Knology Inc. (KNOL, Financial) filed Quarterly Report for the period ended 2010-06-30.
Knology Inc. has a market cap of $475.7 million; its shares were traded at around $12.91 with a P/E ratio of 61.5 and P/S ratio of 1.1. Knology Inc. had an annual average earning growth of 22% over the past 5 years.KNOL is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Direct Costs. Direct costs increased 6.7% from $34.1 million for the three months ended June 30, 2009, to $36.4 million for the three months ended June 30, 2010. Direct costs of video services increased 8.8% from $23.8 million for the three months ended June 30, 2009, to $25.9 million for the same period in 2010. Direct costs of voice services decreased 12.8% from $6.7 million for the three months ended June 30, 2009, to $5.8 million for the same period in 2010. Direct costs of data services increased 9.0% from $1.7 million for the three months ended June 30, 2009, to $1.9 million for the same period in 2010. Direct costs of other services increased 154.0% from $619,000 for the three months ended June 30, 2009, to $1.6 million for the same period in 2010. Pole attachment and other network rental expenses decreased 4.1% from $1.3 million for the three months ended June 30, 2009, to $1.2 million for the same period in 2010. We expect our cost of services to increase as we add more connections. The increase in direct costs of video services are primarily due to programming costs increases, which have been increasing over the last several years on an aggregate basis due to an increase in subscribers and on a per subscriber basis due to an increase in costs per program channel. Further, local commercial television broadcast stations are charging retransmission fees, similar to fees charged by other program providers. We expect the trend of annual increases to continue and we may not be able to pass these higher costs on to customers because of competitive factors, which could adversely affect our cash flow and gross profit. We expect increases in voice, data and other direct costs of services with the additions of leased facilities used to backhaul our traffic to our switching facilities as connections and data capacity requirements increase.
Depreciation and amortization. Our depreciation and amortization decreased 6.7% from $22.9 million for the three months ended June 30, 2009, to $21.3 million for the three months ended June 30, 2010 primarily due to the maturing of our asset base.
Interest expense. Interest expense increased from $9.7 million for the three months ended June 30, 2009, to $11.3 million for the three months ended June 30, 2010. The increase in interest expense is primarily a result of the increase in interest rates on our term loans. In addition, we recorded $4.6 million and $5.5 million in amortization of deferred loss associated with our derivative instruments for the three months ended June 30, 2009 and 2010, respectively. A gain of $3.0 million and $7.8 million was recorded on the value of the interest rate swaps for the three months ended June 30, 2009 and 2010, respectively.
The interest rate swaps are valued by an independent third party. An error occurred due to a misinterpretation of the valuation information, specifically related to the inclusion of accrued interest in the third party valuation as well as separately accruing interest payable. The correction of the error in the valuation of the derivative resulted in a credit to other income in the amount of $4.2 million in the second quarter of 2010. Further, the Company would have recognized $3.5 million less charge to expense from the change in derivative value during the first quarter of 2009 had the interest rate swaps been recorded correctly. The effect over all other quarters in 2009 was approximately $783,000. The Company believes the correction of this non-cash item is immaterial to the users of our financial statements as it has no impact on total revenue, EBITDA, net operating income and cash flows for the periods affected, and these are key metrics used by analysts, lenders and other users of our financial statements in evaluating the Companys performance. Therefore no restatement of prior period financial statements is deemed necessary. The correction has no impact on the statement of operations prior to January 1, 2009.
Direct Costs. Direct costs increased 8.6% from $66.8 million for the six months ended June 30, 2009, to $72.5 million for the six months ended June 30, 2010. Direct costs of video services increased 7.7% from $48.0 million for the six months ended June 30, 2009, to $51.7 million for the same period in 2010. Direct costs of voice services remained relatively unchanged at $12.0 million for the six months ended June 30, 2009 and 2010. Direct costs of data services increased 18.4% from $3.3 million for the six months ended June 30, 2009, to $3.9 million for the same period in 2010. Direct costs of other services increased 170.9% from $984,000 for the six months ended June 30, 2009, to $2.7 million for the same period in 2010. Pole atta
Read the The complete Report
Knology Inc. has a market cap of $475.7 million; its shares were traded at around $12.91 with a P/E ratio of 61.5 and P/S ratio of 1.1. Knology Inc. had an annual average earning growth of 22% over the past 5 years.KNOL is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
On August 3, 2010, we executed a definitive agreement to acquire certain assets and assume certain liabilities of Sunflower Broadband (Sunflower), a provider of video, voice and data services to residential and business customers in Douglas County and Lawrence, Kansas for $165 million. Sunflower has approximately $35.8 million in total assets and $50.0 million in annual total revenues (unaudited). The transaction is expected to close during the fourth quarter of 2010, subject to certain closing conditions, including regulatory approvals. We expect to fund the proposed transaction by using a portion of our cash on hand and by accessing the capital markets in a manner which will allow us to manage the leverage profile of the business, while maintaining the flexibility to continue to growth the business with a disciplined approach.Direct Costs. Direct costs increased 6.7% from $34.1 million for the three months ended June 30, 2009, to $36.4 million for the three months ended June 30, 2010. Direct costs of video services increased 8.8% from $23.8 million for the three months ended June 30, 2009, to $25.9 million for the same period in 2010. Direct costs of voice services decreased 12.8% from $6.7 million for the three months ended June 30, 2009, to $5.8 million for the same period in 2010. Direct costs of data services increased 9.0% from $1.7 million for the three months ended June 30, 2009, to $1.9 million for the same period in 2010. Direct costs of other services increased 154.0% from $619,000 for the three months ended June 30, 2009, to $1.6 million for the same period in 2010. Pole attachment and other network rental expenses decreased 4.1% from $1.3 million for the three months ended June 30, 2009, to $1.2 million for the same period in 2010. We expect our cost of services to increase as we add more connections. The increase in direct costs of video services are primarily due to programming costs increases, which have been increasing over the last several years on an aggregate basis due to an increase in subscribers and on a per subscriber basis due to an increase in costs per program channel. Further, local commercial television broadcast stations are charging retransmission fees, similar to fees charged by other program providers. We expect the trend of annual increases to continue and we may not be able to pass these higher costs on to customers because of competitive factors, which could adversely affect our cash flow and gross profit. We expect increases in voice, data and other direct costs of services with the additions of leased facilities used to backhaul our traffic to our switching facilities as connections and data capacity requirements increase.
Depreciation and amortization. Our depreciation and amortization decreased 6.7% from $22.9 million for the three months ended June 30, 2009, to $21.3 million for the three months ended June 30, 2010 primarily due to the maturing of our asset base.
Interest expense. Interest expense increased from $9.7 million for the three months ended June 30, 2009, to $11.3 million for the three months ended June 30, 2010. The increase in interest expense is primarily a result of the increase in interest rates on our term loans. In addition, we recorded $4.6 million and $5.5 million in amortization of deferred loss associated with our derivative instruments for the three months ended June 30, 2009 and 2010, respectively. A gain of $3.0 million and $7.8 million was recorded on the value of the interest rate swaps for the three months ended June 30, 2009 and 2010, respectively.
The interest rate swaps are valued by an independent third party. An error occurred due to a misinterpretation of the valuation information, specifically related to the inclusion of accrued interest in the third party valuation as well as separately accruing interest payable. The correction of the error in the valuation of the derivative resulted in a credit to other income in the amount of $4.2 million in the second quarter of 2010. Further, the Company would have recognized $3.5 million less charge to expense from the change in derivative value during the first quarter of 2009 had the interest rate swaps been recorded correctly. The effect over all other quarters in 2009 was approximately $783,000. The Company believes the correction of this non-cash item is immaterial to the users of our financial statements as it has no impact on total revenue, EBITDA, net operating income and cash flows for the periods affected, and these are key metrics used by analysts, lenders and other users of our financial statements in evaluating the Companys performance. Therefore no restatement of prior period financial statements is deemed necessary. The correction has no impact on the statement of operations prior to January 1, 2009.
Direct Costs. Direct costs increased 8.6% from $66.8 million for the six months ended June 30, 2009, to $72.5 million for the six months ended June 30, 2010. Direct costs of video services increased 7.7% from $48.0 million for the six months ended June 30, 2009, to $51.7 million for the same period in 2010. Direct costs of voice services remained relatively unchanged at $12.0 million for the six months ended June 30, 2009 and 2010. Direct costs of data services increased 18.4% from $3.3 million for the six months ended June 30, 2009, to $3.9 million for the same period in 2010. Direct costs of other services increased 170.9% from $984,000 for the six months ended June 30, 2009, to $2.7 million for the same period in 2010. Pole atta
Read the The complete Report
