-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iu+/W1KiCb8xyZADRXCkvBlWyj2VuBcK74Kk1XQXLIEbLz46JQvSNTQ6i3RIVDmm 7YnveTI+XrqoBgmPk3iBsA== 0000950132-95-000444.txt : 19951119 0000950132-95-000444.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950132-95-000444 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH PITTSBURGH SYSTEMS INC CENTRAL INDEX KEY: 0000764765 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 251485389 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13716 FILM NUMBER: 95590088 BUSINESS ADDRESS: STREET 1: 4008 GIBSONIA RD CITY: GIBSONIA STATE: PA ZIP: 15044-9311 BUSINESS PHONE: 4124439600 MAIL ADDRESS: STREET 1: 4008 GIBSONIA ROAD CITY: GIBSONIA STATE: PA ZIP: 15044-9311 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 ------------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------ ------------------------ Commission File Number 0-13716 ---------------------------------------------------------- NORTH PITTSBURGH SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1485389 - -------------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4008 Gibsonia Road, Gibsonia, Pennsylvania 15044-9311 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 412 443-9600 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) No Change - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (l) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock Outstanding ------------------------ At November 1, 1995, the Registrant had 7,520,000 shares of common stock outstanding, par value $.3125 per share, the only class of such stock issued. PART I ITEM 1 FINANCIAL STATEMENTS NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Thousands - Except Per Share Amounts)
For the Three Months For the Nine Months Ended September 30 Ended September 30 ---------------------- ---------------------- 1995 1994 1995 1994 --------- --------- --------- --------- Operating revenues: Local network services $ 1,866 $ 1,759 $ 5,533 $ 5,103 Long distance and access services 9,964 9,298 29,123 27,171 Directory advertising, billing & other services 531 487 1,586 1,456 Telecommunication equipment sales 592 1,206 1,550 2,339 Other operating revenues 490 266 1,197 947 -------- -------- -------- -------- Total Operating Revenues 13,443 13,016 38,989 37,016 -------- -------- -------- -------- Operating expenses: Depreciation and amortization 2,137 1,750 5,991 5,590 Network and other operating expenses 5,575 4,666 15,752 13,927 State and local taxes 535 512 1,671 1,560 Telecommunication equipment expenses 496 1,073 1,370 2,216 -------- -------- -------- -------- Total Operating Expenses 8,743 8,001 24,784 23,293 -------- -------- -------- -------- Net Operating revenues 4,700 5,015 14,205 13,723 Other expense (income), net: Interest expense 399 383 1,200 1,155 Interest income (225) (275) (800) (725) Sundry expense (income), net 72 (9) 150 (127) -------- -------- -------- -------- 246 99 550 303 -------- -------- -------- -------- Earnings before income taxes 4,454 4,916 13,655 13,420 Income taxes: Current 1,851 1,992 5,542 5,434 Deferred - - - - -------- -------- -------- -------- 1,851 1,992 5,542 5,434 -------- -------- -------- -------- Net earnings $ 2,603 $ 2,924 $ 8,113 $ 7,986 ======== ======== ======== ======== Average common shares outstanding 7,520 7,520 7,520 7,520 ======== ======== ======== ======== Earnings per share of common stock $ .35 $ .39 $ 1.08 $ 1.06 ======== ======== ======== ======== Dividends per share of common stock $ .24 $ .22 $ .72 $ .66 ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. -1- NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Thousands of Dollars)
Sept. 30 Dec. 31 ASSETS 1995 1994 ------ ---------- --------- Current assets: Cash and temporary investments $ 9,586 $14,779 Marketable securities available for sale 1,550 2,063 Marketable securities held to maturity 6,475 5,640 Accounts receivable: Customers 3,552 3,169 Access service settlements and other 5,897 4,295 Inventories of construction and operating materials and supplies 2,175 2,110 Prepaid taxes 130 - ---------- --------- Total current assets 29,365 32,056 ---------- --------- Property, plant and equipment: Telephone plant in service: Land 188 188 Buildings 8,523 8,281 Equipment 92,133 87,711 Miscellaneous physical property 608 36 ---------- --------- 101,452 96,216 Less accumulated depreciation and amortization 51,581 47,596 ---------- --------- 49,871 48,620 Construction in progress 7,746 2,374 ---------- --------- Total property, plant and equipment, net 57,617 50,994 Investments 3,286 3,480 Prepaid Pension Cost 926 827 Other assets 4,234 4,221 ---------- --------- $ 95,428 $91,578 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Current portion of long-term debt $ 690 $ 662 Accounts payable 6,357 5,174 Accrued interest 121 127 Dividend payable 1,805 1,654 Taxes other than income taxes 344 620 Accrued vacation 621 621 Other liabilities 375 283 Federal and state income taxes 591 247 ---------- --------- Total current liabilities 10,904 9,388 ---------- --------- Long term debt 21,876 22,396 Unamortized investment tax credits 508 621 Deferred income taxes 5,725 5,653 Postretirement benefits 4,210 4,065 Other liabilities 1,490 1,544 Shareholders' equity: Capital stock/Common stock 2,350 2,350 Capital in excess of par value 2,215 2,215 Retained earnings 46,150 43,346 ---------- --------- Total shareholders' equity 50,715 47,911 ---------- --------- $ 95,428 $91,578 ========== =========
See accompanying notes to condensed consolidated financial statements. -2- NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Thousands of Dollars)
For the Nine Months Ended September 30 ------------------------ 1995 1994 ---------- -------- Cash from operating activities: Net earnings $ 8,113 $ 7,986 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 5,786 5,590 Equity (income) losses of affiliated companies (41) (99) Provision for postretirement benefits other than pensions 146 230 Investment tax credit amortization (113) (130) Deferred income taxes - - Changes in assets and liabilities: Accounts receivable (1,985) (1,553) Inventories of construction and operating materials & supplies (65) 235 Prepaid federal and state taxes (130) (99) Accounts payable 1,184 1,164 Taxes other than income taxes (276) (206) Other liabilities 39 307 Federal and state income taxes 344 (923) Prepaid Pension Cost (99) (195) Other, net 7 95 ---------- -------- Total adjustments 4,797 4,416 ---------- -------- Net cash from operating activities 12,910 12,402 ---------- -------- Cash used for investing activities: Expenditures for property and equipment (12,348) (7,615) Net salvage on retirements 87 116 ---------- -------- Net capital additions (12,261) (7,499) ---------- -------- Purchase of marketable securities held to maturity (5,211) (5,236) Proceeds from redemption of marketable securites held to maturity 4,376 2,842 Purchase of marketable securities available for sale (732) (950) Proceeds from sale of marketable securities available for sale 1,245 1,073 Investments in affiliated entities 235 (150) ---------- -------- Net cash used for investing activities (12,348) (9,920) ---------- -------- Cash used for financing activities: Cash dividends (5,264) (4,813) Retirement of debt (491) (461) ---------- -------- Net cash used for financing activities (5,755) (5,274) ---------- -------- Net (decrease) increase in cash and temporary investments (5,193) (2,792) Cash and temporary investments at beginning of period 14,779 19,045 ---------- -------- Cash and temporary investments at end of period $ 9,586 $16,253 ========== ======== Interest paid $ 1,150 $ 1,161 ========== ======== Income taxes paid $ 5,813 $ 6,489 ========== ========
See accompanying notes to condensed consolidated financial statements. -3- NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) GENERAL ------- The condensed consolidated financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Consolidated herein are the financial results of the Registrant's wholly-owned subsidiaries, North Pittsburgh Telephone Company, Penn Telecom, Inc., Pinnatech, Inc. and Management Consulting Solutions, Inc. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Nevertheless, the Registrant believes that its disclosures herein are adequate to make the information presented not misleading and, in the opinion of management, all adjustments (which consisted only of normal recurring accruals) necessary to present fairly the results of operations for the interim periods have been reflected. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Registrant's latest annual report to the Securities and Exchange Commission on Form 10-K. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Financial Condition ------------------- (a) General ------- There were no material changes in the Registrant's consolidated general financial condition from the end of its preceding fiscal year on December 31, 1994 to September 30, 1995, the end of the nine-month period reported herein. (b) Liquidity and Capital Resources ------------------------------- Consolidated capital expenditure commitments for the purchase and installation of communications and other equipment at September 30, 1995 amounted to approximately $1,603,074 with such amount being part of the 1995 Construction Program. Funds for financing construction expenditures in the nine-month period ended September 30, 1995 were generated from internal sources. In the foreseeable future, based on projected construction budgets and cash flows, North Pittsburgh Telephone Company anticipates financing all telephone plant construction from cash reserves and internally generated funds. At September 30, 1995, construction work in progress is $7,745,618. An additional $6,778,970 will be expended to complete these projects. The Registrant and its subsidiaries have not experienced any difficulty in the past meeting either long-term or short-term cash commitments. Cash flow generated through regular operations has been adequate to not only finance a significant portion of the capital requirements of the Registrant as discussed in the previous paragraph but also to meet principal and interest payments on long-term debt and all working capital requirements. It is anticipated that future long-term interest and principal payments will be made from the same source of internally generated funds. -4- (c) Regulatory ---------- On August 4, 1995, the U.S. House of Representatives passed a bill which includes provisions that could lead to the opening of the Registrant's telephone subsidiary's local exchange market to competitors and would permit local exchange carriers, such as the Registrant's subsidiary to provide interLATA services. The Senate passed a similar bill in June, 1995. A conference committee will attempt to work through the differences between the two bills prior to year end. There are a number of on-going PA PUC proceedings in respect to intraLATA presubscription, new competitive local exchange carriers in Pittsburgh and Philadelphia and universal service. No definitive predictions can be made as to whether or when such legislation or proceedings will be enacted or effective, the provisions thereof, or the impact on the business or financial condition of the Registrant. 2. Results of Operations --------------------- Total operating revenues increased $1,973,000 (5.3%) in the nine-month period ended September 30, 1995, over the comparable period in 1994. This change was due to increases in long distance and access services of $1,952,000 (7.2%), local network services of $430,000 (8.4%) offset by a decrease in telecommunications equipment sales of $789,000 (33.8%). Higher long distance and access service revenues were generally the result of an increase in the number of customers and in minutes of use. However, the rate of growth of revenues slowed in 1995 as compared to 1994 due to the expansion in the first quarter of 1995 of an optional flat rated calling plan to meet customer calling needs. Increased local network service revenues were attributable to customer growth. The decrease in telecommunications equipment sales reflects a decrease in the number of systems sold in 1995 as compared to 1994. Total operating expenses for the nine-month period ended September 30, 1995, increased $1,491,000 (6.4%) over the preceding year. That change is principally the result of an increase in network and other operating expenses of $1,835,000 (13.1%) offset by a decrease in telecommunication equipment expenses of $846,000 (38.2%). The increase in network and other operating expenses is the result of expanded operations to serve customer growth as noted above. In addition, increased marketing expenses associated with the expansion of the optional calling plan discussed above and increased community awareness advertising campaigns account for the overall increases. The decrease in telecommunication equipment expenses is related to the decrease in equipment sales discussed above. The increase in total operating revenues discussed above coupled with the increase in total operating expenses resulted in a 3.5% increase in net operating revenues in 1995 as compared to the same period in 1994. Net sundry expense of $150,000 is recorded in the first nine months of 1995 versus net sundry income of $127,000 during the same period in 1994. Approximately $215,000 of the total difference of $277,000 in the categories between years is attributable to retroactive telephone industry settlements recorded in both 1995 and 1994. The increase in net operating revenues for the nine-month period ended September 30, 1995, in conjunction with the increase in other expense (income), net, resulted in an increase of $235,000 (1.8%) in earnings before income taxes. The same reasons for fluctuations in the revenues and expenses stated above for the year-to-date comparisons generally apply to the three-month period ended September 30, 1995 compared to the same quarterly period in 1994. The third quarter figures and the year-to-date figures of 1995 also include expenses of approximately $525,000 associated with the start-up business activities of the Registrant to eventually supplement its revenue sources or to replace possible future reductions in its telephone revenues. Such expenses are recorded in depreciation and amortization and network and other operating expense captions on the Consolidated Statements of Earnings. Associated revenues were approximately 50% of expenses and are projected to gradually exceed expenses in two years or less. -5- PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ------ -------------------------------- (a) Exhibits - Exhibit Index for Quarterly Reports on Form 10-Q. --------
Exhibit Number Subject Applicability - ------- ------- ------------- (2) Plan of acquisition, reorganization, Not Applicable arrangement, liquidation or succession (3) Articles of Incorporation Provided in Annual Report on Form 10-K for the year ended December 31, 1993 and Incorporated Herein by Reference. (3) By-Laws Provided in Annual Report on Form 10-K for the year ended December 31, 1993 and Incorporated Herein by Reference. (4) Instruments defining the rights of Provided in Registration of security holders including indentures Securities of Certain Successor Issuers on Form 8-B filed on June 25, 1985 and Incorporated Herein by Reference. (10) Material Contracts Not Applicable (11) Statement re computation of per Attached Hereto share earnings (15) Letter re unaudited interim financial Not Applicable information (18) Letter re change in accounting Not Applicable principles (19) Report furnished to security holders Not Applicable (22) Published report regarding matters Not Applicable submitted to a vote of security holders (23) Consents of experts and counsel Not Applicable (24) Power of attorney Not Applicable (27) Financial Data Schedule Attached Hereto (99) Additional exhibits Not Applicable
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter ------------------- ended September 30, 1995. -6- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORTH PITTSBURGH SYSTEMS, INC. ------------------------------ (Registrant) Date November 13, 1995 /s/ G. A. Gorman ----------------------- ----------------------------------------- G. A. Gorman, President Date November 13, 1995 /s/ A. P. Kimble ----------------------- ----------------------------------------- A. P. Kimble, Vice President, Secretary & Treasurer -7- EX-11 2 COMPUTATION OF EARNINGS NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES Exhibit No. (11) - Statement - computation of per share earnings Statement of Computations of Earnings per Share
For the Three Months For the Nine Months Ended September 30 Ended September 30 ------------------------ ------------------------ 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Net earnings $2,603,000 $2,924,000 $8,113,000 $7,986,000 =========== =========== =========== =========== Average common shares outstanding 7,520,000 7,520,000 7,520,000 7,520,000 =========== =========== =========== =========== Earnings per share of common stock $ .35 $ .39 $ 1.08 $ 1.06 =========== =========== =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM September 30, 1995 Quarterly Report AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 9,586 8,025 9,449 0 2,175 29,365 109,198 51,581 95,428 10,904 21,876 2,350 0 0 50,715 95,428 1,550 38,989 1,370 24,784 0 0 1,200 13,655 5,542 8,113 0 0 0 8,113 1.08 1.08
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