##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For
the quarterly period ended June 30, 2006
 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
  Washington
    
    91-1366564(State of Organization)
    
    (I.R.S. Employer Identification No.)
 101 Stewart Street, Suite 700, Seattle, Washington
    
    98065(Address of Principal Executive Offices)
    
    (Zip Code)
  (Registrants telephone number, including area code)
  
   þ o
  o o þ
  o þ




---



TABLE OF CONTENTS  PART 1  FINANCIAL INFORMATIONITEM 1. Financial StatementsITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Continuing OperationsITEM 3. Quantitative and Qualitative Disclosures About Market RiskITEM 4. Controls and ProceduresPART II  OTHER INFORMATIONITEM 1 Legal proceedingsITEM 1A Risk FactorsITEM 2 Changes in securitiesITEM 3 Defaults upon senior securitiesITEM 4 Submission of matters to a vote of security holdersITEM 5 Other informationITEM 6 Exhibits and Reports on Form 8-KSIGNATURESEXHIBIT 31.(A)EXHIBIT 31.(B)EXHIBIT 32.(A)EXHIBIT 32.(B)    Table of Contents  
  
  
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCash
    
    $
    715,448
    
    
    $
    877,365Accounts receivable
    
    
    153,466
    
    
    
    230,728Due from affiliates
    
    
    84,167
    
    
    
    83,810Prepaid expenses
    
    
    108,033
    
    
    
    74,950System sale receivable
    
    
    1,776,200
    
    
    
    1,779,553Property and equipment, net of accumulated
depreciation of $11,239,457 and $10,477,977,
respectively
    
    
    6,475,642
    
    
    
    6,568,493Franchise agreements, net of accumulated
amortization of $9,995,974, respectively
    
    
    9,606,966
    
    
    
    9,606,966Loan fees and other intangibles, net of accumulated
amortization of $748,792 and $729,673, respectively
    
    
    105,158
    
    
    
    124,277Total assets
    
    $
    19,025,080
    
    
    $
    19,346,142LIABILITIES AND PARTNERS CAPITAL (DEFICIT)Accounts payable and accrued expenses
    
    $
    987,017
    
    
    $
    1,183,102Due to Managing General Partner and affiliates
    
    
    60,404
    
    
    
    46,643Deposits
    
    
    17,135
    
    
    
    16,335Subscriber prepayments
    
    
    211,409
    
    
    
    184,811Notes payable
    
    
    3,358,031
    
    
    
    3,827,998Total liabilities
    
    
    4,633,996
    
    
    
    5,258,889Partners capital (deficit):General Partners:Contributed capital, net
    
    
    (25,367
    )
    
    
    (25,367
    )Accumulated deficit
    
    
    (41,378
    )
    
    
    (44,421
    )(66,745
    )
    
    
    (69,788
    )Limited Partners:Contributed capital, net
    
    
    18,554,382
    
    
    
    18,554,844Accumulated deficit
    
    
    (4,096,553
    )
    
    
    (4,397,803
    )14,457,829
    
    
    
    14,157,041Total partners capital (deficit)
    
    
    14,391,084
    
    
    
    14,087,253Total liabilities and partners capital (deficit)
    
    $
    19,025,080
    
    
    $
    19,346,142




---



##### Table of Contents



For the six months ended June 30,2006
    
    
    2005Service revenues
    
    $
    4,288,367
    
    
    $
    4,234,699Expenses:Cable system operations (including
$82,506 and $64,131 to affiliates in
2006 and 2005, respectively), excluding
depreciation and amortization shown below
    
    
    390,301
    
    
    
    380,629General and administrative (including
$434,893 and $431,531 to affiliates
in 2006 and 2005, respectively)
    
    
    1,200,862
    
    
    
    1,076,485Programming (including $2,266 and
$1,054 to affiliates in 2006 and 2005,
respectively)
    
    
    1,439,281
    
    
    
    1,381,628Depreciation
    
    
    762,659
    
    
    
    781,964Loss (gain) on disposal of assets
    
    
    544
    
    
    
    (21,213
    )3,793,647
    
    
    
    3,599,493Income from operations
    
    
    494,720
    
    
    
    635,206Other income (expense):Interest expense and amortization of loan fees
    
    
    (191,939
    )
    
    
    (165,356
    )Interest income and other, net
    
    
    1,512
    
    
    
    268(190,427
    )
    
    
    (165,088
    )Income from continuing operations
    
    $
    304,293
    
    
    $
    470,118Discontinued operations (note 3)Income from operations of Brenham and Bay City
systems, net (including gain on sale of systems of
$7,253,829 in 2005)
    
    
    
    
    
    
    7,162,355Net income
    
    
    304,293
    
    
    
    7,632,473Allocation of net income:General Partners
    
    $
    3,043
    
    
    $
    76,325Limited Partners
    
    $
    301,250
    
    
    $
    7,556,148Income from continuing operations per limited
partnership unit (49,656 units):
    
    $
    6
    
    
    $
    9Income from discontinued operations per limited
partnership unit (49,656 units):
    
    $
    
    
    
    $
    143Net income per limited partnership unit:(49,656 units)
    
    $
    6
    
    
    $
    152




---



##### Table of Contents



For the three months ended June 30,2006
    
    
    2005Service revenues
    
    $
    2,170,931
    
    
    $
    2,121,584Expenses:Cable system operations (including
$46,940 and $31,071 to affiliates in
2006 and 2005, respectively), excluding
depreciation and amortization shown below
    
    
    193,915
    
    
    
    196,710General and administrative (including
$219,882 and $222,466 to affiliates
in 2006 and 2005, respectively)
    
    
    618,595
    
    
    
    547,140Programming (including $1,272 and
$652 to affiliates in 2006 and 2005,
respectively)
    
    
    723,492
    
    
    
    686,240Depreciation
    
    
    367,903
    
    
    
    390,729Loss on disposal of assets
    
    
    272
    
    
    
    3,0291,904,177
    
    
    
    1,823,848Income from operations
    
    
    266,754
    
    
    
    297,736Other income (expense):Interest expense and amortization of loan fees
    
    
    (96,894
    )
    
    
    (85,938
    )Interest income and other, net
    
    
    1,035
    
    
    
    272(95,859
    )
    
    
    (85,666
    )Income from continuing operations
    
    $
    170,895
    
    
    $
    212,070Discontinued operations (note 3)Income from operations of Brenham and Bay City
systems, net (including gain on sale of systems of
$7,254,239 in 2005)
    
    
    
    
    
    
    7,174,896Net income
    
    
    170,895
    
    
    
    7,386,966Allocation of net income:General Partners
    
    $
    1,709
    
    
    $
    73,870Limited Partners
    
    $
    169,186
    
    
    $
    7,313,096Income from continuing operations per limited
partnership unit (49,656 units):
    
    $
    3
    
    
    $
    4Income from discontinued operations per limited
partnership unit (49,656 units):
    
    $
    
    
    
    $
    143Net income per limited partnership unit:(49,656 units)
    
    $
    3
    
    
    $
    147




---



##### Table of Contents



For the six months ended June 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    304,293
    
    
    $
    7,632,473Adjustments to reconcile net income to
cash provided by operating activities:Depreciation
    
    
    762,659
    
    
    
    857,842Loan fee amortization
    
    
    19,119
    
    
    
    73,978Loss (gain) on sale of assets
    
    
    544
    
    
    
    (7,275,042
    )Other
    
    
    
    
    
    
    20,686(Increase) decrease in operating assets:Accounts receivable
    
    
    80,615
    
    
    
    41,613Due from affiliates
    
    
    (357
    )
    
    
    (55,758
    )Prepaid expenses
    
    
    (33,083
    )
    
    
    (78,259
    )Increase (decrease) in operating liabilities:Accounts payable and accrued expenses
    
    
    (197,091
    )
    
    
    (196,504
    )Due to Managing General Partner and affiliates
    
    
    13,761
    
    
    
    (6,691
    )Deposits
    
    
    800
    
    
    
    1,570Subscriber prepayments
    
    
    26,598
    
    
    
    58,480Net cash provided by operating activities
    
    
    977,858
    
    
    
    1,074,388CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (684,883
    )
    
    
    (660,882
    )Proceeds from sale of systems
    
    
    
    
    
    
    8,448,517Proceeds from sale of assets
    
    
    15,075
    
    
    
    Proceeds from insurance
    
    
    
    
    
    
    24,992Net cash (used in) provided by investing activities
    
    
    (669,808
    )
    
    
    7,812,627CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on borrowings
    
    
    (469,967
    )
    
    
    (8,113,073
    )Loan fees
    
    
    
    
    
    
    (137,062
    )Net cash used in financing activities
    
    
    (469,967
    )
    
    
    (8,250,135
    )(DECREASE) INCREASE IN CASH
    
    
    (161,917
    )
    
    
    636,880CASH, beginning of period
    
    
    877,365
    
    
    
    65,547CASH, end of period
    
    $
    715,448
    
    
    $
    702,427SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest
    
    $
    185,307
    
    
    $
    864,773Distribution to Limited Partners for income taxes
    
    $
    181,194
    
    
    $
    




---



##### Table of Contents



NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Intangible Assets
   2006 (6 months)
    
    
    19,1202007
    
    
    38,2392008
    
    
    38,2392009
    
    
    9,560$
    105,158
 (3) System Sales




---



##### Table of Contents



For the six months ended
June 30,2005Service revenues
    
    $
    2,556,822Expenses:Operating (including $26,288 received from affiliates in
2005)
    
    
    189,461General and administrative (including $229,127 paid to
affiliates in 2005)
    
    
    632,295Programming (including $991 paid to affiliates in 2005)
    
    
    1,049,575Depreciation and amortization
    
    
    75,878Gain on disposal of assets
    
    
    (7,540,249
    )(5,593,040
    )Income from operations
    
    
    8,149,862Other expense:Interest expense and amortization of loan fees
    
    
    (577,538
    )Loss on extinguishment of debt
    
    
    (409,969
    )Income from operations of
Brenham and Bay City systems, net
    
    $
    7,162,355




---



##### Table of Contents



For the three months ended June 30,2005Service revenues
    
    $
    1,275,042Expenses:Operating (including $12,658 received from affiliates in
2005)
    
    
    96,211General and administrative (including $116,887 paid to
affiliates in 2005)
    
    
    310,316Programming (including $603 paid to affiliates in 2005)
    
    
    524,154Gain on disposal of assets
    
    
    (7,540,659
    )(6,609,978
    )Income from operations
    
    
    7,885,020Other expense:Interest expense and amortization of loan fees
    
    
    (300,155
    )Loss on extinguishment of debt
    
    
    (409,969
    )Income from operations of
Brenham and Bay City systems, net
    
    $
    7,174,896
  (4) Notes Payable




---



##### Table of Contents



2006 (6 months)
    
    
    471,7462007
    
    
    1,165,6332008
    
    
    1,387,5542009
    
    
    333,098$
    3,358,031
   (5) Litigation




---



##### Table of Contents



PART I (continued)
 
 ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Continuing
Operations
 Results of Continuing Operations  Six Months Ended June 30, 2006 and 2005
   
    
    $3,441,814 (80%) from basic and expanded services,
    
    $267,286 (6%) from premium services
    
    $42,621 (1%) from digital services
    
    $176,328 (4%) from high speed Internet services
    
    $159,218 (4%) from advertising
    
    $86,928 (2%) from late fees
    
    $114,172 (3 %) from other sources.




---



##### Table of Contents



Results of Continuing Operations  Three Months Ended June 30, 2006 and 2005
   
    
    $1,735,137 (80%) from basic and expanded services,
    
    $135,793 (6%) from premium services
    
    $20,795 (1%) from digital services
· $96,655 (4%) from high speed Internet services
    
    $84,614 (4%) from advertising
    
    $46,407 (2%) from late fees
    
    $51,530 (3 %) from other sources.




---



##### Table of Contents



Liquidity and Capital Resources
     Notes Payable
     2006 (6 months)
    
    
    471,7462007
    
    
    1,165,6332008
    
    
    1,387,5542009
    
    
    333,098$
    3,358,031




---



##### Table of Contents



System Sales
   Obligations and Commitments
  Payments Due By PeriodLess than 1
    
    
    1   3
    
    
    3  5
    
    
    More thanTotal
    
    
    year
    
    
    years
    
    
    years
    
    
    5 yearsNotes payable
    
    $
    3,358,031
    
    
    $
    1,054,563
    
    
    $
    2,303,468
    
    
    
    
    
    
    
    Minimum operating lease payments
    
    
    5,220
    
    
    
    4,476
    
    
    
    744
    
    
    
    
    
    
    
    Total
    
    $
    3,363,251
    
    
    $
    1,059,039
    
    
    $
    2,304,212
 
 (a)
    
    These contractual obligations do not include accounts payable and accrued liabilities,
which are expected to
be paid in 2006.(b)
    
    The Partnership also rents utility poles in its operations. Amounts due under these
agreements are not included in the above minimum operating lease payments amounts as,
generally, pole rentals are cancelable on short notice. The Partnership does however
anticipate that such rentals will recur.(c)
    
    Note that obligations related to the Partnerships notes payable exclude interest
expense.




---



##### Table of Contents



Capital Expenditures
   Critical Accounting Policies
  Revenue Recognition
  Property and Equipment
   Intangible Assets




---



##### Table of Contents



Allocation of Interest Expense to Discontinued Operations
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
   
 ITEM 4. Controls and Procedures




---



##### Table of Contents



Legal proceedings
   
 Risk Factors
  
 Changes in securities
  
 Defaults upon senior securities
  
 Submission of matters to a vote of security holders
  
 Other information
  
 Exhibits and Reports on Form 8-K
  31 (a).
    
    Certification of Chief Executive Officer of Northland
Communications Corporation, the Managing General Partner, dated August 14, 2006
pursuant to section 302 of the Sarbanes-Oxley Act31 (b).
    
    Certification of President (Principal Financial and Accounting
Officer) of Northland Communications Corporation, the Managing General Partner,
dated August 14, 2006 pursuant to section 302 of the Sarbanes-Oxley Act32 (a).
    
    Certification of Chief Executive Officer of Northland
Communications Corporation, the Managing General Partner, dated August 14, 2006
pursuant to section 906 of the Sarbanes-Oxley Act32 (b).
    
    Certification of President (Principal Financial and Accounting
Officer) of Northland
Communications Corporation, the Managing General Partner, dated August 14,
2006 pursuant to section 906 of the Sarbanes-Oxley Act




---



##### Table of Contents



SIGNATURES
  NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
 
 SIGNATURES
    
    CAPACITIES
    
    DATE/S/ RICHARD I. CLARK

Richard I. Clark
    
    Executive Vice President, Treasurer and
Assistant Secretary
    
    8-14-06/S/ GARY S. JONES

Gary S. Jones
    
    President
    
    8-14-06