##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
|    |  | For the quarterly period ended June 30, 2002                                           

or

|       |  |                                                                                         
|------ |  | ----------------------------------------------------------------------------------------
|[    ] |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
|       |  | For the transition period from      to                                                  

Commission file number 333-43157

NORTHLAND CABLE TELEVISION, INC.

---

(Exact name of registrant as specified in its charter)


|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|STATE OF WASHINGTON                            |  | 91-1311836                          
|                                               |  |                                     
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)

AND SUBSIDIARY GUARANTOR:

NORTHLAND CABLE NEWS, INC.

---

(Exact name of registrant as specified in its charter)


|                                                  |  |                                     
|------------------------------------------------- |  | ------------------------------------
|STATE OF WASHINGTON                               |  | 91-1638891                          
|                                                  |  |                                     
|(State or other jurisdiction of incorporation)    |  | (I.R.S. Employer Identification No.)
|                                                 
|1201 THIRD AVENUE, SUITE 3600
SEATTLE, WASHINGTON |  | 98101                               
|                                                  |  |                                     
|(Address of principal executive offices)          |  | (Zip Code)                          

Registrants telephone number, including area code: (206) 621-1351

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes   [X]     No   [   ]



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|This filing
contains 19 pages. Exhibits index appears
on page 18. |  | 
|----------------------------------------------------------------- |  | 





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TABLE OF CONTENTS



|                               |                                                                                               |                                                                                               |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION
|                               | ITEM 1. Financial Statements                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS  (UNAUDITED)                                          
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)  (UNAUDITED)
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)                                
|                               |                                                                                               | NOTES TO UNAUDITED FINANCIAL STATEMENTS                                                      
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION   
|                               | ITEM 1 Legal proceedings                                                                     
|                               | ITEM 2 Changes in securities                                                                 
|                               | ITEM 3 Defaults upon senior securities                                                       
|                               | ITEM 4 Submission of matters to a vote of security holders                                   
|                               | ITEM 5 Other information                                                                     
|                               | ITEM 6 Exhibits and Reports on Form 8-K                                                      
|SIGNATURES                    
|EXHIBIT 99.(A)                
|EXHIBIT 99.(B)                



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##### Table of Contents






PART 1  FINANCIAL INFORMATION




ITEM 1. Financial Statements




NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS  (UNAUDITED)

|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |             |             |  
|---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------- | ----------- | ----------- | ------------ | ----------- | ----------- | ----------- | -
|                                                                                                     |                                                                                                                                         |                                                 |             | June 30,    |             | December 31,
|                                                                                                     |                                                                                                                                         |                                                 |             | 2002        |             | 2001        
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |             
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             | (restated) 
|ASSETS                                                                                               |                                                                                                                                         |                                                 |             |             |             |              |             |            
|Current Assets:                                                                                      |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     | Cash                                                                                                                                    |                                                 | $           | 3,010,596   |             |              | $           | 2,724,099   |            
|                                                                                                     | Due from affiliates                                                                                                                     |                                                 |             | 311,438     |             |              |             | 295,650     |            
|                                                                                                     | Accounts receivable                                                                                                                     |                                                 |             | 2,421,436   |             |              |             | 3,437,560   |            
|                                                                                                     | Prepaid expenses                                                                                                                        |                                                 |             | 389,757     |             |              |             | 547,480     |            
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total current assets                            |             |             | 6,133,227   |              |             |             | 7,004,789   |  
|Investment in Cable Television Properties:                                                           |                                                                                                                                         |                                                 |             |             |             |              |             |            
|Property and equipment, net of accumulated
depreciation of $58,516,969 and $53,518,610,
respectively |                                                                                                                                         |                                                 | 55,722,822  |             |             |              | 57,237,151  |            
|Franchise agreements and acquisition costs, net
of accumulated amortization of $48,279,931           |                                                                                                                                         |                                                 | 53,387,986  |             |             |              | 53,384,986  |            
|Goodwill, net of accumulated
amortization of $2,407,104                                              |                                                                                                                                         |                                                 | 3,937,329   |             |             |              | 3,937,329   |            
|Other intangible assets, net of accumulated
amortization of $5,897,861 and $5,372,238,
respectively  |                                                                                                                                         |                                                 | 3,842,739   |             |             |              | 4,361,939   |            
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total investment in cable television properties |             |             | 116,890,876 |              |             |             | 118,921,405 |  
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total assets                                    |             | $           | 123,024,103 |              |             | $           | 125,926,194 |  
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                |                                                                                                                                         |                                                 |             |             |             |              |             |            
|Current Liabilities:                                                                                 |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     | Accounts payable                                                                                                                        |                                                 | $           | 154,613     |             |              | $           | 1,103,869   |            
|                                                                                                     | Accrued expenses                                                                                                                        |                                                 |             | 5,665,778   |             |              |             | 6,395,484   |            
|                                                                                                     | Converter deposits                                                                                                                      |                                                 |             | 152,181     |             |              |             | 157,534     |            
|                                                                                                     | Subscriber prepayments                                                                                                                  |                                                 |             | 1,928,354   |             |              |             | 1,898,112   |            
|                                                                                                     | Due to affiliates                                                                                                                       |                                                 |             | 616,529     |             |              |             | 242,741     |            
|                                                                                                     | Interest rate swap agreements                                                                                                           |                                                 |             | 747,931     |             |              |             | 1,919,587   |            
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total current liabilities                       |             |             | 9,265,386   |              |             |             | 11,717,327  |  
|Notes payable                                                                                        |                                                                                                                                         |                                                 | 170,031,182 |             |             |              | 171,031,182 |            
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total liabilities                               |             |             | 179,296,568 |              |             |             | 182,748,509 |  
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|Shareholders Deficit:                                                                               |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     | Common stock (par value $1.00 per share, authorized
50,000 shares; 10,000 shares issued and outstanding)
and additional paid-in capital |                                                 |             | 12,359,377  |             |              |             | 12,359,377  |            
|                                                                                                     | Accumulated other comprehensive income                                                                                                  |                                                 |             | 59,000      |             |              |             | 268,000     |            
|                                                                                                     | Accumulated deficit                                                                                                                     |                                                 |             | (68,690,842 | )           |              |             | (69,449,692 | )          
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|                                                                                                     |                                                                                                                                         | Total shareholders deficit                     |             |             | (56,272,465 | )            |             |             | (56,822,315 | )
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            
|Total liabilities and shareholders deficit                                                          |                                                                                                                                         | $                                               | 123,024,103 |             |             | $            | 125,926,194 |            
|                                                                                                     |                                                                                                                                         |                                                 |             |             |             |              |             |            

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





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##### Table of Contents






NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)  (UNAUDITED)

|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |            |            |            | 
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------- | ------------------------ | ---------- | --------------------------------- | ---------- | ----------- | ---------- | ---------- | ---------- | 
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            | For the six months ended June 30,
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                  
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            | 2002                              |            | 2001       
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |            
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |            | (restated)
|Service revenues                                                                                     |                                                                                                                                                                          | $                                                       | 30,697,069               |            |                                   | $          | 30,930,182  |           
|Expenses:                                                                                            |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|                                                                                                     | Cable system operations (including
$161,121 and $164,372, net paid to affiliates
in 2002 and 2001, respectively), exclusive of
depreciation and amortization shown below |                                                         |                          | 11,532,667 |                                   |            |             | 10,843,322 |           
|                                                                                                     | General and administrative (including
$211,968 and $465,553 net paid to affiliates
in 2002 and 2001, respectively)                                                       |                                                         |                          | 4,519,364  |                                   |            |             | 4,908,848  |           
|                                                                                                     | Management fees paid to parent                                                                                                                                           |                                                         |                          | 1,534,853  |                                   |            |             | 1,546,509  |           
|                                                                                                     | Depreciation and amortization                                                                                                                                            |                                                         |                          | 5,298,394  |                                   |            |             | 10,199,118 |           
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|                                                                                                     |                                                                                                                                                                          |                                                         | Total operating expenses |            |                                   | 22,885,278 |             |            |            | 27,497,797 | 
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|Income from operations                                                                               |                                                                                                                                                                          |                                                         | 7,811,791                |            |                                   |            | 3,432,385   |           
|Other income (expense):                                                                              |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|                                                                                                     |                                                                                                                                                                          | Interest expense                                        |                          |            | (8,441,966                        | )          |             |            | (9,281,286 | )         
|                                                                                                     |                                                                                                                                                                          | Interest income and other, net                          |                          |            | 24,244                            |            |             |            | 64,837     |           
|                                                                                                     |                                                                                                                                                                          | Unrealized gain (loss) on interest rate swap agreements |                          |            | 1,380,657                         |            |             |            | (2,163,529 | )         
|                                                                                                     |                                                                                                                                                                          | Loss on disposal of assets                              |                          |            | (15,876                           | )          |             |            | (15,383    | )         
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|                                                                                                     |                                                                                                                                                                          |                                                         | (7,052,941               | )          |                                   |            | (11,395,361 | )         
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|Net income (loss)                                                                                    |                                                                                                                                                                          |                                                         | 758,850                  |            |                                   |            | (7,962,976  | )         
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|Cumulative effect of change in accounting principle                                                  |                                                                                                                                                                          |                                                         |                         |            |                                   |            | 689,000     |           
|Reclassification of accumulated other comprehensive
income to unrealized gain on interest rate swaps |                                                                                                                                                                          |                                                         | (209,000                 | )          |                                   |            | (209,000    | )         
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|Other comprehensive income                                                                           |                                                                                                                                                                          |                                                         | (209,000                 | )          |                                   |            | 480,000     |           
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           
|Total comprehensive income (loss)                                                                    |                                                                                                                                                                          | $                                                       | 549,850                  |            |                                   | $          | (7,482,976  | )         
|                                                                                                     |                                                                                                                                                                          |                                                         |                          |            |                                   |            |             |           

The accompanying notes are an integral part of these statements.





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##### Table of Contents



NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)  (UNAUDITED)

|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |           |            |            | 
|---------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------ | --------- | ----------------------------------- | ---------- | ---------- | --------- | ---------- | ---------- | 
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           | For the three months ended June 30,
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                    
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           | 2002                                |            | 2001      
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |           
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |           | (restated)
|Service revenues                                                                                     |                                                                                                                                                                        | $                                                       | 15,482,261               |           |                                     | $          | 15,524,527 |          
|Expenses:                                                                                            |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|                                                                                                     | Cable system operations (including
$88,958 and $79,357, net paid to affiliates
in 2002 and 2001, respectively), exclusive of
depreciation and amortization shown below |                                                         |                          | 5,787,827 |                                     |            |            | 5,348,464 |           
|                                                                                                     | General and administrative (including
$266,086 and $339,210, net paid to affiliates
in 2002 and 2001, respectively)                                                    |                                                         |                          | 2,389,240 |                                     |            |            | 2,552,640 |           
|                                                                                                     | Management fees paid to parent                                                                                                                                         |                                                         |                          | 774,182   |                                     |            |            | 776,860   |           
|                                                                                                     | Depreciation and amortization                                                                                                                                          |                                                         |                          | 2,661,639 |                                     |            |            | 5,135,646 |           
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|                                                                                                     |                                                                                                                                                                        |                                                         | Total operating expenses |           |                                     | 11,612,888 |            |           |            | 13,813,610 | 
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|Income from operations                                                                               |                                                                                                                                                                        |                                                         | 3,869,373                |           |                                     |            | 1,710,917  |          
|Other income (expense):                                                                              |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|                                                                                                     |                                                                                                                                                                        | Interest expense                                        |                          |           | (4,021,660                          | )          |            |           | (4,638,672 | )         
|                                                                                                     |                                                                                                                                                                        | Interest income and other, net                          |                          |           | 19,418                              |            |            |           | 28,711     |           
|                                                                                                     |                                                                                                                                                                        | Unrealized gain (loss) on interest rate swap agreements |                          |           | 412,482                             |            |            |           | (92,683    | )         
|                                                                                                     |                                                                                                                                                                        | Loss on disposal of assets                              |                          |           | (10,052                             | )          |            |           | (12,194    | )         
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|                                                                                                     |                                                                                                                                                                        |                                                         | (3,599,812               | )         |                                     |            | (4,714,838 | )        
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|Net income (loss)                                                                                    |                                                                                                                                                                        |                                                         | 269,561                  |           |                                     |            | (3,003,921 | )        
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|Reclassification of accumulated other comprehensive
income to unrealized gain on interest rate swaps |                                                                                                                                                                        |                                                         | (105,000                 | )         |                                     |            | (105,000   | )        
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|Other comprehensive income                                                                           |                                                                                                                                                                        |                                                         | (105,000                 | )         |                                     |            | (105,000   | )        
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          
|Total comprehensive income (loss)                                                                    |                                                                                                                                                                        | $                                                       | 164,561                  |           |                                     | $          | (3,108,921 | )        
|                                                                                                     |                                                                                                                                                                        |                                                         |                          |           |                                     |            |            |          

The accompanying notes are an integral part of these statements.





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##### Table of Contents






NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)

|                                                                                     |                                                         |                                       |            |                                   |            |      |            |            |            |  
|------------------------------------------------------------------------------------ | ------------------------------------------------------- | ------------------------------------- | ---------- | --------------------------------- | ---------- | ---- | ---------- | ---------- | ---------- | -
|                                                                                     |                                                         |                                       |            | For the six months ended June 30,
|                                                                                     |                                                         |                                       |            |                                  
|                                                                                     |                                                         |                                       |            | 2002                              |            | 2001
|                                                                                     |                                                         |                                       |            |                                   |            |     
|                                                                                     |                                                         |                                       |            |                                   |            |      |            | (restated)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |                                                         |                                       |            |                                   |            |      |            |           
|Net income (loss)                                                                    |                                                         | $                                     | 758,850    |                                   |            | $    | (7,962,976 | )         
|Adjustments to reconcile net income (loss) to
cash provided by operating activities: |                                                         |                                       |            |                                   |            |      |            |           
|                                                                                     | Depreciation and amortization                           |                                       |            | 5,298,394                         |            |      |            | 10,199,118 |           
|                                                                                     | Unrealized (loss) gain on interest rate swap agreements |                                       |            | (1,380,657                        | )          |      |            | 2,163,529  |           
|                                                                                     | Amortization of loan costs                              |                                       |            | 335,991                           |            |      |            | 335,991    |           
|                                                                                     | Loss on disposal of assets                              |                                       |            | 15,876                            |            |      |            | 15,383     |           
|                                                                                     | (Increase) decrease in operating assets:                |                                       |            |                                   |            |      |            |            |           
|                                                                                     |                                                         | Accounts receivable                   |            |                                   | (209,964   | )    |            |            | (106,187   | )
|                                                                                     |                                                         | Prepaid expenses                      |            |                                   | 157,723    |      |            |            | (17,663    | )
|                                                                                     |                                                         | Due from affiliates                   |            |                                   | (15,788    | )    |            |            | (154,636   | )
|                                                                                     | Increase (decrease) in operating liabilities            |                                       |            | (1,678,962                        | )          |      |            | (1,267,805 | )         
|                                                                                     |                                                         | Accounts payable and accrued expenses |            |                                   | (1,678,962 | )    |            |            | (1,267,805 | )
|                                                                                     |                                                         | Due to affiliates                     |            |                                   | 373,788    |      |            |            | 614,068    |  
|                                                                                     |                                                         | Converter deposits                    |            |                                   | (5,353     | )    |            |            | 3,670      |  
|                                                                                     |                                                         | Subscriber prepayments                |            |                                   | 30,242     |      |            |            | 330,474    |  
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|Net cash provided by operating activities                                            |                                                         |                                       | 3,680,140  |                                   |            |      | 4,152,966  |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |                                                         |                                       |            |                                   |            |      |            |           
|Investment in cable television properties                                            |                                                         |                                       | (3,623,858 | )                                 |            |      | (7,560,286 | )         
|Proceeds from disposition of cable system                                            |                                                         |                                       | 1,226,088  |                                   |            |      |           |           
|Proceeds from disposal of assets                                                     |                                                         |                                       | 13,550     |                                   |            |      | 14,420     |           
|Franchises and other intangibles                                                     |                                                         |                                       | (9,423     | )                                 |            |      | (67,089    | )         
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|Net cash used in investing activities                                                |                                                         |                                       | (2,393,643 | )                                 |            |      | (7,612,955 | )         
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |                                                         |                                       |            |                                   |            |      |            |           
|Proceeds from notes payable                                                          |                                                         |                                       |           |                                   |            |      | 3,000,000  |           
|Principal payments on borrowings                                                     |                                                         |                                       | (1,000,000 | )                                 |            |      |           |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|Net cash (used in) provided by financing activities                                  |                                                         |                                       | (1,000,000 | )                                 |            |      | 3,000,000  |           
|INCREASE (DECREASE) IN CASH                                                          |                                                         |                                       | 286,497    |                                   |            |      | (459,989   | )         
|CASH, beginning of period                                                            |                                                         |                                       | 2,724,099  |                                   |            |      | 2,551,425  |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|CASH, end of period                                                                  |                                                         | $                                     | 3,010,596  |                                   |            | $    | 2,091,436  |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                    |                                                         |                                       |            |                                   |            |      |            |           
|                                                                                     | Cash paid during the period for interest                |                                       | $          | 8,268,429                         |            |      | $          | 9,029,838  |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           
|                                                                                     | Cash paid during the period for state income taxes      |                                       | $          | 4,881                             |            |      | $          | 12,604     |           
|                                                                                     |                                                         |                                       |            |                                   |            |      |            |           

The accompanying notes are an integral part of these statements.





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##### Table of Contents






NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)

NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)

(1) BASIS OF PRESENTATION:

Interim Financial Reporting

These unaudited financial statements are being filed in conformity with
Rule 10-01 of Regulation S-X regarding interim financial statements and do
not contain all of the necessary footnote disclosures required for a fair
presentation of the consolidated balance sheets, statements of operations
and statements of cash flows in conformity with accounting principles
generally accepted in the United States of America. However, in the
opinion of management, this data includes all adjustments, consisting only
of normal recurring accruals, necessary to present fairly the Companys
consolidated financial position at June 30, 2002, its consolidated
statements of operations for the six and three months ended June 30, 2002
and 2001 and its consolidated statements of cash flows for the six months
ended June 30, 2002 and 2001. Results of operations for these periods are
not necessarily indicative of results to be expected for the full year.
These financial statements and notes should be read in conjunction with
the Companys Annual Report on Form 10-K for the year ended December 31,
2001. Certain amounts have been restated as described below.

Restated Financial Statements

In July, management of Northland Cable Television, Inc. and Subsidiary
(the Company) became aware of a misclassification in the Companys
financial statements as of, and for the year ended December 31, 2001, the
quarterly periods within 2001 and for the quarter ended March 31, 2002.
The misclassification relates to the implementation of Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activity, on January 1, 2001 for those interest
rate swap agreements that existed at implementation. Correction of this
misclassification results in the reclassification of a non-cash item from
the Companys statement of operations to other comprehensive income in
2001, and included as accumulated other comprehensive income, a component
of shareholders deficit. This correction has no impact on income from
operations, earnings before interest, taxes, depreciation and amortization
(EBITDA) or the Companys calculations of or compliance with the
restrictive covenants under the terms of its loan agreement for the
periods affected, nor does it affect total shareholders deficit at any
date.

As of January 1, 2001 the Company had two interest rate swap agreements
that expire in August of 2002. Upon implementation of SFAS No. 133, the
Company recognized $689,000 as a non-cash, cumulative effect of change in
accounting principle in its statement of operations, which represented the
fair market value of these interest rate swap agreements at January 1,
2001. This amount should have been classified as a component of
accumulated other comprehensive income on the balance sheet upon
implementation, and then be amortized into earnings over the remaining
term of the swap agreements. Other than the impact of this
misclassification in the initial implementation of SFAS No. 133 management
believes its ongoing accounting for interest rate swap agreements has been
proper.

Management and the Board of Directors of the Company concluded that it was
in the best interest of the Company to reissue the financial statements
for the periods affected by this misclassification.





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##### Table of Contents



Upon completion of the audit of the restated 2001 financial statements,
the company will be filing amendments to Form 10-K for the year ended
December 31, 2001 and Form 10-Q for the quarterly periods ended March 31,
2001, June 30, 2001, September 30, 2001 and March 31, 2002. However, the
financial statements presented in this filing as of December 31, 2001, and
for the six and three months ended June 30, 2001 have been restated as
follows to correct for this matter:

|                                       |  |                         |             |             |  |   |             |  
|-------------------------------------- |  | ----------------------- | ----------- | ----------- |  | - | ----------- | -
|                                       |  | As of December 31, 2001
|                                       |  |                        
|                                       |  | As Reported             |             | As Restated
|                                       |  |                         |             |            
|                                       |  | (unaudited)            
|Balance Sheet Data:                    |  |                         |             |             |  |   |             |  
|Total assets                           |  | $                       | 125,926,194 |             |  | $ | 125,926,194 |  
|Total Liabilities                      |  |                         | 182,748,509 |             |  |   | 182,748,509 |  
|Accumulated deficit                    |  |                         | (69,181,692 | )           |  |   | (69,449,692 | )
|Accumulated
other comprehensive income |  |                         |            |             |  |   | 268,000     |  
|Shareholders deficit                  |  |                         | (56,822,315 | )           |  |   | (56,822,315 | )

|                                                                                                          |  |                                |            |                                  |  |             |            |             |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | -------------------------------- |  | ----------- | ---------- | ----------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                          |  | Six Months Ended June 30, 2001 |            | Three Months Ended June 30, 2001
|                                                                                                          |  |                                |            |                                 
|                                                                                                          |  | As Reported                    |            | As Restated                      |  | As Reported |            | As Restated
|                                                                                                          |  |                                |            |                                  |  |             |            |            
|                                                                                                          |  | (unaudited)                    |            | (unaudited)                     
|Statements of Operations Data:                                                                            |  |                                |            |                                  |  |             |            |             |  |   |            |   |  |   |            |  
|Service revenues                                                                                          |  | $                              | 30,930,182 |                                  |  | $           | 30,930,182 |             |  | $ | 15,524,527 |   |  | $ | 15,524,527 |  
|Income from operations                                                                                    |  |                                | 3,432,385  |                                  |  |             | 3,432,385  |             |  |   | 1,710,917  |   |  |   | 1,710,917  |  
|Interest expense and other                                                                                |  |                                | (9,920,832 | )                                |  |             | (9,231,832 | )           |  |   | (4,622,155 | ) |  |   | (4,622,155 | )
|Unrealized gain (loss) on interest
rate swap agreements                                                   |  |                                | (1,683,529 | )                                |  |             | (2,163,529 | )           |  |   | (197,683   | ) |  |   | (92,683    | )
|Net loss before cumulative effect
of change in accounting principle                                       |  |                                | (8,171,976 | )                                |  |             | (7,962,976 | )           |  |   | (3,108,921 | ) |  |   | (3,003,921 | )
|Cumulative effect of change in
accounting principle                                                       |  |                                | 689,000    |                                  |  |             |           |             |  |   |           |   |  |   |           |  
|Net loss                                                                                                  |  |                                | (7,482,976 | )                                |  |             | (7,962,976 | )           |  |   | (3,108,921 | ) |  |   | (3,003,921 | )
|Cumulative effect of change in
accounting principle                                                       |  |                                |           |                                  |  |             | 689,000    |             |  |   |           |   |  |   |           |  
|Reclassification of other comprehensive
income to unrealized gain (loss) on
interest rate swap agreements |  |                                |           |                                  |  |             | (209,000   | )           |  |   |           |   |  |   | (105,000   | )
|Other comprehensive income (loss)                                                                         |  |                                |           |                                  |  |             | 480,000    |             |  |   |           |   |  |   | (105,000   | )
|Total comprehensive loss                                                                                  |  |                                | (7,482,976 | )                                |  |             | (7,482,976 | )           |  |   | (3,108,921 | ) |  |   | (3,108,921 | )

(2) ACQUISITION OF SYSTEMS AND DISPOSITION OF ASSETS

On September 30, 2001 the Company acquired a cable system serving the
areas in and around Highlands, North Carolina, serving approximately 3,200
basic subscribers, from an affiliated Limited Partnership. The system was
acquired at a price of approximately $4,600,000 and was





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financed with approximately $3,800,000 of cash on hand and an in-kind
equity contribution from the Companys parent of $798,850.

On December 21, 2001, the Company sold its cable system serving the areas
of Bainbridge Island, Kingston and Hansville, Washington, which
represented approximately 6,450 basic subscribers, to TCI Cable Partners
of St. Louis, L.P. The systems were sold at a price of approximately
$19,800,000. The Company recognized a gain of approximately $12,700,000
related to the transaction.

Pro forma operating results of the Company for 2001, assuming the
acquisition and dispositions described above had been made at the
beginning of 2001, follow:

|                 |  |                  |            |                    |  |   |            |  
|---------------- |  | ---------------- | ---------- | ------------------ |  | - | ---------- | -
|                 |  | Six Months Ended |            | Three Months Ended
|                 |  | June 30, 2001    |            | June 30, 2001     
|                 |  |                  |            |                   
|                 |  | (unaudited)     
|Service Revenues |  | $                | 29,800,000 |                    |  | $ | 15,000,000 |  
|                 |  |                  |            |                    |  |   |            |  
|Net Loss         |  | $                | (7,500,000 | )                  |  | $ | (2,800,000 | )
|                 |  |                  |            |                    |  |   |            |  

(3) INTANGIBLE ASSETS  SFAS NO. 142

Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and
Other Intangible Assets. SFAS No. 142 requires that the Company cease
amortization of goodwill and other intangible assets determined to have
indefinite lives, and establishes a new method of testing these assets for
impairment on an annual basis or on an interim basis if an event occurs or
circumstances change that would more likely than not reduce the fair value
of a reporting unit below its carrying value or if the fair values of
intangible assets with indefinite lives falls below their carrying value
on an annual basis. The amortization of existing goodwill ceased on
December 31, 2001. The Company determined that its franchises met the
definition of indefinite lived assets. Accordingly, amortization on these
assets also ceased on December 31, 2001. The Company tested these
intangibles for impairment upon adoption of the new standard and
determined that the fair value of the assets exceeded their carrying
value. The Company will continue to test these assets for impairment
annually, or more frequently as warranted by events or changes in
circumstances. The book value of the Companys intangible assets is
presented in the following table:

|                                    |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |            | 
|----------------------------------- | ------------------------------------- | - | ------------- | ----------- | ----------------- | --- | ----------- | ----------- | -------- | - | ------------ | ---------- | -------- | - | ----------- | ----------- | ----------- | - | ----------- | ----------- | - | - | ---------- | ---------- | 
|                                    |                                       |   | June 30, 2002 |             | December 31, 2001
|                                    |                                       |   |               |             |                  
|                                    |                                       |   |               |             |                   |     | (unaudited) |             |          |   |              |            |          |   |             |             | (unaudited) |   |             |             |  
|                                    |                                       |   | Gross         |             |                   | Net |             | Gross       |          |   |              | Net       
|                                    |                                       |   | Carrying      |             | Accumulated       |     | Carrying    |             | Carrying |   | Accumulated  |            | Carrying
|                                    |                                       |   | Amount        |             | Amortization      |     | Amount      |             | Amount   |   | Amortization |            | Amount  
|                                    |                                       |   |               |             |                   |     |             |             |          |   |              |            |         
|Indefinite-lived intangible assets: |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |           
|                                    | Franchises                            |   | $             | 101,667,917 |                   |     | $           | (48,279,931 | )        |   | $            | 53,387,986 |          |   | $           | 101,664,917 |             |   | $           | (48,279,931 | ) |   | $          | 53,384,986 | 
|                                    | Goodwill                              |   |               | 6,344,433   |                   |     |             | (2,407,104  | )        |   |              | 3,937,329  |          |   |             | 6,344,433   |             |   |             | (2,407,104  | ) |   |            | 3,937,329  | 
|                                    |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |           
|                                    |                                       |   | 108,012,350   |             |                   |     | (50,687,035 | )           |          |   | 57,325,315   |            |          |   | 108,009,350 |             |             |   | (50,687,035 | )           |   |   | 57,322,315 |           
|Definite-lived intangible assets:   |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |           
|                                    | Loan fees and other
intangible assets |   |               | 9,740,600   |                   |     |             | (5,897,861  | )        |   |              | 3,842,739  |          |   |             | 9,734,177   |             |   |             | (5,372,238  | ) |   |            | 4,361,939  | 
|                                    |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |           
|                                    |                                       | $ | 117,752,950   |             |                   | $   | (56,584,896 | )           |          | $ | 61,168,054   |            |          | $ | 117,743,527 |             |             | $ | (56,059,273 | )           |   | $ | 61,684,254 |           
|                                    |                                       |   |               |             |                   |     |             |             |          |   |              |            |          |   |             |             |             |   |             |             |   |   |            |           

As required by SFAS No. 142, the statement has not been retroactively
applied to the results for periods prior to adoption. A reconciliation of
net income (loss) for the six and three months ended June 30, 2002, and
for the twelve months ended December 31, 2001, 2000 and 1999, as if
amortization of goodwill and franchises had not been recorded is presented
below:





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|                                                      |  |                  |            |                    |  |                                  |            |      |  |      |            |   |  |   |             |   |  |   |             |  
|----------------------------------------------------- |  | ---------------- | ---------- | ------------------ |  | -------------------------------- | ---------- | ---- |  | ---- | ---------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                      |  | Six Months Ended |            | Three Months Ended |  | Twelve Months Ended December 31,
|                                                      |  | June 30, 2001    |            | June 30, 2001      |  | 2001                             |            | 2000 |  | 1999
|                                                      |  |                  |            |                    |  |                                  |            |      |  |     
|                                                      |  | (unaudited)      |            | (unaudited)       
|NET LOSS:                                             |  |                  |            |                    |  |                                  |            |      |  |      |            |   |  |   |             |   |  |   |             |  
|Reported Net Loss                                     |  | $                | (7,962,976 | )                  |  | $                                | (3,003,921 | )    |  | $    | (1,864,718 | ) |  | $ | (14,268,443 | ) |  | $ | (11,776,281 | )
|Add back: amortization of
indefinite-lived franchises |  |                  | 5,141,220  |                    |  |                                  | 2,570,611  |      |  |      | 10,343,687 |   |  |   | 10,351,363  |   |  |   | 10,137,025  |  
|Add back: amortization of goodwill                    |  |                  | 86,555     |                    |  |                                  | 43,278     |      |  |      | 171,903    |   |  |   | 173,111     |   |  |   | 173,111     |  
|                                                      |  |                  |            |                    |  |                                  |            |      |  |      |            |   |  |   |             |   |  |   |             |  
|Adjusted net loss                                     |  | $                | (2,735,201 | )                  |  | $                                | (390,032   | )    |  | $    | 8,650,872  |   |  | $ | (3,743,969  | ) |  | $ | (1,466,145  | )
|                                                      |  |                  |            |                    |  |                                  |            |      |  |      |            |   |  |   |             |   |  |   |             |  

Amortization expense for each of the next five years is expected to be
approximately as follows:

|     |  |   |           | 
|---- |  | - | --------- | 
|2003 |  | $ | 746,000   | 
|2004 |  |   | 706,000   | 
|2005 |  |   | 706,000   | 
|2006 |  |   | 700,000   | 
|2007 |  |   | 466,000   | 
|     |  |   |           | 
|     |  | $ | 3,324,000 | 
|     |  |   |           | 

(4) NOTES PAYABLE

In August of 2000, the Company refinanced its existing senior bank
indebtedness. The original indebtedness was repaid with borrowings
under the Revised Senior Credit Facility. The Revised Senior Credit
Facility established a $35 million 364-day revolving credit loan. In
August of 2001, the revolver converted to a term loan due on June 30,
2007. The other two components consisted originally of a seven-year
revolving term loan in the aggregate principal amount of $40 million and
a seven-year term loan in the aggregate principal amount of $35 million.
The allowable borrowings on the $40 million revolver were reduced by
approximately $17.3 million during 2001. Amounts outstanding under the
Revised Senior Credit Facility mature on June 30, 2007. The Revised
Senior Credit Facility is collateralized by a first lien position on all
present and future assets and stock of the Company. Interest rates vary
based on certain financial covenants; currently 8.776% (weighted
average). Graduated principal and interest payments are due quarterly,
beginning September 30, 2003, until maturity on June 30, 2007. The
estimated fair value of the revolving credit and term loan facility is
equal to its carrying value because of its variable interest rate
nature. As of June 30, 2002, approximately $4,695,000 was available to
borrow by the Company under the revolving credit facility.

Under the revolving credit and term loan agreement, the Company has agreed
to restrictive covenants which require the maintenance of certain ratios,
including a Pro Forma Debt Service ratio not less than 1.25 to 1.0 and a
Leverage Ratio of no greater than 6.50 to 1.0, among other restrictions.
The Company submits quarterly debt compliance reports to its creditor
under this arrangement. As of June 30, 2002, the Company was in
compliance with the terms of the loan agreements.

As of June 30, 2002, the outstanding balance under the Revised Senior
Credit Facility was approximately $70 million. As of the date of this
filing, interest rates on the Revised Senior





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##### Table of Contents



Credit Facility were as follows: $20 million fixed at 9.29% under the
terms of an interest rate swap agreement with the Companys lender
expiring August 20, 2002; $27 million fixed at 5.668% under the terms of
an interest rate swap agreement with the Companys lender expiring
February 20, 2003; $5.5 million fixed at 9.37% under the terms of an
interest rate swap agreement with the Companys lender expiring August 17,
2002; $17 million fixed at LIBOR based rate of 4.38% expiring September
19, 2002; $600,000 fixed at a LIBOR based rate of 4.38% expiring September
19, 2002; The above rates include a margin paid to the lender based on
overall leverage and may increase or decrease as the Companys overall
leverage fluctuates.





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##### Table of Contents



PART I (continued)




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2002 AND 2001

As of June 30, 2002, the Companys systems served approximately 111,905
basic subscribers, 50,477 premium subscribers, 31,212 digital subscribers,
and passed an estimated 192,000 homes.

Revenues totaled $30.7 million for the six months ended June 30, 2002. Of
these revenues, $20.7 million (67%) was derived from basic services, $2.3
million (8%) from premium services, $4.1 million (13%) from expanded basic
services, $600,000 (2%) from digital services, $316,000 (1%) from service
maintenance contracts, $1.5 million (5%) from advertising and $1.2 million
(4%) from other sources.

Average monthly revenue per subscriber increased $3.34 or 7.9% from $42.16
to $45.50 for the six months ended June 30, 2002. The December 2001
disposition of cable television systems serving approximately 6,450 basic
subscribers in and around Bainbridge Island, Washington (the Bainbridge
Systems) decreased revenues approximately $1.8 million or 5.8%. The
September 2001 acquisition of a cable system serving approximately 3,200
basic subscribers in and around Highlands, North Carolina (the Highlands
System) increased revenues approximately $632,000 or 2.0%. On a pro
forma basis, effecting for the sale of the Bainbridge Systems and the
Highlands System acquisition: (i) revenues would have increased
approximately $901,000 or 3.0%; and (ii) average monthly revenue per
average basic subscriber would have increased $3.56 or 8.5%, from $41.94
to $45.50 for the six months ended June 30, 2002. This increase is
primarily attributable to rate increases implemented during the first
quarter of 2002, increased revenue from higher penetration of new product
tiers and a 27% increase in advertising revenue per basic subscriber.

Cable system operation expenses, which include costs related to
programming, technical personnel, repairs and maintenance and advertising
sales, increased approximately $700,000 or 6.5% from $10.8 million to
$11.5 million for the six months ended June 30, 2002. On a pro forma
basis, excluding the impact of the sale of the Bainbridge Systems and the
Highlands System acquisition, operating expenses would have increased
approximately $1.1 million or 10.6%. Programming costs increased $1.1
million on a pro forma basis resulting from rate increases by certain
programming vendors, the launch of new programming services in various
systems and the launch of digital programming services.

General and administrative expenses, which include on-site office and
customer service personnel costs, corporate overhead, customer billing,
postage, marketing expenses and franchise fees, decreased approximately
$400,000 or 8.2% from $4.9 million to $4.5 million for the six months
ended June 30, 2002. On a pro forma basis, excluding the impact of the
sale of the Bainbridge Systems and the Highlands System acquisition,
general and administrative expenses would have decreased approximately
$200,000 or 4.3%. The decrease is primarily attributable to





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reductions in corporate overhead and property taxes, offset by a 60%
increase in marketing expense.

Management fees for the six months ended June 30, 2002 were consistent
with the same period in the previous year. Management fees are calculated
at 5.0% of gross revenues.

Depreciation and amortization expenses decreased approximately $4.9
million or 48.0% from $10.2 million to $5.3 million for the six months
ended June 31, 2002. Such decrease is primarily attributable to the
Companys implementation of SFAS No. 142. As of December 31, 2001, the
Company discontinued amortizing its franchises and goodwill in accordance
with SFAS No. 142 resulting in a decrease of approximately $5.2 million in
amortization expense for the six months ended June 30, 2002.

Interest expense decreased approximately $900,000 or 9.7%, from $9.3
million to $8.4 million for the six months ended June 30, 2002. Average
outstanding indebtedness decreased $13.0 million from $184 million to
$171 million for the six months ended June 30, 2001 and 2002,
respectively. This is primarily attributable to the fact that
approximately $19.3 million of the proceeds from the sale of the
Bainbridge Systems were used to pay down amounts outstanding under the
Companys revised Senior Credit Facility offset by approximately $6.8
million in borrowings during 2001 to replenish working capital.

The Company has elected not to designate its interest rate swap agreements
as hedges under SFAS No. 133. Accordingly, the Company has recorded a
liability equal to the fair market value to settle the agreements and a
corresponding debit in its statement of operations. Each quarter, the
change in the market value of the Companys swap agreements is recorded as
other income or expense. The market value adjustment for the six months
ended June 30, 2002 was a credit of approximately $1.2 million. In
addition, the Company recorded $209,000 of income for the six months ended
June 30, 2002 resulting from the reclassification to earnings of
accumulated other comprehensive income to earnings recorded upon
implementation of SFAS No. 133 on January 1, 2001.

THREE MONTHS ENDED JUNE 30, 2002 AND 2001

Revenues totaled $15.5 million for the three months ended June 30, 2002
remaining constant with the same period in 2001. Of these revenues, $10.4
million (67%) was derived from basic services, $1.2 million (7%) from
premium services, $2.1 million (14%) from expanded basic services,
$300,000 (2%) from digital services, $100,000 (1%) from service
maintenance contracts, $800,000 (5%) from advertising and $600,000 (4%)
from other sources.

Average monthly revenue per subscriber increased $3.41 or 8.0% from $42.72
to $46.13 for the three months ended June 30, 2002. The December 2001
disposition of the Bainbridge Systems serving approximately 6,450 basic
subscribers decreased revenues approximately $892,000 or 5.7%. The
September 2001 acquisition of the Highlands System serving approximately
3,200 basic subscribers increased revenues approximately $360,000 or 2.3%.
On a pro forma basis, effecting for the sale of the Bainbridge Systems
and the Highlands System acquisition: (i) revenues would have increased
approximately $490,000 or 3.3%; and (ii) average monthly revenue per
average basic subscriber would have increased $3.59 or 8.4%, from $42.54
to $46.13 for the three months ended June 30, 2002. This increase is
primarily attributable to rate increases implemented during the first
quarter of 2002, increased revenue from higher penetration of new product
tiers and a 32% increase in advertising revenue per basic subscriber.





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##### Table of Contents



Cable system operation expenses increased approximately $500,000 or 9.4%
from $5.3 million to $5.8 million for the three months ended June 30,
2002. On a pro forma basis, excluding the impact of the sale of the
Bainbridge Systems and the Highlands System acquisition, operating
expenses would have increased approximately $700,000 or 13.7%.
Programming costs increased $610,000 on a pro forma basis resulting from
rate increases by certain programming vendors as well as the launch of new
analog programming services and the launch of digital programming
services.

General and administrative expenses decreased approximately $200,000 or
7.7% from $2.6 million to $2.4 million for the three months ended June 30,
2002. On a pro forma basis, excluding the impact of the sale of the
Bainbridge Systems and the Highlands System acquisition, general and
administrative expenses would have decreased approximately $100,000 or
4.0%. The decrease is attributable to reductions in corporate overhead
and property, offset by a 71% increase in marketing expense.

Management fees for the three months ended June 30, 2002 were consistent
with the same period in the previous year. Management fees are calculated
at 5.0% of gross revenues.

Depreciation and amortization expenses decreased approximately $2.6
million or 51.0% from $5.1 million to $2.7 million for the three months
ended June 30, 2002. Such decrease is primarily attributable to the
Companys implementation of SFAS No. 142. As of December 31, 2001, the
Company discontinued amortizing its franchises and goodwill accordance
with SFAS No. 142 resulting in a decrease of approximately $2.6 million in
amortization expense for the three months ended June 30, 2002.

Interest expense decreased approximately $600,000 or 13.0%, from $4.6
million to $4.0 million for the three months ended June 30, 2002.
Average outstanding indebtedness decreased $14 million from $185 million
to $171 million for the three months ended June 30, 2001 and 2002,
respectively. This is primarily attributable to the fact that
approximately $19.3 million in proceeds from the sale of the Bainbridge
Systems were used to pay down amounts outstanding under the Companys
revised Senior Credit Facility offset by approximately $6.8 million in
borrowings to replenish working capital.

The Company has elected not to designate its interest rate swap agreements
as hedges under SFAS No. 133. Accordingly, the Company has recorded a
liability equal to the fair market value to settle the agreements. Each quarter, the
change in the market value of the Companys swap agreements is recorded as
other income or expense. The market value adjustment for the three months
ended June 30, 2002 was a credit of approximately $307,000. In addition,
the Company recorded $105,000 of income for the three months ended June
30, 2002 resulting from the reclassification to earnings of accumulated
other comprehensive income to earnings recorded upon implementation of
SFAS No. 133 on January 1, 2001.

LIQUIDITY AND CAPITAL RESOURCES

The cable television business generally requires substantial capital for
the construction, expansion and maintenance of the signal distribution
system. In addition, the Company has pursued a business strategy, which
includes selective acquisitions. The Company has financed these
expenditures through a combination of cash flow from operations,
borrowings under the





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revolving credit and term loan facility provided by a variety of banks
and the issuance of senior subordinated notes. The Companys debt
service obligations for the remainder of 2002 are expected to be
approximately $7.3 million. The Company anticipates that cash flow from
operations will be sufficient to service its debt through December 31,
2002. The Company believes that cash flow from operations will be
adequate to meet the Companys long-term liquidity requirements prior to
the maturity of its long-term indebtedness, although no assurance can be
given in this regard.

Net cash provided by operating activities was $3.7 million for the six
months ended June 30, 2002. Adjustments to the $760,000 net income for
the period to reconcile to net cash provided by operating activities
consisted primarily of $5.6 million of depreciation and amortization,
offset by $1.4 relating to interest rate swap agreements and decreases
in operating assets of approximately $1.2 million.

Net cash used in investing activities was $2.4 million for the six
months ended June 30, 2002, and substantially consisted of $3.6 million
in capital expenditures offset by the receipt of $1.2 million from a
hold back note related to the sale of the Bainbridge Systems.

Net cash used in financing activities consisted of $1.0 million in
principal prepayments on the Senior Credit Facility.

Net cash provided by operating activities was $4.2 million for the six
months ended June 30, 2001. Adjustments to the $8.0 million net loss for
the period to reconcile to net cash provided by operating activities
consisted primarily of $10.5 million of depreciation and amortization,
$2.2 million related to interest rate swap agreements, decreases in
operating liabilities of approximately $300,000 and increases in
operating assets of approximately $300,000.

Net cash used in investing activities was $7.6 million for the six
months ended June 30, 2001 and consisted of $7.6 million in capital
expenditures and additions of intangible assets.

Net cash provided by financing activities was $3.0 million for the six
months ended June 30, 2001. The Company had $3.0 million in borrowings
of long term debt to finance planned capital expenditures.

Operating income before charges for interest, taxes, depreciation and
amortization (EBITDA) decreased approximately $500,000 or 3.7%, from
$13.6 million to $13.1 million for the six months ended June 30, 2002.
EBITDA as a percentage of revenues (EBITDA Margin) decreased from
44.0% to 42.7% for the six months ended June 30, 2002. On a pro forma
basis, excluding the impact of the sale of the Bainbridge Systems and
the Highlands System acquisition, EBITDA would have remained relatively
constant. The aforementioned increases in pro forma revenues were offset
by higher programming costs resulting from rate increases by certain
programming vendors as well as the launch of new programming services in
various systems. Industry analysts generally consider EBITDA to be an
appropriate measure of the performance of multi-channel television
operations. EBITDA is not presented in accordance with accounting
principles generally accepted in the United States of America and should
not be considered an alternative to, or more meaningful than, operating
income or operating cash flow as an indication of the Companys
operating performance.





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CAPITAL EXPENDITURES

For the six months ended June 30, 2002, the Company incurred capital
expenditures of approximately $3.6 million. Capital expenditures included:
(i) new product digital launches, (ii) expansion and improvements of cable
properties; (iii) additions to plant and equipment; and (iv) line drops,
extensions and installations of cable plant facilities.

The Company plans to invest approximately $5.0 million in capital
expenditures for the remainder of 2002. This represents anticipated
expenditures for upgrading and rebuilding certain distribution facilities,
which will allow for the continued deployment of new products, such as
digital and Internet services in selected markets. Furthermore, capital
expenditures will involve extensions of distribution facilities to add
new subscribers.

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards
No. 143  In June 2001, the
FASB issued SFAS No. 143 Accounting for Asset Retirement Obligations.
SFAS No. 143 requires entities to record the fair value of a liability for
an asset retirement obligation in the period in which it is incurred. The
associated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset. Statement No. 143 will be effective for
the Company beginning January 1, 2003. The Company has not yet estimated
the impact of implementation on its financial position, results of
operations or cash flows.

Statement of Financial Accounting Standards No. 145  In April 2002, the
FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS
No. 145 provides for the rescission of several previously issued
accounting standards, new accounting guidance for the accounting for
certain lease modifications and various technical corrections that are not
substantive in nature to existing pronouncements. SFAS No. 145 will be
effective beginning January 1, 2003, except for the provisions relating to
the amendment of SFAS No.13, which will be effective for transactions
occurring subsequent to May 15, 2002. Adoption of SFAS No. 145 will not
have a material impact on the Companys financial statements.

Statement of Financial Accounting Standards No. 146  In June 2002, the
FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity is recognized at fair value
when the liability is incurred and is effective for exit or disposal
activities that are initiated after December 31, 2002. The Partnership
has not yet estimated the impact of implementation on its financial
position, results of operations or cash flows.

CRITICAL ACCOUNTING POLICIES

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





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policies, which have been chosen among alternatives, require a more
significant amount of management judgment than other accounting policies
the Company employs.

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

Long-lived Assets  The Company periodically reviews the carrying value of
its long-lived assets, including property and equipment and intangible
assets, whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. As of June 30, 2002, there has
been no indication of such impairment.

On January 1, 2002, the Company adopted SFAS No. 142 Goodwill and Other
Intangibles. Under this statement, goodwill and franchises are no longer
being amortized, but are tested for impairment annually, or more
frequently as warranted by events or changes in circumstances. As of June
30, 2002, there was no indication of such impairment.





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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to market risks arising from changes in interest
rates. The Companys primary interest rate exposure results from
changes in LIBOR or the prime rate, which are used to determine the
interest rate applicable to the Companys debt facilities. As of the
date of this filing, the Company had entered into three interest rate
swap agreements for $27,000,000, $20,000,000, and $5,600,000 of these
borrowings, to partially hedge interest rate exposure. Interest rate
swaps have the effect of converting the applicable variable rate
obligations to fixed or other variable rate obligations. Had the Company
not entered into these fixed rate agreements, the potential loss over
one year that would result from a hypothetical, instantaneous and
unfavorable change of 100 basis points in the interest rate of the
Companys variable rate obligations would be approximately $526,000.

The Company does not use financial instruments for trading or other
speculative purposes.

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





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PART II  OTHER INFORMATION




ITEM 1 Legal proceedings

The Company is a party to ordinary and routine litigation proceedings
that are incidental to the Companys business. Management believes that
the outcome of all pending legal proceedings will not, individually or
in the aggregate, have a material adverse effect on the Company, its
financial condition, prospects and debt service ability.




ITEM 2 Changes in securities

None




ITEM 3 Defaults upon senior securities

None




ITEM 4 Submission of matters to a vote of security holders

None




ITEM 5 Other information

None




ITEM 6 Exhibits and Reports on Form 8-K

(a)  Exhibit Index

|       |  |                                                                                                                                                  
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|99(a). |  | Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|      
|99(b). |  | Certification of the President Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002          

(b)  Reports on Form 8-K



| |  |      |  |                                                                                                                                                                                                                                                                                                 
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (i)  |  | Form 8-K originally filed on July 15, 2002, and
amended on July 19, 2002, announcing the dismissal of Arthur
Andersen LLP as the Companys independent auditors, and the
appointment of KPMG LLP to serve as the Companys independent
auditors.                                                
|
| |  | (ii) |  | Form 8-K filed July 18, 2002 reporting the
misclassification in the financial statements as of, and for the
year ended December 31, 2001, and for the quarter ended March
31, 2002, and managements intentions to reissue the financial
statements and audit report for those periods affected.





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SIGNATURES

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

Northland Cable Television, Inc. and Subsidiary

|                     |  |                                                            |  |         |  | 
|-------------------- |  | ---------------------------------------------------------- |  | ------- |  | 
|SIGNATURES           |  | CAPACITIES                                                 |  | DATE   
|                     |  |                                                            |  |        
|                    
|/s/ Richard I. Clark |  | Executive Vice President,
Treasurer andAssistant Secretary
|Richard I. Clark     |  |                                                            |  | 8/14/02
|                    
|/s/ Gary S. Jones    |  | President                                                 
|Gary S. Jones        |  |                                                            |  | 8/14/02