UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2006
Commission file numbers |
| 333-33540 |
|
| 333-33540-1 |
INSIGHT MIDWEST, L.P.
INSIGHT CAPITAL, INC.
(Exact name of registrants as specified in their charters)
Delaware |
| 13-4079232 |
Delaware |
| 13-4079679 |
(State or other jurisdiction of |
| (I.R.S. Employer |
810 7th Avenue |
| 10019 |
Registrants’ telephone number, including area code: 917-286-2300
Indicate by check mark whether the registrants (1) have 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 (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer x
Indicate by check mark whether the registrants are a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x
Indicate the number of shares outstanding of each of the registrants’ classes of common stock, as of the latest practicable date.
Insight Midwest, L.P. |
| —Not Applicable |
Insight Capital, Inc. |
| —Not Applicable |
The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2005.
1
INSIGHT MIDWEST, LP
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
|
| March 31, |
| December 31, |
| ||||
|
| 2006 |
| 2005 |
| ||||
|
| (unaudited) |
|
|
| ||||
Assets |
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 34,261 |
|
| $ | 24,853 |
|
|
Investments |
| 4,958 |
|
| 4,701 |
|
| ||
Trade accounts receivable, net of allowance for doubtful accounts of $998 and $1,079 as of March 31, 2006 and December 31, 2005 |
| 17,556 |
|
| 27,233 |
|
| ||
Launch funds receivable |
| 587 |
|
| 974 |
|
| ||
Prepaid expenses and other current assets |
| 11,159 |
|
| 8,860 |
|
| ||
Total current assets |
| 68,521 |
|
| 66,621 |
|
| ||
Fixed assets, net |
| 1,102,612 |
|
| 1,107,571 |
|
| ||
Goodwill |
| 14,684 |
|
| 14,684 |
|
| ||
Franchise costs |
| 2,357,535 |
|
| 2,357,535 |
|
| ||
Deferred financing costs, net of accumulated amortization of $20,975 and $19,769 as of March 31, 2006 and December 31, 2005 |
| 18,708 |
|
| 19,910 |
|
| ||
Other non-current assets |
| 1,792 |
|
| 1,582 |
|
| ||
Total assets |
| $ | 3,563,852 |
|
| $ | 3,567,903 |
|
|
Liabilities and partners’ capital |
|
|
|
|
|
|
| ||
Accounts payable |
| $ | 33,856 |
|
| $ | 40,843 |
|
|
Accrued expenses and other current liabilities |
| 33,797 |
|
| 38,535 |
|
| ||
Accrued property taxes |
| 16,079 |
|
| 12,792 |
|
| ||
Accrued programming costs (inclusive of $29,877 and $29,878 due to related parties as of March 31, 2006 and December 31, 2005) |
| 45,613 |
|
| 43,705 |
|
| ||
Deferred revenue |
| 3,714 |
|
| 4,978 |
|
| ||
Interest payable |
| 46,585 |
|
| 20,459 |
|
| ||
Debt—current portion |
| 83,500 |
|
| 83,500 |
|
| ||
Due to affiliates |
| 49,607 |
|
| 46,013 |
|
| ||
Total current liabilities |
| 312,751 |
|
| 290,825 |
|
| ||
Deferred revenue |
| 1,281 |
|
| 1,499 |
|
| ||
Debt |
| 2,410,359 |
|
| 2,432,811 |
|
| ||
Other non-current liabilities |
| 4,047 |
|
| 2,382 |
|
| ||
Partners’ capital: |
|
|
|
|
|
|
| ||
Deferred stock compensation |
| (497 | ) |
| (535 | ) |
| ||
Partners’ accumulated capital |
| 835,911 |
|
| 840,921 |
|
| ||
Total partners’ capital |
| 835,414 |
|
| 840,386 |
|
| ||
Total liabilities and partners’ capital |
| $ | 3,563,852 |
|
| $ | 3,567,903 |
|
|
See accompanying notes
2
INSIGHT MIDWEST, LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
|
| Three Months Ended |
| ||||
|
| 2006 |
| 2005 |
| ||
Revenue |
| $ | 301,281 |
| $ | 269,327 |
|
Operating costs and expenses: |
|
|
|
|
| ||
Programming and other operating costs (exclusive of depreciation and amortization) (inclusive of $43,081 and $41,499 of programming expense incurred through related parties for the three months ended March 31, 2006 and 2005) |
| 110,255 |
| 98,773 |
| ||
Selling, general and administrative (inclusive of $38 and $0 of stock-based compensation as of March 31, 2006 and 2005) |
| 72,136 |
| 57,428 |
| ||
Management fees |
| 9,038 |
| 8,098 |
| ||
Depreciation and amortization |
| 62,953 |
| 59,684 |
| ||
Total operating costs and expenses |
| 254,382 |
| 223,983 |
| ||
Operating income |
| 46,899 |
| 45,344 |
| ||
Other income (expense): |
|
|
|
|
| ||
Interest expense |
| (52,363 | ) | (48,341 | ) | ||
Interest income |
| 513 |
| 105 |
| ||
Other income (expense) |
| (59 | ) | 92 |
| ||
Total other expense, net |
| (51,909 | ) | (48,144 | ) | ||
Net loss |
| $ | (5,010 | ) | $ | (2,800 | ) |
See accompanying notes
3
INSIGHT MIDWEST, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
|
| Three Months Ended |
| ||||
|
| 2006 |
| 2005 |
| ||
Operating activities: |
|
|
|
|
| ||
Net loss |
| $ | (5,010 | ) | $ | (2,800 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 62,953 |
| 59,684 |
| ||
Stock-based compensation |
| 38 |
| — |
| ||
Provision for losses on trade accounts receivable |
| 2,904 |
| 3,801 |
| ||
Amortization of note discount |
| 88 |
| 80 |
| ||
Loss on interest rate swaps |
| — |
| 233 |
| ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Trade accounts receivable |
| 6,773 |
| 8,872 |
| ||
Launch funds receivable |
| 387 |
| 2,156 |
| ||
Prepaid expenses and other assets |
| (2,532 | ) | (3,845 | ) | ||
Accounts payable |
| (6,987 | ) | (2,339 | ) | ||
Interest payable |
| 26,126 |
| 7,375 |
| ||
Accrued expenses and other liabilities |
| 2,569 |
| (1,290 | ) | ||
Net cash provided by operating activities |
| 87,309 |
| 71,927 |
| ||
Investing activities: |
|
|
|
|
| ||
Purchase of fixed assets |
| (57,100 | ) | (37,515 | ) | ||
Sale of fixed assets |
| 335 |
| — |
| ||
Purchase of investments |
| (257 | ) | — |
| ||
Net cash used in investing activities |
| (57,022 | ) | (37,515 | ) | ||
Financing activities: |
|
|
|
|
| ||
Repayment of credit facilities |
| (20,875 | ) | (20,875 | ) | ||
Other |
| (4 | ) | — |
| ||
Net cash used in financing activities |
| (20,879 | ) | (20,875 | ) | ||
Net increase in cash and cash equivalents |
| 9,408 |
| 13,537 |
| ||
Cash and cash equivalents, beginning of period |
| 24,853 |
| 72,476 |
| ||
Cash and cash equivalents, end of period |
| $ | 34,261 |
| $ | 86,013 |
|
See accompanying notes
4
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
We were formed in September 1999 to serve as the holding company and a financing vehicle for Insight Communications Company, Inc.’s (“Insight Inc.”) cable television system joint venture with AT&T Broadband, LLC (now known as Comcast Cable Holdings, LLC (“Comcast Cable”)). We are owned 50% by Insight Communications Company, L.P. (“Insight LP”), which is wholly owned by Insight Inc., and 50% by an indirect subsidiary of Comcast Cable. Insight LP serves as our general partner and manages and operates our systems.
Through our wholly owned operating subsidiaries, Insight Communications Midwest, LLC (“Insight Communications Midwest”), Insight Communications of Central Ohio, LLC (“Insight Ohio”) and Insight Kentucky Partners II, L.P. (“Insight Kentucky”), we own and operate cable television systems in Indiana, Kentucky, Ohio, and Illinois which passed approximately 2.4 million homes and served approximately 1.3 million customers as of March 31, 2006.
The accompanying consolidated financial statements include the accounts of Insight Midwest Holdings, LLC, our wholly-owned subsidiary which owns 100% of the outstanding equity of our operating subsidiaries, and Insight Capital, Inc., our wholly-owned subsidiary formed for the sole purpose of being the co-issuer of our senior notes, which allows certain investors the ability to be holders of the debt.
Reclassifications have been made to the prior year’s financial statements to conform to those classifications used in 2006.
2. Responsibility for Interim Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements.
In management’s opinion, the consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2005.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2006 are not necessarily indicative of the results to be expected for the year ending December 31, 2006 or any other interim period.
5
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (“SFAS 123R”). SFAS 123R establishes the accounting for transactions in which an entity pays for employee services in share-based payment transactions. SFAS 123R requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The Company adopted SFAS 123R effective January 1, 2006 using the modified-prospective transition method. Under this method stock-based compensation is recognized for awards granted in the period after adoption. Prior year financial statements are not restated. The adoption of this standard did not have a material impact on our consolidated financial statements.
In May 2005, FASB issued SFAS No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces Accounting Principles Board (“APB”) Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements and changes the requirements for the accounting for and reporting of a change in accounting principles. SFAS No. 154 applies to all voluntary changes in an accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific provisions, those provisions should be followed. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning in 2006.
4. Investments
Oxygen Cable, LLC
Oxygen Cable, LLC (“Oxygen”) is an independent cable television network with programming tailored to the interests of women. On July 9, 2002 we entered into a carriage agreement with Oxygen, whereby we agreed to carry programming content from Oxygen. The term of the carriage agreement expires on December 31, 2006.
Concurrently with the carriage agreement, we entered into an equity issuance agreement with Oxygen. The agreement calls for Oxygen to deliver to us shares having an aggregate fair market value as of December 31, 2005 of $3.8 million, and by December 1, 2006 deliver to us additional shares having an aggregate fair market value as of the December 31, 2005 valuation of $2.0 million. Pursuant to the equity issuance agreement, a portion of the monthly programming fees represent our equity investment in Oxygen. As of March 31, 2006 and December 31, 2005, our carrying value in this investment was $5.0 million and $4.7 million. We and Oxygen are currently in the process of negotiating the fair market value of Oxygen which will be used to determine the number of shares that we will receive. As of March 31, 2006, no shares have been delivered to us.
6
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Fixed Assets
Fixed assets consisted of:
|
| March 31, |
| December 31, |
| ||
|
| 2006 |
| 2005 |
| ||
|
| (in thousands) |
| ||||
Land, buildings and improvements |
| $ | 37,815 |
| $ | 36,768 |
|
Cable system equipment |
| 2,420,786 |
| 2,365,956 |
| ||
Furniture, fixtures and office equipment |
| 20,059 |
| 19,079 |
| ||
|
| 2,478,660 |
| 2,421,803 |
| ||
Less: accumulated depreciation and amortization |
| (1,376,048 | ) | (1,314,232 | ) | ||
Total fixed assets, net |
| $ | 1,102,612 |
| $ | 1,107,571 |
|
We recorded depreciation expense of $61.7 million and $58.6 million for the three months ended March 31, 2006 and 2005.
6. Debt
|
| March 31, |
| December 31, |
| ||||
|
| 2006 |
| 2005 |
| ||||
|
| (in thousands) |
| ||||||
Note payable to Insight Inc. |
| $ | 100,000 |
|
| $ | 100,000 |
|
|
Insight Midwest Holdings Credit Facility |
| 1,383,375 |
|
| 1,404,250 |
|
| ||
Insight Midwest 93¤4% Senior Notes |
| 385,000 |
|
| 385,000 |
|
| ||
Insight Midwest 101¤2% Senior Notes |
| 630,000 |
|
| 630,000 |
|
| ||
|
| 2,498,375 |
|
| 2,519,250 |
|
| ||
Net unamortized discount/premium on notes |
| (469 | ) |
| (557 | ) |
| ||
Market value of interest rate swaps |
| (4,047 | ) |
| (2,382 | ) |
| ||
Total debt |
| $ | 2,493,859 |
|
| $ | 2,516,311 |
|
|
Insight Midwest Holdings $1.975 Billion Credit Facility
Our wholly owned subsidiary, Insight Midwest Holdings, LLC, serves as borrower under a $1.975 billion credit facility. Obligations under this credit facility are secured by a pledge of the outstanding equity interests of Insight Midwest Holdings and its subsidiaries. On March 28, 2002, we borrowed $100.0 million from Insight Inc. The loan bears annual interest of 9%, compounded semi-annually, has a scheduled maturity date of January 31, 2011 and permits prepayments. Insight Midwest Holdings is permitted under the credit facility to make distributions to us for the purpose of repaying this loan, including accrued interest, provided that there are no defaults existing under the credit facility. As of March 31, 2006 and December 31, 2005, the balance of the $100.0 million loan including accrued interest was $142.2 million and $139.1 million.
7
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Debt (Continued)
Debt Principal Payments
As of March 31, 2006, the remaining principal payments required on our debt were as follows (in thousands):
2006 |
| $ | 62,625 |
|
2007 |
| 83,500 |
| |
2008 |
| 104,750 |
| |
2009 |
| 1,517,500 |
| |
2010 |
| 630,000 |
| |
Thereafter |
| 100,000 |
| |
Total |
| $ | 2,498,375 |
|
7. Derivative Instruments
We enter into derivative instruments, typically interest-rate swap agreements, to modify the interest characteristics of our outstanding debt to either a floating or fixed rate basis. These agreements involve fixed rate interest payments in exchange for floating rate interest receipts, known as cash flow hedges, and floating rate interest payments in exchange for fixed rate interest receipts, known as fair value hedges, over the life of the agreement without an exchange of the underlying principal amount. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense related to the debt. The related amount payable or receivable is included in other liabilities or assets.
Gains and losses related to fair value hedges that are determined to be effective hedges are recorded in the consolidated statements of operations as an adjustment to the swap instrument and an offsetting adjustment to the carrying value of the underlying debt. Gains and losses related to interest rate swaps that are determined not to be effective hedges and do not qualify for hedge accounting are recorded in our consolidated statements of operations as other income or expense.
Fair Value Hedges
In July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under a tranche of our 101¤2% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expired on November 1, 2005. We recorded a loss on these swaps of $233,000 for the three months ended March 31, 2005, which is included in other income (expense).
8
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Derivative Instruments (Continued)
In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under a different tranche of our 101¤2% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated statements of operations. The cost, if terminated, of this swap as of March 31, 2006 and December 31, 2005 was $4.0 million and $2.4 million and has been recorded in other non-current liabilities and as an adjustment to the carrying value of debt.
8. Related Party Transactions
Programming
We purchase the majority of our programming through affiliates of Comcast Cable. Charges for such programming, including a 11¤2% administrative fee, were $43.1 million and $41.5 million for the three months ended March 31, 2006 and 2005. As of March 31, 2006 and December 31, 2005, $29.9 million of accrued programming costs were due to affiliates of Comcast Cable. We believe that the programming rates charged through these affiliates are lower than those available from independent parties.
Insight Interactive
Effective November 17, 1999, Insight Cable Services entered into a Contribution Agreement with Source Media, Inc., providing for the creation of a joint venture, Insight Interactive LLC. Under the terms of the Contribution Agreement, Source Media contributed its Virtual Modem 2.5 software and the Interactive Channel products and services, including SourceGuide and LocalSource television content. On March 14, 2002, Insight Cable Services purchased the remaining 50% equity interest in Insight Interactive that it did not already own from Source Media. We are currently providing Insight Interactive’s services to customers in some of our systems. For the three months ended March 31, 2006 and 2005, fees for such services totaled $831,000 and $707,000.
Due To Affiliates
As of March 31, 2006 and December 31, 2005, we had amounts owed to Insight LP, our manager, primarily comprised of accrued interest related to our $100.0 million note payable to Insight Inc., incurred but unpaid management fees, calculated as approximately 3% of revenues, and other operational expenses.
9. Commitments and Contingencies
Programming Contracts
We enter into long-term contracts with third parties who provide us with programming for distribution over our cable television systems. These programming contracts are a significant part of our business and represent a substantial portion of our operating costs. Since future fees under such contracts are based on numerous variables, including number and type of customers, we have not recorded any liabilities with respect to such contracts.
9
INSIGHT MIDWEST, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and Contingencies (Continued)
Litigation
In April 2005, Acacia Media Technologies Corporation filed a lawsuit against us and others in the United States District Court for the Southern District of New York. The complaint alleges, among other things, infringement of certain United States patents that allegedly relate to systems and methods for transmitting and/or receiving digital audio and video content. The complaint seeks injunctive relief and damages in an unspecified amount. In the event that a Court ultimately determines that we infringe on any of the patents, we may be subject to substantial damages, which may include treble damages and/or an injunction that could require us to materially modify certain products and services that we currently offer to subscribers. We believe that the claims are without merit and intend to defend the action vigorously. The final disposition of this claim is not expected to have a material adverse effect on our consolidated financial position but could possibly be material to our consolidated results of operations of any one period. Further, at this time the outcome of the litigation is impossible to predict, and no assurance can be given that any adverse outcome would not be material to our consolidated financial position.
We are subject to various legal proceedings that arise in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of these matters, it is our opinion that the resolution of these matters will not have a material adverse affect on our consolidated financial condition.
10
INSIGHT CAPITAL, INC.
BALANCE SHEETS
(dollars in thousands, except per share amounts)
|
| March 31, |
| December 31, |
| ||
|
| 2006 |
| 2005 |
| ||
|
| unaudited |
|
|
| ||
Assets |
|
|
|
|
| ||
Cash |
| $ | 1 |
| $ | 1 |
|
Deferred financing costs, net of accumulated amortization of $12,341 and $11,689 as of March 31, 2006 and December 31, 2005 |
| 10,440 |
| 11,092 |
| ||
Total assets |
| $ | 10,441 |
| $ | 11,093 |
|
Liabilities and shareholder’s deficit |
|
|
|
|
| ||
Accrued interest |
| $ | 46,331 |
| $ | 20,409 |
|
Total current liabilities |
| 46,331 |
| 20,409 |
| ||
Senior notes, to be paid by Insight Midwest, LP |
| 1,014,531 |
| 1,014,443 |
| ||
Total liabilities |
| 1,060,862 |
| 1,034,852 |
| ||
Shareholder’s deficit: |
|
|
|
|
| ||
Common stock; $.01 par value; 1,000 shares authorized, issued and outstanding |
| — |
| — |
| ||
Paid-in-capital |
| 1 |
| 1 |
| ||
In-substance allocation of proceeds related to senior notes to be paid by Insight Midwest |
| (531,616 | ) | (531,616 | ) | ||
Accumulated deficit |
| (518,806 | ) | (492,144 | ) | ||
Total shareholder’s deficit |
| (1,050,421 | ) | (1,023,759 | ) | ||
Total liabilities and shareholder’s deficit |
| $ | 10,441 |
| $ | 11,093 |
|
See accompanying notes
11
INSIGHT CAPITAL, INC.
STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
|
| Three Months Ended |
| ||||
|
| 2006 |
| 2005 |
| ||
Expenses: |
|
|
|
|
| ||
Amortization |
| $ | (652 | ) | $ | (652 | ) |
Interest expense |
| (26,010 | ) | (26,003 | ) | ||
Net loss |
| $ | (26,662 | ) | $ | (26,655 | ) |
See accompanying notes
12
INSIGHT CAPITAL, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
|
| Three Months Ended |
| ||||
|
| 2006 |
| 2005 |
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net loss |
| $ | (26,662 | ) | $ | (26,655 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
| ||
Accretion of discount on notes |
| 88 |
| 81 |
| ||
Amortization |
| 652 |
| 652 |
| ||
Interest expense assumed by affiliate |
| 25,922 |
| 25,922 |
| ||
Net cash provided by operating activities |
| — |
| — |
| ||
Net increase in cash |
| — |
| — |
| ||
Cash, beginning of period |
| 1 |
| 1 |
| ||
Cash, end of period |
| $ | 1 |
| $ | 1 |
|
See accompanying notes
13
INSIGHT CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business
Insight Capital, Inc. (the “Company”), a Delaware corporation, was formed on September 23, 1999, for the sole purpose of being a co-issuer with Insight Midwest, L.P. (“Insight Midwest”) of senior notes which allows certain investors the ability to be holders of the debt. The Company has no operations. The outstanding shares of the Company are owned by Insight Midwest.
2. Responsibility for Interim Financial Statements
The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements.
In management’s opinion, the financial statements reflect all adjustments considered necessary for a fair presentation of the statement of financial position as of the interim dates presented. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Information
This quarterly report on Form 10-Q contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of our company, including, without limitation, statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “estimates” or similar expressions. We believe it is important to communicate management’s expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2005, as well as any other cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, operating results and financial condition. Examples of these risks include:
· All of the services offered by our company face a wide range of competition that could adversely affect our future results of operations;
· We have substantial debt and have significant interest payment requirements, which may adversely affect our ability to obtain financing in the future to finance our operations and our ability to react to changes in our business;
· There is uncertainty surrounding our potential dissolution, the process for which may be triggered by either of our partners;
· The terms of Insight Midwest Holdings’ credit facility may limit our ability to access the cash flow of our subsidiaries;
· We have a history of net losses and may not be profitable in the future;
· Our programming costs are substantial, and they are expected to increase; and
· General business conditions, economic uncertainty or slowdown, and the effects of governmental regulation could adversely affect our future results of operations.
We do not undertake any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date that this report is filed with the SEC or to reflect the occurrence of unanticipated events, except as required by law.
Our revenues are earned from customer fees for cable television video services including basic, premium, digital and pay-per-view services and ancillary services, such as rental of converters, remote control devices and installations. In addition, we earn revenues from providing high-speed Internet services, selling advertising, providing telephone services, and commissions for products sold through home shopping networks.
15
The following table is derived from our consolidated financial statements that are included in this report and sets forth certain statement of operations data for our consolidated operations:
|
| Three Months |
| ||||
|
| 2006 |
| 2005 |
| ||
Revenue |
| $ | 301,281 |
| $ | 269,327 |
|
Operating costs and expenses: |
|
|
|
|
| ||
Programming and other operating costs |
| 110,255 |
| 98,773 |
| ||
Selling, general and administrative |
| 72,136 |
| 57,428 |
| ||
Management Fees |
| 9,038 |
| 8,098 |
| ||
Depreciation and amortization |
| 62,953 |
| 59,684 |
| ||
Total operating costs and expenses |
| 254,382 |
| 223,983 |
| ||
Operating income |
| 46,899 |
| 45,344 |
| ||
Interest expense |
| 52,363 |
| 48,341 |
| ||
Net loss |
| (5,010 | ) | (2,800 | ) | ||
Net cash provided by operating activities |
| 87,309 |
| 71,927 |
| ||
Net cash used in investing activities |
| 57,022 |
| 37,515 |
| ||
Net cash used in financing activities |
| 20,879 |
| 20,875 |
| ||
Capital expenditures |
| 57,100 |
| 37,515 |
| ||
Use of Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow
We utilize Adjusted Operating Income before Depreciation and Amortization, (defined as operating income before depreciation, amortization and non-cash stock-based compensation) among other measures, to evaluate the performance of our businesses. Adjusted Operating Income before Depreciation and Amortization is considered an important indicator of the operational strength of our businesses and is a component of our annual compensation programs. In addition, our debt agreements use Adjusted Operating Income before Depreciation and Amortization, adjusted for certain non-recurring items, in our leverage and other covenant calculations. We also use this measure to determine how we will allocate resources and capital. Our management finds this measure helpful because it captures all of the revenue and ongoing operating expenses of our businesses and therefore provides a means to directly evaluate the ability of our business operations to generate returns and to compare operating capabilities across our businesses. This measure is also used by equity and fixed income research analysts in their reports to investors evaluating our businesses and other companies in the cable television industry. We believe Adjusted Operating Income before Depreciation and Amortization is useful to investors because it enables them to assess our performance in a manner similar to the methods used by our management and provides a measure that can be used to analyze, value and compare companies in the cable television industry, which may have different depreciation, amortization and stock-based compensation policies.
A limitation of Adjusted Operating Income before Depreciation and Amortization, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures, investment spending and Free Cash Flow. Management also evaluates the costs of capitalized tangible and intangible assets by analyzing returns provided on the capital dollars deployed. Another limitation of Adjusted Operating Income before Depreciation and Amortization is that it does not reflect income net of interest expense, which is a significant expense for us because of the substantial debt we incurred to acquire cable television systems and finance capital expenditures to upgrade our cable network. Management evaluates the impact of interest expense through measures including interest expense, Free Cash Flow, the returns analysis discussed above and debt service covenant ratios under our credit facility.
16
Free Cash Flow is net cash provided by operating activities (as defined by accounting principles generally accepted in the United States) less capital expenditures. Free Cash Flow is considered to be an important indicator of our liquidity, including our ability to repay indebtedness. We believe Free Cash Flow is useful for investors because it enables them to assess our ability to service our debt and to fund continued growth with internally generated funds in a manner similar to the methods used by our management, and provides a measure that can be used to analyze, value and compare companies in the cable television industry.
Both Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, Operating Income, Net Income and various cash flow measures (e.g., Net Cash Provided by Operating Activities), as well as other measures of financial performance and liquidity reported in accordance with accounting principles generally accepted in the United States.
Reconciliation of Net Loss to Adjusted Operating Income before Depreciation and Amortization
The following table reconciles Net Loss to Adjusted Operating Income before Depreciation and Amortization. In addition, the table provides the components from Net Loss to Operating Income for purposes of the discussions that follow.
|
| Three Months |
| ||||
|
| 2006 |
| 2005 |
| ||
|
| (in thousands) |
| ||||
Net loss |
| $ | (5,010 | ) | $ | (2,800 | ) |
Other (income) expense: |
|
|
|
|
| ||
Other |
| 59 |
| (92 | ) | ||
Interest income |
| (513 | ) | (105 | ) | ||
Interest expense |
| 52,363 |
| 48,341 |
| ||
Total other expense, net |
| 51,909 |
| 48,144 |
| ||
Operating income |
| 46,899 |
| 45,344 |
| ||
Depreciation and amortization |
| 62,953 |
| 59,684 |
| ||
Stock-based compensation |
| 38 |
| — |
| ||
Adjusted Operating Income before Depreciation and Amortization |
| $ | 109,890 |
| $ | 105,028 |
|
17
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
The following table provides a reconciliation from net cash provided by operating activities to Free Cash Flow. In addition, the table provides the components from net cash provided by operating activities to operating income for purposes of the discussions that follow.
|
| Three Months |
| ||||
|
| 2006 |
| 2005 |
| ||
|
| (in thousands) |
| ||||
Operating income |
| $ | 46,899 |
| $ | 45,344 |
|
Depreciation and amortization |
| 62,953 |
| 59,684 |
| ||
Stock-based compensation |
| 38 |
| — |
| ||
Adjusted Operating Income before Depreciation and Amortization |
| 109,890 |
| 105,028 |
| ||
Changes in working capital accounts(1) |
| 506 |
| 4,981 |
| ||
Cash paid for interest(2) |
| (23,087 | ) | (38,082 | ) | ||
Net cash provided by operating activities |
| 87,309 |
| 71,927 |
| ||
Capital expenditures |
| (57,100 | ) | (37,515 | ) | ||
Free Cash Flow |
| $ | 30,209 |
| $ | 34,412 |
|
(1) Changes in working capital accounts are based on the net cash changes in current assets and current liabilities, excluding charges related to interest and taxes and other non-cash expenses.
(2) Interest for the first quarter of 2005 included bond interest payments due April 1, 2005 that were made on March 31, 2005. Had the payments been made on April 1, 2005, Free Cash Flow for the three months ended March 31, 2005 would have been $53,181.
Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
Revenue for the three months ended March 31, 2006 totaled $301.3 million, an increase of 12% over the prior year, due primarily to customer gains in all services, as well as video rate increases. High-speed Internet service revenue increased 34% over the prior year, which was attributable to an increased customer base and was partially offset by lower average revenue per customer due to promotional discounts. We added a net 44,400 high-speed Internet customers during the quarter to end at 514,800 customers. In addition, digital service revenue increased 19% over the prior year due to an increased customer base. We added a net 41,700 digital customers during the quarter to end at 560,500 customers.
Basic cable service revenue increased 7% due to an increased customer base and video rate increases, partially offset by promotional discounts. We are increasing customer growth and retention efforts by increasing spending on sales and marketing efforts, emphasizing bundling and enhancing and differentiating our video services by providing video-on-demand, high definition television and digital video recorders. We are also continuing to focus on improving customer satisfaction through higher service levels and increased education of product offerings.
18
Revenue by service offering was as follows for the three months ended March 31 (dollars in thousands):
|
| Revenue by Service Offering |
|
|
|
|
| ||||||||||||||||||
|
| Three Months Ended |
| % of |
| Three Months Ended |
| % of |
|
|
| % Change |
| ||||||||||||
Basic |
|
| $ | 158,207 |
|
|
| 52.5 | % |
|
| $ | 147,632 |
|
|
| 54.8 | % |
|
|
|
| 7.2 | % |
|
High-Speed Internet |
|
| 56,497 |
|
|
| 18.8 | % |
|
| 42,113 |
|
|
| 15.6 | % |
|
|
|
| 34.2 | % |
| ||
Digital |
|
| 31,723 |
|
|
| 10.5 | % |
|
| 26,761 |
|
|
| 9.9 | % |
|
|
|
| 18.5 | % |
| ||
Advertising |
|
| 17,697 |
|
|
| 5.9 | % |
|
| 16,988 |
|
|
| 6.3 | % |
|
|
|
| 4.2 | % |
| ||
Premium |
|
| 13,394 |
|
|
| 4.4 | % |
|
| 14,344 |
|
|
| 5.3 | % |
|
|
|
| -6.6 | % |
| ||
Telephone |
|
| 11,355 |
|
|
| 3.8 | % |
|
| 7,732 |
|
|
| 2.9 | % |
|
|
|
| 46.9 | % |
| ||
Franchise fees |
|
| 7,354 |
|
|
| 2.4 | % |
|
| 7,420 |
|
|
| 2.8 | % |
|
|
|
| -0.8 | % |
| ||
Other |
|
| 5,054 |
|
|
| 1.7 | % |
|
| 6,337 |
|
|
| 2.4 | % |
|
|
|
| -20.2 | % |
| ||
Total |
|
| $ | 301,281 |
|
|
| 100.0 | % |
|
| $ | 269,327 |
|
|
| 100.0 | % |
|
|
|
| 11.9 | % |
|
Total Customer Relationships were 1,376,800 as of March 31, 2006, an increase of 49,700 from 1,327,100 as of March 31, 2005. Total Customer Relationships represent the number of customers who receive one or more of our products (i.e., basic cable, high-speed Internet or telephone) without regard to which product they purchase. Total Revenue Generating Units (“RGUs”) which represent the sum of basic, digital, high-speed Internet and telephone customers, as of March 31, 2006 increased 15% as compared to March 31, 2005. RGUs by category were as follows (in thousands):
|
| March 31, 2006 |
| March 31, 2005 |
| ||||
Basic |
|
| 1,306.7 |
|
|
| 1,271.4 |
|
|
Digital |
|
| 560.5 |
|
|
| 459.0 |
|
|
High-speed Internet |
|
| 514.8 |
|
|
| 367.8 |
|
|
Telephone |
|
| 99.7 |
|
|
| 68.6 |
|
|
Total RGUs |
|
| 2,481.7 |
|
|
| 2,166.8 |
|
|
Average monthly revenue per basic customer was $77.60 for the three months ended March 31, 2006 compared to $70.58 for the three months ended March 31, 2005. This primarily reflects the continued growth of high-speed Internet and digital product offerings in all markets, as well as video rate increases.
Programming and other operating costs increased $11.5 million, or 12%. Increases in customers and substantial increases in programming rates were partially offset by programming credits. The credits resulted from favorable resolution of pricing negotiations related to certain prior period programming costs that were accrued at a higher rate than the amount actually paid. In addition, direct operating costs increased due to an increase in our high-speed Internet service provider costs. This increase is primarily attributable to the addition of 44,400 high-speed Internet customers and the payment of contractually obligated and other one-time transition costs to bring Internet services in house. Other operating costs increased primarily as a result of increases in repair, maintenance and warranty costs; an increase in taxes due to a change in the tax law in Kentucky; and an increase in installation labor due to increased customer activity.
Selling, general and administrative expenses increased $14.7 million, or 26%, primarily due to increased payroll, payroll related costs and temporary help, including an increase in the number of employees and salary increases for existing employees. Marketing expenses increased over the prior year to support the continued rollout of high-speed Internet, digital and telephone products, and to grow our core video customer base.
19
Management fees increased $940,000 or 12% to $9.0 million for the three months ended March 31, 2006 from $8.1 million for the three months ended Mach 31, 2005. Management fees, equal to approximately 3% of revenues, are paid to Insight LP.
Depreciation and amortization expense increased $3.3 million or 5% primarily as a result of additional capital expenditures through March 31, 2006. These expenditures were primarily for purchases of customer premise equipment, installation materials, capitalized labor and network extensions, all of which we consider necessary in order to continue to maintain and grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since March 31, 2005.
As a result of the factors discussed above, Adjusted Operating Income before Depreciation and Amortization increased $4.9 million to $109.9 million, an increase of 5% over the prior year’s quarter.
Interest expense increased $4.0 million, or 8%, due to higher interest rates, which averaged 8.36% for the three months ended March 31, 2006, as compared to 7.46% for the three months ended March 31, 2005.
Liquidity and Capital Resources
Our business requires cash for operations, debt service and capital expenditures. The cable television business has substantial ongoing capital requirements for the construction, expansion and maintenance of its broadband networks and provision of new services. In the past, expenditures have been made for various purposes, including the upgrade of the existing cable network, and in the future will be made for network extensions, installation of new services, customer premise equipment (e.g., set-top boxes), deployment of new product and service offerings, and, to a lesser extent, network upgrades. Historically, we have been able to meet our cash requirements with cash flow from operations, borrowings under our credit facilities and issuances of private and public debt and equity.
Cash provided by operations for the three months ended March 31, 2006 and 2005 was $87.3 million and $71.9 million. The increase was primarily attributable to the timing of cash receipts and payments related to our working capital accounts and the effect of non-cash items and was partially offset by an increase in our net loss.
Cash used in investing activities for the three months ended March 31, 2006 and 2005 was $57.0 million and $37.5 million. The increase primarily was due to increases in capital expenditures. For the three months ended March 31, 2006 and 2005, we spent $57.1 million and $37.5 million in capital expenditures. These expenditures principally constituted purchases of customer premise equipment, capitalized labor, installation materials, headend equipment and system upgrades and rebuilds, all of which are necessary to maintain our existing network, grow our customer base and expand our service offerings.
Cash used in financing activities for the three months ended March 31, 2006 and 2005 was $20.9 million for the amortization payments on the credit facility.
Free Cash Flow for the three months ended March 31, 2006 totaled $30.2 million compared to $34.4 million for the three months ended March 31, 2005. The decrease in Free Cash Flow from March 31, 2005 to March 31, 2006 of $4.2 million was primarily driven by the following:
· A $19.6 million increase in capital expenditures; and
· A $500,000 source of Free Cash Flow for the three months ended March 31, 2006 compared to a $5.0 million source for the three months ended March 31, 2005 from changes in working capital accounts.
20
These uses of cash were offset by:
· A $15.0 million decrease in cash interest expense paid due to a timing difference in the bond interest payments; and
· A $4.9 million increase in Adjusted Operating Income before Depreciation and Amortization.
While we expect to continue to use Free Cash Flow to repay our indebtedness, as interest rates continue to increase, we expect our interest costs will also be higher, thus reducing Free Cash Flow.
On July 21, 2005 we completed a refinancing of the existing $1.1 billion Term B loan facility under the Midwest Holdings credit facility. This refinancing reduced the applicable margins for LIBOR rate borrowings from LIBOR plus 275 basis points to LIBOR plus 200 basis points and the applicable margin will be reduced an additional 25 basis points if Midwest Holdings’ leverage ratio drops below 2.75. The maximum total leverage ratio covenant was reset from 3.75 to 4.50 on July 1, 2005 with step downs to 4.25 on July 1, 2006 and 4.00 on July 1, 2007. The facility was also amended to provide certain flexibility to refinance our senior notes.
We have a substantial amount of debt. Our high level of debt could have important consequences for you. Our principal source of cash we need to pay our obligations and to repay the principal amount of our debt obligations is the cash that our subsidiaries generate from their operations and their borrowings. We believe that the Insight Midwest Holdings credit facility, cash on-hand and our cash flow from operations are sufficient to support our current operating plan. We had the ability to draw upon $283.7 million of unused availability under the Insight Midwest Holdings credit facility as of March 31, 2006 to fund any shortfall resulting from the inability of our cash from operations to fund our capital expenditures, meet our debt service requirements or otherwise fund our operations.
The following table summarizes our contractual obligations and commitments, excluding interest and commitments for programming, as of March 31, 2006, including periods in which the related payments are due (in thousands):
|
| Contractual Obligations |
| |||||||||
|
| Long-Term |
| Operating |
| Total |
| |||||
2006 |
| $ | 62,625 |
|
| $ | 2,300 |
|
| $ | 64,925 |
|
2007 |
| 83,500 |
|
| 1,943 |
|
| 85,443 |
| |||
2008 |
| 104,750 |
|
| 1,400 |
|
| 106,150 |
| |||
2009 |
| 1,517,500 |
|
| 1,025 |
|
| 1,518,525 |
| |||
2010 |
| 630,000 |
|
| 539 |
|
| 630,539 |
| |||
Thereafter |
| 100,000 |
|
| 975 |
|
| 100,975 |
| |||
Total cash obligations |
| $ | 2,498,375 |
|
| $ | 8,182 |
|
| $ | 2,506,557 |
|
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our revolving credit and term loan agreements bear interest at floating rates. Accordingly, we are exposed to potential losses related to changes in interest rates. In order to manage our exposure to interest rate risk, we enter into derivative financial instruments, typically interest rate swaps. The counter-parties to our swap agreements are major financial institutions. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
The aggregate fair market value and aggregate carrying value of our 9¾% and 10½% senior notes was $1.1 billion and $1.0 billion as of March 31, 2006. The fair market value of our credit facility borrowings approximates its carrying value as the credit facility borrowings bear interest at floating rates of interest. As of March 31, 2006 and December 31, 2005, the cost, if terminated, of our interest rate swap agreement was $4.0 million and $2.4 million and is reflected in our financial statements as an other non-current liability. Changes in the fair value of our interest rate derivative financial instruments are either recognized in income or in partners’ capital as a component of other comprehensive income depending on whether the derivative financial instruments qualify for hedge accounting.
Item 4. Controls and Procedures
Insight Midwest’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of March 31, 2006. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that (i) Insight Midwest’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (ii) Insight Midwest’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Midwest’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) under the Exchange Act that occurred during the quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
Insight Capital’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of March 31, 2006. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that (i) Insight Capital’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (ii) Insight Capital’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Midwest’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) under the Exchange Act that occurred during the quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
22
See Note 9 in Item 1 of PART I, Notes to Consolidated Financial Statements.
There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, 2005.
Exhibits: | ||
31.1 |
| Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer of Insight Midwest, L.P. |
31.2 |
| Rule 13a-14(a)/15d-14(a) Certifications of the Chief Financial Officer of Insight Midwest, L.P. |
31.3 |
| Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer of Insight Capital, Inc. |
31.4 |
| Rule 13a-14(a)/15d-14(a) Certifications of the Chief Financial Officer of Insight Capital, Inc. |
32.1 |
| Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer of Insight Midwest, L.P. |
32.2 |
| Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer of Insight Capital, Inc. |
23
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.
Date: May 11, 2006 | INSIGHT MIDWEST, L.P. | |
| By: | /s/ JOHN ABBOT |
|
| John Abbot |
|
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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.
Date: May 11, 2006 | INSIGHT CAPITAL, INC. | |
| By: | /s/ JOHN ABBOT |
|
| John Abbot |
|
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
24