836,000, or 97.2%, to $21,984,000 from $11,148,000 for the
first six months of 2005, and earnings per share amounted to $1.47
as compared to $.74 for the first six months of 2005. In addition,
for the first six months of 2006, operating revenues decreased
$3,517,000, or 6.3%, while operating expenses decreased $431,000,
or 1.1%, and Other income (net) increased $21,633,000 as compared
to the first six months of 2005. The factors described above in the
second quarter analysis, including the $19,622,000 gain the RTB
stock redemption ($11,479,000 after tax, or $.76 per share)
recorded in the Company's second quarter of 2006 and the $2,404,000
carrier settlement ($1,406,000 after tax, or $.09 per share)
recorded in the Company's second quarter of 2005, were also the
main contributors to the change in net income for the first six
months of 2006. Turning to operations, Mr. Brown reported that as
of June 30, 2006, the Company had a total of 68,143 access lines in
its ILEC territory, 63,295 CLEC access line equivalents (including
2,428 DSL subscribers) and a total of 15,120 DSL subscribers across
all subsidiaries. He noted that although ILEC access lines had
decreased 4.6% over the past twelve-month period ended June 30,
2006, total CLEC access line equivalents and consolidated DSL
subscribers had grown 3.3% and 13.4%, respectively, over that same
twelve-month period. Mr. Brown concluded his remarks by commenting
on the recent achievement of the Company's CLEC, Penn Telecom,
Inc., which, to the best of the Company's knowledge, became the
first regional competitive telecommunications provider to supply
the entire communications infrastructure for a sporting event with
global exposure. While Penn Telecom was meeting the challenge
during the recent Major League Baseball All-Star Game and related
events held in Pittsburgh from July 7th through July 11th, the
Company's ISP, Pinnatech, Inc. (d/b/a Nauticom), was providing the
Internet service for the related broadband facilities. Mr. Brown
stated that the selection by Major League Baseball and the host
Pittsburgh Pirates of Penn Telecom and Nauticom provides a strong
endorsement of both companies' reputations for providing both
quality services and responsiveness in meeting dynamic customer
demands. North Pittsburgh Systems, Inc. has total assets of $158
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 June
30, 2006. -0- *T NORTH PITTSBURGH SYSTEMS, INC. SUMMARIZED
FINANCIAL INFORMATION (Unaudited) (Amounts in Thousands - Except
Per Share Data) For the Three Months For the Six Months Ended June
30 Ended June 30 -------------------- ------------------- 2006
2005(a) 2006 2005(a) --------- ---------- --------- --------- Total
operating revenues $25,713 $28,741 $52,438 $55,955 Total operating
expenses 19,782 19,326 39,179 39,610 --------- ---------- ---------
--------- Net operating income 5,931 9,415 13,259 16,345 Other
income, net 22,131 1,609 24,390 2,757 --------- ----------
--------- --------- Income from continuing operations before income
taxes 28,062 11,024 37,649 19,102 Provision for income taxes 11,670
4,536 15,671 7,857 --------- ---------- --------- --------- Income
from continuing operations 16,392 6,488 21,978 11,245 Income (loss)
from discontinued operations, net of income taxes(a) 6 (29) 6 (97)
--------- ---------- --------- --------- Net income $16,398 $6,459
$21,984 $11,148 ========= ========== ========= ========= Common
shares outstanding 15,005 15,005 15,005 15,005 ========= ==========
========= ========= Basic and diluted earnings per share $1.09 $.43
$1.47 $.74 ========= ========== ========= ========= Dividends per
share $1.20 $.19 $1.39 $.37 ========= ========== =========
========= June 30 Dec. 31 2006 2005 ---------- --------- Cash and
temporary investments $50,938 $55,567 Total assets 157,791 159,200
Total debt 20,055 21,597 Total shareholders' equity 100,654 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
North Pittsburgh Systems (MM) (NASDAQ:NPSI)
Historical Stock Chart
From Sep 2024 to Oct 2024
North Pittsburgh Systems (MM) (NASDAQ:NPSI)
Historical Stock Chart
From Oct 2023 to Oct 2024