**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

----

**FORM 10-Q**

**QUARTERLY REPORT PURSUANT TO SECTION 13or 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

**Forthe Quarterly Period Ended June 30, 2007**

**Commissionfile number 0-26677**

----

**INSIGHT COMMUNICATIONS COMPANY, INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**                                                     |   | **13-4053502**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
| **810 7****th Avenue  New York, New York**                  |   | **10019**                             |
| (Address of  principal executive offices)                        |   | (Zip code)                            |

 

**Registrant’s telephone number,including area code:** 917-286-2300

----

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirements for thepast 90 days.  Yes  o  No*  *x

(Note: As a voluntaryfiler, not subject to the filing requirements, the registrant filed all reportsunder Section 13 or 15(d) of the Exchange Act during the preceding 12months.)

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer  o  Acceleratedfiler  o  Non-acceleratedfiler  x

Indicate by check mark whetherthe registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o  No x

Indicatethe number of shares outstanding of each of the registrant’s classes of commonstock, as of the latest practicable date. Not Applicable

 

----

**PART I.   FINANCIALINFORMATION**

**Item 1.**                        FinancialStatements

The accompanying unaudited consolidated financialstatements have been prepared in accordance with the requirements of Form 10-Qand, therefore, do not include all information and footnotes required byaccounting principles generally accepted in the United States. However, in ouropinion, all adjustments, consisting of normal recurring accruals, necessaryfor a fair presentation of the results of operations for the relevant periodshave been made. Results for the interim periods are not necessarily indicativeof the results to be expected for the year. These financial statements shouldbe read in conjunction with the summary of significant accounting policies andthe notes to the restated consolidated financial statements included in ourannual report on Form 10-K/A for the year ended December 31,2006, which was filed on August 15, 2007.

1

----

**INSIGHT COMMUNICATIONS COMPANY, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share and per share amounts)**

 

| ** **                                                                                                                                   | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                   | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| ** **                                                                                                                                   | ** ** | **unaudited**     | ** ** | ** **            | ** ** |
| **Assets**                                                                                                                                   |       |              |       |                  |       |   |   |
| Cash and cash  equivalents                                                                                                                   |       | $                 | 45,890     |                  |       | $ | 43,573 |   |   |
| Trade accounts  receivable, net of allowance for doubtful accounts of $1,171 and $1,148 as of  June 30, 2007 and December 31, 2006 |       | 30,414            |       |                  | 31,060     |   |   |
| Prepaid expenses  and other current assets                                                                                                   |       | 8,698             |       |                  | 8,828      |   |   |
| Total current assets                                                                                                                         |       | 85,002            |       |                  | 83,461     |   |   |
| Fixed assets, net                                                                                                                            |       | 1,144,441         |       |                  | 1,151,260  |   |   |
| Goodwill                                                                                                                                     |       | 187,982           |       |                  | 187,982    |   |   |
| Franchise costs                                                                                                                              |       | 2,361,959         |       |                  | 2,361,959  |   |   |
| Deferred  financing costs, net of accumulated amortization of $31,240 and $29,473 as of  June 30, 2007 and December 31, 2006       |       | 17,698            |       |                  | 19,053     |   |   |
| Investments                                                                                                                                  |       | 7,000             |       |                  | 7,000      |   |   |
| Other non-current  assets                                                                                                                    |       | 3,368             |       |                  | 2,941      |   |   |
| Total assets                                                                                                                                 |       | $                 | 3,807,450  |                  |       | $ | 3,813,656 |   |   |

 

See accompanying notes

2

----

**INSIGHT COMMUNICATIONS COMPANY, INC. CONSOLIDATED BALANCE SHEETS (Continued) (dollars in thousands, except share and per share amounts)**

 

| ** **                                                                                                                                                  | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                  | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| ** **                                                                                                                                                  | ** ** | **unaudited**     | ** ** | ** **            | ** ** |
| **Liabilities and stockholders’  equity**                                                                                                              | ** ** | ** **        | ** ** |                  | ** ** | ** ** |   |
| Accounts payable                                                                                                                                            |       | $                 | 36,977     |                  |       | $ | 43,772 |   |   |
| Accrued expenses  and other current liabilities                                                                                                             |       | 56,911            |       |                  | 45,521     |   |   |
| Accrued property  taxes                                                                                                                                     |       | 19,780            |       |                  | 13,595     |   |   |
| Accrued  programming costs (inclusive of $34,614 and $30,677 due to related parties as  of June 30, 2007 and December 31, 2006)                   |       | 52,668            |       |                  | 45,880     |   |   |
| Deferred revenue                                                                                                                                            |       | 991               |       |                  | 2,076      |   |   |
| Interest payable                                                                                                                                            |       | 59,952            |       |                  | 49,518     |   |   |
| Total current liabilities                                                                                                                                   |       | 227,279           |       |                  | 200,362    |   |   |
| Deferred revenue                                                                                                                                            |       | 292               |       |                  | 683        |   |   |
| Deferred tax  liability                                                                                                                                     |       | 216,466           |       |                  | 212,648    |   |   |
| Debt                                                                                                                                                        |       | 2,762,825         |       |                  | 2,805,722  |   |   |
| Minority interest                                                                                                                                           |       | 259,878           |       |                  | 245,634    |   |   |
| Stockholders’  equity:                                                                                                                                 |       |              |       |                  |       |   |   |
| Voting preferred stock,  $.01 par value:                                                                                                                    |       |              |       |                  |       |   |   |
| Series A—1,000,000 shares authorized; 848,945  shares issued and outstanding as of June 30, 2007 and December 31,  2006                 |       | 8                 |       |                  | 8          |   |   |
| Series B—1,000,000 shares authorized; 517,836  shares issued and outstanding as of June 30, 2007 and December 31,  2006                 |       | 5                 |       |                  | 5          |   |   |
| Non-voting preferred  stock, $.01 par value:                                                                                                                |       |              |       |                  |       |   |   |
| Series C—15,000,000 shares authorized;  13,364,693 shares issued and outstanding as of June 30, 2007 and  December 31, 2006             |       | 134               |       |                  | 134        |   |   |
| Series D—50,000,000 shares authorized;  47,015,659 shares issued and outstanding as of June 30, 2007 and  December 31, 2006             |       | 470               |       |                  | 470        |   |   |
| Non-voting common stock,  $.01 par value:                                                                                                                   |       |              |       |                  |       |   |   |
| Series E—5,000,000 shares authorized; 3,480,497  and 3,536,247 shares issued and outstanding as of June 30, 2007 and  December 31, 2006 |       | 35                |       |                  | 35         |   |   |
| Series F—100,000 shares authorized; 95,020 and  93,250 shares issued and outstanding as of June 30, 2007 and  December 31, 2006    |       | 1                 |       |                  | 1          |   |   |
| Voting common stock,  $.01 par value:                                                                                                                       |       |              |       |                  |       |   |   |
| Series G—10,000,000 shares authorized; 0 shares  issued and outstanding as of June 30, 2007 and December 31, 2006                       |       | —            |       |                  | —     |   |   |
| Additional  paid-in-capital                                                                                                                                 |       | 827,221           |       |                  | 826,509    |   |   |
| Accumulated  deficit                                                                                                                                        |       | (487,164          | )          |                  | (478,861   | ) |   |
| Accumulated other  comprehensive income                                                                                                                     |       | —            |       |                  | 306        |   |   |
| Total stockholders’ equity                                                                                                                             |       | 340,710           |       |                  | 348,607    |   |   |
| Total liabilities  and stockholders’ equity                                                                                                            |       | $                 | 3,807,450  |                  |       | $ | 3,813,656 |   |   |

 

See accompanying notes

3

----

**INSIGHT COMMUNICATIONS COMPANY, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)(dollars in thousands)**

| ** **                                                                                                                                                                                                                                                                               | ** ** | **Three months ended June 30,**                                                      | ** ** | **Six months ended June 30,**                                                        | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                               | ** ** | **        2007        ** | ** ** | **        2006        ** | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                                                                                                                                                                                                                                                               | ** ** | ** **                                                                                               | ** ** | **As restated**                                                                                     | ** ** | ** ** | ** ** | **As restated** | ** ** |
| Revenue                                                                                                                                                                                                                                                                                  |       |                                                                                                     | $          | 355,503                                                                                                  |       |   |   | $ | 311,717 |   |   | $ | 694,972 |   | $ | 612,998 |   |
| Operating costs  and expenses:                                                                                                                                                                                                                                                           |       |                                                                                                     |       |                                                                                                     |       |   |   |   |   |   |   |   |   |
| Programming and other operating costs (exclusive of  depreciation and amortization) (inclusive of $51,638 and $102,927, and  $44,257 and $87,338 of programming expense incurred through related parties  for the three and six months ended June 30, 2007 and 2006) |       |                                                                                                     | 122,306    |                                                                                                     |       |   | 112,956 |   |   | 242,161 |   | 224,370 |   |
| Selling, general and administrative (inclusive of  $323 and $714, and $334 and $884 of stock-based compensation for the  three and six months ended June 30, 2007 and 2006)                                                                                               |       |                                                                                                     | 97,979     |                                                                                                     |       |   | 81,524 |   |   | 188,652 |   | 159,690 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                            |       |                                                                                                     | 71,954     |                                                                                                     |       |   | 67,343 |   |   | 141,233 |   | 131,655 |   |
| Total operating  costs and expenses                                                                                                                                                                                                                                                      |       |                                                                                                     | 292,239    |                                                                                                     |       |   | 261,823 |   |   | 572,046 |   | 515,715 |   |
| Operating income                                                                                                                                                                                                                                                                         |       |                                                                                                     | 63,264     |                                                                                                     |       |   | 49,894 |   |   | 122,926 |   | 97,283 |   |
| Other income  (expense):                                                                                                                                                                                                                                                                 |       |                                                                                                     |       |                                                                                                     |       |   |   |   |   |   |   |   |   |
| Interest expense                                                                                                                                                                                                                                                                         |       |                                                                                                     | (56,502    | )                                                                                                        |       |   | (61,208 | ) |   | (114,399 | ) | (122,283 | ) |
| Interest income                                                                                                                                                                                                                                                                          |       |                                                                                                     | 251        |                                                                                                     |       |   | 369 |   |   | 571 |   | 881 |   |
| Other income (expense)                                                                                                                                                                                                                                                                   |       |                                                                                                     | 389        |                                                                                                     |       |   | 20 |   |   | 782 |   | (50 | ) |
| Total other  expense, net                                                                                                                                                                                                                                                                |       |                                                                                                     | (55,862    | )                                                                                                        |       |   | (60,819 | ) |   | (113,046 | ) | (121,452 | ) |
| Income (loss) before minority interest and income  taxes                                                                                                                                                                                                                                 |       |                                                                                                     | 7,402      |                                                                                                     |       |   | (10,925 | ) |   | 9,880 |   | (24,169 | ) |
| Minority interest  income (expense)                                                                                                                                                                                                                                                      |       |                                                                                                     | (13,691    | )                                                                                                        |       |   | 2,110 |   |   | (14,244 | ) | 4,615 |   |
| Loss before income taxes                                                                                                                                                                                                                                                                 |       |                                                                                                     | (6,289     | )                                                                                                        |       |   | (8,815 | ) |   | (4,364 | ) | (19,554 | ) |
| Provision for  income taxes                                                                                                                                                                                                                                                              |       |                                                                                                     | (1,909     | )                                                                                                        |       |   | (1,989 | ) |   | (3,939 | ) | (3,978 | ) |
| Net loss                                                                                                                                                                                                                                                                                 |       |                                                                                                     | $          | (8,198                                                                                                   | )          |   |   | $ | (10,804 | ) |   | $ | (8,303 | ) | $ | (23,532 | ) |

 

See accompanying notes

4

----

**INSIGHT COMMUNICATIONS COMPANY, INC.consolidated STATEMENTS OF CASHFLOWS**(unaudited) (dollars inthousands)

| ** **                                                                       | ** ** | **Six months ended June 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| ** **                                                                       | ** ** | ** **                                        | ** ** | **As restated** | ** ** |
| **Operating activities:**                                                        | * *   | * *                                          | * *   | * * | * * |
| Net loss                                                                         |       | $                                                 | (8,303     | ) | $ | (23,532 | ) |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |       |                                              |       |   |   |
| Depreciation and amortization                                                    |       | 141,233                                           |       | 131,655 |   |
| Stock-based compensation                                                         |       | 714                                               |       | 884 |   |
| Minority interest                                                                |       | 14,244                                            |       | (4,615 | ) |
| Provision for losses on trade accounts receivable                                |       | 6,906                                             |       | 7,026 |   |
| Amortization of note discount                                                    |       | 2,103                                             |       | 6,571 |   |
| Deferred income taxes                                                            |       | 3,818                                             |       | 3,818 |   |
| Changes in  operating assets and liabilities:                                    |       |                                              |       |   |   |
| Trade accounts receivable                                                        |       | (6,260                                            | )          | (4,604 | ) |
| Prepaid expenses and other assets                                                |       | (303                                              | )          | (2,697 | ) |
| Accounts payable                                                                 |       | (6,795                                            | )          | 37 |   |
| Interest payable                                                                 |       | 10,434                                            |       | 16,220 |   |
| Accrued expenses and other liabilities                                           |       | 22,580                                            |       | 2,569 |   |
| Net cash provided by operating activities                                        |       | 180,371                                           |       | 133,332 |   |
| **Investing activities:**                                                        |       |                                              |       |   |   |
| Purchase of fixed assets                                                         |       | (132,680                                          | )          | (141,765 | ) |
| Sale of fixed assets                                                             |       | 39                                                |       | 504 |   |
| Purchase of investments                                                          |       | —                                            |       | (518 | ) |
| Net cash used in investing activities                                            |       | (132,641                                          | )          | (141,779 | ) |
| **Financing activities:**                                                        |       |                                              |       |   |   |
| Repayment of credit facilities                                                   |       | (55,000                                           | )          | (41,750 | ) |
| Net proceeds from borrowings under credit facilities                             |       | 10,000                                            |       | 25,000 |   |
| Debt issuance costs                                                              |       | (412                                              | )          | — |   |
| Other                                                                            |       | (1                                                | )          | 1 |   |
| Net cash used in financing activities                                            |       | (45,413                                           | )          | (16,749 | ) |
| Net increase  (decrease) in cash and cash equivalents                            |       | 2,317                                             |       | (25,196 | ) |
| Cash and cash  equivalents, beginning of period                                  |       | 43,573                                            |       | 29,782 |   |
| Cash and cash  equivalents, end of period                                        |       | $                                                 | 45,890     |   | $ | 4,586 |   |

 

See accompanying notes

5

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1.   Organization andBasis of Presentation**

Through our wholly owned subsidiary, InsightCommunications Company, L.P. (“Insight LP”), we own a 50% interest in InsightMidwest, L.P. (“Insight Midwest”), which through its operating subsidiaries,Insight Communications Midwest, LLC (“Insight Communications Midwest”), InsightKentucky Partners II, L.P. (“Insight Kentucky”) and Insight Communicationsof Central Ohio, LLC (“Insight Ohio”), owns and operates cable systems inIllinois, Indiana, Kentucky and Ohio which passed approximately 2.5 millionhomes and had approximately 1.4 million customer relationships as of June 30, 2007.

Insight LP is the general partner of Insight Midwest. ThroughInsight LP, we manage all of Insight Midwest’s systems. An indirect subsidiaryof Comcast Corporation (“Comcast”) owns a 50% limited partner interest inInsight Midwest. The accompanying consolidated financial statements include ouraccounts and those of our wholly owned subsidiaries, Insight LP and InsightCable Services, LLC.

On April 1, 2007,Insight Midwest’s partnership agreement was amended, and we agreed with Comcaston a division of Insight Midwest’s assets and liabilities. Upon completion ofthe transaction, we will own 100% of Insight Midwest’s cable systems servingcustomers in Louisville, Lexington, Bowling Green and Covington, Kentucky, inEvansville, Indiana, and in Columbus, Ohio, (the “Insight Systems Group”) andComcast will own 100% of Insight Midwest’s cable systems serving customers inRockford/Dixon, Quincy/Macomb, Springfield, Peoria and Champaign/Urbana,Illinois and in Bloomington, Anderson, Lafayette and Kokomo, Indiana (the “ComcastSystems Group”). Pending completion of the transaction, we will continue toserve as general partner and control and manage all of the cable systems ofInsight Midwest and will continue to include the results of Insight Midwest inour consolidated financial statements. In conjunction with the division ofassets and liabilities, the Insight Systems Group was initially allocated approximately$1,259.6 billion of the partnership’s debt and the Comcast Systems Group wasinitially allocated approximately $1,335.4 billion of the partnership’s debt. Thisdebt allocation excludes the $350.0 million outstanding principal amount 121¤4%Senior Discount Notes due 2011 issued by Insight Communications Company, Inc.(“Insight Inc.”). The closing is subject to closing conditions, including localgovernmental approvals and regulatory approvals, and is expected to becompleted by the end of 2007 (see Note 9 “Minority and Preferred Interests”).

**2.   Restatement ofConsolidated Financial Statements**

As previously described inour amended annual report on Form 10-K/A for the year ended December 31,2006, as filed on August 15, 2007, we identified an error in ouraccounting for non-cash income tax expense and deferred taxes. The correctionrelates to the tax impact of intangible assets arising from certain businesscombinations, primarily tax-deductible franchise costs, which is amortized asan expense for tax purposes over 15 years but has not been amortized forfinancial reporting purposes since the adoption of SFAS No. 142 “Goodwilland Other Intangible Assets,” on January 1, 2002. We record deferredincome tax expense and a deferred tax liability related to the tax-deductiblefranchise costs. However, in preparing the financial statements, wehistorically had netted the deferred tax liability related to franchise costsagainst deferred tax assets (primarily related to our net operating losscarryforwards) and provided a valuation allowance on the net deferred tax assetbalance. Because the deferred tax liability could have an indefinite life, itshould not have been netted against deferred tax assets with a definite lifewhen determining the required valuation allowance.

6

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**2.**   Restatement ofConsolidated Financial Statements (Continued)

As a result, we did notrecord the appropriate valuation allowance and related deferred income taxexpense. The deferred tax liability described above should have remained on ourbalance sheet indefinitely unless there were an impairment of franchise costsfor financial reporting purposes or the related business entity were disposedof through a sale or otherwise.

Our prior accountingtreatment resulted in an understatement of deferred income tax expense, therelated deferred tax liability and goodwill. This resulted in an understatementof net loss in the amount of $1.9 million and $3.8 million for thethree and six months ended June 30, 2006, in our consolidated financialstatements. The correction had no effect on our revenues, operating income,cash flows or liquidity for any period.

The effects of this change on the consolidatedstatements of operations for the three and six months ended June 30, 2006and cash flows for the six months ended June 30, 2006 are summarized asfollows (in thousands).

| ** **                            | ** ** | **Consolidated Statements of Operations** | ** ** |
|---------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                            | ** ** | **As Previously  Reported**                         | ** ** | **Adjustments** | ** ** | **As Restated** | ** ** |
| Three Months Ended June 30, 2006 |       |                                                     |       |   |   |   |   |   |   |   |   |   |   |
| Provision for income  taxes           |       |                                                     | $          | (80 | ) |   |   | $ | (1,909 | ) |   |   | $ | (1,989 | ) |   |
| Net loss                              |       |                                                     | (8,895     | ) |   |   | (1,909 | ) |   |   | (10,804 | ) |   |
| Six Months Ended June 30, 2006   |       |                                                     |       |   |   |   |   |   |   |   |   |   |   |
| Provision for income  taxes           |       |                                                     | $          | (160 | ) |   |   | $ | (3,818 | ) |   |   | $ | (3,978 | ) |   |
| Net loss                              |       |                                                     | (19,714    | ) |   |   | (3,818 | ) |   |   | (23,532 | ) |   |

 

| ** **                          | ** ** | **Consolidated Statements of Cash Flows** | ** ** |
|-------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                          | ** ** | **As Previously  Reported**                              | ** ** | **Adjustments** | ** ** | **As Restated** | ** ** |
| Six Months Ended June 30, 2006 |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                            |       |                                                          | $          | (19,714 | ) |   |   | $ | (3,818 | ) |   |   | $ | (23,532 | ) |   |
| Deferred income taxes               |       |                                                          | —     |   |   |   | 3,818 |   |   |   | 3,818 |   |   |
|                                     |            |                                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**3.   Responsibilityfor Interim Financial Statements**

Our accompanying unauditedconsolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States for interimfinancial information and with the instructions to Form 10-Q and Article 10of Regulation S-X. Accordingly, they do not include all of the information andfootnote disclosures required by accounting principles generally accepted inthe United States for complete financial statements.

In our opinion, theconsolidated financial statements reflect all adjustments considered necessaryfor a fair presentation of the consolidated results of operations and financialposition for the interim periods presented. All such adjustments are of anormal recurring nature. These unaudited interim consolidated financialstatements should be read in conjunction with the audited restated consolidatedfinancial statements and notes to consolidated financial statements containedin our amended annual report on Form 10-K/A for the year ended December 31,2006, which was filed on August 15, 2007.

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States requires us to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates. The results of operations for thethree and six months ended June 30, 2007 are not necessarily indicative ofthe results to be expected for the year ending December 31, 2007 or anyother interim period.

7

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**4.   RecentAccounting Pronouncements**

In September 2006, theFinancial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standards (“SFAS”) No. 157, *Fair Value Measurements*(“SFASNo. 157”). SFAS No. 157 defines fair value, establishing a frameworkfor measuring fair value and expands disclosure about fair value measurements.SFAS No. 157 is effective for fiscal years beginning after November 15,2007 or calendar year 2008 for us. We do not expect SFAS No. 157 to have amaterial impact on our consolidated financial statements.

In February 2007, FASBissued SFAS No. 159, *The Fair Value Option forFinancial Assets and Liabilities*(“SFAS No. 159”). SFAS No. 159provides the option to report certain financial assets and liabilities at fairvalue, with the intent to mitigate volatility in financial reporting that canoccur when related assets and liabilities are recorded on different bases. Thisstatement is effective for us beginning January 1, 2008. We do not expectSFAS No. 159 to have a material impact on our consolidated financialstatements.

In June 2006, theFASB issued Interpretation No. 48, *Accounting for**Uncertainty in Income Taxes* (“FIN 48”). FIN 48 clarifies theaccounting for uncertainty in income taxes recognized in an enterprise’sfinancial statement in accordance with SFAS No. 109, *Accountingfor Income Taxes* (“SFAS 109”). This interpretation prescribes acomprehensive model for the financial statement recognition, measurement,presentation and disclosure of uncertain tax positions taken or expected to betaken in an income tax return. FIN 48 also provides guidance on derecognitionof tax benefits, classification on the balance sheet, interest and penalties,accounting in interim periods, disclosure and transition.

The Company adopted FIN 48effective January 1, 2007 and had no material unrecognized tax benefits asof the adoption date and as of June 30, 2007. The Company is subject to taxationin the U.S. and various state jurisdictions. The Company’s tax returns for2003 through 2006 tax years remain subject to examination.

**5.   Investments**

***Promptu***

Promptu (formerly AgileTVCorporation) is a privately owned company that develops voice navigationservices for television and mobile devices. On May 11, 2005, we made aninvestment in Promptu by purchasing shares of Promptu’s Series B1preferred stock and common stock for an aggregate purchase price of (i) approximately$900,000 in cash and (ii) approximately $300,000 in the form of conversionof an outstanding promissory note. We are accounting for our investment inPromptu under the cost method. As of June 30, 2007 and December 31, 2006, our carrying valuein this investment was $1.2 million.

***Oxygen Cable, LLC***

Oxygen Cable, LLC (“Oxygen”)is an independent cable television network with programming tailored to theinterests of women. On July 9, 2002, we entered into a carriage agreementwith Oxygen, whereby we agreed to carry programming content from Oxygen. In October 2006,we agreed to extend the term of the carriage agreement through December 31,2008.

Concurrently with thecarriage agreement, we entered into an equity issuance agreement with Oxygen.Pursuant to the equity issuance agreement, a portion of the monthly programmingfees through December 31, 2006 represented our equity investment in Oxygen.We are accounting for our investment in Oxygen under the cost method. As of June 30,2007 and December 31, 2006, our carrying value in this investment was $5.8 million.

8

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**6.   FixedAssets**

| ** **                                       | ** ** | **June 30,**       | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **2007**                | ** ** | **2006**              | ** ** |
| ** **                                       | ** ** | **(unaudited)**         | ** ** | ** **            | ** ** |
| ** **                                       | ** ** | **(in thousands)** | ** ** |
| Land, buildings and improvements                 |       | $                       | 46,667     |                  | $          | 45,777 |   |
| Cable system equipment                           |       | 2,805,682               |       | 2,676,108             |       |
| Furniture, fixtures and  office equipment        |       | 23,615                  |       | 23,197                |       |
|                                             |       | 2,875,964               |       | 2,745,082             |       |
| Less: accumulated  depreciation and amortization |       | (1,731,523              | )          | (1,593,822            | )          |
| Total fixed assets, net                          |       | $                       | 1,144,441  |                  | $          | 1,151,260 |   |

 

We recorded depreciationexpense of $71.1 million and $139.5 million for the three and sixmonths ended June 30, 2007 and $65.9 million and $128.8 millionfor the three and six months ended June 30, 2006.

**7.   Debt**

| ** **                                      | ** ** | **June 30,**       | ** ** | **December 31,** | ** ** |
|-------------------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| ** **                                      | ** ** | **2007**                | ** ** | **2006**              | ** ** |
| ** **                                      | ** ** | **(unaudited)**         | ** ** | ** **            | ** ** |
| ** **                                      | ** ** | **(in thousands)** | ** ** |
| Insight Midwest Holdings  Credit Facility       |       | $                       | 2,241,000  |                  |       | $ | 2,286,000 |   |   |
| Insight Midwest 93¤4%  Senior Notes        |       | 200,000                 |       |                  | 200,000    |   |   |
| Insight Inc. 121¤4%  Senior Discount Notes |       | 350,000                 |       |                  | 350,000    |   |   |
|                                            |       | 2,791,000               |       |                  | 2,836,000  |   |   |
| Net unamortized discount  on notes              |       | (28,175                 | )          |                  | (30,278    | ) |   |
| Total debt                                      |       | $                       | 2,762,825  |                  |       | $ | 2,805,722 |   |   |

 

***Insight Midwest Holdings $2.445 Billion CreditFacility***

Insight Midwest Holdings, LLC, a wholly owned subsidiaryof Insight Midwest, holds all of the outstanding equity of each of ouroperating subsidiaries, and on October 6, 2006, entered into a new $2.445billion senior secured credit facility. The facility is comprised of a $385.0 millionA Term Loan scheduled to mature on October 6, 2013, a $1.8 billion B TermLoan scheduled to mature on April 6, 2014 and $260.0 million inrevolving commitments scheduled to terminate on October 6, 2012. Theweighted average interest rate for debt outstanding under the credit facilitywas 7.20% at June 30, 2007. As of June 30, 2007 we were in compliancewith the credit facility’s covenant requirements.

On March 28, 2002, weloaned $100.0 million to Insight Midwest. The loan to Insight Midwestbears annual interest of 9%, compounded semi-annually, has a scheduled maturitydate of January 31, 2011 and permits prepayments. Insight Midwest Holdingsis permitted under the credit facility to make distributions to Insight Midwestfor the purpose of repaying our loan, including accrued interest, provided thatthere are no defaults existing under the credit facility. During the three and six months ended June 30,2007, Insight Midwest repaid a total of $0 and $4.5 million of the loanbalance. As of June 30, 2007 and December 31, 2006, thebalance of the $100.0 million loan, including accrued interest was $137.6 millionand $136.1 million.

***Insight Inc. 12***1¤4%Senior Discount Notes

In 2001, we completed a $400.0 million offeringof 121¤4%Senior Discount Notes due in February 2011. These notes were issued at adiscount to their principal amount at maturity. In 2002 and 2004, werepurchased a total of $50.0 million face amount of these notes.

9

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**7.**   Debt (Continued)

No cash interest on the discount notes accrued priorto February 15, 2006. Thereafter, cash interest on the discount notesbegan to accrue and is payable on February 15 and August 15 of eachyear. The initial accreted value of the discount notes increased until February 15,2006 such that the accreted value equaled the revised outstanding principalamount of $350.0 million at that time and on December 31, 2006.

The Insight Inc. 121¤4%Senior Discount Notes contain certain financial and other debt covenants. As ofJune 30, 2007, we were in compliance with all covenant requirements.

***Debt Principal Payments***

As of June 30,2007, the remaining principal payments required on our debt were as follows (in thousands):

| 2007       |   | $         | —    |   |
|------------|--------|-----------|-----------|--------|
| 2008       |   | 9,312     |      |
| 2009       |   | 242,063   |      |
| 2010       |   | 61,313    |      |
| 2011       |   | 430,562   |      |
| Thereafter |   | 2,047,750 |      |
| Total      |   | $         | 2,791,000 |   |

 

**8.   DerivativeInstruments**

We enter into derivativeinstruments, typically interest-rate swap agreements, to modify the interestcharacteristics of our outstanding debt to either a floating or fixed ratebasis. These agreements involve fixed rate interest payments in exchange forfloating rate interest receipts, known as cash flow hedges, and floating rateinterest payments in exchange for fixed rate interest receipts, known as fairvalue hedges, over the life of the agreement without an exchange of theunderlying principal amount. The differential to be paid or received is accruedas interest rates change and is recognized as an adjustment to interest expenserelated to the debt. The related estimated fair value is included in othercurrent or non-current liabilities or assets. Gains and losses related to cashflow hedges that are determined to be effective hedges are recorded asaccumulated other comprehensive income or loss in the accompanying consolidatedbalance sheets. Gains and losses related to fair value hedges that aredetermined to be effective hedges are recorded in the consolidated statementsof operations as an adjustment to the swap instrument and an equal andoffsetting adjustment to the carrying value of the underlying debt. Gains andlosses related to interest rate swaps that are determined not to be effectivehedges and do not qualify for hedge accounting are recorded in our consolidatedstatements of operations as other income or expense.

**Cash Flow Hedges**

In October 2006,we entered into two interest rate swap agreements to hedge our exposure tofluctuations in the base rate for our Term Loan B whereby we swappedfloating rates for:

·       afixed rate of 5.240% on $450.0 million notional value of our Term Loan Bdebt which expires in December 2007; and

·       afixed rate of 5.148% of $400.0 million notional value of our Term Loan Bdebt which expires in December 2008.

10

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**8.**   Derivative Instruments (Continued)

In the second quarterthese swaps offset movements in the base rate for our Term Loan B by 101.2% and101.8%, respectively. During the second quarter of 2007, these swap agreementswere determined to be ineffective cash flow hedges for the purposes of SFASNo. 133, *Accounting for Derivative Instruments andHedging Activities*. At June 30, 2007 and December 31, 2006the estimated fair value of these interest rate swap agreements wereapproximately $1.1 million and $306,000 and were recorded in other currentor non-current assets on the accompanying consolidated balance sheets dependingon the expiration date of the underlying swap agreement.

**9.   Minority andPreferred Interests**

In May 2003, the FASB issued SFAS No. 150, *Accounting for Certain Financial Instruments with Characteristics ofboth Liabilities and Equity*. This Statement establishes standardsfor how an issuer classifies and measures certain financial instruments withcharacteristics of both liabilities and equity. Financial instruments that fallwithin the scope of SFAS No. 150 that were previously classified as equity arenow required to be classified as liabilities or, in some circumstances, assets.

As of June 30, 2007 and December 31, 2006 wehad $259.9 million and $245.6 million of minority interests recordedin our balance sheet as temporary equity related to Insight Midwest. The Insight Midwest partnership was formed inSeptember 1999 to serve as the holding company and a financing vehicle forour cable television system 50/50 joint venture with an indirect subsidiary ofAT&T Broadband (now known as Comcast Cable). The results of the partnershipare included in our consolidated financial statements since we as generalpartner effectively control Insight Midwest’s operating and financial decisions.

EffectiveApril 1, 2007, we have divided Insight Midwest’s assets and liabilitiesinto the Insight Systems Group and the Comcast Systems Group. Subsequent to April 1,2007, adjustments to minority interest reflect the earnings and losses of theComcast Systems Group. (See Note 1—“Organization and Basis of Presentation”for additional disclosure in connection with the proposed division of assetsand liabilities of the partnership). As of June 30, 2007, we estimated thesettlement value of this minority interest to be between $1.3 billion and$2.0 billion.

**10.   PartnershipSplit-Up Costs**

During the second quarterof 2007, we recorded $3.1 million in employee retention benefits, inaccordance with SFAS No. 146, *Accounting for CostsAssociated with Exit or Disposal Activities,* and $2.7 millionin legal fees in connection with matters related to our agreement with Comcastto divide the assets and liabilities of Insight Midwest and our evaluation ofstrategic alternatives post split-up. The closing is subject to closingconditions, including local governmental approvals and regulatory approvals,and is expected to be completed by the end of 2007. The Company has establisheda plan to provide one-time retention benefits for certain employees related tothe split-up. The total approved plan is $12.3 million which will bemodified as circumstances warrant. These one-time retention benefits and legalfees are included in selling, general and administrative expenses in theaccompanying consolidated statements of operations.

11

----

**INSIGHT COMMUNICATIONS COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**11.   Related PartyTransactions**

***Programming***

We purchase the majorityof our programming through affiliates of Comcast Cable. Charges for suchprogramming, including a 11⁄2% administrative fee, were $51.6 million and$102.9 million for the three and six months ended June 30, 2007 and$44.3 million and $87.3 million for the three and six months ended June 30,2006. As of June 30, 2007 and December 31, 2006, $34.6 millionand $30.7 million of accrued programming costs were due to affiliates ofComcast Cable. We believe that the programming rates charged through theseaffiliates are lower than those available from independent parties. Upon thecompletion of the division of assets and liabilities of Insight Midwestdescribed in Note 1, we will no longer have the right to purchaseprogramming services for our systems through this affiliate arrangement.

**12.   Commitments andContingencies**

***Programming Contracts***

We enter into long-termcontracts with third parties who provide us with programming for distributionover our cable television systems. These programming contracts are asignificant part of our business and represent a substantial portion of ouroperating costs. Since future fees under such contracts are based on numerousvariables, including number and type of customers, we have not recorded anyliabilities with respect to such contracts.

***Litigation***

In April 2005, Acacia Media TechnologiesCorporation filed a lawsuit against us and others in the United States DistrictCourt for the Southern District of New York. The complaint alleges, among otherthings, infringement of certain United States patents that allegedly relate tosystems and methods for transmitting and/or receiving digital audio and videocontent. The complaint seeks injunctive relief and damages in an unspecifiedamount. In the event that a court ultimately determines that we infringe on anyof the patents, we may be subject to substantial damages, which may includetreble damages and/or an injunction that could require us to materially modifycertain products and services that we currently offer to subscribers. Webelieve that the claims are without merit and intend to defend the actionvigorously. The final disposition of this claim is not expected to have amaterial adverse effect on our consolidated financial position but couldpossibly be material to our consolidated results of operations of any oneperiod. Further, at this time the outcome of the litigation is impossible topredict, and no assurance can be given that any adverse outcome would not bematerial to our consolidated financial position.

We are subject to various legal proceedings that arisein the ordinary course of business. While it is impossible to determine withcertainty the ultimate outcome of these matters, it is our opinion that theresolution of these matters will not have a material adverse affect on ourconsolidated financial condition.

12

----

**Item 2.**                        Management’sDiscussion and Analysis of Financial Condition and Results of Operations

The following discussionand analysis reflects and updates disclosures for the restatement of ourhistorical consolidated financial results for the three and six months ended June 30,2006, as more fully described in our amended annual report on Form 10-K/A,as filed on August 15, 2007. Accordingly, the only changes to the 2006financial information presented are to the Net loss line under “Overview” andthe Net loss and Provision for income taxes line items in the table under “Reconciliationof Net Loss to Adjusted Operating Income before Depreciation and Amortization”.

**CautionaryStatement Regarding Forward-Looking Information**

This quarterlyreport on Form 10-Q contains certain forward-looking statements withrespect to the financial condition, results of operations, plans, objectives,future performance and business of our company, including, without limitation,statements preceded by, followed by or that include the words “believes,” “expects,”“anticipates,” “estimates” or similar expressions. We believe it is importantto communicate management’s expectations. However, there may be events in thefuture that we are not able to accurately predict or over which we have nocontrol. The risk factors listed in our Annual Report on Form 10-Kfor the year ended December 31, 2006, as well as any other cautionarylanguage in this quarterly report, provide examples of risks, uncertainties andevents that may cause our actual results to differ materially from theexpectations we describe in our forward-looking statements. You should be awarethat the occurrence of the events described in these risk factors and elsewherein this quarterly report could have a material adverse effect on our business,operating results and financial condition. Examples of these risks include:

·       Allof the services offered by our company face a wide range of competition thatcould adversely affect our future results of operations;

·       Wehave substantial debt and have significant interest payment requirements, whichmay adversely affect our ability to obtain financing in the future to fund ouroperations and our ability to react to changes in our business;

·       Uponcompletion of the division of our joint venture with a subsidiary of ComcastCorporation, we will face new challenges as a smaller company, includingoperating at lower margins;

·       Theterms of Insight Midwest’s indebtedness limits our ability to access the cashflow of Insight Midwest’s subsidiaries for debt service and any other purpose;

·       Wehave a history of net losses and may not be profitable in the future;

·       Ourprogramming costs are substantial, and they are expected to increase,particularly as a result of the pending division of our joint venture withComcast; and

·       Generalbusiness conditions, economic uncertainty or slowdown, and the effects ofgovernmental regulation could adversely affect our future results ofoperations.

We do not undertake anyobligation to publicly update or release any revisions to these forward-lookingstatements to reflect events or circumstances after the date that thisquarterly report is filed with the SEC or to reflect the occurrence ofunanticipated events, except as required by law.

**Overview**

Our revenues are earned from customer fees for cabletelevision video services including basic, classic, digital, premium,video-on-demand and ancillary services, such as rental of converters and remotecontrol devices and installations. In addition, we earn revenues from providinghigh-speed Internet services, selling 

13

----

advertising, providingtelephone services and commissions for products sold through home shoppingnetworks.

Thefollowing table is derived from our consolidated financial statements that areincluded in this report and sets forth certain statement of operations data forour consolidated operations (in thousands):

| ** **                                           | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                           | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                           | ** ** | ** **                                      | ** ** | **As restated**                          | ** ** | ** ** | ** ** | **As restated** | ** ** |
| Revenue                                              |       | $                                               | 355,503    |                                          |       | $ | 311,717 |   |   | $ | 694,972 |   |   | $ | 612,998 |   |   |
| Operating costs and  expenses:                       |       |                                            |       |                                          |       |   |   |   |   |   |   |   |   |
| Programming and other operating costs                |       | 122,306                                         |       |                                          | 112,956    |   |   | 242,161 |   |   | 224,370 |   |   |
| Selling, general and administrative                  |       | 97,979                                          |       |                                          | 81,524     |   |   | 188,652 |   |   | 159,690 |   |   |
| Depreciation and amortization                        |       | 71,954                                          |       |                                          | 67,343     |   |   | 141,233 |   |   | 131,655 |   |   |
| Total operating  costs and expenses                  |       | 292,239                                         |       |                                          | 261,823    |   |   | 572,046 |   |   | 515,715 |   |   |
| Operating income                                     |       | 63,264                                          |       |                                          | 49,894     |   |   | 122,926 |   |   | 97,283 |   |   |
| Interest expense                                     |       | 56,502                                          |       |                                          | 61,208     |   |   | 114,399 |   |   | 122,283 |   |   |
| Minority interest  income (expense)                  |       | (13,691                                         | )          |                                          | 2,110      |   |   | (14,244 | ) |   | 4,615 |   |   |
| Net loss                                             |       | (8,198                                          | )          |                                          | (10,804    | ) |   | (8,303 | ) |   | (23,532 | ) |   |
| Net cash provided  by operating activities           |       | 86,652                                          |       |                                          | 46,807     |   |   | 180,371 |   |   | 133,332 |   |   |
| Net cash used in  investing activities               |       | 55,737                                          |       |                                          | 84,229     |   |   | 132,641 |   |   | 141,779 |   |   |
| Net cash used in  (provided by) financing activities |       | 20,000                                          |       |                                          | (4,125     | ) |   | 45,413 |   |   | 16,749 |   |   |
| Capital expenditures                                 |       | 55,753                                          |       |                                          | 84,136     |   |   | 132,680 |   |   | 141,765 |   |   |
|                                                      |            |                                                 |            |                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

**Use of AdjustedOperating Income before Depreciation and Amortization and Free Cash Flow**

We utilize Adjusted Operating Income beforeDepreciation and Amortization, (defined as operating income beforedepreciation, amortization, non-cash stock-based compensation and partnershipdissolution costs) among other measures, to evaluate the performance of ourbusinesses. Adjusted Operating Income before Depreciation and Amortization isconsidered an important indicator of the operational strength of our businessesand is a component of our annual compensation programs. In addition, our debtagreements use Adjusted Operating Income before Depreciation and Amortization,adjusted for certain non-recurring items, in our leverage and other covenantcalculations. We also use this measure to determine how we will allocateresources and capital. Our management finds this measure helpful because itcaptures all of the revenue and ongoing operating expenses of our businessesand therefore provides a means to directly evaluate the ability of our businessoperations to generate returns and to compare operating capabilities across ourbusinesses. This measure is also used by equity and fixed income researchanalysts in their reports to investors evaluating our businesses and othercompanies in the cable television industry. We believe Adjusted OperatingIncome before Depreciation and Amortization is useful to investors andbondholders because it enables them to assess our performance in a mannersimilar to the methods used by our management and provides a measure that canbe used to analyze, value and compare companies in the cable televisionindustry, which may have different depreciation, amortization and stock-basedcompensation policies.

A limitation of Adjusted Operating Income beforeDepreciation and Amortization, however, is that it does not reflect theperiodic costs of certain capitalized tangible and intangible assets used ingenerating revenues in our businesses. Management evaluates the costs of suchtangible and intangible assets through other financial measures such as capitalexpenditures, investment spending and Free Cash Flow. Management also evaluatesthe costs of capitalized tangible and intangible assets by analyzing returnsprovided on the capital dollars deployed. Another limitation of AdjustedOperating Income before Depreciation and Amortization is that it does notreflect income net of interest expense, which is a 

14

----

significant expense for usbecause of the substantial debt we incurred to acquire cable television systemsand finance capital expenditures to upgrade our cable network. Managementevaluates the impact of interest expense through measures including interestexpense, Free Cash Flow, the returns analysis discussed above and debt servicecovenant ratios under our credit facility.

Free Cash Flow is net cash provided by operatingactivities (as defined by accounting principles generally accepted in theUnited States) less capital expenditures. Free Cash Flow is considered to be animportant indicator of our liquidity, including our ability to repayindebtedness. We believe Free Cash Flow is useful for investors and bondholdersbecause it enables them to assess our ability to service our debt and to fundcontinued growth with internally generated funds in a manner similar to themethods used by our management, and provides a measure that can be used toanalyze, value and compare companies in the cable television industry.

Both Adjusted OperatingIncome before Depreciation and Amortization and Free Cash Flow should beconsidered in addition to, not as a substitute for, Operating Income, NetIncome and various cash flow measures (e.g., Net Cash Provided by OperatingActivities), as well as other measures of financial performance and liquidityreported in accordance with accounting principles generally accepted in theUnited States.

***Reconciliation of Net Loss to Adjusted OperatingIncome before Depreciation and Amortization***

Thefollowing table reconciles Net Loss to Adjusted Operating Income beforeDepreciation and Amortization. In addition, the table provides the componentsfrom Net Loss to Operating Income for purposes of the discussions that follow(in thousands).

| ** **                                                           | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|----------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                           | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                                           | ** ** | ** **                                      | ** ** | **As restated**                          | ** ** | ** ** | ** ** | **As restated** | ** ** |
| Net loss                                                             |       | $                                               | (8,198     | )                                             |       | $ | (10,804 | ) |   | $ | (8,303 | ) |   | $ | (23,532 | ) |   |
| Provision for  income taxes                                          |       | 1,909                                           |       |                                          | 1,989      |   |   | 3,939 |   |   | 3,978 |   |   |
| Loss before  income taxes                                            |       | (6,289                                          | )          |                                          | (8,815     | ) |   | (4,364 | ) |   | (19,554 | ) |   |
| Minority interest  income (expense)                                  |       | 13,691                                          |       |                                          | (2,110     | ) |   | 14,244 |   |   | (4,615 | ) |   |
| Income (loss)  before minority interest and income taxes             |       | 7,402                                           |       |                                          | (10,925    | ) |   | 9,880 |   |   | (24,169 | ) |   |
| Other (income) expense:                                              |       |                                            |       |                                          |       |   |   |   |   |   |   |   |   |
| Other                                                                |       | (389                                            | )          |                                          | (20        | ) |   | (782 | ) |   | 50 |   |   |
| Interest income                                                      |       | (251                                            | )          |                                          | (369       | ) |   | (571 | ) |   | (881 | ) |   |
| Interest expense                                                     |       | 56,502                                          |       |                                          | 61,208     |   |   | 114,399 |   |   | 122,283 |   |   |
| Total other  expense, net                                            |       | 55,862                                          |       |                                          | 60,819     |   |   | 113,046 |   |   | 121,452 |   |   |
| Operating income                                                     |       | 63,264                                          |       |                                          | 49,894     |   |   | 122,926 |   |   | 97,283 |   |   |
| Depreciation and  amortization                                       |       | 71,954                                          |       |                                          | 67,343     |   |   | 141,233 |   |   | 131,655 |   |   |
| Partnership  dissolution costs                                       |       | 5,848                                           |       |                                          | —     |   |   | 5,848 |   |   | — |   |   |
| Stock-based  compensation                                            |       | 323                                             |       |                                          | 334        |   |   | 714 |   |   | 884 |   |   |
| Adjusted Operating  Income before Depreciation and Amortization |       | $                                               | 141,389    |                                          |       | $ | 117,571 |   |   | $ | 270,721 |   |   | $ | 229,822 |   |   |

 

15

----

***Reconciliation of Net Cash Provided by OperatingActivities to Free Cash Flow***

Thefollowing table provides a reconciliation from net cash provided by operatingactivities to Free Cash Flow. In addition, the table provides the componentsfrom net cash provided by operating activities to operating income for purposesof the discussions that follow.

| ** **                                                      | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                      | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                                      | ** ** | **(in thousands)**                         | ** ** |
| Operating income                                                |       | $                                               | 63,264     |                                          | $          | 49,894 |   | $ | 122,926 |   | $ | 97,283 |   |
| Depreciation and amortization                                   |       | 71,954                                          |       | 67,343                                        |       | 141,233 |   | 131,655 |   |
| Partnership dissolution costs                                   |       | 5,848                                           |       | —                                        |       | 5,848 |   | — |   |
| Stock-based compensation                                        |       | 323                                             |       | 334                                           |       | 714 |   | 884 |   |
| Adjusted  Operating Income before Depreciation and Amortization |       | 141,389                                         |       | 117,571                                       |       | 270,721 |   | 229,822 |   |
| Changes in working capital accounts(1)                          |       | (4,740                                          | )          | 5,758                                         |       | 13,631 |   | 3,672 |   |
| Cash paid for interest                                          |       | (49,980                                         | )          | (76,384                                       | )          | (103,722 | ) | (99,471 | ) |
| Cash paid for taxes                                             |       | (17                                             | )          | (138                                          | )          | (259 | ) | (691 | ) |
| Net cash provided  by operating activities                      |       | 86,652                                          |       | 46,807                                        |       | 180,371 |   | 133,332 |   |
| Capital expenditures                                            |       | (55,753                                         | )          | (84,136                                       | )          | (132,680 | ) | (141,765 | ) |
| Free Cash Flow                                                  |       | $                                               | 30,899     |                                          | $          | (37,329 | ) | $ | 47,691 |   | $ | (8,433 | ) |

----

(1)          Changesin working capital accounts are based on the net cash changes in current assetsand current liabilities, excluding charges related to interest and taxes andother non-cash expenses.

**Results ofOperations**

***Three Months Ended June 30, 2007 Compared toThree Months Ended June 30, 2006***

Revenue for the three months ended June 30, 2007,totaled $355.5 million, an increase of 14% over the prior year, due primarilyto Revenue Generating Unit (“RGU”) growth across all of our services, as wellas video rate increases. High-speed Internet service revenue increased 25% overthe prior year, which was attributable to an increased customer base and waspartially offset by lower average revenue per customer (“ARPU”) due topromotional discounts. We added a net 18,900 high-speed Internet customersduring the quarter to end at 674,900 customers.

Basic cable service revenue increased 6% due to anincreased customer base and video rate increases, partially offset bypromotional discounts. Historically, we have experienced a seasonal decline inbasic customers during the second quarter primarily as a result of studentsleaving the university communities we serve. In addition, digital servicerevenue increased 25% over the prior year due to an increased customer base anda $1.58 increase in digital ARPU. We added a net 7,700 digital customers duringthe quarter to end at 661,500 customers.

We have been increasing our customer growth andretention efforts by increasing spending on sales and marketing efforts, emphasizingbundling and enhancing and differentiating our video services withvideo-on-demand, high definition television and digital video recorders. We arealso continuing to focus on improving customer satisfaction through higherservice levels and increased customer education of product offerings.

16

----

To increase our bundling opportunities and extend ourgrowth potential in future years, we, during the second half of 2006 and in January 2007,successfully rolled out our telephone product in eight previously unserveddistricts. As a result, we added a net 29,400 telephone customers during thequarter to end at 177,200 customers.

Revenueby service offering was as follows for the three months ended June 30(dollars in thousands):

| ** **           | ** ** | **Revenue by Service Offering**  | ** ** | ** **                        | ** ** |
|----------------------|------------|-------------------------------------------------|------------|-----------------------------------|------------|
| ** **           | ** ** | **Three Months  Ended  June 30,2007** | ** ** | **% of Total  Revenue** | ** ** | **Three Months  Ended  June 30,2006** | ** ** | **% of  Total  Revenue** | ** ** | **% Change  in Revenue** | ** ** |
| Basic                |       |                                            | $          | 169,891                           |       |   |   | 47.8 | % |   |   | $ | 160,328 |   |   |   | 51.5 | % |   |   | 6.0 | % |   |
| High-Speed  Internet |       |                                            | 73,260     |                              |       |   | 20.6 | % |   |   | 58,616 |   |   |   | 18.8 | % |   |   | 25.0 | % |   |
| Digital              |       |                                            | 42,954     |                              |       |   | 12.1 | % |   |   | 34,307 |   |   |   | 11.0 | % |   |   | 25.2 | % |   |
| Advertising          |       |                                            | 21,674     |                              |       |   | 6.1 | % |   |   | 20,020 |   |   |   | 6.4 | % |   |   | 8.3 | % |   |
| Telephone            |       |                                            | 20,083     |                              |       |   | 5.6 | % |   |   | 12,528 |   |   |   | 4.0 | % |   |   | 60.3 | % |   |
| Premium              |       |                                            | 13,953     |                              |       |   | 3.9 | % |   |   | 13,852 |   |   |   | 4.4 | % |   |   | 0.7 | % |   |
| Franchise fees       |       |                                            | 8,114      |                              |       |   | 2.3 | % |   |   | 7,384 |   |   |   | 2.4 | % |   |   | 9.9 | % |   |
| Other                |       |                                            | 5,574      |                              |       |   | 1.6 | % |   |   | 4,682 |   |   |   | 1.5 | % |   |   | 19.1 | % |   |
| Total                |       |                                            | $          | 355,503                           |       |   |   | 100.0 | % |   |   | $ | 311,717 |   |   |   | 100.0 | % |   |   | 14.0 | % |   |

 

Total Customer Relationships were 1,424,100 as of June 30,2007, an increase of 49,000 from 1,375,100 as of June 30, 2006. TotalCustomer Relationships represent the number of customers who receive one ormore of our products (i.e., basic cable, high-speed Internet or telephone)without regard to which product they purchase.

In thequarter ended June 30, 2007, we added 53,000 RGUs, which represent the sumof basic, digital, high-speed Internet and telephone customers, and as of June 30,2007, had 2,854,600 RGUs, an increase of 13% from June 30, 2006. RGUs bycategory were as follows (in thousands):

| ** **           | ** ** | **June 30, 2007** | ** ** | **June 30, 2006** | ** ** |
|----------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Basic                |       |                        | 1,341.0    |                        |       |   | 1,302.4 |   |   |
| High-speed  Internet |       |                        | 674.9      |                        |       |   | 534.5 |   |   |
| Digital              |       |                        | 661.5      |                        |       |   | 572.2 |   |   |
| Telephone            |       |                        | 177.2      |                        |       |   | 107.2 |   |   |
| Total RGUs           |       |                        | 2,854.6    |                        |       |   | 2,516.3 |   |   |

 

Average monthly revenue per basic customer was $88.27for the three months ended June 30, 2007, compared to $79.65 for the threemonths ended June 30, 2006. This primarily reflects the continued growthof high-speed Internet, video and telephone product offerings in all markets,as well as video rate increases.

Programming and other operating costs increased $9.4million, or 8%. Increases in programming rates, customers and the addition ofnew programming content were significant drivers of the cost increase for thequarter ended June 30, 2007. Other direct operating costs increased due tothe increase in telephone cost of service as we successfully rolled out thisproduct in eight previously unserved districts during the second half of 2006and in January 2007. This increase was partially offset by decreases inour high-speed Internet service costs as the company, in 2006, transitioned itsInternet services in-house and realized both cost savings and operationalbenefits from this investment even while increasing our customer base.

17

----

Selling, general and administrative expenses increased$16.5 million, or 20%, primarily due to increased payroll, payroll-relatedcosts and temporary help associated with an increase in the number of employeesand salary increases for existing employees. The increase in the number ofemployees represents investments in sales and marketing, customer care andnetwork operations personnel to continue to upgrade and enhance our productofferings, manage our increasingly complex network and increase customersatisfaction. A portion of the network operations personnel increases were directlyrelated to the transition of our Internet services in-house. $5.8 million ofpartnership dissolution costs recorded in the second quarter of 2007 related toInsight’s planned division of its partnership with Comcast significantlycontributed to the increase in selling, general and administrative expenses. Franchisefees, customer billing and collection fees increased primarily due to theincrease in our revenues and our customer base. Marketing expenses increasedover the prior year to support the continued rollout of high-speed Internet,digital and telephone products, and to grow our core video customer base.

Depreciation and amortization expense increased $4.6million, or 7%, primarily as a result of a continued high level of capitalexpenditures through June 30,2007. These expenditures were primarily for purchases of customer premiseequipment, installation labor and materials, capitalized labor, headendequipment, network extensions and network capacity and bandwidth increases, allof which we consider necessary in order to continue to maintain and grow ourcustomer base and expand our service offerings. Partially offsetting thisincrease was a decrease in depreciation expense related to certain assets thathave become fully depreciated since June 30, 2006.

As a result of the factors discussed above, AdjustedOperating Income before Depreciation and Amortization increased $23.8 millionto $141.4 million, an increase of 20% over the prior year’s quarter.

Interest expense decreased $4.7 million, or 8%,because of lower interest rates, which averaged 8.1% for the three months endedJune 30, 2007, as comparedto 8.9% for the three months ended June 30, 2006.

Minority interest expense increased $15.8 millionprimarily as a result of the division of the assets and liabilities of theInsight Midwest partnership into the Insight Systems Group and the ComcastSystems Group. This resulted in us recording adjustments to minority interestbased on the earnings and losses of the Comcast Systems Group.

***Six Months Ended June 30, 2007 Compared to SixMonths Ended June 30, 2006***

Revenue for the six months ended June 30, 2007,totaled $695.0 million, an increase of 13% over the prior year, due primarilyto RGU growth across all of our services, as well as video rate increases.High-speed Internet service revenue increased 24% over the prior year, whichwas attributable to an increased customer base and was partially offset bylower average revenue per customer due to promotional discounts. We added a net63,700 high-speed Internet customers during the six months to end at 674,900customers.

Basic cable service revenue increased 6% due to anincreased customer base and video rate increases, partially offset bypromotional discounts. We added a net 18,200 basic customers during the sixmonths to end at 1,341,000 customers. In addition, digital service revenueincreased 26% over the prior year due to an increased customer base and a $1.56increase in digital ARPU. We added a net 39,900 digital customers during thesix months to end at 661,500 customers.

To increase our bundling opportunities and extend ourgrowth potential in future years, we, during the second half of 2006 and in January 2007,successfully rolled out our telephone product in eight previously unserveddistricts. As a result, we added a net 53,800 telephone customers during thesix months to end at 177,200 customers.

18

----

Revenueby service offering was as follows for the six months ended June 30(dollars in thousands):

| ** **           | ** ** | **Revenue by Service Offering** | ** ** | ** **                        | ** ** |
|----------------------|------------|------------------------------------------------|------------|-----------------------------------|------------|
| ** **           | ** ** | **Six Months  Ended  June 30,2007**  | ** ** | **% of Total  Revenue** | ** ** | **Six Months  Ended  June 30,2006** | ** ** | **% of  Total  Revenue** | ** ** | **% Change  in Revenue** | ** ** |
| Basic                |       |                                           | $          | 338,042                           |       |   |   | 48.6 | % |   |   | $ | 318,535 |   |   |   | 52.0 | % |   |   | 6.1 | % |   |
| High-Speed  Internet |       |                                           | 142,791    |                              |       |   | 20.5 | % |   |   | 115,113 |   |   |   | 18.8 | % |   |   | 24.0 | % |   |
| Digital              |       |                                           | 83,494     |                              |       |   | 12.0 | % |   |   | 66,030 |   |   |   | 10.8 | % |   |   | 26.4 | % |   |
| Advertising          |       |                                           | 39,059     |                              |       |   | 5.6 | % |   |   | 37,717 |   |   |   | 6.2 | % |   |   | 3.6 | % |   |
| Telephone            |       |                                           | 35,886     |                              |       |   | 5.2 | % |   |   | 23,883 |   |   |   | 3.9 | % |   |   | 50.3 | % |   |
| Premium              |       |                                           | 28,148     |                              |       |   | 4.1 | % |   |   | 27,246 |   |   |   | 4.4 | % |   |   | 3.3 | % |   |
| Franchise fees       |       |                                           | 16,112     |                              |       |   | 2.3 | % |   |   | 14,738 |   |   |   | 2.4 | % |   |   | 9.3 | % |   |
| Other                |       |                                           | 11,440     |                              |       |   | 1.7 | % |   |   | 9,736 |   |   |   | 1.5 | % |   |   | 17.5 | % |   |
| Total                |       |                                           | $          | 694,972                           |       |   |   | 100.0 | % |   |   | $ | 612,998 |   |   |   | 100.0 | % |   |   | 13.4 | % |   |

 

Average monthly revenue per basic customer was $86.70for the six months ended June 30, 2007, compared to $78.77 for the sixmonths ended June 30, 2006. This primarily reflects the continued growthof high-speed Internet, video and telephone product offerings in all markets,as well as video rate increases.

Programming and other operating costs increased $17.8million, or 8%. Increases in programming rates, customers and the addition ofnew programming content were significant drivers of the cost increase for the sixmonths ended June 30, 2007. For the six months ended June 30, 2006,programming costs reflected certain programming credits resulting fromfavorable resolution of pricing negotiations related to certain prior periodprogramming costs that were accrued at a higher rate than the amount actuallypaid. Programming credits for the six months ended June 30, 2007 weresignificantly lower, causing overall programming cost increases to be greater. Otherdirect operating costs decreased due to decreases in our high-speed Internetservice costs as the company, in 2006, transitioned its Internet servicesin-house and realized both cost savings and operational benefits from thisinvestment even while increasing our customer base. These decreases werepartially offset by an increase in telephone cost of service as we successfullyrolled out this product in eight previously unserved districts during thesecond half of 2006 and in January 2007.

Selling, general and administrative expenses increased$29.0 million, or 18%, primarily due to increased payroll, payroll-relatedcosts and temporary help associated with an increase in the number of employeesand salary increases for existing employees. The increase in the number ofemployees represents investments in sales and marketing, customer care andnetwork operations personnel to continue to upgrade and enhance our productofferings, manage our increasingly complex network and increase customersatisfaction. A portion of the network operations personnel increases weredirectly related to the transition of our Internet services in-house. $5.8million of partnership dissolution costs recorded in the second quarter of 2007related to Insight’s planned division of its partnership with Comcastsignificantly contributed to the increase in selling, general andadministrative expenses. Marketing expenses increased over the prior year tosupport the continued rollout of high-speed Internet, digital and telephoneproducts, and to grow our core video customer base. Franchise fees, customerbilling and collection fees increased primarily due to the increase in ourrevenues and our customer base.

Depreciation and amortization expense increased $9.6million, or 7%, primarily as a result of a continued high level of capitalexpenditures through June 30,2007. These expenditures were primarily for purchases of customer premiseequipment, installation labor and materials, capitalized labor, headendequipment, network extensions and network capacity and bandwidth increases, allof which we consider necessary in order to continue to maintain and grow ourcustomer base and expand our service offerings. 

19

----

Partially offsetting thisincrease was a decrease in depreciation expense related to certain assets thathave become fully depreciated since June 30, 2006.

As a result of the factors discussed above, AdjustedOperating Income before Depreciation and Amortization increased $40.9 millionto $270.7 million, an increase of 18%.

Interest expense decreased $7.9 million, or 6%,because of lower interest rates, which averaged 8.1% for the six months ended June 30, 2007, as compared to 8.9% for thesix months ended June 30,2006.

Minority interest expense increased $18.9 millionprimarily as a result of the division of the assets and liabilities of the InsightMidwest partnership into the Insight Systems Group and the Comcast SystemsGroup. This resulted in us recording adjustments to minority interest based onthe earnings and losses of the Comcast Systems Group.

**Liquidity andCapital Resources**

Our business requires cash for operations, debtservice and capital expenditures. The cable television business has substantialongoing capital requirements for the provision of new services and theconstruction, expansion and maintenance of its broadband networks. In the past,expenditures have been made for various purposes including the upgrade of theexisting cable network, and will continue to be made for customer premiseequipment (e.g., set-top boxes), installation and deployment of new product andservice offerings, capitalized payroll, network capacity, bandwidth increases,network extensions, and, to a lesser extent, network upgrades. Historically, wehave been able to meet our cash requirements with cash flow from operations,borrowings under our credit facilities and issuances of private and public debtand equity.

Cash provided by operations for the six months ended June 30,2007 and 2006 was $180.4 million and $133.3 million. The increase was primarilyattributable to the decrease in our net loss and the timing of cash receiptsand payments related to our working capital accounts.

Cash used in investing activities for the six monthsended June 30, 2007 and 2006 was $132.6 million and $141.8 million and wasprimarily for capital expenditures. These expenditures principally constitutedpurchases of customer premise equipment, installation labor and materials andcapitalized labor, all of which are necessary to grow our customer base andexpand our service offerings.

Cash used in financing activities for the six monthsended June 30, 2007 and 2006 was $45.4 million and $16.7 million. Theseexpenditures were primarily for the repayment of our credit facility.

Free Cash Flow forthe six months ended June 30, 2007 totaled $47.7 million, compared to($8.4) million for the six months ended June 30, 2006. This increase inFree Cash Flow from June 30, 2006 to June 30, 2007 of $56.1 millionwas primarily driven by the following:

·       A$40.9 million increase in Adjusted Operating Income before Depreciation andAmortization;

·       A$10.0 million increase in the generation of Free Cash Flow over the same periodin the prior year from changes in working capital accounts; and

·       A$9.1 million decrease in capital expenditures.

These increases incash flow were offset by:

·       A$4.3 million increase in cash interest expense paid primarily driven byinterest on the 121⁄4% senior discount notes which was paid in cash in February 2007,whereas in February 2006 it was paid-in-kind. Partially offsetting thisincrease was a decrease in interest rates.

We believe that the Insight Midwest Holdings creditfacility, cash on-hand and our cash flow from operations are sufficient tosupport our current operating plan. As of June 30, 2007 we had the abilityto 

20

----

draw upon $194.3 millionof unused availability under the Insight Midwest Holdings credit facility tofund any shortfall resulting from the inability of Insight Midwest’s cash fromoperations to fund its capital expenditures, meet its debt service requirementsor otherwise fund its operations. We expect to use any available Free Cash Flowto repay our indebtedness.

On April 1, 2007, Insight Midwest’s partnershipagreement was amended, and we agreed with Comcast on a division of InsightMidwest’s assets and liabilities. Upon completion of the transaction, we willown 100% of Insight Midwest’s cable systems serving customers in Louisville,Lexington, Bowling Green and Covington, Kentucky, in Evansville, Indiana, andin Columbus, Ohio, and Comcast will own 100% of Insight Midwest’s cable systemsserving customers in Rockford/Dixon, Quincy/Macomb, Springfield, Peoria andChampaign/Urbana, Illinois and in Bloomington, Anderson, Lafayette and Kokomo,Indiana. Pending completion of the transaction, we will continue to serve asgeneral partner and control and manage all of the cable systems of InsightMidwest and will continue to include the results of Insight Midwest in ourconsolidated financial statements. In conjunction with the division of assetsand liabilities, the Insight Systems Group was initially allocatedapproximately $1,259.6 billion of the partnership’s debt and the ComcastSystems Group was initially allocated approximately $1,335.4 billion of thepartnership’s debt. This debt allocation excludes the $350.0 millionoutstanding principal amount 121⁄4% Senior Discount Notes due 2011 issued byInsight Inc. The closing is subject to closing conditions, including localgovernmental approvals and regulatory approvals, and is expected to becompleted by the end of 2007.

The credit facilityhas been structured to survive the division of Insight Midwest, subject tocertain conditions, including:

·       proforma financial covenant compliance upon consummation of the division;

·       compliancewith the financial covenants for the remaining life of the credit facility; and

·       thereshall not have occurred and be continuing any event of default that wouldcontinue after giving effect to the division.

Subject to pro forma financial covenant compliance,any cash received as a result of the division may be applied, at our option,to: (a) repay the remaining 93⁄4% senior notes, (b) repay the 121⁄4%senior discount notes, (c) repay the $100.0 million intercompany note, (d) prepaythe Term Loans on a pro rata basis, (e) repay other debt and/or (f) forgeneral corporate purposes. After the occurrence of the division, the marginwith respect to the Term Loan B will increase by 50 basis points, or 0.50%, ifand for so long as the Insight Midwest Holdings’ leverage ratio exceeds6.50:1.00. Upon the occurrence of the division, the maximum leverage permittedwill increase by 0.50:1.00.

We have a substantial amount of debt. Our high levelof debt could have important consequences. Our investments in our operatingsubsidiaries, including Insight Midwest, constitute substantially all of ouroperating assets. Consequently, our subsidiaries conduct all of ourconsolidated operations and own substantially all of our operating assets. Ourprincipal source of cash we need to pay our obligations and to repay theprincipal amount of our debt obligations is the cash that our subsidiariesgenerate from their operations and their borrowings. Our subsidiaries are notobligated to make funds available to us and are restricted by the terms oftheir indebtedness from doing so. Because of such restrictions, our ability toaccess the cash flow of our subsidiaries may be contingent upon our ability torefinance the debt of our subsidiaries. As of June 30, 2007 we were incompliance with all covenants under our credit agreement.

21

----

Thefollowing table summarizes our contractual obligations and commitments,excluding interest and commitments for programming, as of June 30, 2007, including periods in which therelated payments are due (unaudited, in thousands):

| ** **              | ** ** | **Contractual Obligations** | ** ** |
|-------------------------|------------|----------------------------------|------------|
| ** **              | ** ** | **Long-Term  Debt**              | ** ** | **Operating  Leases** | ** ** | **Total** | ** ** |
| 2007                    |       | $                                | —     |   |   | $ | 2,548 |   |   | $ | 2,548 |   |
| 2008                    |       | 9,312                            |       |   | 4,205 |   |   | 13,517 |   |
| 2009                    |       | 242,063                          |       |   | 3,203 |   |   | 245,266 |   |
| 2010                    |       | 61,313                           |       |   | 1,281 |   |   | 62,594 |   |
| 2011                    |       | 430,562                          |       |   | 729 |   |   | 431,291 |   |
| Thereafter              |       | 2,047,750                        |       |   | 2,967 |   |   | 2,050,717 |   |
| Total cash  obligations |       | $                                | 2,791,000  |   |   | $ | 14,933 |   |   | $ | 2,805,933 |   |

 

**Item 3.   Quantitativeand Qualitative Disclosures About Market Risk**

Our revolving credit and term loan agreements bearinterest at floating rates. Accordingly, we are exposed to potential lossesrelated to changes in interest rates. In order to manage our exposure tointerest rate risk, we enter into derivative financial instruments, typicallyinterest rate swaps. The counter-parties to our swap agreements are majorfinancial institutions. We do not enter into derivatives or other financialinstruments for trading or speculative purposes.

The aggregate fair marketvalue and aggregate carrying value of our 93⁄4% senior notes and 121⁄4% seniordiscount notes was $566.3 million and $550.0 million as of June 30, 2007. The fair market value of ourcredit facility borrowings approximates its carrying value as the creditfacility borrowings bear interest at floating rates of interest. As of June 30, 2007, the fair value, if terminated,of our interest rate swap agreements was $1.1 million and is reflected in ourfinancial statements as other current or non-current assets. Changes in thefair value of our interest rate derivative financial instruments are eitherrecognized in income or in stockholders’ equity as a component of othercomprehensive income depending on whether the derivative financial instrumentsqualify for hedge accounting.

**Item 4.   Controlsand Procedures**

We have established disclosure controls and proceduresto ensure that information required to be disclosed in reports filed under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded,processed, summarized and reported within time periods specified in theSecurities and Exchange Commission rules and forms and that informationrequired to be disclosed by us in the reports we file or submit under theExchange Act is accumulated and communicated to the officers who certify our financialreports and to other members of senior management and the board of directors toallow timely decisions regarding required disclosure.

In connection with the restatement of our priorfinancial results, which is more fully described in Note 2 to ourconsolidated financial statements, under the supervision and with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer, we reevaluated the effectiveness of our disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e) underthe Exchange Act) as of June 30, 2007. Based upon that reevaluation andparticularly in light of the restatement of our financial results, weidentified a material weakness in our internal control over financial reportingwith respect to accounting for income taxes relating to the treatment of taxdeductible franchise costs in the determination of the deferred tax assetvaluation allowance.

Solely as a result of this material weakness, weconcluded that our disclosure controls and procedures were not effective as ofJune 30, 2007. Management has discussed the circumstances leading up tothe 

22

----

restatement with the AuditCommittee of our board of directors, and management and the Audit Committeehave concluded that the error was inadvertent and unintentional.

We are in the process of designing and implementingimprovements in our internal control over financial reporting in accounting forincome taxes. These improvements include, among other things, improveddocumentation and analysis regarding the temporary differences betweenfinancial and tax reporting, training individuals involved in accounting andreporting for income taxes regarding these issues, and enhancing thedocumentation around conclusions reached in the implementation of theapplicable generally accepted accounting principles.

There has not been any change in our internal controlover financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) underthe Exchange Act) during the quarter ended June 30, 2007 that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

23

----

**PART II.   OTHERINFORMATION**

**Item 1A.**                RiskFactors

There have been nomaterial changes in our risk factors from those disclosed in our annual reporton Form 10-K/A for the year ended December 31, 2006.

**Item 2.**                        UnregisteredSales of Equity Securities and Use of Proceeds

During the three monthsended June 30, 2007, weissued 200 shares of Series F non-voting common stock to certain of ouremployees. The issuances of non-voting common stock were not registered underthe Securities Act of 1933 because such issuances were offered and sold intransactions not involving a public offering, and therefore exempt fromregistration under the Securities Act of 1933 pursuant to Section 4(2).

**Item 6.**                        Exhibits

Exhibits:
| 31.1 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Executive Officer of Insight Communications Company, Inc. |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Financial Officer of Insight Communications Company, Inc. |
| 32   |   | Section 1350  Certifications                                                                                              |

 

24

----

**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
| Date: August 15, 2007 | INSIGHT COMMUNICATIONS COMPANY,  INC.                   |
|----------------------------|---------------------------------------------------------|
|                       | By:                                                     | /s/ JOHN ABBOT |
|                       | John Abbot                                              |
|                       | *Executive Vice President and Chief Financial  Officer* |
|                       | *(Principal Financial Officer)*                         |

 

25

----