North Pittsburgh Systems, Inc. Reports First Quarter 2005 Earnings
11 May 2005 - 5:56AM
Business Wire
North Pittsburgh Systems, Inc. (NASDAQ:NPSI) today announced net
income of $4,689,000, or $.31 per share, on operating revenues of
$27,661,000 for the first quarter of 2005. This compares to net
income of $4,397,000, or $.29 per share, on operating revenues of
$27,446,000 for the comparable period last year. NPSI's President,
Harry R. Brown, stated that the 6.6% increase in earnings was
attributable for the most part to increased investment earnings
recorded from the Company's limited partner interests in three
wireless partnerships. Mr. Brown reported that operating revenues
increased $215,000, or 0.8%, during first quarter 2005 as compared
to first quarter 2004. He said the Company's ability to continue to
effectively penetrate its Competitive Local Exchange Carrier's
(CLEC) edge-out markets and the further expansion of its broadband
service offerings were primarily responsible for the revenue
increase. This ability to grow end-user customer revenues was
offset in large part by decreases in the Company's access revenues.
In this regard, Mr. Brown explained that access revenues were
negatively impacted by the phase down of the Company's CLEC
interstate access rates pursuant to the Federal Communication
Commission's (FCC) Access Charge Reform Order, decreases in
effective rates charged for wireless traffic and a decrease in
revenues realized from the National Exchange Carrier Association
(NECA) pooling arrangements in which the Company's Incumbent Local
Exchange Carrier (ILEC) participates. Mr. Brown also noted that
telecommunication equipment sales were $290,000 lower in first
quarter 2005 as compared to first quarter 2004. Operating expenses
for first quarter 2005 increased $524,000, or 2.6%, over the
comparable prior year period. Mr. Brown reported that the increase
in operating expenses was predominately due to increases in the
direct costs associated with the growth in access lines and access
line equivalents, 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,
depreciation expense increased as a result of a 4.3% increase in
the Company's depreciable asset base over the prior year comparable
period. Other income (net) for the first quarter of 2005 improved
$789,000 from the prior year period due principally to a $516,000
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 $190,000 increase in interest income earned on higher cash
and temporary investment balances and a $75,000 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, 2005, the Company had a total of 71,828 access lines in
its ILEC territory, 59,370 CLEC access line equivalents (including
2,414 DSL subscribers) and a total of 12,544 DSL subscribers across
all subsidiaries. He noted that although ILEC access lines had
decreased 2.9% over the past twelve-month period ended March 31,
2005, total CLEC access line equivalents and consolidated DSL
subscribers had grown 15.9% and 20.1%, respectively, over that same
twelve-month period. Mr. Brown concluded his remarks by stating
that one of the greatest strengths the Company has shown over the
past several years is its stability in the constantly changing
telecommunications environment. This stability is displayed not
only in the earnings of the Company but also in its ability to pay
significant dividends, maintain one of the strongest balance sheets
in the industry and fortify long-term relationships with its
customers. North Pittsburgh Systems, Inc. has total assets of $156
million and operates an integrated high-technology
telecommunications business in Western Pennsylvania providing
competitive and local exchange services, long distance, business
phone systems 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, 2005. -0- *T NORTH PITTSBURGH SYSTEMS, INC.
SUMMARIZED FINANCIAL INFORMATION (Unaudited) (Amounts in Thousands
- Except Per Share Data) For the Three Months Ended March 31
-------------------------------- 2005 2004(a) --------------
---------------- Total operating revenues $ 27,661 $ 27,446 Total
operating expenses 20,848 20,324 -------------- ----------------
Net operating income 6,813 7,122 Other income, net 1,147 358
-------------- ---------------- Income before income taxes 7,960
7,480 Provision for income taxes 3,271 3,083 --------------
---------------- Net income $ 4,689 $ 4,397 ==============
================ Common shares outstanding 15,005 15,005
============== ================ Basic and diluted earnings per
share $ .31 $ .29 ============== ================ Dividends per
share $ .18 $ .18 ============== ================ March 31 Dec. 31
2005 2004 -------------- ---------------- Cash and temporary
investments $ 44,006 $ 42,569 Total assets 156,013 155,500 Total
debt 23,911 24,682 Total shareholders' equity 88,844 86,861 (a)
Certain prior year operating revenues and expenses have been
reclassified to conform to the current year's presentation. These
reclassifications did not affect the net operating income or net
income amounts. *T
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