Mankato telephone company HickoryTech Corp. reported an 18 percent drop in third-quarter earnings late Thursday, to $1.7 million, while revenue grew 1 percent to $45.8 million.

But the earnings drop would have been 41 percent if the company had not on Friday restated its earnings for the last five fiscal years, as well as for the first two quarters of 2012, according to documents filed with the Securities and Exchange Commission.

"We continued to achieve solid growth in our fiber and data business in the third quarter and year-to-date, providing overall top-line growth, despite declines in our telecom business," said CEO John Finke.

The restatement lowered 2011 third-quarter earnings from $2.97 million to $2.1 million, thereby creating a more favorable comparison with the 2012 third-quarter earnings. HickoryTech's third-quarter revenue comparisons did not change as a result of the restatement, which did not alter the revenue figures in previous years.

The restatements were triggered by the advice of the company's accountants, HickoryTech said in its SEC filing. None of the company's financial covenants with lenders were breached as a result of the restatement, the firm said.

"We are restating our previously reported financial information for these periods to change our accounting for interest rate swaps," the company said in its SEC filing.

Interest rate swaps are an accounting method that allows one stream of interest payments to be exchanged for another. Companies typically use them to limit or manage exposure to fluctuations in interest rates, or to get a slightly lower interest rate.

"We utilize interest rate swap agreements to manage our exposure to interest rate fluctuations on a portion of our variable-interest rate debt," HickoryTech said in its filing.

The HickoryTech restatement had the effect of lowering earnings per share in some prior years and raising it in others, according to the SEC filing.

In 2011, HickoryTech's earnings per share were adjusted down from 69 cents to 63 cents; in 2010, EPS went from 91 cents to 95 cents; in 2009, EPS went from 86 cents to 93 cents; in 2008, it went from 61 cents to 52 cents, and in 2007 it went from 65 cents to 59 cents.

On Friday, the company restated quarterly earnings from earlier this year. The first quarter 2012 earnings dropped 1.3 percent from $2.32 million to $2.29 million, and second-quarter 2012 earnings dropped 4 percent from $1.8 million to $1.7 million.

Steve Alexander • 612-673-4553