##### 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 March 31, 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 [   ]



---

This filing contains _______ pages. Exhibits index appears on page _______.






---

TABLE OF CONTENTS



|                            |                                                                                               |                                                 |  |  |  |  |  | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS          
|                            |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
|                            |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
|                            |                                                                                               | NOTES TO UNAUDITED FINANCIAL STATEMENTS        
|                            | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|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                 



---



##### Table of Contents



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




CONSOLIDATED CONDENSED BALANCE SHEETS


|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |             |             |             |  
|---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------------------------- | ----------- | ----------- | ----------- | ------------ | ----------- | ----------- | ----------- | -
|                                                                                                     |                                                                                                                                         |                                                 |                             |             | March 31,   |             | December 31,
|                                                                                                     |                                                                                                                                         |                                                 |                             |             | 2002        |             | 2001        
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |             
|                                                                                                     |                                                                                                                                         |                                                 |                             |             | (unaudited) |             |              |             |            
|ASSETS                                                                                               |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|Current Assets:                                                                                      |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     | Cash                                                                                                                                    |                                                 | $                           | 5,162,131   |             |             | $            | 2,724,099   |            
|                                                                                                     | Due from affiliates                                                                                                                     |                                                 |                             | 912,944     |             |             |              | 295,650     |            
|                                                                                                     | Accounts receivable                                                                                                                     |                                                 |                             | 3,265,268   |             |             |              | 3,437,560   |            
|                                                                                                     | Prepaid expenses                                                                                                                        |                                                 |                             | 572,025     |             |             |              | 547,480     |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         | Total current assets                            |                             |             | 9,912,368   |             |              |             | 7,004,789   |            
|Investment in Cable Television Properties:                                                           |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|Property and equipment, net of accumulated
depreciation of $55,976,817 and $53,518,610,
respectively |                                                                                                                                         |                                                 | 55,746,377                  |             |             |             | 57,237,151   |            
|Franchise agreements, net of accumulated
amortization of $47,705,273                                 |                                                                                                                                         |                                                 | 53,229,933                  |             |             |             | 53,229,933   |            
|Goodwill, net of accumulated
amortization of $2,407,104                                              |                                                                                                                                         |                                                 | 3,937,329                   |             |             |             | 3,937,329    |            
|Other intangible assets, net of accumulated
amortization of $6,213,372 and $5,946,896,
respectively  |                                                                                                                                         |                                                 | 4,256,942                   |             |             |             | 4,516,992    |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         | Total investment in cable television properties |                             |             | 117,170,581 |             |              |             | 118,921,405 |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         | Total assets                                    |                             | $           | 127,082,949 |             |              | $           | 125,926,194 |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|Current Liabilities:                                                                                 |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     | Accounts payable                                                                                                                        |                                                 | $                           | 64,095      |             |             | $            | 1,103,869   |            
|                                                                                                     | Accrued expenses                                                                                                                        |                                                 |                             | 8,138,814   |             |             |              | 6,395,484   |            
|                                                                                                     | Converter deposits                                                                                                                      |                                                 |                             | 157,325     |             |             |              | 157,534     |            
|                                                                                                     | Subscriber prepayments                                                                                                                  |                                                 |                             | 2,277,484   |             |             |              | 1,898,112   |            
|                                                                                                     | Due to affiliates                                                                                                                       |                                                 |                             | 795,664     |             |             |              | 242,741     |            
|                                                                                                     | Interest rate derivative                                                                                                                |                                                 |                             | 1,055,412   |             |             |              | 1,919,587   |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         |                                                 | Total current liabilities   |             |             | 12,488,794  |              |             |             | 11,717,327  |  
|Notes payable                                                                                        |                                                                                                                                         |                                                 | 171,031,182                 |             |             |             | 171,031,182  |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         |                                                 | Total liabilities           |             |             | 183,519,976 |              |             |             | 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 deficit                                                                                                                     |                                                 |                             | (68,796,404 | )           |             |              | (69,181,692 | )          
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|                                                                                                     |                                                                                                                                         |                                                 | Total shareholders deficit |             |             | (56,437,027 | )            |             |             | (56,822,315 | )
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            
|Total liabilities and shareholders deficit                                                          |                                                                                                                                         | $                                               | 127,082,949                 |             |             | $           | 125,926,194  |            
|                                                                                                     |                                                                                                                                         |                                                 |                             |             |             |             |              |            





---



##### Table of Contents



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




CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS


|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |            |            |            | 
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------------------------------ | ------------------------ | ---------- | ------------------------------------ | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                                             |                                                                                                                    |                                |                          |            | For the three months ended March 31,
|                                                                             |                                                                                                                    |                                |                          |            |                                     
|                                                                             |                                                                                                                    |                                |                          |            | 2002                                 |            | 2001      
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |           
|                                                                             |                                                                                                                    |                                |                          |            | (unaudited)                         
|Revenues:                                                                    |                                                                                                                    |                                |                          |            |                                      |            |            |           
|                                                                             | Service revenues                                                                                                   |                                | $                        | 15,214,808 |                                      |            | $          | 15,405,655 |           
|Expenses:                                                                    |                                                                                                                    |                                |                          |            |                                      |            |            |           
|                                                                             | Cable system operations (including
$78,286 and $85,016, net paid to affiliates
in 2002 and 2001, respectively)     |                                |                          | 5,744,840  |                                      |            |            | 5,494,858  |           
|                                                                             | General and administrative (including
$706,553 and $902,852 net paid to affiliates
in 2002 and 2001, respectively) |                                |                          | 2,130,124  |                                      |            |            | 2,356,208  |           
|                                                                             | Management fees paid to parent                                                                                     |                                |                          | 760,671    |                                      |            |            | 769,649    |           
|                                                                             | Depreciation and amortization                                                                                      |                                |                          | 2,636,755  |                                      |            |            | 5,063,473  |           
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           
|                                                                             |                                                                                                                    |                                | Total operating expenses |            |                                      | 11,272,390 |            |            |            | 13,684,188 | 
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           
|Income from operations                                                       |                                                                                                                    |                                | 3,942,418                |            |                                      |            | 1,721,467  |           
|Other income (expense):                                                      |                                                                                                                    |                                |                          |            |                                      |            |            |           
|                                                                             |                                                                                                                    | Interest expense               |                          |            | (4,420,306                           | )          |            |            | (4,642,614 | )         
|                                                                             |                                                                                                                    | Interest income and other, net |                          |            | 4,825                                |            |            |            | 36,127     |           
|                                                                             |                                                                                                                    | Interest rate derivative       |                          |            | 864,175                              |            |            |            | (2,174,846 | )         
|                                                                             |                                                                                                                    | Loss on disposal of assets     |                          |            | (5,824                               | )          |            |            | (3,189     | )         
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           
|                                                                             |                                                                                                                    |                                | (3,557,130               | )          |                                      |            | (6,784,522 | )         
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           
|Net income (loss) before cumulative effect of
change in accounting principle |                                                                                                                    |                                | 385,288                  |            |                                      |            | (5,063,055 | )         
|Cumulative effect of change in accounting principle                          |                                                                                                                    |                                |                         |            |                                      |            | 689,000    |           
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           
|Net income (loss)                                                            |                                                                                                                    | $                              | 385,288                  |            |                                      | $          | (4,374,055 | )         
|                                                                             |                                                                                                                    |                                |                          |            |                                      |            |            |           





---



##### Table of Contents



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




CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS


|                                                                                     |                                                     |                                       |            |                                      |           |      |            |           |          |  
|------------------------------------------------------------------------------------ | --------------------------------------------------- | ------------------------------------- | ---------- | ------------------------------------ | --------- | ---- | ---------- | --------- | -------- | -
|                                                                                     |                                                     |                                       |            | For the three months ended March 31,
|                                                                                     |                                                     |                                       |            |                                     
|                                                                                     |                                                     |                                       |            | 2002                                 |           | 2001
|                                                                                     |                                                     |                                       |            |                                      |           |     
|                                                                                     |                                                     |                                       |            | (unaudited)                         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |                                                     |                                       |            |                                      |           |      |            |          
|Net income (loss)                                                                    |                                                     | $                                     | 385,288    |                                      |           | $    | (4,374,055 | )        
|Adjustments to reconcile net income (loss) to
cash provided by operating activities: |                                                     |                                       |            |                                      |           |      |            |          
|                                                                                     | Depreciation and amortization                       |                                       |            | 2,636,755                            |           |      |            | 5,063,473 |         
|                                                                                     | Cumulative effect of change in accounting principle |                                       |            |                                     |           |      |            | (689,000  | )       
|                                                                                     | Interest rate derivative                            |                                       |            | (864,175                             | )         |      |            | 2,174,846 |         
|                                                                                     | Amortization of loan costs                          |                                       |            | 167,996                              |           |      |            | 167,995   |         
|                                                                                     | Loss on disposal of assets                          |                                       |            | 5,824                                |           |      |            | 3,189     |         
|                                                                                     | (Increase) decrease in operating assets:            |                                       |            |                                      |           |      |            |           |         
|                                                                                     |                                                     | Accounts receivable                   |            |                                      | (53,796   | )    |            |           | 120,142  |  
|                                                                                     |                                                     | Prepaid expenses                      |            |                                      | (24,545   | )    |            |           | (43,037  | )
|                                                                                     |                                                     | Due from affiliates                   |            |                                      | (617,294  | )    |            |           | (309,703 | )
|                                                                                     | Increase (decrease) in operating liabilities        |                                       |            |                                      |           |      |            |           |         
|                                                                                     |                                                     | Accounts payable and accrued expenses |            |                                      | 1,239,295 |      |            |           | 519,536  |  
|                                                                                     |                                                     | Due to affiliates                     |            |                                      | 552,923   |      |            |           | 541,440  |  
|                                                                                     |                                                     | Converter deposits                    |            |                                      | (209      | )    |            |           | 7,139    |  
|                                                                                     |                                                     | Subscriber prepayments                |            |                                      | 379,372   |      |            |           | 500,858  |  
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|Net cash provided by operating activities                                            |                                                     |                                       | 3,807,434  |                                      |           |      | 3,682,823  |          
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |                                                     |                                       |            |                                      |           |      |            |          
|Investment in cable television properties                                            |                                                     |                                       | (1,594,614 | )                                    |           |      | (4,135,974 | )        
|Proceeds from disposition of cable system                                            |                                                     |                                       | 226,088    |                                      |           |      |           |          
|Proceeds from disposal of assets                                                     |                                                     |                                       | 5,550      |                                      |           |      | 3,856      |          
|Franchise fees and other intangibles                                                 |                                                     |                                       |           |                                      |           |      | (22,741    | )        
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|Net cash used in investing activities                                                |                                                     |                                       | (1,362,976 | )                                    |           |      | (4,154,859 | )        
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |                                                     |                                       |            |                                      |           |      |            |          
|Proceeds from notes payable                                                          |                                                     |                                       |           |                                      |           |      | 1,000,000  |          
|Loan fees and other costs incurred                                                   |                                                     |                                       | (6,426     | )                                    |           |      |           |          
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|Net cash (used in) provided by financing activities                                  |                                                     |                                       | (6,426     | )                                    |           |      | 1,000,000  |          
|INCREASE IN CASH                                                                     |                                                     |                                       | 2,438,032  |                                      |           |      | 527,964    |          
|CASH, beginning of period                                                            |                                                     |                                       | 2,724,099  |                                      |           |      | 2,551,425  |          
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|CASH, end of period                                                                  |                                                     | $                                     | 5,162,131  |                                      |           | $    | 3,079,389  |          
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                    |                                                     |                                       |            |                                      |           |      |            |          
|                                                                                     | Cash paid during the period for interest            |                                       | $          | 1,727,177                            |           |      | $          | 2,050,607 |         
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          
|                                                                                     | Cash paid during the period for state income taxes  |                                       | $          | 4,881                                |           |      | $          | 5,651     |         
|                                                                                     |                                                     |                                       |            |                                      |           |      |            |          





---



##### Table of Contents



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




NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2002
(Unaudited)

(1) BASIS OF PRESENTATION:

These unaudited financial statements are being filed in conformity with
Rule 10-01 of Regulation S-X regarding interim financial statement
disclosure and do not contain all of the necessary footnote disclosures
required for a fair presentation of the balance sheets, statements of
operations and statements of cash flows in conformity with generally
accepted accounting principles. However, in the opinion of management,
this data includes all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the Companys financial position at
March 31, 2002, its statements of operations for the three months ended
March 31, 2002 and 2001 and its statement of cash flows for the three
months ended March 31, 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.

(2)  NORTHLAND CABLE NEWS:

Northland Cable News, Inc. (NCN), a wholly owned subsidiary of the
Company, developed and distributed local news, sports and information
programming to Northland Cable Television, Inc. and certain of the
Companys affiliates. The Companys payment obligations under the $100
million of senior notes are fully and unconditionally, jointly and
severally guaranteed on a senior subordinated basis by NCN. The guarantee
of NCN is subordinated to the prior payment in full of all senior debt of
NCN (as of March 31, 2002, NCN had no senior debt outstanding) and the
amounts for which NCN will be liable under the guarantee issued from time
to time with respect to senior debt. Management ceased the operations of
NCN on January 1, 2001, and does not believe that this has a material
effect on the Companys financial position, results of operations or
financing agreements. Separate financial statements of NCN have not been
presented because management has determined that they would not be
material to financial statement readers. Summary financial information of
NCN is presented below.

|                              |  |                                    |        |      |  |   |        |  
|----------------------------- |  | ---------------------------------- | ------ | ---- |  | - | ------ | -
|                              |  | Three month period ended March 31,
|                              |  |                                   
|                              |  | 2002                               |        | 2001
|                              |  |                                    |        |     
|INCOME STATEMENT
INFORMATION: |  |                                    |        |      |  |   |        |  
|Revenues from affiliates      |  | $                                  |       |      |  | $ |       |  
|Operating expenses            |  |                                    |       |      |  |   | 2,552  |  
|Other, net                    |  |                                    | 3,816  |      |  |   |       |  
|                              |  |                                    |        |      |  |   |        |  
|Net loss                      |  | $                                  | (3,816 | )    |  | $ | (2,552 | )
|                              |  |                                    |        |      |  |   |        |  





---



##### Table of Contents



|                           |                                |              |   |            |        |              |   |            |         | 
|-------------------------- | ------------------------------ | ------------ | - | ---------- | ------ | ------------ | - | ---------- | ------- | 
|                           |                                |              |   | March 31,  |        | December 31,
|                           |                                |              |   | 2002       |        | 2001        
|                           |                                |              |   |            |        |             
|BALANCE SHEET INFORMATION: |                                |              |   |            |        |              |   |           
|                           | Current assets                 |              | $ | 1,980,037  |        |              | $ | 2,229,287  |        
|                           | Less: intercompany elimination |              |   | (1,963,339 | )      |              |   | (2,018,237 | )      
|                           |                                |              |   |            |        |              |   |           
|                           |                                | Total Assets |   | $          | 16,698 |              |   | $          | 211,050 | 
|                           |                                |              |   |            |        |              |   |           
|                           | Current and total liabilities  |              | $ |           |        |              | $ | 70,188     |        
|                           |                                |              |   |            |        |              |   |           

(3) ACQUISITION OF SYSTEMS AND DISPOSITION OF ASSETS

On September 21, 2001, the Company sold its
cable system serving areas in and around McCormick, South Carolina,
which represented approximately 440 basic subscribers, to
Quarterlane Farms, LLC. The system was sold at a purchase price of
approximately $218,000.

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 purchase price of approximately $4,600,000 and was 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 purchase 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 disposition described above had been made at the beginning
of 2001, follow:

|                 |  |                      |            |  
|---------------- |  | -------------------- | ---------- | -
|                 |  | For the Three Months
|                 |  | Ended March 31,     
|                 |  | 2001                
|                 |  |                     
|Service revenues |  | $                    | 14,753,796 |  
|                 |  |                      |            |  
|Net loss         |  | $                    | (4,174,603 | )
|                 |  |                      |            |  

(4)  RECENTLY IMPLEMENTED ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 141 and 142 In June
2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141,
Business Combinations and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 prospectively prohibits the pooling of interest
method of accounting for business combinations initiated after June 30,
2001. SFAS No. 142 establishes a new method of testing goodwill 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. The amortization of
existing goodwill ceased on December 31, 2001. SFAS No. 141 is not
expected to have a material impact on the Companys financial position,
results of operations or cash flows. The adoption of





---



##### Table of Contents



SFAS No. 142 will
result in the Companys discontinuation of amortization of its goodwill.
The Company determined that its franchise and acquisition costs met the
definition of indefinite lived assets. Accordingly, amortization on these
assets also ceased on December 31, 2001. The adoption of SFAS No. 142
will result in the Companys discontinuation of amortization of its
goodwill. The Company has tested its intangibles for impairment under the
new standard and has determined that there is no impairment as of March
31, 2002. The net book value of its franchises, goodwill and acquisition
costs at March 31, 2002 was $57,322,313. Amortization of these assets was
approximately $2.6 million in the first quarter of 2001. Amortization of
these assets would have been approximately the same amount in the first
quarter of 2002.

Statement of Financial Accounting Standards No. 144 In August 2001, the
FASB issued SFAS No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets. Statement No. 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived
assets to be disposed of. Statement No. 144 supercedes Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and supercedes the accounting and reporting
provisions of Accounting Principles Board Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of Disposal of Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for segments of a business to be disposed of.
Implementation of Statement No. 144, which is effective January 1, 2002,
has been implemented by the Company and does not have an impact on the
Companys financial position, results of operations or cash flows for the
three months ended March 31, 2002.

(5)  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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 of SFAS No. 143 on its financial position,
results of operations or cash flows.





---



##### Table of Contents



PART I (continued)




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

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 AND 2001

As of March 31, 2002 the Companys cable systems served approximately
113,040 basic subscribers, 51,174 premium subscribers, 10,520 digital
subscribers and passed an estimated 191,845 homes.

Revenues decreased approximately $200,000 or 1.3% from $15.4 million to
$15.2 million for the three months ended March 31, 2001 and March 31, 2002
respectively. Of these revenues, approximately $10.3 million (68%) was
derived from basic services, $1.1 million (7%) from premium services, $2.0
million (13%) from expanded basic services, $300,000 (2%) from digital
services, $200,000 (1%) from service maintenance contracts, $700,000 (5%)
from advertising and $600,000 (4%) from other sources. Average monthly
revenue per subscriber increased $3.26 or 7.8% from $41.61 to $44.87 for
the three months ended March 31, 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 $900,000 or 5.8%. The September 2001
acquisition of a cable system serving approximately 3,200 basic
subscribers in an around Highlands, North Carolina (the Highlands
System) increased revenues approximately $300,000 or 2.0%. On a pro
forma basis, excluding the impact of the sale of the Bainbridge and McCormick Systems and the Highlands System acquisition: (i) revenues would have increased
approximately $461,000 or 3.4%; and (ii) average monthly revenue per
average basic subscriber would have increased $3.48 or 8.4%, from $41.37
to $44.87 for the three months ended March 31, 2002. This increase is
primarily attributable to rate increases implemented during the first
quarter of 2002 as well as increased revenue from higher penetration of
new product tiers.

Cable system operation expenses, which include costs related to
programming, technical personnel, repairs and maintenance and advertising
sales, increased approximately $200,000 or 3.6% from $5.5 million to $5.7
million for the three months ended March 31, 2002. On a pro forma basis,
excluding the impact of the sale of the Bainbridge and McCormick Systems and the
Highlands System acquisition operating expenses would have increased
approximately $515,000 or 9.9%. This increase is primarily attributable
to higher programming costs resulting from rate increases by certain
programming vendors as well as the launch of new programming services in
various systems.

General and administrative expenses, which include on-site office and
customer service personnel costs, customer billing, postage, marketing
expenses and franchise fees, decreased approximately $200,000 or 8.7% from
$2.3 million to $2.1 million for the three months ended March 31, 2002.
On a pro forma basis, excluding the impact of the sale of the
Bainbridge and McCormick Systems
and the Highlands System acquisition general and
administrative expenses would have decreased approximately $126,000
or 5.6%. The
decrease is primarily attributable to reductions in administrative service
expenses and administrative salaries offset by increases in insurance
expense and revenue based expenses such as franchise fees.





---



##### Table of Contents



Management fees for the three months ended March 31, 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 $2.5
million or 49.0% from $5.1 million to $2.6 million for the three months
ended March 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, goodwill and acquisition
costs in accordance with SFAS No.142 resulting in a decrease of
approximately $2.6 million in amortization expense for the three months
ended March 31, 2002.

Interest expense decreased approximately $200,000 or 4.3%, from $4.6
million to $4.4 million for the three months ended March 31, 2002.
Average outstanding indebtedness decreased $12 million from $183 million
to $171 million for the three months ended March 31, 2001 and 2002,
respectively. Approximately $18.3 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 $3.8 million in borrowings related to the
Highlands Acquisition and approximately $3.0 million in
borrowings to replenish working capital.

The Company has elected not to designate its derivatives as hedges under
SFAS No. 133. Accordingly, the Company has recorded a liability equal to
the fair market value of its derivatives, $864,000 in income related to
the change in value during the three months ended March 31, 2002.

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, and intends to pursue, a
business strategy which includes selective acquisitions. The Company has
financed these expenditures through a combination of cash flow from
operations, borrowings under the 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 year ended
December 31, 2002 are expected to be approximately $15.8 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, excluding acquisitions and certain
levels of capital expenditures, 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 $3.3 million for the three
months ended March 31, 2002. Adjustments to the $400,000 net loss for
the period to reconcile to net cash provided by operating activities
consisted primarily of $2.8 million of depreciation and amortization,
decreases of $900,000 relating to interest rate derivatives and
increases in operating liabilities of approximately $1.6 million offset
by increases in operating assets of $700,000.

Net cash used in investing activities was $800,000 for the three months
ended March 31, 2002, and substantially consisted of $1.1 million in
capital expenditures offset by $226,000 in post-closing proceeds from
sale of the Bainbridge Systems.

Earnings before charges for interest, taxes, depreciation and
amortization (EBITDA) decreased approximately $200,000 or 2.9%, from
$6.8 million to $6.6 million for the three





---



##### Table of Contents



months ended March 31, 2002.
EBITDA as a percentage of revenues (EBITDA Margin) decreased from
44.0% to 43.2% for the three months ended March 31, 2002. On a pro
forma basis, excluding the impact of the sale of the Bainbridge and
McCormick Systems and
the Highlands System acquisition, EBITDA would have increased
approximately $52,000 or 0.8%. 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 generally accepted accounting principles
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.

Net cash provided by operating activities was $3.7 million for the three
months ended March 31, 2001. Adjustments to the $4.4 million net loss
for the period to reconcile to net cash provided by operating activities
consisted primarily of $5.2 million of depreciation and amortization and
increases in operating liabilities of $1.6 million.

Net cash used in investing activities was $4.2 million for the three
months ended March 31, 2001 and consisted of $4.2 million in capital
expenditures and additions of intangible assets.

Net cash provided by financing activities was approximately $1.0 million
for the three months ended March 31, 2001. The Company had $1.0 million
in borrowings of long term debt to finance planned capital expenditures.

On August 14, 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
establishes a $35 million 364-day revolving credit loan. At the end of
the 364-day period, the revolver converts to a term loan due on June 30,
2007. The other two components consist 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. 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
9.164% (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 March 31, 2002, $5,660,000 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 March 31, 2002, the Company was in
compliance with the terms of the loan agreements.

At March 31, 2002, the outstanding balance under the Senior Credit
Facility was $71 million. As of the date of this filing, interest rates on
the Senior 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





---



##### Table of Contents



agreement with the Companys lender
expiring February 20, 2003; $5.9 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 4.41% expiring May 20,
2002; $711,000 fixed at a LIBOR based rate of 4.41% expiring June 19, 2002; $400,000
fixed at a LIBOR based rate of 4.40% expiring June 19, 2002; $81,000 fixed
at a LIBOR based rate of 4.36% expiring May 20, 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.

CAPITAL EXPENDITURES

For the three months ended March 31, 2002, the Company incurred capital
expenditures of approximately $1.1 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 $8.1 million in capital
expenditures for the remainder of 2002. This represents anticipated
expenditures for upgrading and rebuilding certain distribution facilities,
continued deployment of new product digital services, extensions of
distribution facilities to add new subscribers and general maintenance.

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 $20,000,000, $20,000,000, and $27,000,000 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 $670,000.

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.





---



##### Table of Contents






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      
| |  |  | -----------------------
|
| |  |  | (b) Reports on Form 8-K



| |  |  | (i) Form 8-K dated December 21, 2001, was filed January 4, 2002
reporting the disposition of the Bainbridge Island, Kingston and
Hansville, Washington systems.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents






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 |  | May 15, 2002
|           |                  | and Assistant Secretary
|           | Richard I. Clark |                         |  |                                            
|           |                  |                        
|/s/        | Gary S. Jones    |                         |  | President                                   |  | May 15, 2002
|           |                  |                        
|           | Gary S. Jones    |                         |  |