Summary of KNOLOGY INC - Yahoo! Finance

Results of Operations and Financial Condition, Financial Statements and Exhibits

Item 2.02. Results of Operations and Financial Condition.

On November 5, 2008, Knology, Inc. (the "Company") issued a press release announcing its 2008 third quarter results. The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

In the attached press release, we use the non-GAAP financial measures EBITDA, as adjusted, and EBITDA margin. EBITDA is an acronym that means earnings before interest, taxes, depreciation and amortization. EBITDA, as adjusted, is an operational measure that is not calculated and presented in accordance with accounting principles generally accepted in the United States. The Company defines EBITDA, as adjusted, as earnings before interest; taxes; depreciation and amortization; non-cash stock-based compensation; restructuring expense; capital markets activity; adjustment of interest rate derivative instrument to market; adjustment of warrants to market; loss on early extinguishment of debt; gain on disposal of discontinued operations; and other expenses. EBITDA, as adjusted, eliminates the uneven effect on operating income of non-cash depreciation of tangible assets and amortization of certain intangible assets and, therefore, is useful to management in measuring the overall operational strength and performance of the Company. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used for generating the Company's revenues. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures and investment spending. Another limitation of EBITDA, as adjusted, is that it does not reflect income net of interest expense, which is a significant expense of the Company because of the substantial debt it has incurred, and will continue to incur, to acquire, upgrade and build out its broadband network. EBITDA margin is calculated as EBITDA, as adjusted, divided by total revenue for the relevant period.

We also use the Non-GAAP financial measure Free Cash Flow. Free Cash Flow is calculated as EBITDA, as adjusted, less capital expenditures and less cash interest paid, net of cash interest received. The use of Free Cash Flow is important because it allows management, as well as investors and analysts, to assess our ability to make additional investments and meet our debt obligations.

The press release attached as Exhibit 99.1 and incorporated by reference herein includes a reconciliation of EBITDA, as adjusted and Free Cash Flow to net loss, the most directly comparable GAAP measure, for the three month periods ended September 30, 2007 and 2008.