**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

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

**FORTHE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005**

| **Commission file numbers** | ** ** | **333-33540**   |
|-----------------------------|------------|-----------------|
| ** **                  | ** ** | **333-33540-1** |

 

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**INSIGHT MIDWEST, L.P.INSIGHT CAPITAL, INC.**

(Exact name of registrantsas specified in their charters)

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| **Delaware**                                                              | ** ** | **13-4079232**       |
|---------------------------------------------------------------------------|------------|----------------------|
| **Delaware**                                                              | ** ** | **13-4079679**       |
| (State  or other jurisdiction of                                          |       | (I.R.S.  Employer    |
| incorporation  or organization)                                           |       | Identification  No.) |
| **810 7th  Avenue**                                                       |       |                 |
| **New York, New York**                                                    | ** ** | **10019**            |
| (Address  of principal executive offices)                                 |       | (Zip  code)          |
| Registrants’ telephone  number, including area code:**917-286-2300** |

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Indicate by check markwhether the registrants (1) have filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrants wererequired to file such reports) and (2) have been subject to such filingrequirements for the past 90 days.   Yes x    No o

Indicate by check markwhether the registrants are accelerated filers (as defined in Exchange Act Rule 12b-2.   Yes o    No x

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

Indicatethe number of shares outstanding of each of the registrants’ classes of commonstock, as of the latest practicable date.

| Insight Midwest, L.P.       |   | —Not Applicable |
|-----------------------------|--------|----------------------|
| Insight  Capital, Inc. |   | —Not Applicable |

 

 

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**PART I.   FINANCIAL INFORMATION**

**Item 1.**                        FinancialStatements

The accompanying unaudited consolidated financialstatements have been prepared in accordance with the requirements of Form 10-Qand, therefore, do not include all information and footnotes required byaccounting principles generally accepted in the United States. However, in ouropinion, all adjustments, consisting of normal recurring accruals, necessaryfor a fair presentation of the results of operations for the relevant periodshave been made. Results for the interim periods are not necessarily indicativeof the results to be expected for the year. These financial statements shouldbe read in conjunction with the summary of significant accounting policies andthe notes to the consolidated financial statements included in our AnnualReport on Form 10-K for the year ended December 31, 2004.

1

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**INSIGHT MIDWEST, LPCONSOLIDATED BALANCE SHEETS*(in thousands)***

| ** **                                                                                                                                        | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                        | ** ** | **2005**               | ** ** | **2004**              | ** ** |
| ** **                                                                                                                                        | ** ** | ***(unaudited)***      | ** ** | ** **            | ** ** |
| **Assets**                                                                                                                                        | * *   |                   | * *   | ** **            |       |   |   |   |   |
| Cash and cash  equivalents                                                                                                                        |       |                   | $          | 85,225                | ** ** |   |   | $ | 72,476 |   |   |
| Investments                                                                                                                                       |       |                   | 5,652      | ** **            |       |   | 4,100 |   |   |
| Trade accounts  receivable, net of allowance for doubtful accounts of $1,291 and $1,050 as of  September 30, 2005 and December 31, 2004 |       |                   | 22,584     | ** **            |       |   | 31,352 |   |   |
| Launch funds  receivable                                                                                                                          |       |                   | 517        | ** **            |       |   | 2,749 |   |   |
| Prepaid expenses  and other current assets                                                                                                        |       |                   | 12,126     | ** **            |       |   | 9,300 |   |   |
| Total current assets                                                                                                                              |       |                   | 126,104    | ** **            |       |   | 119,977 |   |   |
| Fixed assets, net                                                                                                                                 |       |                   | 1,093,951  | ** **            |       |   | 1,130,600 |   |   |
| Goodwill                                                                                                                                          |       |                   | 14,684     | ** **            |       |   | 14,684 |   |   |
| Franchise costs                                                                                                                                   |       |                   | 2,357,535  | ** **            |       |   | 2,357,535 |   |   |
| Deferred  financing costs, net of accumulated amortization of $18,564 and $15,170 as of  September 30, 2005 and December 31, 2004       |       |                   | 21,094     | ** **            |       |   | 22,776 |   |   |
| Other non-current  assets                                                                                                                         |       |                   | 1,208      | ** **            |       |   | 1,843 |   |   |
| Total assets                                                                                                                                      |       |                   | $          | 3,614,576             | ** ** |   |   | $ | 3,647,415 |   |   |
| **Liabilities  and partners’ capital**                                                                                                       |       |                   |       | ** **            |       |   |   |   |   |
| Accounts payable                                                                                                                                  |       |                   | $          | 22,096                | ** ** |   |   | $ | 27,147 |   |   |
| Accrued expenses  and other current liabilities                                                                                                   |       |                   | 32,173     | ** **            |       |   | 36,092 |   |   |
| Accrued property  taxes                                                                                                                           |       |                   | 12,736     | ** **            |       |   | 13,049 |   |   |
| Accrued  programming costs (inclusive of $37,743 and $36,838 due to related parties as  of September 30, 2005 and December 31, 2004)    |       |                   | 53,478     | ** **            |       |   | 51,328 |   |   |
| Deferred revenue                                                                                                                                  |       |                   | 5,744      | ** **            |       |   | 8,996 |   |   |
| Interest payable                                                                                                                                  |       |                   | 48,131     | ** **            |       |   | 20,643 |   |   |
| Debt—current  portion                                                                                                                        |       |                   | 83,500     | ** **            |       |   | 83,500 |   |   |
| Due to affiliates                                                                                                                                 |       |                   | 58,749     | ** **            |       |   | 55,177 |   |   |
| Total current liabilities                                                                                                                         |       |                   | 316,607    | ** **            |       |   | 295,932 |   |   |
| Deferred revenue                                                                                                                                  |       |                   | 1,835      | ** **            |       |   | 2,904 |   |   |
| Debt                                                                                                                                              |       |                   | 2,454,368  | ** **            |       |   | 2,518,879 |   |   |
| Other non-current  liabilities                                                                                                                    |       |                   | 2,007      | ** **            |       |   | 2,078 |   |   |
| Partners’  capital:                                                                                                                          |       |                   |       | ** **            |       |   |   |   |   |
| Partners’  accumulated capital                                                                                                               |       |                   | 839,759    | ** **            |       |   | 827,622 |   |   |
| Total partners’ capital                                                                                                                      |       |                   | 839,759    | ** **            |       |   | 827,622 |   |   |
| Total liabilities  and partners’ capital                                                                                                     |       |                   | $          | 3,614,576             | ** ** |   |   | $ | 3,647,415 |   |   |

 

***See accompanying notes***

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**INSIGHT MIDWEST, LPCONSOLIDATED STATEMENTS OF OPERATIONS*(unaudited)(in thousands)***

| ** **                                                                                                                                                                                                                                                                      | ** ** | **Three months ended  September 30,** | ** ** | **Nine months ended  September 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                      | ** ** | **2005**                                             | ** ** | **2004**                                            | ** ** | **2005** | ** ** | **2004** | ** ** |
| Revenue                                                                                                                                                                                                                                                                         |       | $                                                    | 279,019    |                                                | $          | 250,232 |   | $ | 827,624 |   | $ | 738,268 |   |
| Operating costs  and expenses:                                                                                                                                                                                                                                                  |       |                                                 |       |                                                |       |   |   |   |   |
| Programming and other operating costs (exclusive of  depreciation and amortization) (inclusive of $39,438 and $120,114 and $37,490  and $110,968 of programming expense incurred through related parties for the  three and nine months ended September 30, 2005 and 2004) |       | 95,135                                               |       | 87,298                                              |       | 287,578 |   | 263,302 |   |
| Selling, general and administrative                                                                                                                                                                                                                                             |       | 61,787                                               |       | 51,921                                              |       | 177,458 |   | 144,752 |   |
| Management fees                                                                                                                                                                                                                                                                 |       | 8,371                                                |       | 7,374                                               |       | 24,830 |   | 21,700 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                   |       | 59,691                                               |       | 58,385                                              |       | 179,327 |   | 174,333 |   |
| Total operating  costs and expenses                                                                                                                                                                                                                                             |       | 224,984                                              |       | 204,978                                             |       | 669,193 |   | 604,087 |   |
| Operating income                                                                                                                                                                                                                                                                |       | 54,035                                               |       | 45,254                                              |       | 158,431 |   | 134,181 |   |
| Other income  (expense):                                                                                                                                                                                                                                                        |       |                                                 |       |                                                |       |   |   |   |   |
| Interest expense                                                                                                                                                                                                                                                                |       | (50,940                                              | )          | (43,220                                             | )          | (149,044 | ) | (132,345 | ) |
| Interest income                                                                                                                                                                                                                                                                 |       | 518                                                  |       | 81                                                  |       | 1,188 |   | 164 |   |
| Other income (expense)                                                                                                                                                                                                                                                          |       | 871                                                  |       | 1,081                                               |       | 1,562 |   | (245 | ) |
| Total other  expense, net                                                                                                                                                                                                                                                       |       | (49,551                                              | )          | (42,058                                             | )          | (146,294 | ) | (132,426 | ) |
| Net income                                                                                                                                                                                                                                                                      |       | $                                                    | 4,484      |                                                | $          | 3,196 |   | $ | 12,137 |   | $ | 1,755 |   |

 

***See accompanying notes***

3

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**INSIGHT MIDWEST, LPConsolidated Statements OF CASHFLOWS*(unaudited)(in thousands)***

| ** **                                                                         | ** ** | **Nine months ended  September 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2005**                                            | ** ** | **2004** | ** ** |
| **Operating activities:**                                                          |       |                                                |       |   |   |
| Net income                                                                         |       | $                                                   | 12,137     |   | $ | 1,755 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                                                |       |   |   |
| Depreciation and amortization                                                      |       | 179,327                                             |       | 174,333 |   |
| Provision for losses on trade accounts receivable                                  |       | 13,196                                              |       | 13,803 |   |
| Amortization of note discount                                                      |       | 247                                                 |       | 225 |   |
| Gain on interest rate swaps                                                        |       | (1,684                                              | )          | (249 | ) |
| Changes in operating  assets and liabilities:                                      |       |                                                |       |   |   |
| Trade accounts receivable                                                          |       | (4,428                                              | )          | (10,300 | ) |
| Launch funds receivable                                                            |       | 2,232                                               |       | 6,712 |   |
| Prepaid expenses and other assets                                                  |       | (2,260                                              | )          | 1,641 |   |
| Accounts payable                                                                   |       | (5,051                                              | )          | (6,986 | ) |
| Accrued expenses and other liabilities                                             |       | 24,137                                              |       | 43,688 |   |
| Net cash provided by operating activities                                          |       | 217,853                                             |       | 224,622 |   |
| **Investing  activities:**                                                         |       |                                                |       |   |   |
| Purchase of fixed assets                                                           |       | (140,357                                            | )          | (128,188 | ) |
| Purchase of intangible assets                                                      |       | —                                              |       | (107 | ) |
| Purchase of investments                                                            |       | (1,552                                              | )          | — |   |
| Sale of fixed assets                                                               |       | 1,142                                               |       | 954 |   |
| Net cash used in investing activities                                              |       | (140,767                                            | )          | (127,341 | ) |
| **Financing  activities:**                                                         |       |                                           |       |   |   |
| Net repayments under credit facilities                                             |       | (62,625                                             | )          | (52,688 | ) |
| Debt issuance costs                                                                |       | (1,712                                              | )          | (10 | ) |
| Net cash used in financing activities                                              |       | (64,337                                             | )          | (52,698 | ) |
| Net increase in cash and cash equivalents                                          |       | 12,749                                              |       | 44,583 |   |
| Cash and cash  equivalents, beginning of period                                    |       | 72,476                                              |       | 22,679 |   |
| Cash and cash  equivalents, end of period                                          |       | $                                                   | 85,225     |   | $ | 67,262 |   |

 

***See accompanying notes***

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1. Organization and Basisof Presentation**

We were formed in September 1999 to serve as theholding company and a financing vehicle for Insight Communications Company, Inc.’s(“Insight Inc.”) cable television system joint venture with AT&T Broadband,LLC (now known as Comcast Cable Holdings, LLC (“Comcast Cable”)). We are owned50% by Insight Communications Company, L.P. (“Insight LP”), which is whollyowned by Insight Inc., and 50% by an indirect subsidiary of Comcast Cable. InsightLP serves as our general partner and manages and operates our systems.

Through our wholly owned operating subsidiaries,Insight Communications Midwest, LLC (“Insight Communications Midwest”), InsightCommunications of Central Ohio, LLC (“Insight Ohio”) and Insight KentuckyPartners II, L.P. (“Insight Kentucky”), we own and operate cable televisionsystems in Indiana, Kentucky, Ohio, and Illinois which passed approximately 2.4million homes and served approximately 1.3 million customers as of September 30,2005.

On July 28, 2005, InsightInc. entered into a definitive merger agreement providing for InsightAcquisition Corp. to acquire all of Insight Inc.’s publicly held shares. Underthe terms of the agreement, Insight Inc.’s public shareholders (other thanstockholders that will continue as investors in the surviving corporation)would receive $11.75 per share in cash. Insight Acquisition Corp. was organizedby affiliates of The Carlyle Group in order to effect the transactionscontemplated by the merger agreement. Consummation of the transaction issubject to certain conditions, including approval of the merger agreement andmerger by unaffiliated holders of a majority of the outstanding shares ofInsight Inc.’s Class A common stock.

**2. Responsibility forInterim Financial Statements**

The accompanying unaudited consolidated financialstatements have been prepared in accordance with accounting principlesgenerally accepted in the United States for interim financial information andwith the instructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotedisclosures required by accounting principles generally accepted in the UnitedStates for complete financial statements.

In our opinion, the consolidated financial statementsreflect all adjustments considered necessary for a fair presentation of theconsolidated results of operations and financial position for the interimperiods presented. All such adjustments are of a normal recurring nature. Theseunaudited interim consolidated financial statements should be read inconjunction with the audited consolidated financial statements and notes toconsolidated financial statements contained in our Annual Report on Form 10-Kfor the year ended December 31, 2004.

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States requires us to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates. The results of operations for thethree and nine months ended September 30, 2005 are not necessarilyindicative of the results to be expected for the year ending December 31,2005 or any other interim period.

5

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**3. Recent AccountingPronouncements**

In May 2005, theFinancial Accounting Standards Board (“FASB”) issued Statement of Financial AccountingStandards (“SFAS”) No. 154, *Accounting**Changes and Error Corrections*. SFAS No. 154 replacesAccount Principles Board (“APB”) Opinion No. 20, *AccountingChanges*, and SFAS No. 3, *Reporting AccountingChanges in Interim Financial Statements* and changes the requirementsfor the accounting for and reporting of a change in accounting principles. SFASNo. 154 applies to all voluntary changes in an accounting principle. Italso applies to changes required by an accounting pronouncement in the unusualinstance that the pronouncement does not include specific transition provisions.When a pronouncement includes specific provisions, those provisions should befollowed. The Company does not anticipate that the adoption of this standardwill have a material impact on its consolidated financial statements. SFAS 154is effective for accounting changes and corrections of errors made in fiscalyears beginning in 2006.

**4. Fixed Assets**

Fixedassets consisted of:

| ** **                                      | ** ** | **September 30,**    | ** ** | **December 31,** | ** ** |
|-------------------------------------------------|------------|---------------------------|------------|-----------------------|------------|
| ** **                                      | ** ** | **2005**                  | ** ** | **2004**              | ** ** |
| ** **                                      | ** ** | ***(in thousands)*** | ** ** |
| Land, buildings  and improvements               |       |                      | $          | 35,515                |       |   | $ | 35,649 |   |
| Cable system  equipment                         |       |                      | 2,293,267  |                  |       | 2,155,193 |   |
| Furniture,  fixtures and office equipment       |       |                      | 18,674     |                  |       | 17,867 |   |
|                                            |       |                      | 2,347,456  |                  |       | 2,208,709 |   |
| Less accumulated  depreciation and amortization |       |                      | (1,253,505 | )                     |       | (1,078,109 | ) |
| Total fixed  assets, net                        |       |                      | $          | 1,093,951             |       |   | $ | 1,130,600 |   |

 

We recorded depreciationexpense of $58.5 million and $175.9 million for the three and nine months endedSeptember 30, 2005 and $57.2 million and $170.9 million for the three andnine months ended September 30, 2004.

**5. Debt**

| ** **                                 | ** ** | **September 30,**    | ** ** | **December 31,** | ** ** |
|--------------------------------------------|------------|---------------------------|------------|-----------------------|------------|
| ** **                                 | ** ** | **2005**                  | ** ** | **2004**              | ** ** |
| ** **                                 | ** ** | ***(in thousands)*** | ** ** |
| Note payable to  Insight Inc.              |       |                      | $          | 100,000               |       |   |   | $ | 100,000 |   |   |
| Insight Midwest  Holdings Credit Facility  |       |                      | 1,425,125  |                  |       |   | 1,487,750 |   |   |
| Insight Midwest  93⁄4% Senior Notes     |       |                      | 385,000    |                  |       |   | 385,000 |   |   |
| Insight Midwest  101⁄2% Senior Notes    |       |                      | 630,000    |                  |       |   | 630,000 |   |   |
|                                       |       |                      | 2,540,125  |                  |       |   | 2,602,750 |   |   |
| Net unamortized  discount/premium on notes |       |                      | (643       | )                     |       |   | (890 | ) |   |
| Market value of  interest rate swaps       |       |                      | (1,614     | )                     |       |   | 519 |   |   |
| Total debt                                 |       |                      | $          | 2,537,868             |       |   |   | $ | 2,602,379 |   |   |

 

6

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**5. Debt(Continued)**

***Insight Midwest Holdings $1.975 Billion CreditFacility***

Our wholly owned subsidiary, Insight Midwest Holdings,LLC, serves as borrower under a $1.975 billion credit facility. On March 28,2002, we borrowed $100.0 million from Insight Inc. The loan bears annualinterest of 9%, compounded semi-annually, has a scheduled maturity date of January 31,2011 and permits prepayments. Insight Midwest Holdings is permitted under thecredit facility to make distributions to us for the purpose of repaying thisloan, including accrued interest, provided that there are no defaults existingunder the credit facility. As of September 30, 2005 and December 31,2004, the balance of the $100.0 million loan, including accrued interest, was$136.1 million and $127.0 million.

On July 21, 2005Insight Inc. completed a refinancing of the existing $1.1 billion Term B loanfacility under the Insight Midwest credit facility. This refinancing reducedthe applicable margins for LIBOR rate borrowings from LIBOR plus 275 basispoints to LIBOR plus 200 basis points and the applicable margin will be reducedan additional 25 basis points when Insight Midwest’s leverage ratio drops below2.75. The maximum total leverage ratio covenant was reset from 3.75 to 4.50 on July 1,2005 with additional step downs to 4.25 on July 1, 2006 and to 4.00 on July 1,2007. The facility was also amended to provide Insight Inc. certain flexibilityto refinance the senior notes at Insight Midwest.

***Debt Principal Payments***

As of September 30,2005, the remaining principal payments required on our debt were as follows (inthousands):

| 2005       |   | $         | 20,875    |   |
|------------|--------|-----------|-----------|--------|
| 2006       |   | 83,500    |      |
| 2007       |   | 83,500    |      |
| 2008       |   | 104,750   |      |
| 2009       |   | 1,517,500 |      |
| Thereafter |   | 730,000   |      |
| Total      |   | $         | 2,540,125 |   |

 

**6. Derivative Instruments**

We enter into derivative instruments, typicallyinterest-rate swap agreements, to modify the interest characteristics of ouroutstanding debt to either a floating or fixed rate basis. These agreementsinvolve fixed rate interest payments in exchange for floating rate interestreceipts, known as cash flow hedges, and floating rate interest payments inexchange for fixed rate interest receipts, known as fair value hedges, over thelife of the agreement without an exchange of the underlying principal amount. Thedifferential to be paid or received is accrued as interest rates change and isrecognized as an adjustment to interest expense related to the debt. Therelated amount payable or receivable is included in other non-currentliabilities or assets.

Gains and losses relatedto cash flow hedges that are determined to be effective hedges are recorded asaccumulated other comprehensive income or loss in the accompanying consolidatedbalance sheets. 

7

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**6. DerivativeInstruments (Continued)**

Gains and lossesrelated to fair value hedges that are determined to be effective hedges arerecorded in the consolidated statements of operations as an adjustment to theswap instrument and an equal and offsetting adjustment to the carrying value ofthe underlying debt. Gains and losses related to interest rate swaps that aredetermined not to be effective hedges and do not qualify for hedge accounting arerecorded in our consolidated statements of operations as other income orexpense.

***Fair Value Hedges***

In July 2003, we entered into three interest rateswap agreements whereby we swapped fixed rates under our 101⁄2% senior notes duein December 2010 for variable rates equal to six-month LIBOR, plus theapplicable margin of approximately 8.3%, on $185.0 million notional value ofdebt. These agreements expire November 1, 2005. We recorded a gain onthese swaps of $872,000 and $1.7 million for the three and nine months ended September 30,2005 and $1.5 million and $250,000 for the three and nine month ended September 30,2004, which is included in other income (expense). As of September 30,2005 and December 31, 2004, we recorded $1.7 million and $364,000 of interestpayable related to these agreements. The cost if terminated of these agreementswas $394,000 and $2.1 million as of September 30, 2005 and December 31,2004.

In December 2003, weentered into an interest rate swap agreement whereby we swapped fixed ratesunder our 101⁄2% senior notes due in December 2010 for variable rates equalto six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0million notional value of debt. This agreement expires November 1, 2010. Thisswap has been determined to be perfectly effective in hedging againstfluctuations in the fair value of the underlying debt. As such, changes in thefair value of the underlying debt equally offset changes in the value of theinterest rate swap in our consolidated statements of operations. The fair value(cost if terminated) of this swap as of September 30, 2005 and December 31,2004 was $(1.6) million and $519,000 and has been recorded in other non-currentassets (liabilities) and as an adjustment to the carrying value of debt.

**7. Comprehensive Income**

We record the effective portion of certain derivatives’gains or losses as accumulated other comprehensive income or loss in theaccompanying consolidated balance sheets.

Thefollowing is a reconciliation of net income to comprehensive income (inthousands):

| ** **                              | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                              | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                              | ** ** | **2005**                         | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net income                              |       | $                                | 4,484      |                            | $          | 3,196 |   | $ | 12,137 |   | $ | 1,755 |   |
| Unrealized gain  on interest rate swaps |       | —                           |       | 615                             |       | — |   | 3,422 |   |
| Comprehensive income                    |       | $                                | 4,484      |                            | $          | 3,811 |   | $ | 12,137 |   | $ | 5,177 |   |

 

**8. Related PartyTransactions**

***Managed Systems***

On March 17, 2000,Insight LP entered into a management agreement with Comcast ofMontana/Indiana/Kentucky/Ohio (“Comcast”) (formerly known as InterMedia PartnersSoutheast), an affiliate of Comcast Cable, to provide management services tocertain cable television systems owned by 

8

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**8. RelatedParty Transactions (Continued)**

Comcast.Certain of our employees operate these managed systems. Overhead costs incurredby us were allocated ratably and charged to them on a monthly basis. Effective July 31,2004, the management agreement was terminated by mutual agreement.

***Programming***

We purchase the majorityof our programming through affiliates of Comcast Cable. Charges for suchprogramming, including a 11⁄2% administrative fee, were $39.4 million and $120.1million for the three and nine months ended September 30, 2005 and $37.5million and $111.0 million for the three and nine months ended September 30,2004. As of September 30, 2005 and December 31, 2004, $37.7 millionand $36.8 million of accrued programming costs were due to affiliates ofComcast Cable. We believe that the programming rates charged through theseaffiliates are lower than those available from independent parties.

***Telephone Agreements***

Prior to December 31, 2004, to facilitatedelivery of telephone services, Insight LP was a party to a joint operatingagreement with Comcast Cable that allowed us to deliver to our residentialcustomers, in certain of our service areas, local telephone service provided byComcast Cable. Under the terms of the agreement, we leased certain capacity onour local network to Comcast Cable. In addition, we received additionalpayments related to certain services and support, including installations,marketing and billing. Fee revenue earned in connection with installations wasdeferred and amortized over the term a telephone customer was expected tomaintain their telephone service, then estimated to be three years. Marketingand billing support revenue was recognized in the period such services wereperformed.

On December 31, 2004,we acquired the telephone business conducted by Comcast Cable in the marketsserved under our joint operating agreement and terminated the joint operatingagreement. Subsequent to December 31, 2004, we no longer earn revenue fromthe services described above, but rather we record the continued amortizationof installation fee revenue and revenues earned directly from our customers forproviding telephone and telephone related services.

***Advertising Services***

In October 1999, to facilitate the administrationof our advertising services in our Kentucky Systems, we entered into anagreement with an affiliate of AT&T Broadband (now known as Comcast Cable),which provided for this affiliate to perform all of our Kentucky advertisingsales and related administrative services. Effective September 26, 2004,this agreement was terminated by mutual agreement.

We earned advertisingrevenues through this affiliate of $4.6 million and $13.7 million for theperiod from July 1, 2004 through September 26, 2004 and January 1,2004 through September 26, 2004. Through September 26, 2004, we paidthis affiliate a fixed and variable fee for providing this service based onadvertising sales cash flow growth.

***Due To Affiliates***

As of September 30,2005 and December 31, 2004, we owed Insight LP, certain amounts comprisedprimarily of incurred but unpaid management fees, calculated as approximately3% of revenues, and accrued interest related to our $100.0 million note payableto Insight Inc. and other operational expenses.

9

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**9. Commitments andContingencies**

***Programming Contracts***

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

***Litigation***

In November 2000, we filed a state court actionagainst the City of Louisville for its grant, in September 2000, of a morefavorable franchise to Knology of Louisville, Inc. Upon commencement ofthis action, the City pursuant to a provision in its franchise agreement withKnology, automatically suspended Knology’s franchise pending a final,non-appealable court determination as to whether Knology’s franchise was morefavorable than the franchise under which we operated. In November 2000,Knology filed a federal court action against us seeking monetary damages andother relief for alleged violations of federal laws arising out of our havingfiled, pursuant to the provisions of our own franchise agreement with the City,the state court action. In March 2001, the federal court preliminarily setaside the suspension of Knology’s franchise. In March 2002, a statecircuit court ruled against our claim that Knology’s franchise was morefavorable. We appealed the circuit court’s order to the state court of appealswhich, in June 2003, upheld the lower court ruling. We filed a motion fordiscretionary review of the appeals court’s ruling which was denied by theKentucky Supreme Court.

In May 2003, the federal court granted us summaryjudgment and dismissed six of Knology’s 11 claims. The court granted summaryjudgment to Knology on three claims, two of which resulted in permanentlyenjoining enforcement of the automatic suspension provision of Knology’sfranchise agreement and did not involve damages. The third such claim was forviolation of Knology’s first amendment rights, which was to proceed to trialsolely on the issue of damages, and could have resulted in an award of legalfees and court costs specific to such claim if upheld. The remaining undecidedclaims related to allegations of anticompetitive conduct arising from the statecourt lawsuit and were to proceed to trial on the merits. In August 2003,the court agreed, in part, with our Motion for Reconsideration, that the stayprovision provides no justification for an injunction since the language wassevered. Further, the court granted our Motion to Certify Questions for anImmediate Appeal to the Sixth Circuit Court of Appeals. The Sixth Circuit Courtof Appeals granted our Motion to Certify, and ruled in our favor overturningthe trial court’s rulings in favor of Knology. The Sixth Circuit found that ourright to file the state court lawsuit against the City was protected and thuswe were immune from liability arising from that lawsuit. Knology filed a motionfor an en banc review by the Sixth Circuit which was denied in March 2005.The matter was returned to the trial court for final rulings consistent withthe Sixth Circuit opinion. On August 19, 2005, the trial court dismissedthe action with prejudice and with each party bearing its own costs. We arecontinuing to pursue an award of costs and attorneys fees.

We are subject to variouslegal proceedings that arise in the ordinary course of business. While it isimpossible to determine with certainty the ultimate outcome of these matters,it is our opinion that the resolution of these matters will not have a materialadverse affect on our consolidated financial condition.

10

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**INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**10. Subsequent Event**

On October 13, 2005, Insight Inc. announced thesuccessful completion of a consent solicitation of holders of Insight Inc.’s121⁄4% senior discount notes due 2011 for the waiver of an indenture provisionthat could be deemed to apply to its merger agreement with Insight AcquisitionCorp. and related transactions. The concurrent consent solicitations by us andInsight Capital, Inc. in respect of our 93⁄4% senior notes due 2009 and 101⁄2% seniornotes due 2010, with respect to the waiver of a substantially similar provisionin each indenture governing those notes, also were successfully completed.

On the consent payment date, Insight Inc. will payconsenting holders 0.125% of the accreted value of their 121⁄4% notes and 0.125%of the principal amount of the Insight Midwest notes, subject to the terms andconditions of the consent solicitations, which conditions include consummationof Insight Inc.’s merger with Insight Acquisition Corp.

11

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**INSIGHT CAPITAL, INC.BALANCE SHEETS*(in thousands)***

| ** **                                                                                                                                 | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                 | ** ** | **2005**               | ** ** | **2004**              | ** ** |
| ** **                                                                                                                                 | ** ** | ***(unaudited)***      | ** ** | ** **            | ** ** |
| **Assets**                                                                                                                                 | ** ** |                   | ** ** | ** **            |       | ** ** | ** ** |
| Cash                                                                                                                                       |       |                   | $          | 1                     | ** ** |   | $ | 1 |   |
| Deferred  financing costs, net of accumulated amortization of $11,037 and $9,081 as of  September 30, 2005 and December 31, 2004 |       |                   | 11,744     | ** **            |       | 13,700 |   |
| Total assets                                                                                                                               |       |                   | $          | 11,745                | ** ** |   | $ | 13,701 |   |
| **Liabilities  and shareholder deficit**                                                                                                   |       |                   |       | ** **            |       |   |   |
| Accrued interest                                                                                                                           |       |                   | $          | 46,331                | ** ** |   | $ | 20,409 |   |
| Total current liabilities                                                                                                                  |       |                   | 46,331     | ** **            |       | 20,409 |   |
| Senior notes, to be paid by Insight Midwest, LP                                                                                            |       |                   | 1,014,357  | ** **            |       | 1,014,110 |   |
| Total liabilities                                                                                                                          |       |                   | 1,060,688  | ** **            |       | 1,034,519 |   |
| Shareholder  deficit:                                                                                                                      |       |                   |       | ** **            |       |   |   |
| Common stock;  $.01 par value; 1,000 shares authorized, issued and outstanding                                                             |       |                   | —     | ** **            |       | — |   |
| Paid-in-capital                                                                                                                            |       |                   | 1          | ** **            |       | 1 |   |
| In-substance  allocation of proceeds related to senior notes to be paid by Insight Midwest                                                 |       |                   | (583,460   | **)**                 |       | (635,304 | ) |
| Accumulated  deficit                                                                                                                       |       |                   | (465,484   | **)**                 |       | (385,515 | ) |
| Total shareholder deficit                                                                                                                  |       |                   | (1,048,943 | **)**                 |       | (1,020,818 | ) |
| Total liabilities  and shareholder deficit                                                                                                 |       |                   | $          | 11,745                | ** ** |   | $ | 13,701 |   |

 

***See accompanying notes***

12

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**INSIGHT CAPITAL, INC.STATEMENTS OF OPERATIONS*(unaudited)(in thousands)***

| ** **    | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|---------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **    | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **    | ** ** | **2005**                         | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Expenses:** |       |                             |       |                            |       |   |   |   |   |
| Amortization  |       | $                                | (652       | )                               | $          | (652 | ) | $ | (1,956 | ) | $ | (1,956 | ) |
| Interest      |       | (26,006                          | )          | (25,999                         | )          | (78,013 | ) | (77,991 | ) |
| Net loss      |       | $                                | (26,658    | )                               | $          | (26,651 | ) | $ | (79,969 | ) | $ | (79,947 | ) |

 

***See accompanying notes***

13

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**INSIGHT CAPITAL, INC.STATEMENTS OF CASH FLOWS*(unaudited)(in thousands)***

| ** **                                                                       | ** ** | **Nine months ended** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                       | ** ** | **September 30,**          | ** ** |
| ** **                                                                       | ** ** | **2005**                        | ** ** | **2004** | ** ** |
| **Cash flows from operating  activities:**                                       | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Net loss                                                                         |       | $                               | (79,969    | ) | $ | (79,947 | ) |
| Adjustments to reconcile  net loss to net cash provided by operating activities: |       |                            |       |   |   |
| Accretion of discount on notes                                                   |       | 247                             |       | 225 |   |
| Amortization                                                                     |       | 1,956                           |       | 1,956 |   |
| Interest expense assumed by affiliate                                            |       | 77,766                          |       | 77,766 |   |
| Net cash provided  by operating activities                                       |       | —                          |       | — |   |
| Net increase in cash                                                             |       | —                          |       | — |   |
| Cash, beginning  of period                                                       |       | 1                               |       | 1 |   |
| Cash, end of period                                                              |       | $                               | 1          |   | $ | 1 |   |

 

***See accompanying notes***

14

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**INSIGHT CAPITAL, INC.NOTES TO FINANCIAL STATEMENTS**

**1. Nature of Business**

Insight Capital, Inc.(the “Company”), a Delaware corporation, was formed on September 23, 1999,for the sole purpose of being a co-issuer with Insight Midwest, L.P. (“InsightMidwest”) of senior notes which allows certain investors the ability to beholders of the debt. The Company has no operations. The outstanding shares ofthe Company are owned by Insight Midwest.

**2. Responsibility forInterim Financial Statements**

The accompanying unaudited financial statements of theCompany have been prepared in accordance with accounting principles generallyaccepted in the United States for interim financial information and with theinstructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotedisclosures required by accounting principles generally accepted in the UnitedStates for complete financial statements.

In management’s opinion, the financial statementsreflect all adjustments considered necessary for a fair statement of thefinancial position as of the interim dates presented. These unaudited interimfinancial statements should be read in conjunction with the audited financialstatements and notes to financial statements contained in the Company’s AnnualReport on Form 10-K for the year ended December 31, 2004.

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States requires theCompany to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements. Actual results could differ from thoseestimates.

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

**Forward-Looking Statements**

This quarterlyreport on Form 10-Q contains certain forward-looking statements withrespect to the financial condition, results of operations, plans, objectives,future performance and business of our company, including, without limitation,statements preceded by, followed by or that include the words “believes,” “expects,”“anticipates,” “estimates” or similar expressions. We believe it is importantto communicate management’s expectations to our investors. However, there maybe events in the future that we are not able to accurately predict or overwhich we have no control. The risk factors listed in our Annual Report on Form 10-Kfor the year ended December 31, 2004, as well as any other cautionarylanguage in this quarterly report, provide examples of risks, uncertainties andevents that may cause our actual results to differ materially from theexpectations we describe in our forward-looking statements. You should be awarethat the occurrence of the events described in these risk factors and elsewherein this quarterly report could have a material adverse effect on our business,operating results and financial condition. Examples of these risks include:

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

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

·       Thereis uncertainty surrounding the potential dissolution of our joint venture witha subsidiary of Comcast Corporation;

·       Theterms of our indebtedness limits our ability to access the cash flow of oursubsidiaries for debt service and any other purpose;

·       Ourprogramming costs are substantial, and they are expected to increase; and

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

In addition, actualresults could differ materially from the forward-looking statements containedin this quarterly report as a result of the timing of the completion of theproposed going private transaction or the impact of the transaction on ouroperating results, capital resources, profitability, cash requirements,management resources and liquidity. We do not undertake any obligation topublicly update or release any revisions to these forward-looking statements toreflect events or circumstances after the date that this quarterly report isfiled with the SEC or to reflect the occurrence of unanticipated events, exceptas required by law.

**Overview**

Our revenues are earned from customer fees for cabletelevision video services including basic, classic, premium, digital andpay-per-view services and ancillary services, such as rental of converters,remote control devices and installations. In addition, we earn revenues fromproviding high-speed Internet services, selling advertising, providingtelephone services and commissions for products sold through home shoppingnetworks.

16

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Thefollowing table is derived from our consolidated financial statements and setsforth certain statement of operations data for our consolidated operations:

| ** **                                 | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|--------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                 | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                                 | ** ** | **2005**                         | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                 | ** ** | ***(in thousands)***        | ** ** |
| Revenue                                    |       | $                                | 279,019    |                            | $          | 250,232 |   |   | $ | 827,624 |   |   | $ | 738,268 |   |
| Operating costs and  expenses:             |       |                             |       |                            |       |   |   |   |   |   |   |
| Programming and other operating costs      |       | 95,135                           |       | 87,298                          |       |   | 287,578 |   |   | 263,302 |   |
| Selling, general and administrative        |       | 61,787                           |       | 51,921                          |       |   | 177,458 |   |   | 144,752 |   |
| Management fees                            |       | 8,371                            |       | 7,374                           |       |   | 24,830 |   |   | 21,700 |   |
| Depreciation and amortization              |       | 59,691                           |       | 58,385                          |       |   | 179,327 |   |   | 174,333 |   |
| Total operating  costs and expenses        |       | 224,984                          |       | 204,978                         |       |   | 669,193 |   |   | 604,087 |   |
| Operating income                           |       | 54,035                           |       | 45,254                          |       |   | 158,431 |   |   | 134,181 |   |
| Interest expense                           |       | 50,940                           |       | 43,220                          |       |   | 149,044 |   |   | 132,345 |   |
| Net income                                 |       | 4,484                            |       | 3,196                           |       |   | 12,137 |   |   | 1,755 |   |
| Net cash provided  by operating activities |       | 82,680                           |       | 90,462                          |       |   | 217,853 |   |   | 224,622 |   |
| Net cash used in  investing activities     |       | 50,305                           |       | 46,001                          |       |   | 140,767 |   |   | 127,341 |   |
| Net cash used in  financing activities     |       | 22,587                           |       | 15,563                          |       |   | 64,337 |   |   | 52,698 |   |
| Capital expenditures                       |       | 50,245                           |       | 45,956                          |       |   | 140,357 |   |   | 128,188 |   |
|                                            |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |  |  |

 

**Use of Operating Income before Depreciation andAmortization and Free Cash Flow**

We utilize OperatingIncome before Depreciation and Amortization, among other measures, to evaluatethe performance of our businesses. Operating Income before Depreciation andAmortization is considered an important indicator of the operational strengthof our businesses and is a component of our annual compensation programs. Inaddition, our debt agreements use Operating Income before Depreciation andAmortization, adjusted for certain non-recurring items, in our leverage andother covenant calculations. We also use this measure to determine how we willallocate resources and capital. Our management finds this measure helpfulbecause it captures all of the revenue and ongoing operating expenses of ourbusinesses and therefore provides a means to directly evaluate the ability ofour business operations to generate returns and to compare operatingcapabilities across our businesses. This measure is also used by equity andfixed income research analysts in their reports to investors evaluating ourbusinesses and other companies in the cable television industry. We believeOperating Income before Depreciation and Amortization is useful to investorsbecause it enables them to assess our performance in a manner similar to themethods used by our management and provides a measure that can be used toanalyze, value and compare companies in the cable television industry, whichmay have different depreciation and amortization policies.

A limitation of OperatingIncome before Depreciation and Amortization, however, is that it does notreflect the periodic costs of certain capitalized tangible and intangibleassets used in generating revenues in our businesses. Management evaluates thecosts of such tangible and intangible assets through other financial measuressuch as capital expenditures, investment spending and Free Cash Flow. Managementalso evaluates the costs of capitalized tangible and intangible assets byanalyzing returns provided on the capital dollars deployed. Another limitationof Operating Income before Depreciation and Amortization is that it does notreflect income net of interest expense, which is a significant expense for usbecause of the substantial debt we incurred to acquire cable television systemsand finance capital expenditures to upgrade our cable network. Managementevaluates the impact of interest expense through measures including interestexpense, Free Cash Flow, the returns analysis discussed above and debt servicecovenant ratios under our credit facility.

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Free Cash Flow is net cashprovided by operating activities (as defined by accounting principles generallyaccepted in the United States) less capital expenditures. Free Cash Flow isconsidered to be an important indicator of our liquidity, including our abilityto repay indebtedness. We believe Free Cash Flow is useful for investorsbecause it enables them to assess our ability to service our debt and to fundcontinued growth with internally generated funds in a manner similar to themethods used by our management, and provides a measure that can be used toanalyze, value and compare companies in the cable television industry.

Both Operating Incomebefore Depreciation and Amortization and Free Cash Flow should be considered inaddition to, not as a substitute for, Operating Income, Net Income and variouscash flow measures (e.g., Net Cash Provided by Operating Activities), as wellas other measures of financial performance and liquidity reported in accordancewith accounting principles generally accepted in the United States.

***Reconciliationof Net Income to Operating Income before Depreciation and Amortization***

Thefollowing table reconciles Net Income to Operating Income before Depreciationand Amortization. In addition, the table provides the components from NetIncome to Operating Income for purposes of the discussions that follow.

| ** **                                              | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                              | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                                              | ** ** | **2005**                         | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                              | ** ** | ***(in thousands)***        | ** ** |
| Net Income                                              |       | $                                | 4,484      |                            | $          | 3,196 |   | $ | 12,137 |   | $ | 1,755 |   |
| Other income  (expense):                                |       |                             |       |                            |       |   |   |   |   |
| Other                                                   |       | (871                             | )          | (1,081                          | )          | (1,562 | ) | 245 |   |
| Interest income                                         |       | (518                             | )          | (81                             | )          | (1,188 | ) | (164 | ) |
| Interest expense                                        |       | 50,940                           |       | 43,220                          |       | 149,044 |   | 132,345 |   |
| Total other  expense, net                               |       | 49,551                           |       | 42,058                          |       | 146,294 |   | 132,426 |   |
| Operating income                                        |       | 54,035                           |       | 45,254                          |       | 158,431 |   | 134,181 |   |
| Depreciation and  amortization                          |       | 59,691                           |       | 58,385                          |       | 179,327 |   | 174,333 |   |
| Operating Income before  Depreciation and  Amortization |       | $                                | 113,726    |                            | $          | 103,639 |   | $ | 337,758 |   | $ | 308,514 |   |

 

***Reconciliationof Net Cash Provided by Operating Activities to Free Cash Flow***

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

| ** **                                                   | ** ** | **Three months ended** | ** ** | **Nine months ended** | ** ** |
|--------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                   | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** |
| ** **                                                   | ** ** | **2005**                         | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                   | ** ** | ***(in thousands)***        | ** ** |
| Operating income                                             |       | $                                | 54,035     |                            | $          | 45,254 |   | $ | 158,431 |   | $ | 134,181 |   |
| Depreciation and amortization                                |       | 59,691                           |       | 58,385                          |       | 179,327 |   | 174,333 |   |
| Operating Income  before Depreciation and Amortization  |       | 113,726                          |       | 103,639                         |       | 337,758 |   | 308,514 |   |
| Changes in working capital accounts(1)                       |       | (10,566                          | )          | 2,601                           |       | (7,307 | ) | 14,201 |   |
| Cash paid for interest                                       |       | (20,480                          | )          | (15,778                         | )          | (112,598 | ) | (98,093 | ) |
| Net cash provided  by operating activities                   |       | 82,680                           |       | 90,462                          |       | 217,853 |   | 224,622 |   |
| Capital expenditures                                         |       | (50,245                          | )          | (45,956                         | )          | (140,357 | ) | (128,188 | ) |
| Free Cash Flow                                               |       | $                                | 32,435     |                            | $          | 44,506 |   | $ | 77,496 |   | $ | 96,434 |   |

----

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

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**Results ofOperations**

***Three Months Ended September 30, 2005 Compared toThree Months Ended September 30, 2004***

Revenue for the three months ended September 30,2005 totaled $279.0 million, an increase of 12% over the prior year, dueprimarily to customer gains in our high-speed Internet and digital services, aswell as basic rate increases. High-speed Internet service revenue increased 46%over the prior year, primarily due to an increased customer base. We added anet 47,900 high-speed Internet customers during the quarter to end at 439,200customers. In addition, digital service revenue increased 10% over the prioryear due to an increased customer base. We added a net 29,100 digital customersduring the quarter to end at 489,900 customers.

Basic cable service revenue increased 3% due to basicrate increases partially offset by customer losses over the last twelve months.We are increasing our customer retention efforts by emphasizing bundling,enhancing and differentiating our video services and providing video-on-demand,high definition television and digital video recorders. We are also continuingour focus on improving customer service through higher service levels,increased education of our product offerings and spending on marketing andsales efforts.

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

| ** **           | ** ** | **Revenue by Service Offering**       | ** ** | ** **                    | ** ** | ** **                                           | ** ** |
|----------------------|------------|------------------------------------------------------|------------|-------------------------------|------------|------------------------------------------------------|------------|
| ** **           | ** ** | **Three months  ended  September 30,2005** | ** ** | **% of  Total  Revenue** | ** ** | **Three months  ended  September 30,2004** | ** ** | **% of  Total  Revenue** | ** ** | ** ** | ** ** | **% Change  in Revenue** | ** ** |
| Basic                |       |                                                 | $          | 148,393                       |       |                                                 |       | 53.2 | % |   |   | $ | 143,918 |   |   |   | 57.5 | % |   |   |   |   | 3.1 | % |   |
| High-speed  Internet |       |                                                 | 49,677     |                          |       |                                                 | 17.8       | % |   |   | 33,955 |   |   |   | 13.6 | % |   |   |   |   | 46.3 | % |   |
| Digital              |       |                                                 | 27,300     |                          |       |                                                 | 9.8        | % |   |   | 24,872 |   |   |   | 9.9 | % |   |   |   |   | 9.8 | % |   |
| Advertising          |       |                                                 | 18,416     |                          |       |                                                 | 6.6        | % |   |   | 15,725 |   |   |   | 6.3 | % |   |   |   |   | 17.1 | % |   |
| Premium              |       |                                                 | 13,215     |                          |       |                                                 | 4.7        | % |   |   | 13,694 |   |   |   | 5.5 | % |   |   |   |   | (3.5 | )% |   |
| Telephone            |       |                                                 | 9,020      |                          |       |                                                 | 3.2        | % |   |   | 3,829 |   |   |   | 1.5 | % |   |   |   |   | 135.6 | % |   |
| Franchise fees       |       |                                                 | 7,681      |                          |       |                                                 | 2.8        | % |   |   | 7,183 |   |   |   | 2.9 | % |   |   |   |   | 6.9 | % |   |
| Other                |       |                                                 | 5,317      |                          |       |                                                 | 1.9        | % |   |   | 7,056 |   |   |   | 2.8 | % |   |   |   |   | (24.6 | )% |   |
| Total                |       |                                                 | $          | 279,019                       |       |                                                 |       | 100.0 | % |   |   | $ | 250,232 |   |   |   | 100.0 | % |   |   |   |   | 11.5 | % |   |

 

TotalCustomer Relationships were 1,334,200 as of September 30, 2005 compared to1,330,300 as of September 30, 2004. Total Customer Relationships representthe number of customers who receive one or more of our products (i.e., basiccable, high-speed Internet or telephone) without regard to which product theypurchase. Revenue Generating Units (“RGUs”), which represent the sum of basic,digital, high-speed Internet, and telephone customers, as of September 30,2005 increased 9% as compared to September 30, 2004. RGUs by category wereas follows (in thousands):

| ** **           | ** ** | **September **30, 2005 | ** ** | **September **30, 2004 | ** ** |
|----------------------|------------|----------------------------------|------------|----------------------------------|------------|
| Basic                |       |                             | 1,271.0    |                             |       |   | 1,283.6 |   |   |
| Digital              |       |                             | 489.9      |                             |       |   | 439.4 |   |   |
| High-speed  Internet |       |                             | 439.2      |                             |       |   | 311.5 |   |   |
| Telephone            |       |                             | 80.9       |                             |       |   | 62.8 |   |   |
| Total RGUs           |       |                             | 2,281.0    |                             |       |   | 2,097.3 |   |   |

 

Average monthly revenue per basic customer was $73.58for the three months ended September 30, 2005, compared to $65.01 for the three months ended September 30, 2004 primarily reflecting thecontinued growth of our high-speed Internet and digital product offerings inall markets as well as basic 

19

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rate increases. Inaddition, telephone revenues for the three months ended September 30, 2005reflect service revenues earned directly from our customers compared to thethree months ended September 30, 2004 which reflected revenues billed toComcast under our previous contractual arrangement that was terminatedeffective December 31, 2004. Also included in telephone revenue for thethree months ended September 30, 2005 is the continued amortization ofinstallation revenues under our previous arrangement with Comcast in the amountof $833,000.

Programming and other operating costs increased $7.8million or 9%. Total programming costs for our video products increasedprimarily as a result of increases in programming rates offset by a credit ofapproximately $3.4 million resulting from favorable resolution of pricingnegotiations related to certain prior period programming costs that were accruedat a higher rate than the amount actually paid and $1.7 million for asettlement of disputed claims with a vendor. Other operating costs increasedprimarily as a result of increases in technical salaries for new and existingemployees, in addition to decreased capitalized labor costs due to thecontinued transition from upgrade and new connect activities to maintenance andreconnect activities. Other operating costs also increased as a result of costof sales associated with telephone that were previously paid by Comcast,increases in repairs and maintenance costs due to increased repairs on customerpremise equipment and increased software maintenance costs and increasedproperty taxes due to a favorable reversal of accrued property taxes recordedfor the quarter ended September 30, 2004.

Selling, general and administrative expenses increased$9.9 million or 19%, primarily due to increased payroll and payroll relatedcosts, including annual salary increases for existing employees. Marketingsupport funds (recorded as a reduction to selling, general and administrativeexpenses) decreased over the prior year’s quarter. Marketing expenses increasedover the prior year’s quarter to support the continued roll out of high-speedInternet, digital and telephone products, and to maintain our core videocustomer base. A decrease in expenses previously allocated to Comcast, underour prior agreement to manage certain Comcast systems, also contributed to theincrease in selling, general and administrative expenses. As this agreement wasterminated effective July 31, 2004, the period ended September 30,2005 does not include any of these expense allocations and the quarter ended September 30,2004 includes one month of these expense allocations. Some cost savings havebeen realized upon termination of the management agreement, and the impact ofcertain of these savings is reflected in programming and other operating costs.

Management fees increased $1.0 million or 14% to $8.4million for the three months ended September 30, 2005 from $7.4 millionfor the three months ended September 30, 2004. Management fees, equal toapproximately 3% of revenues, are paid to Insight LP.

Depreciation and amortization expense increased $1.3million or 2% primarily as a result of additional capital expenditures through September 30, 2005. These expenditures wereprimarily for network extensions, capitalized payroll, telephone equipment andpurchases of customer premise equipment, all of which we consider necessary inorder to continue to maintain and grow our customer base and expand our serviceofferings. Partially offsetting this increase was a decrease in depreciationexpense related to certain assets that have become fully depreciated since September 30,2004.

As a result of the factors discussed above, OperatingIncome before Depreciation and Amortization increased $10.1 million, or 10%.

Interest expense increased$7.7 million or 18% primarily due to higher interest rates, which averaged 8.0%for the three months ended September 30, 2005 as compared to 6.6% for the three months ended September 30, 2004.

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***Nine Months Ended September 30, 2005 Compared toNine Months Ended September 30, 2004***

Revenue for the nine months ended September 30,2005 totaled $827.6 million, an increase of 12% over the prior year, dueprimarily to customer gains in high-speed Internet and digital services, aswell as basic rate increases. High-speed Internet service revenue increased 47%over the prior year, primarily due to an increased customer base. We added anet 108,700 high-speed Internet customers during the nine months ended September 30,2005 to end at 439,200 customers. In addition, digital service revenueincreased 12% over the prior year primarily due to an increased customer base. Weadded a net 38,600 digital customers during the nine months ended September 30,2005 to end at 489,900 customers. Basic cable service revenue increased 4%, dueto basic rate increases partially offset by customer losses.

Revenueby service offering was as follows (in thousands):

| ** **          | ** ** | **Revenue by Service Offering**      | ** ** | ** **                    | ** ** | ** **                                          | ** ** |
|---------------------|------------|-----------------------------------------------------|------------|-------------------------------|------------|-----------------------------------------------------|------------|
| ** **          | ** ** | **Nine months  ended  September 30,2005** | ** ** | **% of  Total  Revenue** | ** ** | **Nine months  ended  September 30,2004** | ** ** | **% of  Total  Revenue** | ** ** | ** ** | ** ** | **% Change  in Revenue** | ** ** |
| Basic               |       |                                                | $          | 446,096                       |       |                                                |       | 53.9 | % |   |   | $ | 428,369 |   |   |   | 58.0 | % |   |   |   |   | 4.1 | % |   |
| High-speed Internet |       |                                                | 138,108    |                          |       |                                                | 16.7       | % |   |   | 93,990 |   |   |   | 12.7 | % |   |   |   |   | 46.9 | % |   |
| Digital             |       |                                                | 81,899     |                          |       |                                                | 9.9        | % |   |   | 73,272 |   |   |   | 9.9 | % |   |   |   |   | 11.8 | % |   |
| Advertising         |       |                                                | 55,153     |                          |       |                                                | 6.7        | % |   |   | 46,595 |   |   |   | 6.3 | % |   |   |   |   | 18.4 | % |   |
| Premium             |       |                                                | 41,305     |                          |       |                                                | 5.0        | % |   |   | 43,212 |   |   |   | 5.9 | % |   |   |   |   | (4.4 | )% |   |
| Telephone           |       |                                                | 25,139     |                          |       |                                                | 3.0        | % |   |   | 11,389 |   |   |   | 1.6 | % |   |   |   |   | 120.7 | % |   |
| Franchise fees      |       |                                                | 22,884     |                          |       |                                                | 2.8        | % |   |   | 21,455 |   |   |   | 2.9 | % |   |   |   |   | 6.7 | % |   |
| Other               |       |                                                | 17,040     |                          |       |                                                | 2.0        | % |   |   | 19,986 |   |   |   | 2.7 | % |   |   |   |   | (14.7 | )% |   |
| Total               |       |                                                | $          | 827,624                       |       |                                                |       | 100.0 | % |   |   | $ | 738,268 |   |   |   | 100.0 | % |   |   |   |   | 12.1 | % |   |

 

Average monthly revenue per basic customer was $72.52for the nine months ended September 30,2005, compared to $63.62 for the nine months ended September 30, 2004 primarilyreflecting the continued growth of our high-speed Internet and digital productofferings in all markets as well as basic rate increases.

Programming and other operating costs increased $24.3million or 9%. Total programming costs for our video products increasedprimarily as a result of increased programming rates offset by a credit of$11.1 million resulting from favorable resolution of pricing negotiationsrelated to certain prior period programming costs that were accrued at a higherrate than the amount actually paid. Other operating costs increased primarilyas a result of increases in technical salaries for new and existing employees;in addition to decreased capitalized labor costs due to the continuedtransition from upgrade and new connect activities to maintenance and reconnectactivities. Other operating costs also increased as a result of cost of salesassociated with telephone that were previously paid by Comcast. Despite anincrease of 108,700 high-speed Internet customers, high-speed Internet serviceprovider costs decreased due to more favorable per customer charges under anagreement with our Internet service provider entered into in the third quarterof 2004. However, as we continue to add high-speed Internet customers, ourInternet service provider costs have started to increase in the third quarterended September 30, 2005 and we expect them to continue to increasethroughout the remainder of 2005. Increases in repairs and maintenance costsdue to increased repairs on customer premise equipment and increased softwaremaintenance costs and increases in materials used in reconnect activities arepartially offset by a decrease in property and other taxes due to a decrease inproperty taxes for 2005.

Selling, general and administrative expenses increased$32.7 million or 23%, primarily due to increased payroll, including annualsalary increases for existing employees and increases in health insurance andother payroll related costs. Marketing support funds (recorded as a reductionto selling, 

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general and administrativeexpenses) decreased over the prior year. Marketing expenses increased over theprior year to support the continued roll out of high-speed Internet, digitaland telephone products, and to maintain our core video base. A decrease inexpenses previously allocated to Comcast, under our prior agreement to managecertain Comcast systems, also contributed to the increase in selling, generaland administrative expenses. As this agreement was terminated effective July 31,2004, the period ended September 30, 2005 does not include any of theseexpense allocations and the period ended September 30, 2004 includes onlyseven months of these expense allocations. Some cost savings have been realizedupon termination of the management agreement, and the impact of certain ofthese savings is reflected in programming and other operating costs. Increasesin franchise and copyright fees were partially offset by a decrease in bad debtexpense.

Management fees increased $3.1 million or 14% to $24.8million for the nine months ended September 30, 2005 from $21.7 millionfor the nine months ended September 30, 2004. Management fees, equal toapproximately 3% of revenues, are paid to Insight LP.

Depreciation and amortization expense increased $5.0million or 3% primarily as a result of additional capital expenditures through September 30, 2005. These expenditures wereprimarily for network extensions and purchases of customer premise equipment,all of which we consider necessary in order to continue to grow our customerbase and expand our service offerings. Partially offsetting this increase was adecrease in depreciation expense related to certain assets that have becomefully depreciated since September 30, 2004.

As a result of the factors discussed above, OperatingIncome before Depreciation and Amortization increased $29.2 million, or 9%.

Interest expense increased$16.7 million or 13% primarily due to higher interest rates, which averaged7.8% for the nine months ended September 30, 2005 as compared to 6.7% for the nine months ended September 30, 2004.

**Liquidity and Capital Resources**

Our business requires cash for operations, debtservice and capital expenditures. The cable television business has substantialon-going capital requirements for the construction, expansion and maintenanceof its broadband networks and provision of new services. In the past,expenditures have been made for various purposes including the upgrade of ourexisting cable network, and in the future will be made for network extensions,installation of new services, customer premise equipment (e.g., set-top boxes),deployment of new product and service offerings, and, to a lesser extent,network upgrades. Historically, we have been able to meet our cash requirementswith cash flow from operations, borrowings under our credit facilities andissuances of private and public debt and equity.

Cash provided by operations for the nine months ended September 30, 2005 and 2004 was$217.9 million and $224.6 million. The decrease was primarily attributableto the timing of cash receipts and payments related to our working capitalaccounts partially offset by increased operating income and the affect ofnon-cash items.

Cash used in investing activities for the nine monthsended September 30, 2005 and2004 was $140.8 million and $127.3 million. The increase primarily was dueto capital expenditures for the build out of our telephone product.

Cash used in financing activities for the nine monthsended September 30, 2005 and2004 was $64.3 million and $52.7 million. The increase is primarily due todebt issuance costs paid for the refinancing of the Term B loan facility andincreased amortization payments of our credit facility in 2005.

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For the nine months ended September 30, 2005 and 2004, we spent $140.4 million and$128.2 million in capital expenditures. These expenditures principallyconstituted telephone equipment, purchases of customer premise equipment,capitalized labor, headend equipment and system upgrades and rebuilds, all ofwhich is considered necessary in order to maintain our existing network, togrow our customer base and expand our service offerings.

Free Cash Flow forthe nine months ended September 30, 2005 totaled $77.5 million compared to$96.4 million for the nine months ended September 30, 2004. The decreasewas primarily driven by the following:

·       A$7.3 million use of Free Cash Flow for the nine months ended September 30,2005 compared to a $14.2 million source for the nine months ended September 30,2004 from changes in working capital accounts;

·       A$14.5 million increase in cash interest expense paid primarily driven by anincrease in interest rates; and

·       A$12.1 million increase in capital expenditures.

The above fluctuations reduced Free Cash Flow by $48.1million and were offset by an increase in operating income before depreciationand amortization of $29.2 million.

While we expect to continue to use Free Cash Flow torepay our indebtedness, as interest rates continue to increase, we expect ourinterest costs will also be higher. On July 21, 2005 Insight Inc.completed a refinancing of the existing $1.1 billion Term B loan facility underthe Insight Midwest credit facility. This refinancing reduced the applicablemargins for LIBOR rate borrowings from LIBOR plus 275 basis points to LIBORplus 200 basis points and the applicable margin will be reduced an additional25 basis points if Insight Midwest’s leverage ratio drops below 2.75. Themaximum total leverage ratio covenant was reset from 3.75 to 4.50 on July 1,2005 with additional step downs to 4.25 on July 1, 2006 and to 4.00 on July 1,2007. The facility was also amended to provide Insight Inc. certain flexibilityto refinance the senior notes at Insight Midwest.

We have a substantial amount of debt. Our high levelof debt could have important consequences for you. Our principal source of cashwe need to pay our obligations and to repay the principal amount of our debtobligations is the cash that our subsidiaries generate from their operationsand their borrowings. We believe that the Insight Midwest Holdings creditfacility, cash on-hand and our cash flow from operations are sufficient tosupport our current operating plan. We had the ability to draw upon $320.0million of unused availability under the Insight Midwest Holdings creditfacility as of September 30, 2005 tofund any shortfall resulting from the inability of our cash from operations tofund our capital expenditures, meet our debt service requirements or otherwisefund our operations.

 

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Thefollowing table summarizes our contractual obligations and commitments,excluding interest and commitments for programming, as of September 30,2005, including periods in which the related payments are due (in thousands):

| ** **              | ** ** | **Contractual Obligations** | ** ** |
|-------------------------|------------|----------------------------------|------------|
| ** **              | ** ** | **Long-Term  Debt**              | ** ** | **Operating  Leases** | ** ** | **Total** | ** ** |
| 2005                    |       | $                                | 20,875     |   |   | $ | 791 |   |   | $ | 21,666 |   |
| 2006                    |       | 83,500                           |       |   | 2,412 |   |   | 85,912 |   |
| 2007                    |       | 83,500                           |       |   | 1,430 |   |   | 84,930 |   |
| 2008                    |       | 104,750                          |       |   | 1,018 |   |   | 105,768 |   |
| 2009                    |       | 1,517,500                        |       |   | 700 |   |   | 1,518,200 |   |
| Thereafter              |       | 730,000                          |       |   | 1,373 |   |   | 731,373 |   |
| Total cash  obligations |       | $                                | 2,540,125  |   |   | $ | 7,724 |   |   | $ | 2,547,849 |   |

 

**Item3.**                        Quantitativeand Qualitative Disclosure About Market Risk

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

In July 2003, we entered into three interest rateswap agreements whereby we swapped fixed rates under our 101⁄2% senior notes duein December 2010 for variable rates equal to six-month LIBOR, plus theapplicable margin of approximately 8.3%, on $185.0 million notional value ofdebt. These agreements expire November 1, 2005. We recorded a gain onthese swaps of $872,000 and $1.7 million for the three and nine months ended September 30,2005 and $1.5 million and $250,000 for the three and nine months ended September 30,2004, which is included in other income (expense). As of September 30,2005 and December 31, 2004, we recorded $1.7 million and $364,000 ofinterest payable related to these agreements. The cost if terminated of theseagreements was $394,000 and $2.1 million as of September 30, 2005 and December 31,2004. A hypothetical 100 basis point increase in interest rates along theentire interest rate yield curve would increase our annual interest expense forthese three swaps by approximately $1.9 million.

In December 2003, we entered into an interestrate swap agreement whereby we swapped fixed rates under our 101⁄2% senior notesdue in December 2010 for variable rates equal to six-month LIBOR, plus theapplicable margin of approximately 5.9%, on $130.0 million notional value ofdebt. This agreement expires November 1, 2010. This swap has beendetermined to be perfectly effective in hedging against fluctuations in thefair value of the underlying debt. As such, changes in the fair value of theunderlying debt equally offset changes in the value of the interest rate swapin our consolidated statements of operations. The fair value (cost ifterminated) of this swap as of September 30, 2005 and December 31,2004 was $(1.6) million and $519,000 and has been recorded in other non-currentassets (liabilities) and as an adjustment to the carrying value of debt. Ahypothetical 100 basis point increase in interest rates along the entireinterest rate yield curve would increase our annual interest expense for thisswap by approximately $1.3 million.

The aggregate fair market value and aggregate carryingvalue of our 93⁄4% and 101⁄2% senior notes was $1.1 billion and $1.0 billion as of September 30,2005. The fair market value of our credit facility borrowings approximates itscarrying value as the credit facility borrowings bear interest at floatingrates of interest. As of September 30,2005 and December 31, 2004, the estimated cost if terminated of ourinterest rate swap agreements was approximately $2.0 and $1.6 and is reflectedin our financial statements as other non-current liabilities. Changes in thefair value of our interest rate swaps are either recognized in income or inpartners’ capital as a component of accumulated other comprehensive income(loss) depending on the type of swap and whether it qualifies for hedgeaccounting.

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**Item 4.**                        Controlsand Procedures

Insight Midwest’s management carried out anevaluation, with the participation of its Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of its disclosure controls andprocedures as of September 30, 2005.Based upon that evaluation, its Chief Executive Officer and Chief FinancialOfficer concluded that (i) Insight Midwest’s disclosure controls andprocedures were effective to ensure that information required to be disclosedby it in reports that it files or submits under the Securities Exchange Act of1934 is recorded, processed, summarized and reported, within the time periodsspecified in the rules and forms of the Securities and ExchangeCommission, and (ii) InsightMidwest’s disclosure controls and procedures were designed to ensure thatinformation required to be disclosed by us in reports that we file or submitunder the Securities Exchange Act of 1934 is accumulated and communicated toInsight Midwest’s management, including our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosure.

There has not been any change in its internal controlover financial reporting in connection with the evaluation required by Rule 13a-15(d) underthe Exchange Act that occurred during the quarter ended September 30, 2005 that has materially affected,or is reasonably likely to materially affect, its internal control overfinancial reporting.

Insight Capital’s management carried out anevaluation, with the participation of its Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of its disclosure controls andprocedures as of September 30,2005. Based upon that evaluation, its Chief Executive Officer and ChiefFinancial Officer concluded that (i) Insight Capital’s disclosure controlsand procedures were effective to ensure that information required to bedisclosed by it in reports that it files or submits under the SecuritiesExchange Act of 1934 is recorded, processed, summarized and reported, withinthe time periods specified in the rules and forms of the Securities andExchange Commission, and (ii) InsightCapital’s disclosure controls and procedures were designed to ensure thatinformation required to be disclosed by us in reports that we file or submitunder the Securities Exchange Act of 1934 is accumulated and communicated toInsight Midwest’s management, including our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosure.

There has not been any change in its internal controlover financial reporting in connection with the evaluation required by Rule 13a-15(d) underthe Exchange Act that occurred during the quarter ended September 30, 2005 that has materially affected,or is reasonably likely to materially affect, its internal control overfinancial reporting.

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**PART II. OTHER INFORMATION**

**Item 1.**                        LegalProceedings

See Note 9 in Item 1 of PART I,Notes to Consolidated Financial Statements, and incorporated herein byreference.

**Item 6.**                        Exhibits

Exhibits:

| 31.1 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Executive Officer of Insight Midwest, L.P.                  |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Financial Officer of Insight Midwest, L.P.                  |
| 31.3 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Executive Officer of Insight Capital, Inc.             |
| 31.4 |   | Rule 13a-14(a)/15d-14(a) Certifications  of the Chief Financial Officer of Insight Capital, Inc.             |
| 32.1 |   | Section 1350  Certifications of the Chief Executive Officer and Chief Financial Officer of  Insight Midwest, L.P.      |
| 32.2 |   | Section 1350  Certifications of the Chief Executive Officer and Chief Financial Officer of  Insight Capital, Inc. |

 

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
| Date: November 9, 2005 |   | INSIGHT MIDWEST, L.P |   |
|-----------------------------|--------|----------------------|--------|
|                        |   | By:                  |   | /s/ JOHN ABBOT |   |
|                        |   |                 |   | John Abbot |   |
|                        |   |                 |   | Senior Vice President and Chief |   |
|                        |   |                 |   | Financial Officer |   |
|                        |   |                 |   | (Principal Financial Officer) |   |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
| Date: November 9, 2005 |   | INSIGHT CAPITAL, INC. |   |
|-----------------------------|--------|-----------------------|--------|
|                        |   | By:                   |   | /s/ JOHN ABBOT |   |
|                        |   |                  |   | John Abbot |   |
|                        |   |                  |   | Senior Vice President and Chief |   |
|                        |   |                  |   | Financial Officer |   |
|                        |   |                  |   | (Principal Financial Officer) |   |

 

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