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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 endedMarch 31, 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)
 (206) 621-1351(Registrants telephone number, including area code)
  (Former name, former address and former fiscal year, if changed since last report)
  þ o
  o o þ
  o þ




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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  
  
  
 March 31,
    
    
    December 31,2006
    
    
    2005ASSETSCash
    
    $
    627,243
    
    
    $
    877,365Accounts receivable
    
    
    134,655
    
    
    
    230,728Due from affiliates
    
    
    65,973
    
    
    
    83,810Prepaid expenses
    
    
    91,111
    
    
    
    74,950System sale receivable
    
    
    1,776,200
    
    
    
    1,779,553Property and equipment, net of accumulated
depreciation of $10,871,558 and $10,477,977,
respectively
    
    
    6,548,399
    
    
    
    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 $739,233 and $729,673, respectively
    
    
    114,717
    
    
    
    124,277Total assets
    
    $
    18,965,264
    
    
    $
    19,346,142LIABILITIES AND PARTNERS CAPITAL (DEFICIT)Accounts payable and accrued expenses
    
    $
    910,878
    
    
    $
    1,183,102Due to Managing General Partner and affiliates
    
    
    60,032
    
    
    
    46,643Deposits
    
    
    17,500
    
    
    
    16,335Subscriber prepayments
    
    
    171,879
    
    
    
    184,811Notes payable
    
    
    3,584,324
    
    
    
    3,827,998Total liabilities
    
    
    4,744,613
    
    
    
    5,258,889Partners capital (deficit):General Partners:Contributed capital, net
    
    
    (25,367
    )
    
    
    (25,367
    )Accumulated deficit
    
    
    (43,087
    )
    
    
    (44,421
    )(68,454
    )
    
    
    (69,788
    )Limited Partners:Contributed capital, net
    
    
    18,554,844
    
    
    
    18,554,844Accumulated deficit
    
    
    (4,265,739
    )
    
    
    (4,397,803
    )14,289,105
    
    
    
    14,157,041Total partners capital (deficit)
    
    
    14,220,651
    
    
    
    14,087,253Total liabilities and partners capital (deficit)
    
    $
    18,965,264
    
    
    $
    19,346,142




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For the three months ended March 31,2006
    
    
    2005Service revenues
    
    $
    2,117,436
    
    
    $
    2,113,012Expenses:Cable system operations (including
$35,566 and $33,060 to affiliates in
2005 and 2004, respectively), excluding
depreciation and amortization shown below
    
    
    196,385
    
    
    
    183,919General and administrative (including
$215,011 and $209,065 to affiliates
in 2005 and 2004, respectively)
    
    
    582,265
    
    
    
    529,352Programming (including $994 and
$402 to affiliates in 2005 and 2004,
respectively)
    
    
    715,787
    
    
    
    695,386Depreciation
    
    
    394,760
    
    
    
    391,236(Gain) loss on disposal of assets
    
    
    272
    
    
    
    (24,242
    )1,889,469
    
    
    
    1,775,651Income from operations
    
    
    227,967
    
    
    
    337,361Other income (expense):Interest expense and amortization of loan fees
    
    
    (95,046
    )
    
    
    (64,882
    )Interest income and other, net
    
    
    477
    
    
    
    (94,569
    )
    
    
    (64,882
    )Income from continuing operations
    
    $
    133,398
    
    
    $
    272,479Discontinued operations (note 3)Loss from operations of Brenham and Bay City
systems, net
    
    
    
    
    
    
    (26,972
    )Net income
    
    
    133,398
    
    
    
    245,507Allocation of net income:General Partners
    
    $
    1,334
    
    
    $
    2,455Limited Partners
    
    $
    132,064
    
    
    $
    243,052Income from continuing operations per limited
partnership unit (49,656 units):
    
    $
    3
    
    
    $
    5Loss from discontinued operations per limited
partnership unit (49,656 units):
    
    $
    
    
    
    $
    (1
    )Net income per limited partnership unit:(49,656 units)
    
    $
    3
    
    
    $
    5




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For the three months ended March 31,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    133,398
    
    
    $
    245,507Adjustments to reconcile net income to
cash provided by operating activities:Depreciation
    
    
    394,760
    
    
    
    467,114Loan fee amortization
    
    
    9,560
    
    
    
    37,307Loss (gain) on sale of assets
    
    
    272
    
    
    
    (23,832
    )Other
    
    
    
    
    
    
    11,895(Increase) decrease in operating assets:Accounts receivable
    
    
    99,426
    
    
    
    60,584Due from affiliates
    
    
    17,837
    
    
    
    (44,799
    )Prepaid expenses
    
    
    (16,161
    )
    
    
    (105,732
    )Increase (decrease) in operating liabilitiesAccounts payable and accrued expenses
    
    
    (272,496
    )
    
    
    (212,034
    )Due to Managing General Partner and affiliates
    
    
    13,389
    
    
    
    1,650Deposits
    
    
    1,165
    
    
    
    2,668Subscriber prepayments
    
    
    (12,932
    )
    
    
    99,447Net cash provided by operating activities
    
    
    368,218
    
    
    
    539,775CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (385,670
    )
    
    
    (181,204
    )Proceeds from sale of assets
    
    
    11,004
    
    
    
    Proceeds from insurance
    
    
    
    
    
    
    24,242Net cash used in investing activities
    
    
    (374,666
    )
    
    
    (156,962
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on borrowings
    
    
    (243,674
    )
    
    
    (137,062
    )Net cash used in financing activities
    
    
    (243,674
    )
    
    
    (137,062
    )(DECREASE) INCREASE IN CASH
    
    
    (250,122
    )
    
    
    245,751CASH, beginning of period
    
    
    877,365
    
    
    
    65,547CASH, end of period
    
    $
    627,243
    
    
    $
    311,298SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest
    
    $
    89,168
    
    
    $
    428,077




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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 (1) Basis of Presentation
   (2) Intangible Assets
   2006 (9 months)
    
    
    28,6792007
    
    
    38,2392008
    
    
    38,2392009
    
    
    9,560$
    114,717
 (3) System Sales




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For the three months endedMarch 31, 2005Service revenues
    
    $
    1,281,881Expenses:Operating (including $13,630 received from affiliates in
2005)
    
    
    93,251General and administrative (including $112,240 paid to
affiliates in 2005)
    
    
    321,975Programming (including $388 paid to affiliates in 2005)
    
    
    525,423Depreciation and amortization
    
    
    75,878Loss on disposal of assets
    
    
    4101,016,937Income from operations
    
    
    264,944Other income (expense):Interest expense and amortization of loan fees
    
    
    (291,916
    )Loss from operations of
Brenham and Bay City systems, net
    
    $
    (26,972
    )
  (4) Notes Payable




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2006 (9 months)
    
    
    698,0392007
    
    
    1,165,6332008
    
    
    1,387,5542009
    
    
    333,098$
    3,584,324
   (5) Litigation




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PART I (continued)
 
 ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Continuing
Operations
 Results of Continuing Operations  Three Months Ended March 31, 2006 and 2005
   
    
    $1,706,677 (81%) from basic and expanded services,
    
    $131,491 (6%) from premium services
    
    $21,827 (1%) from digital services
    
    $79,673 (4%) from high speed Internet services
    
    $74,604 (4%) from advertising
    
    $40,521 (2%) from late fees
    
    $62,643 (2 %) from other sources.




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Liquidity and Capital Resources
     Notes Payable
     2006 (9 months)
    
    
    698,0392007
    
    
    1,165,6332008
    
    
    1,387,5542009
    
    
    333,098$
    3,584,324




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System Sales
   Obligations and Commitments
  Payments Due By PeriodLess than 1
    
    
    1 - 3
    
    
    3 - 5
    
    
    More thanTotal
    
    
    year
    
    
    years
    
    
    years
    
    
    5 yearsNotes payable
    
    $
    3,584,324
    
    
    $
    989,447
    
    
    $
    2,594,877
    
    
    
    
    
    
    
    Minimum operating lease payments
    
    
    8,019
    
    
    
    7,275
    
    
    
    744
    
    
    
    
    
    
    
    Total
    
    $
    3,592,343
    
    
    $
    996,722
    
    
    $
    2,595,621
 
 (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.




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




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




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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
May 11, 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 May 11, 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
May 11, 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
May 11, 2006
pursuant to section 906 of the Sarbanes-Oxley Act




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SIGNATURES
  NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
 
 SIGNATURES
    
    CAPACITIES
    
    DATE/S/ RICHARD I. CLARK
    
    Executive Vice President, Treasurer and
    
    5-11-06Richard I. Clark
    
    Assistant Secretary/S/ GARY S. JONES
    
    President
    
    5-11-06Gary S. Jones