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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 March 31, 2005
 or o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
 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, 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 þ 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 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 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  
 PART 1  FINANCIAL INFORMATION 
 ITEM 1. Financial Statements NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS  (UNAUDITED) March 31,
    
    
    December 31,2005
    
    
    2004ASSETSCash
    
    $
    241,420
    
    
    $
    65,547Accounts receivable, net
    
    
    79,580
    
    
    
    341,965Due from affiliates
    
    
    156,759
    
    
    
    111,960Prepaid expenses
    
    
    148,428
    
    
    
    134,282System sale receivable
    
    
    411,600
    
    
    
    411,600Property and equipment, net of accumulated
depreciation of $9,349,086 and $17,294,389
respectively
    
    
    6,645,055
    
    
    
    10,591,016Franchise agreements, net of accumulated
amortization of $10,321,148 and $10,321,249, respectively
    
    
    9,606,996
    
    
    
    9,607,185Loan fees and other intangibles, net of accumulated
amortization of $890,280 and $852,973, respectively
    
    
    686,082
    
    
    
    586,327Assets of discontinued operations
    
    
    4,011,610
    
    
    
    Total assets
    
    $
    21,987,530
    
    
    $
    21,849,882LIABILITIES AND PARTNERS CAPITAL (DEFICIT)Accounts payable and accrued expenses
    
    $
    686,635
    
    
    $
    1,262,921Due to Managing General Partner and affiliates
    
    
    71,075
    
    
    
    69,425Deposits
    
    
    15,780
    
    
    
    20,852Subscriber prepayments
    
    
    245,311
    
    
    
    346,281Notes payable
    
    
    18,275,000
    
    
    
    18,275,000Liabilities of discontinued operations
    
    
    572,819
    
    
    
    Total liabilities
    
    
    19,866,620
    
    
    
    19,974,479Partners capital (deficit):General Partners:Contributed capital, net
    
    
    (25,367
    )
    
    
    (25,367
    )Accumulated deficit
    
    
    (165,892
    )
    
    
    (168,347
    )(191,259
    )
    
    
    (193,714
    )Limited Partners:Contributed capital, net
    
    
    18,735,576
    
    
    
    18,735,576Accumulated deficit
    
    
    (16,423,407
    )
    
    
    (16,666,459
    )2,312,169
    
    
    
    2,069,117Total partners capital (deficit)
    
    
    2,120,910
    
    
    
    1,875,403Total liabilities and partners capital (deficit)
    
    $
    21,987,530
    
    
    $
    21,849,882
 The accompanying notes are an integral part of these statements.




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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS  (UNAUDITED) For the three months ended March 31,2005
    
    
    2004Service revenues
    
    $
    2,113,012
    
    
    $
    2,179,320Expenses:Cable system operations (including
$33,060 and $32,080 to affiliates in
2005 and 2004, respectively), excluding
depreciation and amortization shown below
    
    
    183,919
    
    
    
    192,376General and administrative (including
$209,065 and $214,177 to affiliates
in 2005 and 2004, respectively)
    
    
    529,352
    
    
    
    537,356Programming (including $402 and
$2,061 to affiliates in 2005 and 2004,
respectively)
    
    
    695,386
    
    
    
    681,726Depreciation and amortization
    
    
    391,236
    
    
    
    378,770(Gain) loss on disposal of assets
    
    
    (24,242
    )
    
    
    5,0471,775,651
    
    
    
    1,795,275Income from operations
    
    
    337,361
    
    
    
    384,045Other income (expense):Interest expense and amortization of loan fees
    
    
    (64,882
    )
    
    
    (104,057
    )Interest income and other, net
    
    
    
    
    
    
    3,798(64,882
    )
    
    
    (100,259
    )Income from continuing operations
    
    
    272,479
    
    
    
    283,786Discontinued operations (note 3)Loss from operations of Brenham and Bay City
systems, net
    
    
    (26,972
    )
    
    
    (27,567
    )Net income
    
    $
    245,507
    
    
    $
    256,219Allocation of net income:General Partners
    
    $
    2,455
    
    
    $
    2,562Limited Partners
    
    $
    243,052
    
    
    $
    253,657Income from continuing operations per limited
partnership unit (49,656 units):
    
    $
    5
    
    
    $
    6Income from discontinued operations per limited
partnership unit (49,656 units):
    
    $
    (1
    )
    
    $
    (1
    )Net income
per limited partnership unit: (49,656 units)
    
    $
    5
    
    
    $
    5
 The accompanying notes are an integral part of these statements.




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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS  (UNAUDITED) For the three months ended March 31,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    245,507
    
    
    $
    256,219Adjustments to reconcile net income to
cash provided by operating activities:Depreciation and amortization
    
    
    467,114
    
    
    
    545,186Loan fee amortization
    
    
    37,307
    
    
    
    34,910(Gain) loss on sale of assets
    
    
    (23,832
    )
    
    
    5,047Other
    
    
    11,895
    
    
    
    3,501(Increase) decrease in operating assets:Accounts receivable
    
    
    60,584
    
    
    
    136,478Due from affiliates
    
    
    (44,799
    )
    
    
    (103,050
    )Prepaid expenses
    
    
    (105,732
    )
    
    
    (138,637
    )Increase (decrease) in operating liabilitiesAccounts payable and accrued expenses
    
    
    (212,034
    )
    
    
    (123,712
    )Due to Managing General Partner and affiliates
    
    
    1,650
    
    
    
    (39,881
    )Deposits
    
    
    2,668
    
    
    
    2,005Subscriber prepayments
    
    
    99,447
    
    
    
    71,915Net cash provided by operating activities
    
    
    539,775
    
    
    
    649,981CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (181,204
    )
    
    
    (383,894
    )Proceeds from sale of systems
    
    
    
    
    
    
    708,894Proceeds from insurance
    
    
    24,242
    
    
    
    Proceeds from sale of assets
    
    
    
    
    
    
    1,000Net cash (used in) provided by investing activities
    
    
    (156,962
    )
    
    
    326,000CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on borrowings
    
    
    
    
    
    
    (806,250
    )Loan fees
    
    
    (137,062
    )
    
    
    (1,188
    )Net cash used in financing activities
    
    
    (137,062
    )
    

    
    (807,438
    )INCREASE IN CASH
    
    
    245,751
    
    
    
    168,543CASH, beginning of period
    
    
    65,547
    
    
    
    758,694CASH, end of period
    
    $
    311,298
    
    
    $
    927,237SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for interest
    
    $
    428,077
    
    
    $
    353,647
 The accompanying notes are an integral part of these statements.




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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED 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 full 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, these statements include
all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the
Partnerships financial position at March 31, 2005, its statements of operations for the three
months ended March 31, 2005 and 2004, and its statements of cash flows for the three months ended
March 31, 2005 and 2004. 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, 2004. On February 2, 2005 and February 24, 2005, the Partnership executed purchase and sale agreements to
sell the operating assets and franchise rights of its cable systems serving the communities of
Brenham and Bay City, Texas, respectively. The Brenham and Bay City systems serve approximately
3,400 and 4,300 subscribers, respectively. As management believes that the sale of these assets is
probable, the assets associated with the transactions are considered to be held for sale, as
defined in SFAS No. 144. Accordingly, the accompanying financial statements report the operations
of these systems for the periods presented as discontinued operations. (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. Loan fees are being amortized using the straight-line method, which approximates the effective
interest rate method. Future amortization of loan fees is expected to be approximately as follows: 2005 (9 months)
    
    $
    128,6402006
    
    
    171,5212007
    
    
    171,5212008
    
    
    171,5212009
    
    
    42,879$
    686,082
 (3) System Sales On February 2, 2005, the Partnership executed a purchase and sale agreement to sell the operating
assets and franchise rights of its cable system serving the community of Brenham, Texas. The terms
of the purchase and sale agreement included a sales price of $2,291 per subscriber, and requires
that approximately $850,000 of the gross proceeds be placed in escrow to secure compliance with
representations and warranties. These escrow proceeds are to be released to the Partnership
eighteen months from the closing of the transaction. Management estimates that the net proceeds to
be received upon closing will be approximately $6.7 million, substantially all of which will be
used to pay down amounts outstanding under the Partnerships Credit Facility (currently
$18,275,000). On February 24, 2005, the Partnership executed a purchase and sale agreement to sell the operating
assets and franchise rights of its cable system serving the community of Bay City, Texas. The
terms of the purchase and sale agreement included a sales price of $2,206 per subscriber, and
requires that approximately 10% of the gross proceeds be placed in escrow to secure compliance with
representations and warranties. These escrow proceeds are to be released to the Partnership
eighteen months from the closing of the transaction. Management estimates that the net proceeds to
be received upon closing will be approximately $8.2 million, substantially all of which will be
used to pay down amounts outstanding under the Partnerships Credit Facility (currently $18,275,000).




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Both of these transactions are expected to close by the end of the second quarter of 2005, and
management believes that the sale of these assets is probable. Accordingly, the assets associated
with the transactions are considered to be held for sale, as defined in SFAS No. 144 and the
operations of these systems, for the periods presented, have been presented as discontinued
operations. The assets and liabilities attributable to the Brenham and Bay City systems as of March 31, 2005
and December 31, 2004 consist of the following: As of
    
    
    As ofMarch 31, 2005
    
    
    December 31, 2004Cash
    
    $
    69,878
    
    
    $
    16,893Accounts receivable
    
    
    201,801
    
    
    
    179,757Prepaid expenses
    
    
    91,586
    
    
    
    54,039Property and equipment (net of accumulated
depreciation of $8,412,417 and $8,336,538)
    
    
    3,648,156
    
    
    
    3,695,924Franchise agreements (net of accumulated
amortization of $101)
    
    
    189
    
    
    
    189Total assets
    
    $
    4,011,610
    
    
    $
    3,946,802Accounts payable and accrued expenses
    
    $
    364,662
    
    
    $
    433,206Deposits
    
    
    7,740
    
    
    
    6,552Subscriber prepayments
    
    
    200,417
    
    
    
    176,969Total liabilities
    
    $
    572,819
    
    
    $
    616,727
 In addition, the revenue, expenses and other items attributable to the operations of the Brenham
and Bay City systems for the three months ended March 31, 2005 and 2004 have been reported as
discontinued operations in the accompanying statements of operations, and include the following:




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For the three months ended March 31,2005
    
    
    2004Service revenues
    
    $
    1,281,881
    
    
    $
    1,324,533Expenses:Operating (including $13,630 and $6,489 received
from
affiliates in 2005 and 2004, respectively)
    
    
    93,251
    
    
    
    97,011General and administrative (including $112,240 and
$115,125 paid to affiliates in 2005 and 2004,
respectively)
    
    
    321,975
    
    
    
    338,042Programming (including $388 and $0 paid to affiliates
in 2005 and 2004, respectively)
    
    
    525,423
    
    
    
    513,034Depreciation and amortization
    
    
    75,878
    
    
    
    166,416Loss on disposal of assets
    
    
    410
    
    
    
    1,016,937
    
    
    
    1,114,501Income from operations
    
    
    264,944
    
    
    
    210,032Other income (expense):Interest expense and amortization of loan fees
    
    
    (291,916
    )
    
    
    (237,599
    )Loss from operations of
Brenham and Bay City systems, net
    
    $
    (26,972
    )
    
    $
    (27,567
    )
 In accordance with EITF 87-24, Allocation of Interest to Discontinued Operations, the Partnership
allocated interest expense to discontinued operations using the historic weighted average interest
rate applicable to the Partnerships term loan and approximately $14,950,000 in expected principal
payments, which will be applied to the term loan upon closing of the transactions. (4) Notes Payable On November 6, 2003, the Partnership refinanced its existing credit facility with a new
lender. The credit facility establishes a term loan in the amount of $21,500,000, the proceeds
from which were used to repay the Partnerships existing credit facilities, to provide working
capital and for other general purposes. In March 2005, the Partnership agreed to certain terms and conditions with its existing lender
and amended its term loan agreement. The terms of the amendment modify the principal repayment
schedule, the interest rate margins and various covenants (described below). The term loan is
collateralized by a first lien position on all present and future assets of the Partnership and
matures March 31, 2009. The interest rate per annum applicable to the Refinanced Credit Facility is a fluctuating rate
of interest measured by reference to either: (i) the U.S. dollar prime commercial lending rate
announced by the lender (Base Rate), plus a borrowing margin; or (ii) the London interbank offered
rate (LIBOR), plus a borrowing margin. Under the amendment to the term loan agreement, the
applicable borrowing margins vary, based on the Partnerships leverage ratio, from 2.75% to 3.50%
for Base Rate loans and from 3.75% to 4.50% for LIBOR loans. Under the terms of the amendment to
the term loan agreement, in the event that the Partnership has not completed the sale of the
Brenham and Bay City Systems by June 30, 2005, substantially all of the proceeds from which are
required to be used to repay amounts outstanding under the credit facility, the margin would
increase by an additional 1.50%. If the sales of these systems are not completed by September 30,
2005, the margin would increase by another additional 1.50%. Such increases would be eliminated
upon the sales of the Brenham and Bay City Systems. In addition, in the event the Partnership prepays the Refinanced Credit Facility in excess of
$5,375,000 prior to the third anniversary of the closing of the refinancing transaction, the
Partnership would be required to pay a Prepayment Fee to the lender, as defined by the terms of the
Refinanced Credit Facility.




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Annual maturities of the note payable after March 31, 2005, are as follows: 2005
    
    $
    500,0002006
    
    
    4,379,0002007
    
    
    5,410,0002008
    
    
    6,440,0002009
    
    
    1,546,000$
    18,275,000
 The amendment to the term loan agreement also modified the covenants, which require the
Partnership to comply with specified financial ratios, including maintenance, as tested on a
quarterly basis, of: (A) a Maximum Total Leverage Ratio (the ratio of Funded Debt to Annualized
EBITDA (as defined)) of not more than 4.75 to 1.00, decreasing over time to 3.50 to 1.00; (B) a
Minimum Interest Coverage Ratio (the ratio of Annualized EBITDA (as defined) to aggregate
Interest Expense for the immediately preceding four consecutive fiscal quarters) of not less than
2.50 to 1.00, increasing over time to 3.50 to 1.00; (C) a Minimum Total Debt Service Coverage
Ratio (the ratio of Annualized EBITDA (as defined) to the Partnerships debt service obligations
for the following twelve months) of not less than 1.00 to 1.00, increasing over time to 1.10 to
1.00 (this covenant will not be measured during 2005 under the terms of the amendment to the term
loan agreement); and (D) Maximum Capital Expenditures of not more than $2,500,000. As of March
31, 2005, the Partnership was in compliance with the terms of the loan agreement. As of March 31, 2005, the balance under the credit facility is $18,275,000 and applicable interest
rates are as follows: $16,500,000 at a LIBOR based interest rate of 7.35% and $1,775,000 at a LIBOR
based interest rate of 7.59%. These interest rates expire during the second quarter of 2005, at
which time, new rates will be established.




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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, 2005 and 2004 Revenues from continuing operations totaled $2,113,012 for the three months ended March 31, 2005,
representing a decrease of $66,308 or approximately 3% from the same period in 2004. Rate
increases implemented during 2004 and increased revenue from the Partnerships Internet product
were offset by decreases in subscribers. Total basic subscribers attributable to continuing
operations decreased from 15,088 as of March 31, 2004 to 14,272 as of December 31 2005. The loss in
subscribers is a result of several factors including competition from DBS providers, availability
of off-air signals in the Partnerships markets and regional and local economic conditions. To
reverse this customer trend, the Partnership is increasing its customer retention efforts and its
emphasis on bundling its video and data products. Of these revenues, $1,495,158 (71%) was derived from basic services, $135,569 (6%) from premium
services, $250,506 (12%) from expanded basic services, $21,062 (1%) from digital services, $34,353
(2%) from high speed Internet services, $63,542 (3%) from advertising, $39,035 (2%) from late fees,
and $73,787 (3%) from other sources. Cable system operations expenses attributable to continuing operations totaled $183,919 for the
three months ended March 31, 2005, a decrease of $8,457 or approximately 4% over the same period in
2004. Such decrease is primarily attributable to decreased operating salaries and employee benefit
costs and decreased system maintenance costs. General and administrative expenses attributable to continuing operations totaled $529,352 for the
three months ended March 31, 2005, a decrease of $8,004 or approximately 1% over the same period in
2004. This decrease is primarily attributable to decreases in revenue based fees such as franchise
and management fees, decreased property taxes and audit fees, and decreases in other administrative
overhead costs. Programming expenses attributable to continuing operations totaled $695,386 for the three months
ended March 31, 2005, representing an increase of $13,660 or approximately 2% over the same period
in 2004. Such increase is primarily attributable to an increase in the costs associated with the
Partnerships high-speed Internet product and higher costs charged by various program suppliers,
offset by a decrease in advertising expenses Depreciation and amortization expense attributable to continuing operations for the three months
ended March 31, 2005 increased from $378,770 for the three months ended March 31, 2004 to $391,236
for the same period in 2005. Such increase is primarily attributable to depreciation of recent
purchases related to the upgrade of plant and equipment, offset by certain assets becoming fully
depreciated. Interest expense and amortization of loan fees allocated to continuing operations decreased
approximately $39,175, or approximately 38% from $104,057 to $64,882 for the three months ended
March 31, 2005. This decrease is attributable to lower average outstanding indebtedness as a
result of required principal repayments offset by higher interest rates during the first quarter of
2005 as compared to 2004. In accordance with EITF 87-24, Allocation of Interest to Discontinued Operations, the Partnership
allocated interest expense to discontinued operations using the historic weighted average interest
rate applicable to the Partnerships term loan and approximately $14,950,000 in expected principal
payments, which will be applied to the term loan upon closing of the transactions. Liquidity and Capital Resources The Partnerships primary source of liquidity is cash flow provided by 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 and cash on hand will be sufficient to cover future operating costs, debt
service, planned capital expenditures and working capital needs over the next twelve-month period. Net cash provided by operating activities totaled $539,775 for the three months ended March 31,
2005. Adjustments to the $245,507 net income for the period to reconcile to net cash provided by
operating activities consisted primarily of depreciation and amortization of $467,114 and loan
fee amortization of $37,307, offset by a gain on the disposal of assets of $23,832 and changes in
other operating assets and liabilities of $198,216.




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Net cash used in investing activities consisted of $181,204 in capital expenditures, offset by
the receipt of $24,242 in insurance proceeds for the three months ended March 31 2005. Net cash used in financing activities for the three months ended March 31, 2005, consisted of
$137,062 in loan fee payments that were made in connection with the amendment to the term loan
agreement. Notes Payable On November 6, 2003, the Partnership refinanced its existing credit facility with a new lender.
The credit facility establishes a term loan in the amount of $21,500,000, the proceeds from which
were used to repay the Partnerships existing credit facilities, to provide working capital and
for other general purposes. In March 2005, the Partnership agreed to certain terms and conditions with its existing lender
and amended its term loan agreement. The terms of the amendment modify the principal repayment
schedule, the interest rate margins and various covenants (described below). The term loan is
collateralized by a first lien position on all present and future assets of the Partnership and
matures March 31, 2009. The interest rate per annum applicable to the Refinanced Credit Facility is a fluctuating rate of
interest measured by reference to either: (i) the U.S. dollar prime commercial lending rate
announced by the lender (Base Rate), plus a borrowing margin; or (ii) the London interbank
offered rate (LIBOR), plus a borrowing margin. Under the amendment to the term loan agreement,
the applicable borrowing margins vary, based on the Partnerships leverage ratio, from 2.75% to
3.50% for Base Rate loans and from 3.75% to 4.50% for LIBOR loans. Under the terms of the
amendment to the term loan agreement, in the event that the Partnership has not completed the
sale of the Brenham and Bay City Systems by June 30, 2005, substantially all of the proceeds from
which are required to be used to repay amounts outstanding under the credit facility, the margin
would increase by an additional 1.50%. If the sales of these systems are not completed by
September 30, 2005, the margin would increase by another additional 1.50%. Such increases would
be eliminated upon the sales of the Brenham and Bay City Systems. In addition, in the event the Partnership prepays the Refinanced Credit Facility in excess of
$5,375,000 prior to the third anniversary of the closing of the refinancing transaction, the
Partnership would be required to pay a Prepayment Fee to the lender, as defined by the terms of
the Refinanced Credit Facility. Annual maturities of the note payable after March 31, 2005, are as follows: 2005
    
    $
    500,0002006
    
    
    4,379,0002007
    
    
    5,410,0002008
    
    
    6,440,0002009
    
    
    1,546,000$
    18,275,000
 The amendment to the term loan agreement also modified the covenants, which require the
Partnership to comply with specified financial ratios, including maintenance, as tested on a
quarterly basis, of: (A) a Maximum Total Leverage Ratio (the ratio of Funded Debt to Annualized
EBITDA (as defined)) of not more than 4.75 to 1.00, decreasing over time to 3.50 to 1.00; (B) a
Minimum Interest Coverage Ratio (the ratio of Annualized EBITDA (as defined) to aggregate
Interest Expense for the immediately preceding four consecutive fiscal quarters) of not less than
2.50 to 1.00, increasing over time to 3.50 to 1.00; (C) a Minimum Total Debt Service Coverage
Ratio (the ratio of Annualized EBITDA (as defined) to the Partnerships debt service obligations
for the following twelve months) of not less than 1.00 to 1.00, increasing over time to 1.10 to
1.00 (this covenant will not be measured during 2005 under the terms of the amendment to the term
loan agreement); and (D) Maximum Capital Expenditures of not more than $2,500,000. As of March
31, 2005, the Partnership was in compliance with the terms of the loan agreement. As of March 31, 2005, the balance under the credit facility is $18,275,000 and applicable interest
rates are as follows: $16,500,000 at a LIBOR based interest rate of 7.35% and $1,775,000 at a LIBOR
based interest rate of 7.59%. These interest rates expire during the second quarter of 2005, at
which time, new rates will be established.




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System Sales On February 2, 2005, the Partnership executed a purchase and sale agreement to sell the operating
assets and franchise rights of its cable system serving the community of Brenham, Texas. The terms
of the purchase and sale agreement included a sales price of $2,291 per subscriber, and requires
that approximately $850,000 of the gross proceeds be placed in escrow to secure compliance with
representations and warranties. These escrow proceeds are to be released to the Partnership
eighteen months from the closing of the transaction. Management estimates that the net proceeds to
be received upon closing will be approximately $6.7 million, substantially all of which will be
used to pay down amounts outstanding under the Partnerships Credit Facility (currently
$18,275,000). On February 24, 2005, the Partnership executed a purchase and sale agreement to sell the operating
assets and franchise rights of its cable system serving the community of Bay City, Texas. The
terms of the purchase and sale agreement included a sales price of $2,206 per subscriber, and
requires that approximately 10% of the gross proceeds be placed in escrow to secure compliance with
representations and warranties. These escrow proceeds are to be released to the Partnership
eighteen months from the closing of the transaction. Management estimates that the net proceeds to
be received upon closing will be approximately $8.2 million, substantially all of which will be
used to pay down amounts outstanding under the Partnerships Credit Facility (currently
$18,275,000). Both of these transactions are expected to close by the end of the second quarter of 2005, and
management believes that the sale of these assets is probable. Accordingly, the assets associated
with the transactions are considered to be held for sale, as defined in SFAS No. 144 and the
operations of these systems, for the periods presented, have been presented as discontinued
operations. 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). In association with this transaction, approximately $1,060,000 was to be held in escrow
and released to the Partnership one year from the closing of the transaction, subject to general
representations and warranties. In March of 2004, the Partnership received notice from the buyer
of the Washington Systems of certain claims, which were made under the holdback agreement
provisions of the purchase and sale agreement. Management believes that such claims are
unsubstantiated and intends to vigorously contest such claims. However, approximately $412,000 of
the original escrow proceeds will remain in escrow until such claims are resolved. The escrow
proceeds in excess of the claims were released to the Partnership in March of 2004. The
Partnership has filed a lawsuit against the buyer of the Washington Systems for recovery of the
remaining escrow proceeds and unspecified damages and a trial date has been set for September of
2005. Obligations and Commitments In addition to working capital needs for ongoing operations, the Partnership has capital
requirements for annual maturities related to the Refinanced Credit Facility and required minimum
operating lease payments. The following table summarizes the Partnerships contractual obligations
as of March 31, 2005: Payments Due By PeriodLess than 1
    
    
    1 - 3
    
    
    3 - 5
    
    
    More thanTotal
    
    
    year
    
    
    years
    
    
    years
    
    
    5 yearsNotes payable
    
    $
    18,275,000
    
    
    $
    1,594,750
    
    
    $
    10,304,250
    
    
    $
    6,376,000
    
    
    $
    Minimum operating lease payments
    
    
    29,184
    
    
    
    21,165
    
    
    
    8,019
    
    
    
    
    
    
    
    Total
    
    $
    18,304,184
    
    
    $
    1,615,915
    
    
    $
    10,312,269
    
    
    $
    6,376,000
    
    
    $
    
   (a)
    
    These contractual obligations do not include accounts payable and accrued liabilities,
which are expected to be paid in 2005.(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 During the first three months of 2005, the Partnership paid approximately $180,000 in capital
expenditures. These expenditures included the continuation of distribution plant upgrades in both
Toccoa and Royston, Georgia, and the continued launch of high speed Internet services in areas
served by the Partnerships systems. Management has budgeted that
the Partnership will spend approximately $2,000,000 on capital
expenditures during the remainder of 2005. Planned expenditures include the continuation of
distribution plant upgrades and two way activation in all of the
Georgia systems, the launch of digital and
high-speed Internet services in Sandersville, Georgia, potential line
extension opportunities, vehicle replacements and
the continued deployment of high-speed Internet services in certain areas of the Partnerships
systems. Recently Issued Accounting Pronouncements In November 2004, the EITF ratified its consensus on Issue No. 03-13, Applying the Conditions in
paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations
(EITF 03-13). EITF 03-13 relates to components of an enterprise that are either disposed of or
classified as held for sale. EITF 03-13 allows significant events or circumstances that occur after
the balance sheet date but before the issuance of financials statements to be taken into
consideration in the evaluation of whether a component should be presented as discontinued or
continuing operations, and modifies assessment period guidance to allow for an assessment period of
greater than one year. The implementation of EITF 03-13 does not have a material impact on the
Partnerships financial statements. Critical Accounting Policies This discussion and analysis of 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
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. 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. 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




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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
$183,000. 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 The Partnership maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in our filings under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commissions rules and forms. The Chief Executive Officer and President (Principal
Financial and Accounting Officer) of the Managing General Partner have evaluated these disclosure
controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q
and have determined that such disclosure controls and procedures are effective. There has been no change in the Partnerships internal controls over financial reporting that has
materially affected, or is reasonably likely to materially affect, the internal control over
financial reporting.




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##### Table of Contents



PART II  OTHER INFORMATION 
 ITEM 1 Legal proceedings The Partnership has filed a lawsuit against the buyer of the Washington Systems for recovery of the
remaining escrow proceeds and unspecified damages and a trial date has been set for September of
2005. In addition, The Partnership is party to ordinary and routine litigation proceedings that are
incidental to the Partnerships business. Management believes that the outcome of all pending legal
proceedings will not, individually or in the aggregate, have a material adverse effect on the
Partnership, its financial conditions, prospects or debt service abilities. 
 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  31 (a).
    Certification of Chief Executive Officer of Northland
Communications Corporation, the Managing General Partner, dated May 12, 2005
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 12, 2005 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 12, 2005
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 12, 2005
pursuant to section 906 of the Sarbanes-Oxley Act  (b)
    Reports on Form 8-KForm 8-K filed on April 8, 2005 Letter to limited partners regarding mini-tender offer
dated April 7, 2005




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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
    
    Executive Vice President, Treasurer and
    
    5-16-05Richard I. Clark
    
    Assistant Secretary/s/
    
    GARY S. JONES
    
    President
    
    5-16-05Gary S. Jones