Insight Midwest 10-Q Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2004

Commission file numbers          333-33540

                                                          333-33540-1

INSIGHT MIDWEST, L.P.

INSIGHT CAPITAL, INC.

(Exact name of registrants as specified in their charters)

Delaware	13-4079232
Delaware	13-4079679
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Nos.)
810 7th Avenue
New York, New York	10019
(Address of principal executive offices)	(Zip code)

Registrants’ telephone number, including area code: 917-286-2300

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrants are accelerated filers (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the registrants’ classes of common stock, as of the latest practicable date.

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003.

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INSIGHT MIDWEST, LP

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30, 2004			December 31, 2003
	(unaudited)
Assets
Cash and cash equivalents	$	38,364		$	22,679
Trade accounts receivable, net of allowance for doubtful accounts of $1,242 and $1,123 as of June 30, 2004 and December 31, 2003		23,907			29,271
Launch funds receivable		4,728			9,421
Prepaid expenses and other assets		15,075			17,711
Total current assets		82,074			79,082
Fixed assets, net		1,167,353			1,198,830
Goodwill		14,684			14,684
Franchise costs, net of accumulated amortization of $358,728 and $358,687 as of June 30, 2004 and December 31, 2003		2,357,463			2,357,535
Deferred financing costs, net of accumulated amortization of $12,940 and $10,710 as of June 30, 2004 and December 31, 2003		25,002			27,222
Total assets	$	3,646,576		$	3,677,353
Liabilities and partners’ capital
Accounts payable	$	19,903		$	29,427
Accrued expenses and other liabilities		31,385			31,932
Accrued property taxes		25,757			22,954
Accrued programming costs		48,218			43,261
Deferred revenue		11,803			10,061
Interest payable		23,065			23,315
Debt – current portion		72,875			62,250
Due to affiliates		48,463			40,386
Total current liabilities		281,469			263,586
Deferred revenue		3,670			4,523
Debt		2,557,201			2,607,350
Other non-current liabilities		6,718			5,742
Total liabilities		2,849,058			2,881,201
Partners’ capital:
Partners’ accumulated capital		798,133			799,574
Accumulated other comprehensive loss		(615	)		(3,422	)
Total partners’ capital		797,518			796,152
Total liabilities and partners’ capital	$	3,646,576		$	3,677,353

See accompanying notes

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INSIGHT MIDWEST, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2004			2003			2004			2003
Revenue	$	249,952		$	222,376		$	488,036		$	436,671
Operating costs and expenses:
Programming and other operating costs		88,513			81,349			176,004			160,882
Selling, general and administrative		48,757			41,820			92,831			81,825
Management fees		7,323			6,494			14,326			12,790
Depreciation and amortization		58,959			58,619			115,948			112,187
Total operating costs and expenses		203,552			188,282			399,109			367,684
Operating income		46,400			34,094			88,927			68,987
Other income (expense):
Gain on cable system exchange		—			—			—			26,992
Interest expense		(44,769	)		(45,367	)		(89,125	)		(91,659	)
Interest income		27			64			83			99
Other income (expense)		(3,340	)		1,881			(1,326	)		1,906
Total other expense, net		(48,082	)		(43,422	)		(90,368	)		(62,662	)
Net income (loss)		(1,682	)		(9,328	)		(1,441	)		6,325
Accrual of preferred interests		—			(5,203	)		—			(10,353	)
Net loss attributable to common interests	$	(1,682	)	$	(14,531	)	$	(1,441	)	$	(4,028	)

See accompanying notes

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INSIGHT MIDWEST, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six months ended June 30,
	2004			2003
Operating activities:
Net income (loss)	$	(1,441	)	$	6,325
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		115,948			112,187
Provision for losses on trade accounts receivable		8,070			5,106
Amortization of note discount		148			987
Gain on cable systems exchange		—			(26,992	)
Loss on interest rate swaps		1,235			—
Changes in operating assets and liabilities, net of the effect of acquisitions:
Trade accounts receivable		(2,706	)		(7,821	)
Launch fund receivable		4,693			3,882
Prepaid expenses and other assets		1,808			(861	)
Accounts payable		(9,524	)		(33,311	)
Accrued expenses and other liabilities		15,929			41,956
Net cash provided by operating activities		134,160			101,458
Investing activities:
Purchase of fixed assets		(82,232	)		(82,442	)
Purchase of intangible assets		—			(788	)
Sale of fixed assets		892			—
Purchase of cable television systems, net		—			(26,475	)
Net cash used in investing activities		(81,340	)		(109,705	)
Financing activities:
Distributions of preferred interests		—			(7,000	)
Net borrowings (repayments) under credit facilities		(37,125	)		44,500
Debt issuance costs		(10	)		—
Net cash provided by (used in) financing activities		(37,135	)		37,500
Net increase in cash and cash equivalents		15,685			29,253
Cash and cash equivalents, beginning of period		22,679			9,937
Cash and cash equivalents, end of period	$	38,364		$	39,190

See accompanying notes

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

We were formed in September 1999 to serve as the holding 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 owned 50% by Insight Communications Company, L.P. (“Insight LP”), which is wholly owned by Insight Inc., and 50% by an indirect subsidiary of Comcast Cable. Insight LP serves as our general partner and manages and operates our systems.

Through our wholly owned operating subsidiaries, Insight Communications Midwest, LLC (“Insight Communications Midwest”), Insight Communications of Central Ohio, LLC (“Insight Ohio”) and Insight Kentucky Partners II, L.P. (“Insight Kentucky”), we own and operate cable television systems in Indiana, Kentucky, Ohio, and Illinois which passed approximately 2.3 million homes and served approximately 1.3 million customers as of June 30, 2004. In addition, we also owned and operated a cable television system in Griffin, Georgia through February 28, 2003.

The accompanying consolidated financial statements include the accounts of Insight Midwest Holdings, LLC, our wholly-owned subsidiary which owns 100% of the outstanding equity of our operating subsidiaries. Certain prior period amounts have been reclassified to conform to the current period presentation

2. Responsibility for Interim Financial Statements

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

In our opinion, the consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2003.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004 or any other interim period.

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Fixed Assets

	June 30, 2004			December 31, 2003
	(in thousands)
Land, buildings and improvements	$	36,408		$	34,856
Cable system equipment		2,105,895			2,026,641
Furniture, fixtures and office equipment		16,269			15,605
		2,158,572			2,077,102
Less accumulated depreciation and amortization		(991,219	)		(878,272	)
Total fixed assets, net	$	1,167,353		$	1,198,830

We recorded depreciation expense of $57.8 million and $113.7 million for the three and six months ended June 30, 2004 and $57.7 million and $110.3 million for the three and six months ended June 30, 2003.

4. Debt

	June 30, 2004			December 31, 2003
	(in thousands)
Note payable to Insight Inc.	$	100,000		$	100,000
Insight Midwest Holdings Credit Facility		1,518,875			1,556,000
Insight Midwest 9¾% Senior Notes		385,000			385,000
Insight Midwest 10½% Senior Notes		630,000			630,000
		2,633,875			2,671,000
Net unamortized discount/premium on notes		(1,046	)		(1,194	)
Market value of interest rate swaps		(2,753	)		(206	)
Total debt	$	2,630,076		$	2,669,600

Insight Midwest Holdings $1.975 Billion Credit Facility

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., $97.0 million of which was contributed to Insight Midwest Holdings in April 2002 for use in paying down the credit facility balance and in funding financing costs associated with the amendments, and $3.0 million of which was contributed to Insight Ohio as of March 28, 2002. Insight Midwest Holdings is permitted under the credit facility to make distributions to us for the purpose of repaying this loan, including accrued interest, provided that there are no defaults existing under the credit facility. The loan bears annual interest of 9%, compounded semi-annually, has a scheduled maturity date of January 31, 2011 and permits prepayments.

On August 26, 2003 we amended the Insight Midwest Holdings Credit Facility in connection with our refinancing of all the obligations and conditionally guaranteed obligations of Insight Ohio. The amendment increased the Term B loan portion of the credit facility from $900.0 million to $1.125 billion which increased the total facility size to $1.975 billion from $1.750 billion. We recorded $2.2 million of deferred financing costs associated with this amendment that is being amortized over the remaining term of the credit facility.

6

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Debt (continued)

On August 29, 2003, Insight Midwest Holdings distributed $22.0 million to us and, in turn, we contributed this amount to Insight Ohio for the purpose of repaying the Insight Ohio Credit Facility. Simultaneously, Insight Ohio used these proceeds plus cash on hand to repay the then outstanding balance of the Insight Ohio Credit Facility of $22.5 million plus accrued interest.

Senior Notes

In July 2004, we completed an exchange offer pursuant to which the $130.0 million 10½% Senior Notes issued in December 2003 were exchanged for substantially identical notes registered under the Securities Act of 1933.

Debt Principal Payments

As of June 30, 2004, principal payments required on our debt were as follows (in thousands):

2004	$	31,125
2005		83,500
2006		83,500
2007		83,500
2008		104,750
Thereafter		2,247,500
Total	$	2,633,875

5. Derivative Instruments

We enter into derivative instruments, typically interest-rate swap agreements, to modify the interest characteristics of our outstanding debt to either a floating or fixed rate basis. These agreements involve fixed rate interest payments in exchange for floating rate interest receipts, known as cash flow hedges, and floating rate interest payments in exchange for fixed rate interest receipts, known as fair value hedges, over the life of the agreement without an exchange of the underlying principal amount. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense related to the debt. The related amount payable or receivable is included in other liabilities or assets.

Gains and losses related to cash flow hedges that are determined to be effective hedges are recorded as accumulated other comprehensive income or loss in the accompanying consolidated balance sheets. Gains and losses related to fair value hedges that are determined to be effective hedges are recorded in the consolidated statements of operations as an adjustment to the swap instrument and an offsetting adjustment to the carrying value of the underlying debt. Gains and losses related to interest rate swaps that are determined not to be effective hedges and do not qualify for hedge accounting are recorded in our consolidated statements of operations as other income or expense.

7

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Derivative Instruments (continued)

Cash Flow Hedges

As of June 30, 2004 and December 31, 2003, we had one interest rate swap agreement outstanding that effectively fixed interest rates at 5% on $150.0 million notional value of debt. This agreement expires in August 2004. We recorded $823,000 and $826,000 of accrued interest related to this agreement as of June 30, 2004 and December 31, 2003. As of June 30, 2004 and December 31, 2003, the estimated fair value (cost if terminated) of this interest rate swap agreement was approximately $(615,000) and $(3.4) million.

Fair Value Hedges

In February 2003, we entered into two interest rate swap agreements whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 7.7%, on $185.0 million notional value of debt. Six-month LIBOR ranged between 1.26% and 1.34% for February and March 2003. In May 2003, we settled these swaps and received proceeds of $1.8 million and recorded a gain in this amount, which is included in other income (expense).

In July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expire November 1, 2005. We recorded a loss on these swaps of $3.0 million and $1.2 million for the three and six months ended June 30, 2004, which is included in other income (expense). As of June 30, 2004 and December 31, 2003, we recorded $7,000 and $275,000 of interest receivable related to these agreements. The fair market value (cost if terminated) of these agreements was $(3.3) million and $(2.1) million as of June 30, 2004 and December 31, 2003.

In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated statements of operations. The fair value (cost if terminated) of this swap as of June 30, 2004 and December 31, 2003 was $(2.8) million and $(206,000) and has been recorded in other non-current assets (liabilities) and as an adjustment to the carrying value of debt.

8

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Comprehensive Income (Loss)

We record the effective portion of certain derivatives’ gains or losses as accumulated other comprehensive income or loss in the accompanying consolidated balance sheets. The following is a reconciliation of net income (loss) to comprehensive income (loss) (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2004			2003			2004			2003
Net income (loss)	$	(1,682	)	$	(9,328	)	$	(1,441	)	$	6,325
Unrealized gain on interest rate swaps		1,462			3,606			2,807			10,346
Comprehensive income (loss)	$	(220	)	$	(5,722	)	$	1,366		$	16,671

7. Related Party Transactions

Managed Systems

On March 17, 2000, Insight LP entered into a management agreement with Comcast of Montana/Indiana/Kentucky/Ohio (“Comcast”) (formerly known as InterMedia Partners Southeast), an affiliate of Comcast Cable, to provide management services to cable television systems owned by Comcast. As of June 30, 2004, these systems served approximately 89,400 customers in the state of Indiana. Certain of our employees operate these managed systems. Overhead costs we incur are allocated ratably and charged to them on a monthly basis. Effective July 31, 2004, the management agreement was terminated by mutual agreement.

On February 28, 2003, we exchanged with Comcast of Montana/Indiana/Kentucky/Ohio the system we then owned in Griffin, Georgia, serving approximately 11,800 customers, plus $25.0 million, for the managed systems located in New Albany, Indiana and Shelbyville, Kentucky, together serving approximately 23,400 customers. Additionally, pursuant to the agreement, we paid approximately $1.5 million as a closing adjustment to Comcast of Montana/Indiana/Kentucky/Ohio to complete the rebuild and upgrade of the Griffin, Georgia system.

This system exchange was accounted for on that date as a sale of the Griffin, Georgia system and a purchase of the New Albany, Indiana and Shelbyville, Kentucky systems. In connection with this system exchange, we recorded a gain of approximately $27.1 million equal to the difference between the fair value and carrying value of the Griffin, Georgia system as of the closing date. Of the $64.5 million purchase price of the New Albany, Indiana and Shelbyville, Kentucky systems $31.9 million was allocated to such cable television systems’ assets acquired in relation to their fair values and $32.6 million was allocated to franchise costs.

Programming

We purchase the majority of our programming through affiliates of Comcast Cable. Charges for such programming, including a 1½% administrative fee, were $36.7 million and $73.5 million for the three and six months ended June 30, 2004 and $35.3 million and $70.8 million for the three and six months ended June 30,

9

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Related Party Transactions (continued)

2003. As of June 30, 2004 and December 31, 2003, $32.1 million and $28.3 million of accrued programming costs were due to affiliates of Comcast Cable. We believe that the programming rates charged through these affiliates are lower than those available from independent parties.

Telephone Agreements

In July 2000, to facilitate delivery of telephone services Insight LP entered into a ten-year agreement with AT&T Broadband (now known as Comcast Cable) that allows us to deliver to our residential customers, in certain of our service areas, local telephone service provided by Comcast Cable. Under the terms of the agreement, we lease certain capacity on our local network to Comcast Cable. Revenue earned from leased network capacity used in the provision of telephone services was $2.2 million and $4.3 million for the three and six months ended June 30, 2004 and $1.4 million and $2.6 million for the three and six months ended June 30, 2003. In addition, we provide certain services and support for which we receive additional payments related to installations, marketing and billing support. Fee revenue earned in connection with installations is deferred and amortized over the expected term a telephone customer maintains their telephone service, currently estimated to be three years. Marketing and billing support revenue is recognized in the period such services are performed.

On July 2, 2004, we entered into an agreement with Comcast Cable to acquire the telephone business of Comcast Cable relating to the markets served under our agreement. The transfer of ownership and operational control of Comcast Cable’s telephone business to us will take place after a transition period and is subject to customary closing conditions, including regulatory approvals. The closing is expected to occur during the first half of 2005.

Advertising Services

In October 1999, to facilitate the administration of our advertising services in our Kentucky Systems, we entered into an agreement with an affiliate of AT&T Broadband (now known as Comcast Cable), which provides for this affiliate to perform all of our Kentucky advertising sales and related administrative services. We, through our Kentucky Systems, earned advertising revenues through this affiliate of $5.1 million and $9.1 million for the three and six months ended June 30, 2004 and $5.2 million and $9.1 million for the three and six months ended June 30, 2003. As of June 30, 2004 and December 31, 2003, we had $6.9 million and $9.3 million as a receivable due from this affiliate included in other current assets. We pay this affiliate a fixed and variable fee for providing this service based on advertising sales cash flow growth. As of June 30, 2004 and December 31, 2003, we had $58,000 and $102,000 recorded as payables to this affiliate related to such services. In accordance with the terms of the agreement, we have notified Comcast Cable that the agreement will terminate effective August 31, 2004.

Due To Affiliates

As of June 30, 2004 and December 31, 2003, we owed Insight LP, certain amounts comprised primarily of incurred but unpaid management fees, calculated as approximately 3% of revenues, and accrued interest related to our $100.0 million note payable to Insight Inc.

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Commitments and Contingencies

Programming Contracts

We enter into long-term contracts with third parties who provide us with programming for distribution over our cable television systems. These programming contracts are a significant part of our business and represent a substantial portion of our operating costs. Since future fees under such contracts are based on numerous variables, including number and type of customers, we have not recorded any liabilities with respect to such contracts.

Litigation

In November 2000, we filed a state court action against the City of Louisville for its grant, in September 2000, of a more favorable franchise to Knology of Louisville, Inc. Upon commencement of this action, the City, pursuant to a provision in its franchise agreement with Knology, automatically suspended Knology’s franchise pending a final, non-appealable court determination as to whether Knology’s franchise was more favorable than the franchise under which we operated. In November 2000, Knology filed a federal court action against us seeking monetary damages and other relief for alleged violations of federal laws arising out of our having filed, pursuant to the provisions of our own franchise agreement with the City, the state court action. In March 2001, the federal court preliminarily set aside the suspension of Knology’s franchise. In March 2002, a state circuit court ruled against our claim that Knology’s franchise was more favorable. We appealed the circuit court’s order to the state court of appeals which, in June 2003, upheld the lower court ruling. We filed a motion for discretionary review of the appeals court’s ruling which was denied by the Kentucky Supreme Court. In May 2003, the federal court granted us summary judgment and dismissed six of Knology’s 11 claims. The court granted summary judgment to Knology on three claims, two of which resulted in permanently enjoining enforcement of the automatic suspension provision of Knology’s franchise agreement and do not involve damages. The third such claim is for violation of Knology’s first amendment rights, which will proceed to trial solely on the issue of damages, and would result in an award of legal fees and court costs specific to such claim if upheld. The remaining undecided claims relate to allegations of anticompetitive conduct and are to proceed to trial on the merits. In August 2003, the court agreed, in part, with our Motion for Reconsideration, that the stay provision provides no justification for an injunction since the language was severed. Further, the court granted our Motion to Certify Questions for an Immediate Appeal to the Sixth Circuit Court of Appeals. The Sixth Circuit Court of Appeals granted our Motion to Certify, and we have briefed the issues. The trial will remain stayed pending the Sixth Circuit’s action. We continue to believe that we have substantial and meritorious defenses to the remaining asserted federal claims and intend to defend them vigorously. Consequently, we have not recorded any loss reserves in the accompanying financial statements.

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

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INSIGHT CAPITAL, INC.

BALANCE SHEETS

(in thousands)

	June 30, 2004			December 31, 2003
	unaudited
Assets
Cash	$	1		$	1
Deferred financing costs, net of accumulated amortization of $7,777 and $6,473 as of June 30, 2004 and December 31, 2003		15,003			16,307
Total assets	$	15,004		$	16,308
Liabilities and shareholder deficit
Accrued interest	$	20,409		$	20,409
Total current liabilities		20,409			20,409
Senior notes, to be paid by Insight Midwest, LP		1,013,954			1,013,806
Total liabilities		1,034,363			1,034,215
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		(687,148	)		(738,992	)
Accumulated deficit		(332,212	)		(278,916	)
Total shareholder deficit		(1,019,359	)		(1,017,907	)
Total liabilities and shareholder deficit	$	15,004		$	16,308

See accompanying notes

12

INSIGHT CAPITAL, INC.

STATEMENTS OF OPERATIONS

(unaudited)

(in thousands)

	Three months Ended June 30,						Six months Ended June 30,
	2004			2003			2004			2003
Expenses:
Amortization	$	(652	)	$	(556	)	$	(1,304	)	$	(1,112	)
Interest		(25,997	)		(23,004	)		(51,992	)		(46,008	)
Net loss	$	(26,649	)	$	(23,560	)	$	(53,296	)	$	(47,120	)

See accompanying notes

13

INSIGHT CAPITAL, INC.

STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six months Ended June 30,
	2004			2003
Cash flows from operating activities:
Net loss	$	(53,296	)	$	(47,120	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Accretion of discount on notes		148			988
Amortization		1,304			1,112
Interest expense assumed by affiliate		51,844			45,020
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

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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. (“Insight Midwest”) of senior notes that allows certain investors the ability to be holders of the debt. The Company has no operations. The outstanding shares of the Company are owned by Insight Midwest.

2. Responsibility for Interim Financial Statements

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

In management’s opinion, the financial statements reflect all adjustments considered necessary for a fair statement of the financial position as of the interim dates presented. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Some of the information in this quarterly report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “guidance” and “continue” or similar words. You should read statements that contain these words carefully because they:

• discuss our future expectations;

• contain projections of our future results of operations or financial condition; or

• state other “forward-looking” information.

We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2003, as well as any cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Examples of these risks include our history and expectation of future net losses, our substantial debt, changes in laws and regulations, increasing programming costs and competition. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this quarterly report could have a material adverse effect on our business, operating results and financial condition. We assume no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.

Recent Developments

Acquisition of Telephone Business

On July 2, 2004, we entered into an agreement with Comcast Cable to acquire its telephone business as it relates to the markets served under our existing telephone joint operating agreement. Under our current agreement, we lease certain capacity on our local network to Comcast Cable for which we receive a fee and also provide certain services and support for which we receive additional payments related to installations, marketing and billing. By acquiring ownership of the telephone business from Comcast Cable, we will gain operational and strategic control over the business. Comcast Cable has agreed to pay us, upon the closing of the transaction, an amount equal to $20.0 million less the cumulative negative free cash flow incurred by Comcast Cable in operating this telephone business between June 1, 2004 and the closing. Additionally, as part of the agreement, Comcast Cable will provide to us certain fixed assets related to the telephone business. The transfer of ownership and operational control of Comcast Cable’s telephone business to us will take place after a transition period and is subject to customary closing conditions, including regulatory approvals. The closing is expected to occur during the first half of 2005. At this time, we are unable to predict, with certainty, the actual closing date or the amount of cumulative negative free cash flow that will be incurred by Comcast Cable prior to the closing.

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Termination of Managed Systems Arrangement

On March 17, 2000, Insight LP entered into a management agreement with an affiliate of Comcast to provide management services to cable television systems owned by Comcast. As of June 30, 2004 these systems served approximately 89,400 customers in the state of Indiana. Certain of our employees operate these managed systems. Overhead costs we incur are allocated ratably and charged to them on a monthly basis. Effective July 31, 2004, the management agreement was terminated by mutual agreement.

Termination of Kentucky Advertising Sales Arrangement

In October 1999, we entered into an agreement with an affiliate of Comcast Cable whereby the Comcast Cable affiliate performs all of our Kentucky advertising sales and related administrative services. In accordance with the terms of the agreement, we have notified Comcast Cable that the agreement will terminate effective August 31, 2004. We believe that the assumption of the advertising sales responsibilities in Kentucky offers us the opportunity to continue to grow this business and align the Kentucky operating strategy with our other markets.

For additional information regarding the termination of each of these related party arrangements see Note 7 to Notes to Consolidated Financial Statements.

Results of Operations

Our revenues are earned from customer fees for cable television programming services including premium, digital and pay-per-view services and ancillary services, such as rental of converters and remote control devices, installations and from selling advertising. In addition, we earn revenues from providing high-speed Internet services, from facilitating the delivery of telephone services and from commissions for products sold through home shopping networks.

We have historically recorded net losses. Some of the principle reasons for these net losses include depreciation and amortization associated with our acquisitions and capital expenditures for the construction and upgrading of our systems, and interest costs on borrowed money. We expect to continue to report net losses for the foreseeable future and cannot predict what impact, if any, continued losses will have on our ability to finance our operations in the future.

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The following table is derived from our consolidated financial statements that are included in this report and sets forth certain statement of operations data for our consolidated operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(in thousands)
Revenue	$	249,952		$	222,376		$	488,036		$	436,671
Operating costs and expenses:
Programming and other operating costs		88,513			81,349			176,004			160,882
Selling, general and administrative		48,757			41,820			92,831			81,825
Management fees		7,323			6,494			14,326			12,790
Depreciation and amortization		58,959			58,619			115,948			112,187
Total operating costs and expenses		203,552			188,282			399,109			367,684
Operating income		46,400			34,094			88,927			68,987
Operating cash flow		105,359			92,713			204,875			181,174
Interest expense		44,769			45,367			89,125			91,659
Net income (loss)		(1,682	)		(9,328	)		(1,441	)		6,325
Net cash provided by operating activities		39,295			39,605			134,160			101,458
Net cash used in investing activities		38,276			42,862			81,340			109,705
Net cash provided by (used in) financing activities		(21,572	)		16,750			(37,135	)		37,500
Capital expenditures		38,788			42,695			82,232			82,442

Operating cash flow is a financial measure that is not calculated and presented in accordance with accounting principles generally accepted in the United States. We define operating cash flow as operating income or loss before depreciation and amortization. Operating cash flow is useful to management in measuring the overall operational strength and performance of our company. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating our revenues. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures and investment spending. Another limitation of operating cash flow is that it does not reflect income net of interest expense, which is a significant expense of our company because of the substantial debt we incurred to acquire our cable television systems and finance the capital expenditures for the upgrade of our cable network.

Despite the limitations of operating cash flow, management believes that the presentation of this financial measure is relevant and useful for investors because it allows investors to evaluate our performance in a manner similar to the method used by management. In addition, operating cash flow is commonly used in the cable television industry to analyze and compare cable television companies on the basis of operating performance, although our measure of operating cash flow may not be directly comparable to similar measures used by other companies. Operating cash flow should not be regarded as an alternative to, or more meaningful than, either operating income or net income as an indicator of operating performance or cash flows as a measure of liquidity, as well as other measures of financial performance reported in accordance with accounting principles generally accepted in the United States.

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The following calculations of operating cash flow are not necessarily comparable to similarly titled amounts of other companies:

	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
	(in thousands)
Operating income	$	46,400	$	34,094	$	88,927	$	68,987
Adjustment:
Depreciation and amortization		58,959		58,619		115,948		112,187
Operating cash flow	$	105,359	$	92,713	$	204,875	$	181,174

Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003

The $27.6 million or 12% increase in revenue was primarily a result of increases in basic cable service revenue of 9% due to basic rate increases and gains in our high-speed Internet and digital video revenues, which increased 39% and 23% over the prior year’s quarter, driven by an increased customer base.

Revenue by service offering was as follows (in thousands):

	Revenue by Service Offering
	Three Months Ended June 30, 2004		% of Total Revenue		Three Months Ended June 30, 2003		% of Total Revenue		% Change in Revenue
Basic	$	145,446	58.2	%	$	133,625	60.1	%	8.8	%
Digital		24,679	9.9	%		20,049	9.0	%	23.1	%
High-speed Internet		31,095	12.4	%		22,352	10.1	%	39.1	%
Premium / analog pay-per-view		14,612	5.8	%		14,387	6.5	%	1.6	%
Telephone		3,802	1.5	%		2,796	1.2	%	36.0	%
Advertising		16,883	6.8	%		15,179	6.8	%	11.2	%
Franchise fees		7,264	2.9	%		6,812	3.1	%	6.6	%
Other		6,171	2.5	%		7,176	3.2	%	(14.0	)%
Total	$	249,952	100.0	%	$	222,376	100.0	%	12.4	%

Revenue Generating Units (“RGUs”) as of June 30, 2004, which represent the sum of basic, digital, high-speed Internet, and telephone customers, increased approximately 8% as compared to June 30, 2003. RGUs by type were as follows (in thousands):

	June 30, 2004	June 30, 2003
Basic	1,282.4	1,295.7
Digital	418.2	360.2
High-speed Internet	273.9	179.5
Telephone	61.6	42.1
Total RGUs	2,036.1	1,877.5

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Average monthly revenue per basic customer was $64.58 for the three months ended June 30, 2004, compared to $56.92 for the three months ended June 30, 2003 primarily reflecting basic rate increases and the continued growth of our high-speed Internet and digital product offerings in all markets.

Programming and other operating costs increased $7.2 million or 9%. Programming costs increased primarily as a result of increased programming rates. Additionally, programming costs increased as a result of increased video-on-demand and pay-per-view purchases quarter over quarter. Other operating costs increased primarily due to increased high-speed Internet service provider costs driven by the net addition of approximately 94,400 high-speed Internet customers since June 30, 2003. In addition, other operating costs increased as a result of an increased volume of modems sold.

Selling, general and administrative expenses increased $6.9 million or 17%, primarily because of payroll and related costs due to the addition of new employees, annual salary increases for existing employees and increases in health insurance costs. Marketing expenses increased to support the continued roll-out of high-speed Internet and digital products and also to maintain our core video customer base. Partially offsetting these increases was an increase in marketing support funds (recorded as a reduction to selling, general and administrative expenses) for the promotion of new channel launches.

Management fees increased $829,000 or 13% to $7.3 million for the three months ended June 30, 2004 from $6.5 million for the three months ended June 30, 2003. Management fees, equal to approximately 3% of revenues, are paid to Insight LP.

Depreciation and amortization expense increased $340,000 or 1% primarily as a result of additional capital expenditures through June 30, 2004. These expenditures were primarily for network extensions, upgrades to our headends and purchases of customer premise equipment, all of which we consider necessary in order to continue to grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2003.

Operating cash flow increased $12.6 million or 14% primarily due to increased basic, digital and high-speed Internet revenue, offset by increases in programming and other operating costs and selling, general and administrative costs.

Interest expense remained relatively flat quarter over quarter. The decrease of $598,000 is primarily due to lower interest rates, which averaged 6.8% for the three months ended June 30, 2004 as compared to 7.4% for the three months ended June 30, 2003 and was offset by an increase in debt outstanding, which averaged $2.64 billion for the three months ended June 30, 2004 as compared to $2.47 billion for the three months ended June 30, 2003. As of June 30, 2003, we had $2.67 billion of debt and preferred interests outstanding.

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003

The $51.4 million or 12% increase in revenue was primarily a result of increases in basic cable service revenue of 8% due to basic rate increases and gains in our high-speed Internet and digital video revenues, which increased 41% and 24% over the same prior year period, driven by an increased customer base.

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Revenue by service offering was as follows (in thousands):

	Revenue by Service Offering
	Six Months Ended June 30, 2004		% of Total Revenue		Six Months Ended June 30, 2003		% of Total Revenue		% Change in Revenue
Basic	$	284,451	58.3		$	264,476	60.6	%	7.6	%
Digital		48,400	9.9			39,181	9.0	%	23.5	%
High-speed Internet		60,035	12.3			42,613	9.8	%	40.9	%
Premium / analog pay-per-view		29,518	6.1			29,091	6.6	%	1.5	%
Telephone		7,560	1.6			5,364	1.2	%	40.9	%
Advertising		30,870	6.3			27,714	6.3	%	11.4	%
Franchise fees		14,272	2.9			13,514	3.1	%	5.6	%
Other		12,930	2.6			14,718	3.4	%	(12.1	)%
Total	$	488,036	100.0	%	$	436,671	100.0	%	11.8	%

Average monthly revenue per basic customer was $62.99 for the six months ended June 30, 2004, compared to $56.04 for the six months ended June 30, 2003 primarily reflecting basic rate increases and the continued growth of our high-speed Internet and digital product offerings in all markets.

Programming and other operating costs increased $15.1 million or 9%. Programming costs increased primarily as a result of increased programming rates. Additionally, programming costs increased as a result of increased video-on-demand purchases period over period. Other operating costs increased primarily due to increased high-speed Internet service provider costs driven by the net addition of approximately 94,400 high-speed Internet customers since June 30, 2003. In addition, other operating costs increased as a result of technical salaries and related benefits for new and existing employees and an increased volume of modems sold.

Selling, general and administrative expenses increased $11.0 million or 13%, primarily because of payroll and related costs due to the addition of new employees, annual salary increases for existing employees and increases in health insurance costs. Marketing expenses increased to support the continued roll-out of high-speed Internet and digital products and also to maintain our core video customer base. In addition, due to the net impact of the swap of our Griffin, Georgia system, effective February 28, 2003, for the then managed Shelbyville, Kentucky and New Albany, Indiana systems, we incurred incremental selling, general and administrative costs and are no longer receiving reimbursements from Comcast for these costs. Partially offsetting these increases was an increase in marketing support funds (recorded as a reduction to selling, general and administrative expenses) for the promotion of new channel launches.

Management fees increased $1.5 or 12% to $14.3 million for the six months ended June 30, 2004 from $12.8 million for the six months ended June 30, 2003. Management fees, equal to approximately 3% of revenues, are paid to Insight LP.

Depreciation and amortization expense increased $3.8 million or 3% primarily as a result of additional capital expenditures through June 30, 2004. These expenditures were primarily for network extensions, upgrades to our headends and purchases of customer premise equipment, all of which we consider necessary in order to continue to grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2003.

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Operating cash flow increased $23.7 million or 13% primarily due to increased basic, digital and high-speed Internet revenue, offset by increases in programming and other operating costs and selling, general and administrative costs.

Interest expense remained relatively flat period over period. The decrease of $2.5 million or 3% is primarily due to lower interest rates, which averaged 6.7% for the six months ended June 30, 2004 as compared to 7.5% for the six months ended June 30, 2003, and was partially offset by an increase in debt outstanding, which averaged $2.65 billion for the six months ended June 30, 2004 as compared to $2.46 billion for the six months ended June 30, 2003.

Liquidity and Capital Resources

Our business requires cash for operations, debt service, capital expenditures and acquisitions. The cable television business has substantial on-going capital requirements for the construction, expansion and maintenance of its broadband networks. Capital expenditures have primarily been made to expand our service offerings to include digital video, high-speed Internet and telephone services. These services require certain upgrades to our cable infrastructure and typically include upgrades at our headends and throughout our distribution network. Additionally, these new services require us to purchase additional types customer premise equipment, including digital converters, cable modems and network interface units. Historically, we have been able to meet our cash requirements with cash flow from operations, borrowings under our credit facilities and issuances of private and public debt.

Cash provided by operations for the six months ended June 30, 2004 and 2003 was $134.2 million and $101.5 million. The increase was primarily attributable to increased operating income and the timing of cash receipts and payments related to our working capital accounts.

Cash used in investing activities for the six months ended June 30, 2004 and 2003 was $81.3 million and $109.7 million. The decrease was attributable to the swap of our Griffin, Georgia system for the New Albany, Indiana and Shelbyville, Kentucky systems in the first quarter of 2003.

Cash provided by (used in) financing activities for the six months ended June 30, 2004 and 2003 was $(37.1) million and $37.5 million. During the six months ended June 30, 2004, we:

• made scheduled debt amortization payments related to the A and B Term Loan portions of our credit facility, which totaled $31.1 million; and

• repaid $6.0 million of revolver borrowings that were outstanding as of March 31, 2004 and did not need to re-borrow due to increased operating cash flow.

During the six months ended June 30, 2003, we:

• borrowed $44.5 million under our credit facilities to support our operations and capital spending; and

• made $7.0 million of scheduled preferred interest distribution payments, which ceased with the refinancing of debt of Insight Ohio, discussed below, during the third quarter of 2003.

For the six months ended June 30, 2004 and 2003, we spent $82.2 million and $82.4 million in capital expenditures. These expenditures were primarily for network extensions, upgrades to our headends and purchases of customer premise equipment, all of which we consider necessary in order to continue to grow our customer base and expand our service offerings.

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On August 26, 2003, we amended the Insight Midwest Holdings Credit Facility in connection with our plan to refinance all of the obligations and conditionally guaranteed obligations of Insight Ohio. The amendment increased the Term B loan portion of the credit facility from $900.0 million to $1.125 billion, which increased the total facility size to $1.975 billion from $1.750 billion. We recorded $2.2 million of deferred financing costs associated with this amendment that will be amortized over the remaining term of the credit facility.

We have a substantial amount of debt. Our high level of debt could have important consequences for you. Our principal source of cash we need to pay our obligations and to repay the principal amount of our debt obligations is the cash that our subsidiaries generate from their operations and their borrowings. We believe that the Insight Midwest Holdings credit facility, cash on-hand and our cash flow from operations are sufficient to support our current operating plan. We have the ability to draw upon $399.5 million of unused availability under the Insight Midwest Holdings credit facility as of June 30, 2004 to fund any shortfall resulting from the inability of our cash from operations to fund our capital expenditures, meet our debt service requirements or otherwise fund our operations. On July 1, 2004 the leverage ratio covenant under the Insight Midwest Holdings credit facility reduced from 4.75x to 4.25x. As of June 30, 2004, after giving effect to this reduction, we would have had the ability to draw upon $272.2 million of unused availability under the Insight Midwest Holdings credit facility to fund any cash shortfall.

The following table summarizes our contractual obligations and commitments, excluding interest and commitments for programming, as of June 30, 2004, including periods in which the related payments are due (in thousands):

	Contractual Obligations
	Long-Term Debt		Operating Leases		Total
2004	$	31,125	$	1,307	$	32,432
2005		83,500		1,732		85,232
2006		83,500		1,338		84,838
2007		83,500		668		84,168
2008		104,750		435		105,185
Thereafter		2,247,500		657		2,248,157
Total cash obligations	$	2,633,875	$	6,137	$	2,640,012

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

As of June 30, 2004, we had entered into $150.0 million notional amount of floating to fixed rate interest rate swaps that approximated 10%, of our borrowings under our credit facility, which expire in August 2004. A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense, for the unhedged portion of our credit facility, by approximately $13.7 million.

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In July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expire November 1, 2005. We recorded a loss on these swaps of $3.0 million and $1.2 million for the three and six months ended June 30, 2004, which is included in other income (expense). A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense for these three swaps by approximately $1.9 million.

In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated statements of operations. The fair value (cost if terminated) of this swap as of June 30, 2004 and December 31, 2003 was $(2.8) million and $(206,000) and has been recorded in other non-current assets (liabilities) and as an adjustment to the carrying value of debt. A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense for this swap by approximately $1.3 million.

The aggregate fair market value and aggregate carrying value of our 9¾% and 10½% senior notes was $1.1 billion and $1.0 billion as of June 30, 2004. The fair market value of our credit facility borrowings approximates its carrying value as the credit facility borrowings bear interest at floating rates of interest. As of June 30, 2004, the estimated fair value (cost if terminated) of our interest rate swap agreements was approximately $(6.7) million and is reflected in our financial statements as other non-current liabilities. Changes in the fair value of our interest rate swaps are either recognized in income or in partners’ capital as a component of accumulated other comprehensive income (loss) depending on the type of swap and whether it qualifies for hedge accounting.

Item 4. Controls and Procedures

Insight Midwest’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of June 30, 2004. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that Insight Midwest’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Insight Capital’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of June 30, 2004. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that Insight Capital’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.

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There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 8 in Item 1 of PART I, Notes to Consolidated Financial Statements, and incorporated herein by reference.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

10	Purchase Agreement dated July 2, 2004 between Insight Midwest Holdings, LLC and Comcast Cable Holdings, LLC and certain of its affiliates (1)
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.

(1) Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 of Insight Communications Company, Inc. and incorporated herein by reference

(b) Reports on Form 8-K:

None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2004	INSIGHT MIDWEST, L.P.
	By: /s/ John Abbot
	John Abbot
	Senior Vice President and Chief
	Financial Officer
	(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2004	INSIGHT CAPITAL, INC.
	By: /s/ John Abbot
	John Abbot
	Senior Vice President and Chief
	Financial Officer
	(Principal Financial Officer)

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