KNSY » Topics » Item 3. Quantitative and Qualitative Disclosures about Market Risk

This excerpt taken from the KNSY 10-Q filed Feb 9, 2007.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments as well as the fair value of our Swap.

Investment Portfolio

Our investment portfolio consists primarily of high quality municipal securities the majority of which have maturities ranging from less than one year to three years. We also have two municipal variable-rate demand obligations with a maturities ranging from 17 to 23 years. These municipal variable-rate demand obligations are putable weekly and callable on a monthly basis. The Company had one U.S corporate security with a maturity of approximately 10 years which was called in the month of January 2007 and one mutual fund. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets. We have an audit committee approved investment strategy, which currently limits the duration and types of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. As of December 31, 2006, our total portfolio consisted of approximately $26.0 million of investments. While our investments may be sold at any time because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. Additional information regarding our investments is located in Note 2 to the Consolidated Financial Statements of the Company – Investments.

Debt

On May 25, 2006, we entered into an agreement for a Mortgage with Citibank, N.A. The Mortgage provides us with the ability to take aggregate advances of up to $35 million. In order to manage the market risk from changes in interest rates we also entered into a $35 million aggregate ten-year fixed interest rate swap agreement. As of December 31, 2006 we had taken an $8 million advance under the Mortgage (See Note 9 (Debt) to the Condensed Consolidated Financial Statements of the Company). Our objective and strategy for entering into the swap agreement was to hedge our exposure to variability in cash flows and interest expense associated with the future interest rate payments under the Mortgage and to reduce our interest rate risk in the event of an unfavorable interest rate environment. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates.

 

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Table of Contents
This excerpt taken from the KNSY 10-Q filed Nov 9, 2006.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments and as well as the fair value of our Swap.

Investment Portfolio

Our investment portfolio consists primarily of high quality municipal and U.S. corporate securities. The majority of the above investments have maturities ranging from less than one year to four years. In addition, the Company has one security with a maturity of approximately 10 years and one municipal variable-rate demand obligation with a maturity of approximately 23 years. This municipal variable-rate demand obligation is putable weekly and callable on a monthly basis. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets. We have an audit committee approved investment strategy, which currently limits the duration and types of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. As of September 30, 2006, our total portfolio consisted of approximately $24.4 million of investments. While our investments may be sold at any time because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. Additional information regarding our investments is located in Note 2 to the Consolidated Financial Statements of the Company – Investments.

Debt

On May 25, 2006, we entered into an agreement for a Mortgage with Citibank, N.A. The Mortgage provides us with the ability to take aggregate advances of up to $35 million. In order to manage the market risk from changes in interest rates we also entered into a $35 million aggregate ten-year fixed interest rate swap agreement. As of September 30, 2006 we had taken an $8 million advance under the Mortgage (See Note 9 (Debt) to the Condensed Consolidated Financial Statements of the Company). Our objective and strategy for entering into the swap agreement was to hedge our exposure to variability in cash flows and interest expense associated with the future interest rate payments under the Mortgage and to reduce our interest rate risk in the event of an unfavorable interest rate environment. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates.

 

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This excerpt taken from the KNSY 10-K filed Sep 13, 2006.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments.

Investment Portfolio

Our investment portfolio consists primarily of high quality municipal and corporate obligations. The majority of the above investments have maturities ranging from less than one year to four years. In addition, the Company has one security with a maturity of approximately 10 years. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets and we have an audit committee approved investment strategy which currently limits the duration of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. At June 30, 2006, our total portfolio consisted of approximately $22.3 million of investments. While our investments may be sold at anytime because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. Additional information regarding our investments is located in Note 1 to the Consolidated Financial Statements of the Company – Investments.

Debt

On May 25, 2006, we entered into a $35 million aggregate ten-year fixed interest rate swap agreement (the swap), with Citibank, N.A., to manage the market risk from changes in interest rates under a secured commercial mortgage. As of June 30, 2006 we have taken an $8 million advance under the Mortgage (see Note 7 to the Consolidated Financial Statements of the Company). Our objective and strategy for undertaking the swap was to hedge our exposure to variability in cash flows and interest expense associated with the future interest rate payments under the Mortgage and to reduce our interest rate risk in the event of an unfavorable interest rate environment. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. Additional information regarding the swap is located in Note 1 – under Derivative Instruments and Hedging Activities and Note 7 to the Consolidated Financial Statements of the Company.

This excerpt taken from the KNSY 10-Q filed May 10, 2006.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments.

Our investment portfolio consists primarily of high quality municipal and U.S. corporate securities with maturities ranging from approximately less than 1 year to 4 years, with one security having a maturity of 10 years. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets. We have an audit committee approved investment strategy, which provides guidance on the duration and types of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. At March 31, 2006, our total portfolio consisted of approximately $22.3 million of investments. While our investments may be sold at any time because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. We had no outstanding debt at March 31, 2006.

This excerpt taken from the KNSY 10-Q filed Nov 9, 2005.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments.

 

Our investment portfolio consists primarily of high quality U.S. government, municipal and corporate securities with maturities ranging primarily from 1 month to 4 years, with one security having a maturity of 11 years. Also, the portfolio includes certain municipal variable rate demand obligations that have maturities ranging from 13 to 30 years. These municipal variable-rate demand obligations are putable weekly and callable on a monthly basis. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets. We have an audit committee approved investment strategy, which provides guidance on the duration and types of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. At September 30, 2005, our total portfolio consisted of approximately $34.4 million of investments. While our investments may be sold at anytime because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. We had no outstanding debt at September 30, 2005.

 

This excerpt taken from the KNSY 10-K filed Sep 13, 2005.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our interest income and expense are sensitive to changes in the general level of interest rates. In this regard, changes in interest rates affect the interest earned on our cash, cash equivalents and investments.

 

Our investment portfolio consists primarily of high quality municipal and U.S. government and corporate obligations. The majority of the above investments have maturities ranging from approximately 4 months to 5 years. In addition, the Company has one security with a maturity of approximately 11 years. Also, there are certain municipal variable rate demand obligations that have maturities ranging from 5 to 30 years. These municipal variable-rate demand obligations are putable weekly and callable on a monthly basis. We mitigate default risk by investing in what we believe are safe and high credit quality securities and by monitoring the credit rating of investment issuers. Our portfolio includes only marketable securities with secondary or resale markets and we have an audit committee approved investment strategy which currently limits the duration of our investments. These available-for-sale securities are subject to interest rate risk and decrease in market value if interest rates increase. At June 30, 2005, our total portfolio consisted of approximately $40.7 million of investments. While our investments may be sold at anytime because the portfolio includes available-for-sale marketable securities with secondary or resale markets, we generally hold securities until the earlier of their call date or their maturity. Therefore, we do not expect our results of operations or cash flows to be materially impacted due to a sudden change in interest rates. We had no outstanding debt at June 30, 2005.

 

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