##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|x |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended June 30, 2003

or

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from      to

Commission File Number: 0-16718

Northland Cable Properties Seven Limited Partnership

(Exact Name of Registrant as Specified in Charter)


|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|Washington                               |  | 91-1366564                          
|                                         |  |                                     
|(State of Organization)                  |  | (I.R.S. Employer Identification No.)
|                                         |  |                                     
|101 Stewart Street, Seattle, Washington  |  | 98065                               
|                                         |  |                                     
|(Address of Principal Executive Offices) |  | (Zip Code)                          

(206) 621-1351

(Registrants telephone number, including area code)


N/A

(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has subject to such
filing requirements for the past 90 days.

Yes x No o

Indicate by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)

Yes o No x





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TABLE OF CONTENTS



|                                        |                                                                                                          |  |  |  |  |  |  | 
|--------------------------------------- | -------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION         
|                                        | ITEM 1. Financial Statements                                                                            
|NOTES TO UNAUDITED FINANCIAL STATEMENTS
|                                        | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Continuing Operations
|                                        | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk                                      
|                                        | ITEM 4. Controls and procedures                                                                         
|PART II  OTHER INFORMATION            
|                                        | ITEM 1 Legal proceedings                                                                                
|                                        | ITEM 2 Changes in securities                                                                            
|                                        | ITEM 3 Defaults upon senior securities                                                                  
|                                        | ITEM 4 Submission of matters to a vote of security holders                                              
|                                        | ITEM 5 Other information                                                                                
|                                        | ITEM 6 Exhibits and Reports on Form 8-K                                                                 
|SIGNATURES                             
|EXHIBIT 10.38                          
|EXHIBIT 31(A)                          
|EXHIBIT 31(B)                          
|EXHIBIT 32(A)                          
|EXHIBIT 32(B)                          



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##### Table of Contents



PART 1  FINANCIAL INFORMATION







ITEM 1. Financial Statements

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
BALANCE SHEETS  (UNAUDITED)

|                                                                                                        |                   |                          |                                   |   |             |            |              |   |             |             |  
|------------------------------------------------------------------------------------------------------- | ----------------- | ------------------------ | --------------------------------- | - | ----------- | ---------- | ------------ | - | ----------- | ----------- | -
|                                                                                                        |                   |                          |                                   |   | June 30,    |            | December 31,
|                                                                                                        |                   |                          |                                   |   | 2003        |            | 2002        
|                                                                                                        |                   |                          |                                   |   |             |            |             
|ASSETS                                                                                                  |                   |                          |                                   |   |             |            |              |  
|Cash                                                                                                    |                   | $                        | 113,880                           |   |             | $          | 519,698      |  
|Accounts receivable                                                                                     |                   |                          | 560,838                           |   |             |            | 485,780      |  
|Due from affiliates                                                                                     |                   |                          | 3,750                             |   |             |            | 34,376       |  
|Prepaid expenses                                                                                        |                   |                          | 246,515                           |   |             |            | 101,471      |  
|System sale receivable                                                                                  |                   |                          | 1,150,140                         |   |             |            |             |  
|Property and equipment, net of accumulated
depreciation of $14,181,565 and $13,115,638,
respectively    |                   |                          | 11,959,810                        |   |             |            | 12,582,150   |  
|Franchise agreements , net of accumulated
amortization of $10,321,249                                   |                   |                          | 9,607,185                         |   |             |            | 9,607,185    |  
|Loan fees and other intangibles, net of accumulated
amortization of $935,558 and $991,875, respectively |                   |                          | 156,523                           |   |             |            | 517,422      |  
|Assets of discontinued operations                                                                       |                   |                          |                                  |   |             |            | 6,744,817    |  
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|Total assets                                                                                            |                   | $                        | 23,798,641                        |   |             | $          | 30,592,899   |  
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)                                                             |                   |                          |                                   |   |             |            |              |  
|Accounts payable and accrued expenses                                                                   |                   | $                        | 1,492,403                         |   |             | $          | 1,910,050    |  
|Due to Managing General Partner and affiliates                                                          |                   |                          | 1,019,983                         |   |             |            | 973,023      |  
|Deposits                                                                                                |                   |                          | 18,725                            |   |             |            | 16,275       |  
|Subscriber prepayments                                                                                  |                   |                          | 333,279                           |   |             |            | 319,343      |  
|Notes payable                                                                                           |                   |                          | 20,323,466                        |   |             |            | 40,054,185   |  
|Liabilities of discontinued operations                                                                  |                   |                          |                                  |   |             |            | 947,670      |  
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|                                                                                                        |                   |                          | Total liabilities                 |   |             | 23,187,856 |              |   |             | 44,220,546  |  
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|Partners deficit:                                                                                      |                   |                          |                                   |   |             |            |              |  
|                                                                                                        | General Partners: |                          |                                   |   |             |            |              |   |            
|                                                                                                        |                   | Contributed capital, net |                                   |   | (25,367     | )          |              |   | (25,367     | )          
|                                                                                                        |                   | Accumulated deficit      |                                   |   | (180,994    | )          |              |   | (323,378    | )          
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|                                                                                                        |                   |                          | (206,361                          | ) |             |            | (348,745     | )
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|                                                                                                        | Limited Partners: |                          |                                   |   |             |            |              |   |            
|                                                                                                        |                   | Contributed capital, net |                                   |   | 18,735,576  |            |              |   | 18,735,576  |            
|                                                                                                        |                   | Accumulated deficit      |                                   |   | (17,918,430 | )          |              |   | (32,014,478 | )          
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|                                                                                                        |                   |                          | 817,146                           |   |             |            | (13,278,902  | )
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|                                                                                                        |                   |                          | Total partners capital (deficit) |   |             | 610,785    |              |   |             | (13,627,647 | )
|                                                                                                        |                   |                          |                                   |   |             |            |              |  
|Total liabilities and partners capital (deficit)                                                       |                   | $                        | 23,798,641                        |   |             | $          | 30,592,899   |  
|                                                                                                        |                   |                          |                                   |   |             |            |              |  

The accompanying notes are an integral part of these balance sheets.





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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS  (UNAUDITED)

|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |   |           |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | --- | --------------------------------- | ---------- | --------- | - | --------- | ---------- | -
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     | For the six months ended June 30,
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     | 2003                              |            | 2002     
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |          
|Service revenues                                                                                                                                      |                | $                                                                                                                                                         | 7,000,958                                        |     |                                   | $          | 6,692,630 |  
|Expenses:                                                                                                                                             |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                | Cable system operations (including
$72,616 and $63,784 to affiliates in
2003 and 2002, respectively), excluding
depreciation and amortization shown below |                                                  |     | 456,747                           |            |           |   | 457,433   |           
|                                                                                                                                                      |                | General and administrative (including
$726,884 and $582,737 to affiliates
in 2003 and 2002, respectively)                                                 |                                                  |     | 1,769,756                         |            |           |   | 1,620,550 |           
|                                                                                                                                                      |                | Programming (including $18,923 and
$19,358 to affiliates in 2003 and 2002,
respectively)                                                                  |                                                  |     | 2,378,665                         |            |           |   | 2,179,701 |           
|                                                                                                                                                      |                | Depreciation and amortization                                                                                                                             |                                                  |     | 1,072,048                         |            |           |   | 1,111,480 |           
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                |                                                                                                                                                           | 5,677,216                                        |     |                                   |            | 5,369,164 |  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Income from operations                                                                                                                                |                |                                                                                                                                                           | 1,323,742                                        |     |                                   |            | 1,323,466 |  
|Other income (expense):                                                                                                                               |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                |                                                                                                                                                           | Interest expense and loan fees                   |     |                                   | (834,755   | )         |   |           | (1,020,045 | )
|                                                                                                                                                      |                |                                                                                                                                                           | Interest income and other, net                   |     |                                   | 1,223      |           |   |           | 671        |  
|                                                                                                                                                      |                |                                                                                                                                                           | Unrealized gain on interest rate swap agreements |     |                                   |           |           |   |           | 277,449    |  
|                                                                                                                                                      |                |                                                                                                                                                           | Loss on disposal of assets                       |     |                                   | (16,732    | )         |   |           | (533       | )
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                |                                                                                                                                                           | (850,264                                         | )   |                                   |            | (742,458  | )
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Income from continuing operations                                                                                                                     |                | $                                                                                                                                                         | 473,478                                          |     |                                   | $          | 581,008   |  
|Discontinued operations (note 3)
Income (loss) from operations of Washington
systems, net (including gain on sale of systems
of $14,113,294 in 2003 ) |                |                                                                                                                                                           | 13,764,954                                       |     |                                   |            | (411,580  | )
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Net income                                                                                                                                            |                |                                                                                                                                                           | 14,238,432                                       |     |                                   |            | 169,428   |  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Allocation of net income:                                                                                                                             |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                |                                                                                                                                                           | General Partners                                 |     | $                                 | 142,384    |           |   | $         | 1,694      |  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      |                |                                                                                                                                                           | Limited Partners                                 |     | $                                 | 14,096,048 |           |   | $         | 167,734    |  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Net income per limited partnership unit:                                                                                                              |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|                                                                                                                                                      | (49,656 units) |                                                                                                                                                           | $                                                | 284 |                                   |            | $         | 3 |          
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  
|Net income per $1,000 investment                                                                                                                      |                | $                                                                                                                                                         | 568                                              |     |                                   | $          | 7         |  
|                                                                                                                                                      |                |                                                                                                                                                           |                                                  |     |                                   |            |           |  

The accompanying notes are an integral part of these statements.





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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS  (UNAUDITED)

|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |    |           |          |  
|-------------------------------------------------------------------------------- | -------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | - | ----------------------------------- | -------- | --------- | -- | --------- | -------- | -
|                                                                                 |                |                                                                                                                                                           |                                |   | For the three months ended June 30,
|                                                                                 |                |                                                                                                                                                           |                                |   |                                    
|                                                                                 |                |                                                                                                                                                           |                                |   | 2003                                |          | 2002     
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |          
|Service revenues                                                                 |                | $                                                                                                                                                         | 3,547,096                      |   |                                     | $        | 3,404,941 |   
|Expenses:                                                                        |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                | Cable system operations (including
$35,404 and $30,201 to affiliates in
2003 and 2002, respectively), excluding
depreciation and amortization shown below |                                |   | 236,541                             |          |           |    | 238,143   |         
|                                                                                 |                | General and administrative (including
$362,403 and $290,998 to affiliates
in 2003 and 2002, respectively)                                                 |                                |   | 926,521                             |          |           |    | 834,022   |         
|                                                                                 |                | Programming (including $9,556 and
$13,492 to affiliates in 2003 and 2002,
respectively)                                                                   |                                |   | 1,189,265                           |          |           |    | 1,104,363 |         
|                                                                                 |                | Depreciation and amortization                                                                                                                             |                                |   | 536,324                             |          |           |    | 554,597   |         
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                |                                                                                                                                                           | 2,888,651                      |   |                                     |          | 2,731,125 |   
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Income from operations                                                           |                |                                                                                                                                                           | 658,445                        |   |                                     |          | 673,816   |   
|Other income (expense):                                                          |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                |                                                                                                                                                           | Interest expense and loan fees |   |                                     | (400,360 | )         |    |           | (599,858 | )
|                                                                                 |                |                                                                                                                                                           | Interest income and other, net |   |                                     | 446      |           |    |           | (510     | )
|                                                                                 |                |                                                                                                                                                           | Loss on disposal of assets     |   |                                     | (2,437   | )         |    |           |         |  
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                |                                                                                                                                                           | (402,351                       | ) |                                     |          | (600,368  | ) 
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Income from continuing operations                                                |                | $                                                                                                                                                         | 256,094                        |   |                                     | $        | 73,448    |   
|Discontinued operations (note 3)
Loss from operations of Washington
systems, net |                |                                                                                                                                                           |                               |   |                                     |          | (267,931  | ) 
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Net income (loss)                                                                |                |                                                                                                                                                           | 256,094                        |   |                                     |          | (194,483  | ) 
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Allocation of net income (loss):                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                |                                                                                                                                                           | General Partners               |   | $                                   | 2,561    |           |    | $         | (1,945   | )
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 |                |                                                                                                                                                           | Limited Partners               |   | $                                   | 253,533  |           |    | $         | (192,538 | )
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Net income (loss) per limited partnership unit:                                  |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|                                                                                 | (49,656 units) |                                                                                                                                                           | $                              | 5 |                                     |          | $         | (4 | )        
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   
|Net income (loss) per $1,000 investment                                          |                | $                                                                                                                                                         | 10                             |   |                                     | $        | (8        | ) 
|                                                                                 |                |                                                                                                                                                           |                                |   |                                     |          |           |   

The accompanying notes are an integral part of these statements.



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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS  (UNAUDITED)

|                                                                              |                                                  |                                                |             |                                   |            |      |           |           |          |  
|----------------------------------------------------------------------------- | ------------------------------------------------ | ---------------------------------------------- | ----------- | --------------------------------- | ---------- | ---- | --------- | --------- | -------- | -
|                                                                              |                                                  |                                                |             | For the six months ended June 30,
|                                                                              |                                                  |                                                |             |                                  
|                                                                              |                                                  |                                                |             | 2003                              |            | 2002
|                                                                              |                                                  |                                                |             |                                   |            |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |                                                  |                                                |             |                                   |            |      |           |          
|Net income                                                                    |                                                  | $                                              | 14,238,432  |                                   |            | $    | 169,428   |          
|Adjustments to reconcile net income to
cash provided by operating activities: |                                                  |                                                |             |                                   |            |      |           |          
|                                                                              | Depreciation and amortization                    |                                                |             | 1,255,978                         |            |      |           | 1,694,995 |         
|                                                                              | Unrealized gain on interest rate swap agreements |                                                |             |                                  |            |      |           | (277,449  | )       
|                                                                              | Loan fees                                        |                                                |             | 401,705                           |            |      |           | 111,892   |         
|                                                                              | (Gain) loss on sale of assets                    |                                                |             | (14,096,562                       | )          |      |           | 533       |         
|                                                                              | (Increase) decrease in operating assets:         |                                                |             |                                   |            |      |           |           |         
|                                                                              |                                                  | Accounts receivable                            |             |                                   | (72,753    | )    |           |           | (137,226 | )
|                                                                              |                                                  | Due from affiliates                            |             |                                   | 30,626     |      |           |           | 11,177   |  
|                                                                              |                                                  | Prepaid expenses                               |             |                                   | (140,094   | )    |           |           | (10,026  | )
|                                                                              | Increase (decrease) in operating liabilities     |                                                |             |                                   |            |      |           |           |         
|                                                                              |                                                  | Accounts payable and accrued expenses          |             |                                   | (1,006,798 | )    |           |           | 182,146  |  
|                                                                              |                                                  | Due to Managing General Partner and affiliates |             |                                   | 43,459     |      |           |           | 447,095  |  
|                                                                              |                                                  | Deposits                                       |             |                                   | 2,450      |      |           |           | 19,205   |  
|                                                                              |                                                  | Subscriber prepayments                         |             |                                   | 13,936     |      |           |           | (20,165  | )
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|Net cash provided by operating activities                                     |                                                  |                                                | 670,379     |                                   |            |      | 2,191,605 |          
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |                                                  |                                                |             |                                   |            |      |           |          
|Purchase of property and equipment, net                                       |                                                  |                                                | (466,852    | )                                 |            |      | (970,882  | )        
|Proceeds from sale of systems                                                 |                                                  |                                                | 19,281,427  |                                   |            |      |          |          
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|Net cash provided by (used in) investing activities                           |                                                  |                                                | 18,814,575  |                                   |            |      | (970,882  | )        
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |                                                  |                                                |             |                                   |            |      |           |          
|Principal payments on borrowings                                              |                                                  |                                                | (19,730,719 | )                                 |            |      | (565,844  | )        
|Loan fees                                                                     |                                                  |                                                | (317,891    | )                                 |            |      | (400,000  | )        
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|Net cash used in financing activities                                         |                                                  |                                                | (20,048,610 | )                                 |            |      | (965,844  | )        
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|(DECREASE) INCREASE IN CASH                                                   |                                                  |                                                | (563,656    | )                                 |            |      | 254,879   |          
|CASH, beginning of period                                                     |                                                  |                                                | 677,536     |                                   |            |      | 125,060   |          
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|CASH, end of period                                                           |                                                  | $                                              | 113,880     |                                   |            | $    | 379,939   |          
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                             |                                                  |                                                |             |                                   |            |      |           |          
|                                                                              | Cash paid during the period for interest         |                                                | $           | 1,040,649                         |            |      | $         | 1,445,938 |         
|                                                                              |                                                  |                                                |             |                                   |            |      |           |          

The accompanying notes are an integral part of these statements.





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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS

(1) Basis of Presentation

These unaudited financial statements are being filed in conformity with Rule
10-01 of Regulation S-X regarding interim financial statement disclosure and do
not contain all of the necessary footnote disclosures required for a fair
presentation of the balance sheets, statements of operations and statements of
cash flows in conformity with accounting principles generally accepted in the
United States of America. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the Partnerships financial position at June 30,
2003, its statements of operations for the six and three months ended June 30,
2003 and 2002, and its statements of cash flows for the six months ended June
30, 2003 and 2002. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year. These financial
statements and notes should be read in conjunction with the Partnerships
Annual Report on Form 10-K for the year ended December 31, 2002.

Effective January 1, 2003, the Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting and reporting for
obligations associated with the reporting obligations associated with the
retirement of tangible long lived assets and associated asset retirement
obligations (ARO). Under the scope of this pronouncement, the Partnership
has ARO associated with the removal of equipment from poles and headend sites
that are leased from third parties. Based on managements analyses, the
Partnership has concluded that for the reasons mentioned below, it is not able
to reasonably estimate the fair values of the ARO. First, to operate the cable
television network, the Partnership will always need to have equipment deployed
at these poles and headend sites. Additionally, the Partnership has not
historically incurred any ARO and, given the length of time in the future when
any potential obligations might exist, management believes that estimating any
probability at this time is not practical. As a result, upon adoption of SFAS
No. 143 the Partnership did not record any ARO associated with the obligation
to remove the equipment.

On March 11, 2003, the Partnership sold the operating assets and franchise
rights of its cable systems in and around Sequim and Camano Island, Washington.
The accompanying financial statements have been restated to report the
discontinued operations of the Partnership, effected for this sale.

(2) Intangible Assets

In accordance with the provisions of SFAS No. 142, Goodwill and Other
Intangible Assets, the Partnership does not amortize goodwill or any other
intangible assets determined to have indefinite lives. The Partnership has
determined that its franchises meet the definition of indefinite lived assets.
The Partnership tests these assets for impairment on an annual basis during the
fourth quarter, or on an interim basis if an event occurs or circumstances
change that would reduce the fair value of a reporting unit below its carrying
value or if the fair value of intangible assets with indefinite lives falls
below their carrying value on an annual basis. The book value of the
Partnerships intangible assets, effecting for the sale of the Washington
Systems described in note 3, is presented in the following table:

|                                    |                                 |   |               |            |                   |   |             |             |          |   |              |           |          |   |            |            |     |   |             |             |   |   |            |           | 
|----------------------------------- | ------------------------------- | - | ------------- | ---------- | ----------------- | - | ----------- | ----------- | -------- | - | ------------ | --------- | -------- | - | ---------- | ---------- | --- | - | ----------- | ----------- | - | - | ---------- | --------- | 
|                                    |                                 |   | June 30, 2003 |            | December 31, 2002
|                                    |                                 |   |               |            |                  
|                                    |                                 |   | Gross         |            |                   |   |             |             | Net      |   | Gross        |           |          |   |            |            | Net
|                                    |                                 |   | Carrying      |            | Accumulated       |   | Carrying    |             | Carrying |   | Accumulated  |           | Carrying
|                                    |                                 |   | Amount        |            | Amortization      |   | Amount      |             | Amount   |   | Amortization |           | Amount  
|                                    |                                 |   |               |            |                   |   |             |             |          |   |              |           |         
|Indefinite-lived intangible assets: |                                 |   |               |            |                   |   |             |             |          |   |              |           |          |   |            |            |     |   |             |             |   |   |            |          
|                                    | Franchise agreements            |   | $             | 19,928,434 |                   |   | $           | (10,321,249 | )        |   | $            | 9,607,185 |          |   | $          | 19,928,434 |     |   | $           | (10,321,249 | ) |   | $          | 9,607,185 | 
|Definite-lived intangible assets:   |                                 |   |               |            |                   |   |             |             |          |   |              |           |          |   |            |            |     |   |             |             |   |   |            |          
|                                    | Loan fees and other intangibles |   |               | 1,092,081  |                   |   |             | (935,558    | )        |   |              | 156,523   |          |   |            | 1,509,297  |     |   |             | (991,875    | ) |   |            | 517,422   | 
|                                    |                                 |   |               |            |                   |   |             |             |          |   |              |           |          |   |            |            |     |   |             |             |   |   |            |          
|                                    |                                 | $ | 21,020,515    |            |                   | $ | (11,256,807 | )           |          | $ | 9,763,708    |           |          | $ | 21,437,731 |            |     | $ | (11,313,124 | )           |   | $ | 10,124,607 |          
|                                    |                                 |   |               |            |                   |   |             |             |          |   |              |           |          |   |            |            |     |   |             |             |   |   |            |          





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##### Table of Contents



Amortization of loan fees for the remainder of 2003 and through the remaining
useful life of the assets is expected to be as follows:

|     |  |   |         | 
|---- |  | - | ------- | 
|2003 |  | $ | 104,348 | 
|2004 |  |   | 52,175  | 
|2005 |  |   |        | 
|2006 |  |   |        | 
|2007 |  |   |        | 
|     |  |   |         | 
|     |  | $ | 156,523 | 
|     |  |   |         | 

(3) System Sales

On March 11, 2003, the Partnership sold the operating assets and franchise
rights of its cable systems in and around the communities of Sequim and Camano
Island, Washington (the Washington Systems). The Washington Systems were sold
at a price of approximately $20,340,000 of which the Partnership received
approximately $19,280,000 at closing. The sales price was adjusted at closing
for the proration of certain revenues and expenses and approximately $1,060,000
will be held in escrow and released to the Partnership one year from the
closing of the transaction, subject to general representations and warranties.
Historically, the Partnership has entered into similarly structured
transactions, and has collected the amount held in escrow. Substantially all
of the proceeds were used to pay down amounts outstanding under the
Partnerships credit agreement.

The sale was made pursuant to an offer by Wave Division Networks, LLC, which
was formalized in a Purchase and Sale Agreement dated October 28, 2002. Based
on the offer made by Wave Division Networks, LLC, management determined that
acceptance would be in the best economic interest of the Partnership, and that
the sale was not a result of declining or deteriorating operations nor was it
necessary to create liquidity or reduce outstanding debt. It is the opinion of
management that the Partnership could have continued existing operations and
met all obligations as they became due.

The assets and liabilities attributable to the Washington Systems as of
December 31, 2002 have been reported as assets and liabilities from
discontinued operations in the accompanying balance sheets, and consist of the
following:

|                                                                        |                   |   |                   |           | 
|----------------------------------------------------------------------- | ----------------- | - | ----------------- | --------- | 
|                                                                        |                   |   | As of            
|                                                                        |                   |   | December 31, 2002
|                                                                        |                   |   |                  
|Cash                                                                    |                   | $ | 157,838           |          
|Accounts receivable                                                     |                   |   | 242,211           |          
|Prepaid expenses                                                        |                   |   | 15,819            |          
|Property and equipment (net of accumulated
depreciation of $10,816,079) |                   |   | 5,215,097         |          
|Franchise agreements (net of accumulated
amortization of $528,415)      |                   |   | 961,053           |          
|Goodwill (net of accumulated amortization of
$70,130)                   |                   |   | 152,799           |          
|                                                                        |                   |   |                   |          
|                                                                        | Total assets      |   | $                 | 6,744,817 | 
|                                                                        |                   |   |                   |          
|Accounts payable and accrued expenses                                   |                   |   | 589,453           |          
|Deposits                                                                |                   |   | 2,025             |          
|Subscriber prepayments                                                  |                   |   | 356,192           |          
|                                                                        |                   |   |                   |          
|                                                                        | Total liabilities |   | $                 | 947,670   | 
|                                                                        |                   |   |                   |          





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##### Table of Contents



In addition, the revenue, expenses and other items attributable to the
operations of the Washington Systems for the period from January 1, 2003 to
March 11, 2003 (the date of the sale of the Washington Systems), and for the
six and three months ended June 30, 2002 have been reported as discontinued
operations in the accompanying statements of operations, and include the
following:

|                                                         |                                                                                                           |   |                    |            |      |   |           |          |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | - | ------------------ | ---------- | ---- | - | --------- | -------- | -
|                                                         |                                                                                                           |   | For the six months
|                                                         |                                                                                                           |   | ended June 30,    
|                                                         |                                                                                                           |   |                   
|                                                         |                                                                                                           |   | 2003               |            | 2002
|                                                         |                                                                                                           |   |                    |            |     
|Service revenues                                         |                                                                                                           | $ | 1,129,917          |            |      | $ | 2,890,249 |         
|Expenses:                                                |                                                                                                           |   |                    |            |      |   |           |         
|                                                         | Operating (including $13,642 and $39,158 to
affiliates in 2003 and 2002, respectively)                    |   |                    | 130,423    |      |   |           | 269,506  |  
|                                                         | General and administrative (including $144,476
and $300,050 to affiliates in 2003 and 2002,
respectively) |   |                    | 283,904    |      |   |           | 698,659  |  
|                                                         | Programming (including $32,896 and $73,524 to
affiliates in 2003 and 2002, respectively)                  |   |                    | 388,583    |      |   |           | 896,274  |  
|                                                         | Depreciation and amortization                                                                             |   |                    | 183,930    |      |   |           | 583,515  |  
|                                                         |                                                                                                           |   |                    |            |      |   |           |         
|                                                         |                                                                                                           |   | 986,840            |            |      |   | 2,447,954 |         
|                                                         |                                                                                                           |   |                    |            |      |   |           |         
|Income from operations                                   |                                                                                                           |   | 143,077            |            |      |   | 442,295   |         
|Other income (expense):                                  |                                                                                                           |   |                    |            |      |   |           |         
|                                                         | Interest expense                                                                                          |   |                    | (347,130   | )    |   |           | (666,191 | )
|                                                         | Loan fees                                                                                                 |   |                    | (144,287   | )    |   |           | (187,684 | )
|                                                         | Gain on sale of system                                                                                    |   |                    | 14,113,294 |      |   |           |         |  
|                                                         |                                                                                                           |   |                    |            |      |   |           |         
|Income (loss) from operations of
Washington Systems, net |                                                                                                           | $ | 13,764,954         |            |      | $ | (411,580  | )       
|                                                         |                                                                                                           |   |                    |            |      |   |           |         





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##### Table of Contents



|                                                         |                                                                    |   |                      |          |  
|-------------------------------------------------------- | ------------------------------------------------------------------ | - | -------------------- | -------- | -
|                                                         |                                                                    |   | For the three months
|                                                         |                                                                    |   | ended June 30,      
|                                                         |                                                                    |   | 2002                
|                                                         |                                                                    |   |                     
|Service revenues                                         |                                                                    | $ | 1,473,640            |         
|Expenses:                                                |                                                                    |   |                      |         
|                                                         | Operating (including $19,113 paid to affiliates)                   |   |                      | 132,964  |  
|                                                         | General and administrative (including $156,269
paid to affiliates) |   |                      | 351,042  |  
|                                                         | Programming (including $38,925 paid to
affiliates)                 |   |                      | 461,279  |  
|                                                         | Depreciation and amortization                                      |   |                      | 292,609  |  
|                                                         |                                                                    |   |                      |         
|                                                         |                                                                    |   | 1,237,894            |         
|                                                         |                                                                    |   |                      |         
|Income from operations                                   |                                                                    |   | 235,746              |         
|Other income (expense):                                  |                                                                    |   |                      |         
|                                                         | Interest expense                                                   |   |                      | (330,757 | )
|                                                         | Loan fees                                                          |   |                      | (172,920 | )
|                                                         | Gain on sale of system                                             |   |                      |         |  
|                                                         |                                                                    |   |                      |         
|Income (loss) from operations of Washington Systems, net |                                                                    | $ | (267,931             | )       
|                                                         |                                                                    |   |                      |         

In accordance with EITF 87-24,
Allocation of Interest Expense to Discontinued
Operations, the Partnership allocated interest expense to
discontinued operations using the historic weighted average interest
rate applicable to the Partnerships credit facility and approximately
$18,713,000 in principal payments, which were applied to the credit
facility
as a result of the sale of the Washington Systems.

(4) Notes Payable

On March 31, 2002, the Partnership agreed to certain terms and conditions with
its bank and amended its credit agreement. The new terms and conditions modify
the debt repayment schedule, applicable interest rates, certain financial
covenants, and fees to be paid to the lenders. The new agreement matures on
March 31, 2004, and has an applicable interest rate of LIBOR plus 4% and
provided for scheduled increases in 2003 and 2004. However, if the Partnership
sells assets and reduces the debt by at least $15,000,000, the interest rate
increases scheduled for 2003 and 2004 would not occur and certain fees would be
reduced pro rata by the amount of the debt repayment. The sale of the
Washington Systems in March of 2003 met the asset sale criteria, reducing the
fees and applicable interest rate margin over the remaining term of the loan
agreement.

Under the terms of the Partnerships amended credit agreement, the Partnership
has agreed to restrictive covenants that require the maintenance of certain
ratios, as defined in the amended credit agreement, including a maximum ratio
of Funded Debt to EBITDA of 5.45 to 1.0 and a minimum ratio of Operating Cash
Flow to Interest Expense of 2.25 to 1.0. As of June 30, 2003 the Partnership
was in compliance with its required financial covenants.

As of the date of this filing, the balance under the credit facility is
$20,086,759 at a LIBOR based interest rate of 5.10%. This interest rate expires
August 29, 2003, at which time a new rate will be established.

(5) Subsequent Event

In August 2003, the Partnership agreed to certain terms and conditions with a
new lender in anticipation of refinancing its credit facility. The refinancing
is subject to completion of final agreements and management believes it is
probable that these agreements will be finalized, however, no assurances can be
given that the refinance will be completed. The terms and conditions of the new
agreement would modify the existing debt repayment schedule, applicable
interest rates, certain financial covenants, and fees to be paid to the lenders
and would establish a maturity date of March 31, 2009. Based on the terms of
the new agreement, the Partnership would be required to make the following
principal payments:

|      |      |   |                   |           | 
|----- | ---- | - | ----------------- | --------- | 
|      |      |   | Amended Principal
|      |      |   | Payments         
|      |      |   |                  
|      | 2004 |   | $                 | 3,225,000 | 
|      | 2005 |   |                   | 3,440,000 | 
|      | 2006 |   |                   | 3,655,000 | 
|      | 2007 |   |                   | 4,515,000 | 
|      | 2008 |   |                   | 5,375,000 | 
|      | 2009 |   |                   | 1,290,000 | 
|      |      |   |                   |          
|Total |      | $ | 21,500,000        |          
|      |      |   |                   |          





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##### Table of Contents



PART I (continued)




ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Continuing Operations

Six Months Ended June 30, 2003 and 2002

Revenues totaled $7,000,958 for the six months ended June 30, 2003 representing
an increase of $308,328 or approximately 5% over the same period in 2002. Of
these revenues, $4,534,543 (65%) was derived from basic services, $559,275 (8%)
from premium services, $940,058 (13%) from expanded basic services, $102,200
(1%) from digital services, $464,880 (7%) from advertising, $135,488 (2%) from
late fees, and $264,514 (4%) from other sources. The increase in revenues is
primarily attributable to: (i) rate increases implemented in the Partnerships
systems during the first quarter of 2003 and (ii) increased penetration in
expanded and digital services.

Cable system operating expenses, which consist primarily of salary and benefit
costs, totaled $456,747 for the six months ended June 30, 2003, remaining
relatively constant with the same period in 2002.

General and administrative expenses totaled $1,769,756 for the six months ended
June 30, 2003, an increase of $149,206 or approximately 9% over the same period
in 2002. This increase is primarily attributable to increases in revenue based
fees such as management and franchise fees, marketing expense and other
overhead costs.

Programming expenses totaled $2,378,665 for the six months ended June 30, 2003,
increasing $198,964 or 9% over the same period in 2002. This increase is due
primarily to higher costs charged by various program suppliers as well as costs
incurred as the result of offering additional channels and digital programming
in some of the Partnerships systems.

Depreciation and amortization expense for the six months ended June 30, 2003
decreased $39,432 or approximately 4% over the same period in 2002. Such
decrease is primarily attributable to certain assets becoming fully depreciated
offset by depreciation of recent purchases related to the upgrade of plant and
equipment.

Interest expense and loan fees allocated to continuing operations for the six
months ended June 30, 2003 decreased approximately 18% over the same period in
2002 due primarily to a decrease in the Partnerships effective interest rate
from 7.12% in the first half of 2002 to 6.38% in the first half of 2003 and
required principal payments. In addition, the Partnerships average bank debt
outstanding decreased from $41,042,060 during the first half of 2002 to
$28,995,143 during the same period in 2003, due primarily to the fact that the
proceeds from the sale of the Washington Systems were used to repay debt in
March of 2003.

In accordance with EITF 87-24,
Allocation of Interest Expense to Discontinued
Operations, the Partnership allocated interest expense to
discontinued operations using the historic weighted average interest
rate applicable to the Partnerships credit facility and approximately
$18,713,000 in principal payments, which were applied to the credit
facility
as a result of the sale of the Washington Systems.

The Partnership has elected not to designate its interest rate swap agreements
as hedges under SFAS No. 133. Agreements in place as of December 31, 2001
expired during the first quarter of 2002, and the Partnership has elected not
to enter into any new agreements.

Three Months Ended June 30, 2003 and 2002

Revenues totaled $3,547,096 for the three months ended June 30, 2003
representing an increase of $142,155 or approximately 4% over the same period
in 2002. Of these revenues, $2,309,002 (65%) was derived from basic services,
$276,918 (8%) from premium services, $465,231 (13%) from expanded basic
services, $50,234 (2%) from digital services, $260,785 (7%) from advertising,
$68,088 (2%) from late fees, and $116,838 (3%) from other sources. The
increase in revenues is primarily attributable to: (i) rate increases
implemented in the Partnerships systems during the first quarter of 2003 and
(ii) increased penetration in expanded and digital services.

Cable system operating expenses totaled $236,541 for the three months ended
June 30, 2003, remaining relatively constant with the same period in 2002.

General and administrative expenses totaled $926,521 for the three months ended
June 30, 2003, an increase of $92,499 or approximately 11% over the same period
in 2002. This increase is primarily attributable to increases in revenue based
fees such as management and franchise fees, marketing expense and other
overhead costs.





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##### Table of Contents



Programming expenses totaled $1,189,265 for the three months ended June 30,
2003, increasing $84,902 or 7% over the same period in 2002. This increase is
due primarily to higher costs charged by various program suppliers as well as
costs incurred as the result of offering additional channels and digital
programming in some of the Partnerships systems.

Depreciation and amortization expense for the three months ended June 30, 2003
decreased $18,273 or approximately 3% over the same period in 2002. Such
decrease is primarily attributable to certain assets becoming fully depreciated
offset by depreciation of recent purchases related to the upgrade of plant and
equipment.

Interest expense and loan fees for the three months ended June 30, 2003
decreased approximately 32% over the same period in 2002 due primarily to a
decrease in the Partnerships effective interest rate from 7.09% in the second
quarter of 2002 to 5.24% in the second quarter of 2003 and required principal
payments. In addition, the Partnerships average bank debt outstanding
decreased from $40,872,007 during the second quarter of 2002 to $20,659,838
during the same period in 2003, due primarily to the fact that the proceeds
from the sale of the Washington Systems were used to repay debt in March of
2003.

In accordance with EITF 87-24,
Allocation of Interest Expense to Discontinued
Operations, the Partnership allocated interest expense to
discontinued operations using the historic weighted average interest
rate applicable to the Partnerships credit facility and approximately
$18,713,000 in principal payments, which were applied to the credit
facility
as a result of the sale of the Washington Systems.

The Partnership has elected not to designate its interest rate swap agreements
as hedges under SFAS No. 133. Agreements in place as of December 31, 2001
expired during the first quarter of 2002, and the Partnership has elected not
to enter into any new agreements.

Liquidity and Capital Resources

The Partnerships primary source of liquidity is cash flow provided from
operations. The Partnership generates cash through the monthly billing of
subscribers for cable services. Losses from uncollectible accounts have not
been material. Based on managements analysis, the Partnerships cash flow
from operations will be sufficient to cover future operating costs and planned
capital expenditures over the next twelve-month period.

Net cash provided by operating activities totaled $670,379 for the six months
ended June 30, 2003. Adjustments to the $14,238,432 net income for the
period to reconcile to net cash provided by operating activities consisted
primarily of a gain of $14,096,562 related primarily to the sale of the
Washington Systems, increases in operating assets of $182,221 and decreases
in operating liabilities of $946,953, offset by depreciation and amortization
of $1,255,978 and loan fees of $401,705.

Net cash provided by investing activities consisted of proceeds from the sale
of the Washington Systems of $19,281,427, offset by $466,852 in capital
expenditures for the six months ended June 30, 2003.

Net cash used in financing activities for the six months ended June 30, 2003,
consisted of $19,730,719 in principal payments on long-term debt, due
primarily to the sale of the Washington Systems and loan fee payments of
$317,891.

Notes Payable

On March 31, 2002, the Partnership agreed to certain terms and conditions with
its bank and amended its credit agreement. The new terms and conditions modify
the debt repayment schedule, applicable interest rates, certain financial
covenants, and fees to be paid to the lenders. The new agreement matures on
March 31, 2004, and has an applicable interest rate of LIBOR plus 4% and
provided for scheduled increases in 2003 and 2004. However, if the Partnership
sells assets and reduces the debt by at least $15,000,000, the interest rate
increases scheduled for 2003 and 2004 would not occur and certain fees would be
reduced pro rata by the amount of the debt repayment. The sale of the
Washington Systems in March of 2003 met the asset sale criteria, reducing the
fees and applicable interest rate margin over the remaining term of the loan
agreement.





---



##### Table of Contents



Under the terms of the Partnerships amended credit agreement, the Partnership
has agreed to restrictive covenants that require the maintenance of certain
ratios including a maximum ratio of Funded Debt to EBITDA of 5.45 to 1.0 and a
minimum ratio of Operating Cash Flow to Interest Expense of 2.25 to 1.0. As of
June 30, 2003 the Partnership was in compliance with its required financial
covenants.

As of the date of this filing, the balance under the credit facility is
$20,086,759 at a LIBOR based interest rate of 5.10%. This interest rate expires
August 29, 2003, at which time a new rate will be established.

In August 2003, the Partnership agreed to certain terms and conditions with a
new lender in anticipation of refinancing its credit facility. The refinancing
is subject to completion of final agreements and management believes it is probable that
these agreements will be finalized, however, no assurances can be given that
the refinancing will be completed. The terms and conditions of the new
agreement would modify the existing debt repayment schedule, applicable
interest rates, certain financial covenants, and fees to be paid to the lenders
and would establish a maturity date of March 31, 2009. Based on the terms of
the new agreement, the Partnership would be required to make the following
principal payments:

|      |      |   |                   |           | 
|----- | ---- | - | ----------------- | --------- | 
|      |      |   | Amended Principal
|      |      |   | Payments         
|      |      |   |                  
|      | 2004 |   | $                 | 3,225,000 | 
|      | 2005 |   |                   | 3,440,000 | 
|      | 2006 |   |                   | 3,655,000 | 
|      | 2007 |   |                   | 4,515,000 | 
|      | 2008 |   |                   | 5,375,000 | 
|      | 2009 |   |                   | 1,290,000 | 
|      |      |   |                   |          
|Total |      | $ | 21,500,000        |          
|      |      |   |                   |          

System Sale

On March 11, 2003, the Partnership sold the operating assets and franchise
rights of its cable systems in and around the communities of Sequim and Camano
Island, Washington (the Washington Systems). The Washington Systems were sold
at a price of approximately $20,340,000 of which the Partnership received
approximately $19,280,000 at closing. The sales price was adjusted at closing
for the proration of certain revenues and expenses and approximately $1,060,000
will be held in escrow and released to the Partnership one year from the
closing of the transaction, subject to general representations and warranties.
Historically, the Partnership has entered into similarly structured
transactions, and has collected the amount held in escrow. Substantially all
of the proceeds were used to pay down amounts outstanding under the
Partnerships credit agreement.

The sale was made pursuant to an offer by Wave Division Networks, LLC, which
was formalized in a Purchase and Sale Agreement dated October 28, 2002. Based
on the offer made by Wave Division Networks, LLC, management determined that
acceptance would be in the best economic interest of the Partnership, and that
the sale was not a result of declining or deteriorating operations nor was it
necessary to create liquidity or reduce outstanding debt. It is the opinion of
management that the Partnership could have continued existing operations and
met all obligations as they became due.

In addition to working capital needs for ongoing operations, the Partnership
has capital requirements for (i) annual maturities and interest payments
related to the term loan and (ii) required minimum operating lease payments.
The following table summarizes the contractual obligations of the Partnership,
after effecting for the sales of the Washington Systems and the anticipated
effect of these obligations on the Partnerships liquidity for the remainder of
2003 and in future years:





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##### Table of Contents



|                                                                                |  |      |           |      |  |      |            |      |  |      |        |       |  |   |        |  |  |  |   |  |  |   |            | 
|------------------------------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | ---------- | ---- |  | ---- | ------ | ----- |  | - | ------ |  |  |  | - |  |  | - | ---------- | 
|                                                                                |  | 2003 |           | 2004 |  | 2005 |            | 2006 |  | 2007 |        | Total
|                                                                                |  |      |           |      |  |      |            |      |  |      |        |      
|Notes payable                                                                   |  | $    | 1,223,840 |      |  | $    | 19,056,592 |      |  | $    | 29,868 |       |  | $ | 13,166 |  |  |  |  |  |  | $ | 20,323,466 | 
|Interest payments (weighted average
interest rate of 5.13% as of June 30,
2003) |  |      | 505,230   |      |  |      | 244,773    |      |  |      | 1,440  |       |  |   | 225    |  |  |  |  |  |  |   | 751,668    | 
|Minimum operating lease payments                                                |  |      | 20,431    |      |  |      | 31,898     |      |  |      | 18,698 |       |  |   | 1,898  |  |  |  |  |  |  |   | 72,925     | 
|                                                                                |  |      |           |      |  |      |            |      |  |      |        |       |  |   |        |  |  |  |   |  |  |   |            | 
|Total contractual cash obligations (a)                                          |  | $    | 1,749,501 |      |  | $    | 19,333,263 |      |  | $    | 50,006 |       |  | $ | 15,289 |  |  |  |  |  |  | $ | 21,148,059 | 
|                                                                                |  |      |           |      |  |      |            |      |  |      |        |       |  |   |        |  |  |  |   |  |  |   |            | 



---

|(a) |  | These contractual obligations do not include accounts payable and accrued
liabilities, which are expected to be paid in 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------

Capital Expenditures

During the first six months of 2003, the Partnership incurred approximately
$467,000 in capital expenditures, including various line extensions, plant
upgrades and the continuation of digital service deployment. Planned
expenditures for the remainder of 2003 include the initial phase of an upgrade
of the distribution plant to 450MHz in Royston, GA, as well as the construction
of additional extensions and continued digital deployment.

Recently Issued Accounting Standards

Effective January 1, 2003, the Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting and reporting for
obligations associated with the reporting obligations associated with the
retirement of tangible long lived assets and associated asset retirement
obligations (ARO). Under the scope of this pronouncement, the Partnership
has ARO associated with the removal of equipment from poles and headend sites
that are leased from third parties. Based on managements analyses, the
Partnership has concluded that for the reasons mentioned below, it is not able
to reasonably estimate the fair values of the ARO. First, to operate the cable
television network, the Partnership will always need to have equipment deployed
at these poles and headend sites. Additionally, the Partnership has not
historically incurred any ARO and, given the length of time in the future when
any potential obligations might exist, management believes that estimating any
probability at this time is not practical. As a result, upon adoption of SFAS
No. 143 the Partnership did not record any ARO associated with the obligation
to remove the equipment.

Critical Accounting Policies

This discussion and analysis of our financial condition and results of
operations is based on the Partnerships financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. The following critical accounting policies, which have
been chosen among alternatives, require a more significant amount of management
judgment than other accounting policies the Partnership employs.

Revenue Recognition- Cable television service revenue, including service and
maintenance, is recognized in the month service is provided to customers.
Advance payments on cable services to be rendered are recorded as subscriber
prepayments. Revenues resulting from the sale of local spot advertising are
recognized when the related advertisements or commercials appear before the
public.

Property and Equipment- Property and equipment are recorded at cost. Costs of
additions and substantial improvements, which include materials, labor, and
other indirect costs associated with the construction of cable transmission and
distribution facilities, are capitalized. Indirect costs include employee
salaries and benefits, travel and other costs. These costs are estimated based
on historical information and analysis. The Partnership periodically performs
evaluations of these estimates as warranted by events or changes in
circumstances.





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In accordance with SFAS No. 51, Financial Reporting by Cable Television
Companies, the Partnership also capitalizes costs associated with initial
customer installations. The costs of disconnecting service or reconnecting
service to previously installed locations is expensed in the period incurred.
Costs for repairs and maintenance are also charged to operating expense, while
equipment replacements, including the replacement of drops, are capitalized.

Intangible Assets- In accordance with the provisions of SFAS No. 142,
Goodwill and Other Intangible Assets, the Partnership does not amortize
goodwill or any other intangible assets determined to have indefinite lives.
The Partnership has determined that its franchises meet the definition of
indefinite lived assets. The Partnership tests these assets for impairment on
an annual basis during the fourth quarter, or on an interim basis if an event
occurs or circumstances change that would reduce the fair value of a reporting
unit below its carrying value or if the fair value of intangible assets with
indefinite lives falls below their carrying value on an annual basis.

Management believes the franchises have indefinite lives because the franchises
are expected to be used by the Partnership for the foreseeable future and
effects of obsolescence, competition and other factors are minimal. In
addition, the level of maintenance expenditures required to obtain the future
cash flows expected from the franchises are not material in relation to the
carrying value of the franchises. While the franchises have defined lives
based on the franchising authority, renewals are routinely granted, and
management expects them to continue to be granted. This expectation is
supported by managements experience with the Partnerships franchising
authorities and the franchising authorities of the Partnerships affiliates.





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##### Table of Contents






ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership is subject to market risks arising from changes in interest
rates. The Partnerships primary interest rate exposure results from changes in
LIBOR or the prime rate, which are used to determine the interest rate
applicable to the Partnerships debt facilities. The Partnership has from time
to time entered into interest rate swap agreements to partially hedge interest
rate exposure. Interest rate swaps have the effect of converting the
applicable variable rate obligations to fixed or other variable rate
obligations. As of the date of this filing, the Partnership is not involved in
any interest rate swap agreements. The potential loss over one year that would
result from a hypothetical, instantaneous and unfavorable change of 100 basis
points in the interest rate of all of the Partnerships variable rate
obligations would be approximately $203,000.

Cautionary statement for purposes of the Safe Harbor provisions of the
Private Litigation Reform Act of 1995. Statements contained or incorporated by
reference in this document that are not based on historical fact are
forward-looking statements within the meaning of the Private Securities
Reform Act of 1995. Forward-looking statements may be identified by use of
forward-looking terminology such as believe, intends, may, will,
expect, estimate, anticipate, continue, or similar terms, variations of
those terms or the negative of those terms.




ITEM 4. Controls and procedures

Based on their evaluation as of the end of the period covered by this report,
the General Partners Chief Executive Officer and President (Principal
Financial and Accounting Officer) have concluded that the Partnerships
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934 (the Exchange Act)) are effective
to ensure that information required to be disclosed by the Partnership in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.

There were no significant changes in the Partnerships internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.





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##### Table of Contents






PART II  OTHER INFORMATION




ITEM 1 Legal proceedings

None




ITEM 2 Changes in securities

None




ITEM 3 Defaults upon senior securities

None




ITEM 4 Submission of matters to a vote of security holders

None




ITEM 5 Other information

None




ITEM 6 Exhibits and Reports on Form 8-K



| | (a) |  | Exhibit Index
| | --- |  | -------------

|       |  |                                                                                                                                                                                                                       
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.38. |  | Third Amendment to Amended and Restated Credit Agreement
between Northland Cable Properties Seven Limited Partnership
and Bank of America (fka Seattle First National Bank) dated
May 15, 2003                        
|       |  |                                                                                                                                                                                                                       
|31(a)  |  | Certification of Chief Executive Officer of
Northland Communications Corporation, the Managing General
Partner, dated August 13, 2003 pursuant to section 302 of the
Sarbanes-Oxley Act                               
|       |  |                                                                                                                                                                                                                       
|31(b)  |  | Certification of President (Principal
Financial and Accounting Officer) of Northland Communications
Corporation, the Managing General Partner, dated August 13,
2003 pursuant to section 302 of the Sarbanes-Oxley Act
|       |  |                                                                                                                                                                                                                       
|32(a)  |  | Certification of Chief Executive Officer of
Northland Communications Corporation, the Managing General
Partner, dated August 13, 2003 pursuant to section 906 of the
Sarbanes-Oxley Act                               
|       |  |                                                                                                                                                                                                                       
|32(b)  |  | Certification of President (Principal
Financial and Accounting Officer) of Northland Communications
Corporation, the Managing General Partner, dated August 13,
2003 pursuant to section 906 of the Sarbanes-Oxley Act



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------
|
| |     |  | None               





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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

BY: Northland Communications Corporation,
General Partner

|                                      |  |                                                             |  |        
|------------------------------------- |  | ----------------------------------------------------------- |  | -------
|SIGNATURES                            |  | CAPACITIES                                                  |  | DATE   
|                                      |  |                                                             |  |        
|                                      |  |                                                             |  |        
|/s/ RICHARD I. CLARK

Richard I Clark |  | Executive Vice President, Treasurer and
Assistant Secretary |  | 8-13-03
|                                      |  |                                                             |  |        
|/s/ GARY S. JONES

Gary S. Jones      |  | President                                                   |  | 8-13-03