Atlantic Broadband Finance 10-Q 2008 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 10-Q

CURRENT REPORT

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2008

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from            to            .

Atlantic Broadband Finance, LLC

(Exact Name of Registrant As Specified In Charter)

Delaware	333-115504	20-0226936
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Batterymarch Park, Suite 405

Quincy, MA 02169

(Address of Principal Executive Offices, including Zip Code)

(617) 786-8800

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x    Smaller Reporting Company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the registrant’s classes of common units, as of the last practicable date. Atlantic Broadband Holdings I, LLC owns 100% of the registrant’s equity.

FORWARD LOOKING STATEMENTS

Statements in this document that are not historical facts are hereby identified as “forward looking statements” for the purposes of the safe harbor provided by Section 21E of the Securities Act of 1933 (the “Securities Act”). Atlantic Broadband Finance, LLC (the “Company”) cautions readers that such “forward looking statements”, including without limitation, those relating to the Company’s future business prospects, revenue, working capital, liquidity, capital needs, interest costs and income, wherever they occur in this document or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements”. Such “forward looking statements” should, therefore, be considered in light of the factors set forth in “Item 2. Management’s Discussion and Analysis of the Financial Condition and Results of Operations”.

The “forward looking statements” contained in this report are made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Moreover, the Company, through its senior management, may from time to time make “forward looking statements” about matters described herein or in other matters concerning the Company.

The Company disclaims any intent or obligation to update “forward looking statements” to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

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ATLANTIC BROADBAND FINANCE, LLC

TABLE OF CONTENTS

			Page
Part 1. Financial Information
	Item 1.
		Financial Statements (Unaudited)	4-14
		Condensed Consolidated Balance Sheets – December 31, 2007 and June 30, 2008
		Condensed Consolidated Statements of Operations – Three and six months ended June 30, 2007 and 2008
		Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2007 and 2008
		Notes to Condensed Consolidated Financial Statements
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures of Market Risk	18
	Item 4T.	Controls and Procedures	19
Part 2. Other Information
	Item 1.	Legal Proceedings	19
	Item 1A	Risk Factors	19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3.	Defaults upon Senior Securities	19
	Item 4.	Submission of Matters to a Vote of Security Holders	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	20
	Signatures		21
	Certifications

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ATLANTIC BROADBAND FINANCE, LLC

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	December 31, 2007			June 30, 2008
Assets
Current assets
Cash and cash equivalents	$	3,390		$	3,030
Accounts receivable—net of allowance for doubtful accounts of $470 and $514, respectively		7,788			7,645
Prepaid expenses and other current assets		1,728			2,007
Total current assets		12,906			12,682
Plant, property and equipment, net		205,472			205,549
Franchise rights		547,828			547,828
Goodwill		35,905			35,905
Other intangible assets, net		1,120			701
Debt issuance costs, net		9,494			8,350
Total assets	$	812,725		$	811,015
Liabilities and Member’s Equity
Current liabilities
Current portion of senior debt	$	4,528		$	4,528
Current portion of capital lease obligations		389			355
Accrued interest		6,656			6,788
Accounts payable		14,228			14,556
Accrued expenses		10,635			10,211
Unearned service revenue		4,189			4,196
Total current liabilities		40,625			40,634
Long-term debt		616,650			618,386
Capital lease obligation, net of current portion		196			16
Fair value of derivative instruments		3,039			3,496
Other long-term liabilities		2,216			2,205
Total liabilities		662,726			664,737
Member’s equity		174,677			164,557
Accumulated deficit		(24,678	)		(18,279	)
Total member’s equity		149,999			146,278
Total liabilities and member’s equity	$	812,725		$	811,015

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ATLANTIC BROADBAND FINANCE, LLC

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2008			2007			2008
Cable service revenue	$	62,060		$	69,414		$	121,977		$	136,673
Operating expenses
Direct operating expenses (excluding depreciation and amortization shown separately below)		29,641			31,885			58,114			63,158
Selling, general and administrative expenses (excluding depreciation and amortization shown separately below)		9,432			10,817			18,646			20,452
Depreciation and amortization		13,843			10,428			26,755			21,646
Income from operations		9,144			16,284			18,462			31,417
Interest expense		12,903			11,545			25,170			24,561
Loss on extinguishment of debt		—			—			370			—
Net loss (gain) on derivative instruments		(1,412	)		(2,706	)		24			457
Net loss (income)	$	(2,347	)	$	7,445		$	(7,102	)	$	6,399

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ATLANTIC BROADBAND FINANCE, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2007			2008
Cash flows from operating activities
Net (loss) income	$	(7,102	)	$	6,399
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization		26,755			21,646
Amortization of debt issuance costs		2,045			1,144
Loss on extinguishment of debt		370			—
Net loss on derivative instrument		24			457
Changes in operating assets and liabilities
Accounts receivable		561			143
Prepaid expenses and other current assets		(278	)		(279	)
Accounts payable, accrued expenses, other long-term liabilities and accrued interest		(6,007	)		(3,561	)
Unearned service revenue		619			7
Net cash provided by operating activities		16,987			25,956
Cash flows from investing activities
Purchases of property, plant and equipment		(22,084	)		(17,718	)
Acquisition of cable systems		298			—
Net cash used in investing activities		(21,786	)		(17,718	)
Cash flows from financing activities
Proceeds from issuance of debt		81,500			4,000
Repayments of debt principal		(1,258	)		(2,264	)
Payments of capital lease obligations		(220	)		(214	)
Dividend to members		(82,653	)		(10,120	)
Payment of debt issuance costs		(1,853	)		—
Net cash used in financing activities		(4,484	)		(8,598	)
Net change in cash and equivalents		(9,283	)		(360	)
Cash and cash equivalents, beginning of period		10,250			3,390
Cash and cash equivalents, end of period	$	967		$	3,030
Supplemental disclosure of cash flow information
Interest paid	$	25,362		$	23,285
Supplemental disclosure of noncash investing activities
Capital expenditures included in accounts payable and accrued expenses		4,339			3,586
Supplemental disclosure of noncash financing activities
Reduction in Seller Note in conjunction with final cable system purchase price determination		45			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ATLANTIC BROADBAND FINANCE, LLC

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except where indicated)

(Unaudited)

1. Description of Business

Atlantic Broadband Finance, LLC (the “Company”) was formed in Delaware on August 26, 2003. The Company is a wholly-owned subsidiary of Atlantic Broadband Holdings I, LLC (the “Parent”). The Company and the Parent are wholly-owned indirect subsidiaries of Atlantic Broadband Group, LLC.

On September 3, 2003, the Company entered into a definitive asset purchase agreement with affiliates of Charter Communications, Inc. (“Charter”) to purchase certain cable systems in Pennsylvania, Florida, Maryland, West Virginia, Delaware and New York (together with the Aiken, SC system referred to below, the “Systems”) for approximately $738.1 million, subject to closing adjustments. The Company obtained equity and debt financing to fund the acquisition, which was consummated on March 1, 2004. On July 13, 2006, the Company entered into a definitive asset purchase agreement to purchase substantially all of the assets of G Force LLC, owner of certain cable systems in South Carolina for approximately $61.0 million. We obtained additional debt financing and issued a note payable to the seller of the assets to fund this transaction which was consummated on November 1, 2006.

The Systems offer their customers traditional cable video programming as well as high-speed data and telephony services and other advanced video related broadband services such as high definition television. The Systems sell their video programming, high-speed data, telephony and advanced broadband cable services on a subscription basis.

On June 30, 2008, the Company had approximately 285,000 cable, 119,000 residential high-speed Internet and 41,000 telephone subscribers on the Systems. The Company has 5 subsidiaries which operate the Systems: Atlantic Broadband (Penn), LLC, Atlantic Broadband (Delmar), LLC, Atlantic Broadband (Miami), LLC, Atlantic Broadband (SC), LLC and Atlantic Broadband Management, LLC (collectively, the “Subsidiaries”).

2. Risks and Uncertainties

The Company’s future operations involve a number of risks and uncertainties. Factors that could affect future operating results and cause actual results to vary from historical results include, but are not limited to, growth of its subscriber base and the Company’s ability to service its debt and operations with existing cash flows.

The Company plans to continue the expansion of its existing subscriber base through existing and new services, such as: digital cable, high speed Internet, high-definition television, and telephony services. The Company anticipates additional capital expenditures to facilitate this growth. Under current plans and operations, additional financing in excess of existing facilities is not expected to be required. The Company expects to generate cash flow from operations in excess of capital expenditures in 2008. Operating cash flow is expected to be sufficient to repay current obligations and outstanding debt as they become due through at least the next twelve months. Should the Company fail to meet its expectations, the Company would look to draw down against the existing revolving line of credit, obtain additional financing, refinance existing agreements, and/or reduce capital expenditures.

3. Summary of Significant Accounting Policies

Interim Financial Statements

The condensed consolidated financial statements as of June 30, 2008 and for the three and six months ended June 30, 2007 and 2008 are unaudited. However, in the opinion of management, such financial statements include all adjustments (consisting primarily of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the annual financial statements and related notes included in the Company’s Annual Report on Form 10-K. The balance sheet at December 31, 2007 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

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Basis of Presentation

The financial statements presented herein include the consolidated accounts of Atlantic Broadband Finance, LLC and its Subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities, derivative financial instruments 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. The most significant estimates relate to useful lives of property, plant and equipment and finite-lived intangible assets, the recoverability of the carrying values of goodwill, other intangible assets and fixed assets (which include capitalized labor and overhead costs) and commitments and contingencies. Actual results could differ from those estimates.

Segments

SFAS No. 131,Disclosure about Segments of an Enterprise and Related Information, established standards for reporting information about operating segments in annual financial statements and in interim financial reports issued to shareholders. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance of the segment.

The Company manages the Systems’ operations on the basis of geographic divisional operating segments. The Company has evaluated the criteria for aggregation of the geographic operating segments under paragraph 17 of SFAS No.131. In light of the Systems’ similar services, means for delivery, similarity in type of customers, the use of a unified network and other considerations across its geographic divisional operating structure, management has determined that the Systems have one reportable segment, broadband services.

Capitalization of Labor and Overhead Costs

The cable industry is capital intensive, and a large portion of our resources are spent on capital activities associated with extending, building and upgrading the cable network. Costs associated with network construction, initial customer installations, installation refurbishments and the addition of network equipment necessary to enable advanced services are capitalized. Costs capitalized as part of initial customer installations include materials, direct labor costs associated with capital projects and certain indirect costs. We capitalize direct labor costs associated with personnel based upon the specific time devoted to construction and customer installation activities. Indirect costs are associated with the activities of personnel who assist in connecting and activating the new service and consist of compensation and overhead costs associated with these support functions. The costs of disconnecting service at a customer’s dwelling or reconnecting service to a previously installed dwelling are charged to operating expense in the period incurred. Costs for repairs and maintenance are charged to operating expense as incurred, while equipment replacement and betterments, including replacement of cable drops from the pole to dwelling, are capitalized.

Judgment is required to determine the extent to which indirect costs, or overhead, are incurred as a result of specific capital activities and, therefore, should be capitalized. We capitalize overhead based upon an allocation of the portion of indirect costs that contribute to capitalizable activities using an overhead rate applied to the amount of direct labor capitalized. We have established overhead rates based on an analysis of the nature of costs incurred in support of capitalizable activities and a determination of the portion of costs which is directly attributable to capitalizable activities. The primary costs that are included in the determination of overhead rates are (i) employee benefits and payroll taxes associated with capitalized direct labor, (ii) direct variable costs associated with capitalizable activities, consisting primarily of installation and construction vehicle costs, (iii) the cost of support personnel, such as dispatch that directly assist with capitalizable installation activities, and (iv) other costs directly attributable to capitalizable activities.

Goodwill and Intangible Assets

Intangible assets consist primarily of acquired franchise operating rights and subscriber relationships. Franchise operating rights represent the value attributable to agreements with local franchising authorities, which allows access to homes in the public right of way acquired through a business combination. Subscriber relationships represent the value to the Company of the benefit of acquiring the existing cable television subscriber base. The Company considers franchise

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operating rights to have an indefinite useful life. The Company reached its conclusion regarding the indefinite useful life of its franchise operating rights principally because (i) there are no known or expected legal, regulatory, contractual, competitive, economic, or other factors limiting the period over which these rights will continue to contribute to the Company’s cash flows, (ii) as an incumbent franchisee, the Company’s renewal applications are granted by the local franchising authority on their own merits and not as part of a comparative process with competing applications and (iii) under the 1984 Cable Act, a local franchising authority may not unreasonably withhold the renewal of a cable system franchise. The Company will reevaluate the expected life of its cable franchise rights each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The subscriber relationships are being amortized over the estimated useful life of the subscriber base. The useful life for the subscriber relationships is estimated to be approximately three years and at the end of each reporting period, or earlier if circumstances warrant, the Company reassesses the estimated useful life of the relationships.

The Company tests the impairment of its goodwill and franchise operating rights annually or whenever events or changes in circumstances indicate that these assets might be impaired. The first step of the goodwill impairment test compares the fair value of a system with its carrying amount, including goodwill. If the fair value of the system exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount of the system exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined by performing an assumed purchase price allocation, using the system’s fair value (as determined in the first step) as the purchase price. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. Franchise operating rights are tested for impairment comparing the fair value to the carrying amount of the asset on a system by system basis. The fair value of each system is determined using the discounted cash flow valuation method.

An impairment assessment of goodwill and franchise operating rights could be triggered by a significant reduction in operating results or cash flows at one of more of the Company’s systems, or a forecast of such reductions, a significant adverse change in the locations in which the Company’s systems operate, or by adverse changes to ownership rules, among others. The Company completed its annual impairment test as of March 1, 2008 and did not identify any impairment.

Amortization expense on intangible assets with a definite life for the next five years as of June 30, 2008 is as follows:

	Amortization Expense
2008	$	418
2009		283
Thereafter		—

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157 (“SFAS 157”) “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. However, on February 6, 2008, the FASB issued FSP FAS 157-2 which defers the effective date of SFAS 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. For 2008, we have adopted SFAS 157 except as it applies to those nonfinancial assets and nonfinancial liabilities as noted in FSP FAS 157-2. The partial adoption of SFAS 157 did not have a material impact on our financial position, results of operations or cash flows. We are currently evaluating the impact of adopting SFAS 157 on nonfinancial assets and nonfinancial liabilities.

On February 15, 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). This Statement is a fair value option for financial assets and financial liabilities and includes an amendment of FAS Statement No. 115 which covers accounting for certain investments in debt and equity securities. The Statement permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. If the fair value option is elected, a business entity shall report unrealized gains and losses on elected items in earnings at each subsequent reporting date. Upon initial adoption of this Statement an entity is permitted to elect the fair value option for available-for-sale and held-to-maturity securities previously accounted for under SFAS 115, “Accounting for Certain investments in Debt and Equity Securities”. The effect of reclassifying those securities into the trading category

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should be included in a cumulative-effect adjustment of retained earnings and not in current-period earnings and should be separately disclosed. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. We did not elect the fair value option for any or our financial assets or liabilities.

In December 2007, the FASB issued SFAS No. 141 (revised 2007),“Business Combinations” (“SFAS 141(R)”). SFAS 141 (R) replaces SFAS No. 141, Business Combinations. SFAS 141 (R) requires that the acquiring entity in a business combination recognize the full fair value of assets acquired and liabilities assumed in the transaction; requires certain contingent assets and liabilities acquired to be recognized at their fair values on the acquisition date; requires contingent consideration to be recognized at its fair value on the acquisition date and changes in the fair value to be recognized in earnings until settled; requires the expensing of most transaction and restructuring costs; and generally requires the reversal of valuation allowances related to acquired deferred tax assets and changes to acquired income tax uncertainties to also be recognized in earnings. This accounting standard is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of adopting SFAS 141 (R).

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 (SFAS 161). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities, including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is in the process of evaluating the effect, if any, the adoption of SFAS 161 will have on its financial statements.

On May 5, 2008, Statement of Financial Accounting Standard No. 162, The Hierarchy of Generally Accepted Accounting Principles, of SFAS 162, was issued. This Standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the U.S. We are evaluating the impact, if any, this Standard will have on our financial statements.

4. Fair Value Measurements

On January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), for our financial assets and liabilities. Our adoption of SFAS No. 157 did not impact our financial position, results of operations or liquidity. In accordance with FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), we elected to defer until January 1, 2009 the adoption of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption of SFAS No. 157 for financial assets and liabilities did not have a material impact on our financial position, results of operations or liquidity.

SFAS No. 157 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. SFAS No. 157 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that we use to measure fair value, as well as the assets and liabilities that we value using those levels of inputs.

Level 1:

Quoted prices in active markets for identical assets or liabilities.

Level 2:

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Our Level 2 assets are interest rate swaps whose fair value we determine using a pricing model predicated upon observable market inputs. The Company’s derivative instruments are pay-fixed, receive-variable interest rate swaps based on LIBOR swap rate. The LIBOR swap rate is observable at commonly quoted intervals for the full term of the swaps and therefore is considered a level 2 item.

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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth the financial assets and liabilities as of June 30, 2008 that we measured at fair value on a recurring basis by level within the fair value hierarchy. As required by SFAS No. 157, assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement (dollars in thousands):

	Level 1	Level 2	Level 3	Balance as of June 30, 2008
Liabilities
Interest Rate Swaps	—	3,496	—	3,496

5. Acquisition

G Force LLC

On July 13, 2006, the Company entered into a definitive asset purchase agreement to purchase substantially all of the assets of G Force LLC, owner of certain cable systems in Aiken, South Carolina. The Company financed the acquisition through an increase in its Senior Credit Facility and the issuance of a $6.9 million note payable to the seller of the assets. The transaction was consummated on November 1, 2006. The total purchase price for the assets acquired, excluding liabilities assumed, was $62,269.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition. The Company obtained third-party valuations of certain acquired intangible assets from Grant Thornton LLP.

	November 1, 2006
Accounts receivable	$	1,028
Prepaid expenses and other current assets		82
Property and equipment		21,631
Intangible assets, including franchise operating rights		39,528
Total assets acquired		62,269
Less: Accrued liabilities assumed		1,240
Net assets acquired	$	61,029

Of the $39,528 of acquired intangibles, $38,728 was assigned to franchise operating rights that are not subject to amortization and $800 was assigned to subscriber relationships (estimated useful life of approximately 3 years).

6. Plant, Property and Equipment

Plant, property and equipment consist of the following:

	December 31, 2007		June 30, 2008
Distribution facilities	$	190,474	$	199,208
Subscriber equipment		54,128		58,302
Headend equipment		34,307		36,798
Buildings and leasehold improvements		9,566		9,810
Office equipment and other		13,782		15,252
Vehicles and equipment		8,373		8,955
Land		1,972		1,986

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Construction in progress		80		494
Material inventory		3,538		3,508
Total plant, property and equipment		316,220		334,313
Less: accumulated depreciation		110,748		128,764
Plant, property and equipment, net	$	205,472	$	205,549

Depreciation expense for the three and six months ended June 30, 2007 was $13,619 and $23,812, respectively and for the three and six months ended June 30, 2008 was $10,219 and $21,227, respectively.

7. Finite-Lived Intangible Assets

Intangible assets consist of the following:

	December 31, 2007		June 30, 2008
Subscriber relationships	$	45,411	$	45,411
Other intangible assets		2,200		2,200
Total intangible assets		47,611		47,611
Less: Accumulated amortization		46,491		46,910
Intangible assets, net	$	1,120	$	701

Amortization expense for the three and six months ended June 30, 2007 was $224 and $2,943, respectively and for the three and six months ended June 30, 2008 was $209 and $419, respectively.

8. Accrued Expenses

Accrued expenses consist of the following:

	December 31, 2007		June 30, 2008
Franchise, copyright and revenue sharing fees	$	2,605	$	2,259
Payroll and related taxes		3,418		3,122
Accrued purchase price		167		—
Other accrued expenses		4,445		4,830
Total accrued liabilities	$	10,635	$	10,211

9. Debt

On February 10, 2004, the Company entered into $305,000 of term loans (the “Term Loans”) and a $90,000 revolving credit facility (the “Revolver”) with a group of banks and institutional investors led by Merrill Lynch & Company, General Electric Capital Corporation, Societe Generale and Calyon Corporate and Investment Bank. These two facilities are governed by a single credit agreement dated as of February 10, 2004 (collectively, the “Senior Credit Facility”), which was amended and restated as of February 9, 2005 under substantially the same terms.

The net proceeds from the Senior Credit Facility were primarily used to acquire and operate the Systems.

On August 23, 2006, the Company amended its Senior Credit Facility to increase the Term Loan commitment by $50.0 million in anticipation of the pending acquisition of G Force LLC. The acquisition closed and the additional Term Loan borrowings occurred on November 1, 2006. The additional borrowings were made under the same conditions as the original Term Loans.

On March 6, 2007, the Company amended its Senior Credit Facility and increased the Term Loan commitment and borrowings by $104.5 million. The proceeds of the additional Term Loans were used to provide a dividend to our members of $77.6 million and to reduce outstanding Revolver borrowings by $23.0 million. The balance of the proceeds were used for working capital purposes. The additional borrowings were made under substantially the same conditions as the original Term Loans.

The Senior Credit Facility contains certain restrictive financial covenants that, among other things, require the Company to maintain certain debt service coverage, interest coverage, fixed charge coverage, leverage ratios and a certain

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level of EBITDA and places certain limitations on additional debt and investments. The Senior Credit Facility contains conditions precedent to borrowing, events of default (including change of control) and covenants customary for facilities of this nature. The Senior Credit Facility is collateralized by substantially all of the assets of the Company and its subsidiaries.

At December 31, 2007, there was $449,416 outstanding under the Term Loans and $14,917 under the Revolver. At June 30, 2008, there was $447,152 outstanding under the Term Loans and $18,917 under the Revolver. The interest rate on the Senior Credit Facility will be, at the election of the Company, based on either a Eurodollar or a Base Rate option, each as defined in the credit agreement, plus a spread ranging between 1.0% and 3.25%. Excluding the interest rate swaps, the weighted average interest rate for 2007 and 2008 on the Term Note and Revolver was 8.04% and 6.15%, respectively. Interest payments on Base Rate Loans shall be payable in arrears on the last day of each calendar quarter and at maturity. Interest payments on Eurodollar Loans shall be payable on the last day of each interest period relating to such loan and at maturity.

As of June 30, 2008, there was approximately $71,083 of unused commitments under the Revolver all of which could be drawn in compliance with the financial covenants under the Senior Credit Facility. In order to maintain the revolving lines of credit, the Company is obligated to pay certain commitment fees at nominal interest rates on the unused portions of the loans.

The Company can make no assurances that it will be able to satisfy and comply with the covenants under the Senior Credit Facility. The Company’s ability to maintain its liquidity and maintain compliance with its covenants under the Senior Credit Facility is dependent upon its ability to successfully execute its current business plan. The Company can make no assurances, however, that its business will generate sufficient cash flow from operations or that existing available cash or future borrowings will be available to it under the Senior Credit Facility in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs. As of June 30, 2008, the Company was in compliance with its covenants under the Senior Credit Facility.

Term Loan installments began on June 30, 2006. The Revolver shall be paid such that the amount outstanding shall not exceed $67,500 from March 1, 2009 until the termination date. The Revolver shall be paid in full on the termination date of March 1, 2010. Principal payments under the Senior Credit Facility for each year ending December 31, 2008 through 2011 are as follows:

2008	$	2,264
2009		4,528
2010		130,422
2011		328,855
	$	466,069

Senior Subordinated Notes

On February 10, 2004, the Company issued $150,000 of 9^3/8% senior subordinated notes (the “Notes”). The Notes mature on January 15, 2014. Interest is payable every six months in arrears on January 15 and July 15. The Notes are general unsecured senior subordinated obligations subordinated to the Senior Credit Facility. The proceeds of the offering were used to finance the acquisition of the Systems.

Interest Rate Swap Agreements

The Company entered into three interest rate swap agreements on March 17, 2004 for a total notional value of $230,000 with a term of three years at a fixed rate of 1.25% for the first year, 2.25% for the second year and rates ranging from 3.53% to 3.58% for the third year. These agreements ended on March 16, 2007. In September 2006, the Company entered into four additional swap agreements with a forward start date of March 19, 2007 for a total notional value of $225,000 with a term of two years at a fixed rate of 5.08% The marking-to-market of the interest rate swap agreements resulted in the recognition of $1,412 in other income and $24 in other expense for the three and six months ended June 30, 2007, respectively and $2,706 in other income and $457 in other expense for the three and six months ended June 30, 2008, respectively.

Seller Note

In conjunction with the November 1, 2006 acquisition of G Force, LLC, the Company issued to the seller a note in the amount of $6.9 million. This note has an interest rate of 6%, payable semi-annually, and is payable on the third anniversary of the acquisition date.

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10. Member’s Equity

The Parent owns all 1,000 units issued by the Company. The Parent contributed $1,709 in 2003 to effect its formation. In 2004, the Parent contributed $260,791 which the Company used to acquire the Systems. In March 2007, the Company provided a dividend to its members of $77,628. The Company provided additional dividends totaling $10,095 during the remainder of 2007, $10 during the first quarter of 2008 and $10,110 during the second quarter of 2008.

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

The following discussion and analysis is based upon our unaudited interim consolidated financial statements, and our review of the business and operations of each of the Systems.

Overview of Operations

The operating revenue of the Company is derived primarily from monthly subscription fees charged to customers for video, data and telephony services, equipment rental and ancillary services provided by the Systems. Generally, the customer subscriptions may be discontinued by the customer at any time. In addition, the Company derives revenue from installation and reconnection fees charged to customers to commence and reinstate service, pay-per-view programming where users are charged a fee for individual programs viewed, advertising revenues and franchise fee revenues, which are collected by the Systems and then paid to local franchising authorities.

Expenses consist primarily of operating costs, selling, general and administrative expenses, depreciation and amortization expenses and interest expense. Operating costs primarily include programming costs, the cost of the System’s workforce, cable service related expenses, franchise fees and expenses related to customer billings.

Historical Performance

Operating Data

	June 30, 2007		December 31, 2007		June 30, 2008
Equivalent Basic Units (“EBU’s”)	228,149		227,137		225,401
Digital subscribers	80,479		83,629		87,190
High Speed Data (“HSD”) subscribers	101,627		111,583		119,461
Telephone subscribers	21,067		30,520		41,394
Homes passed	496,153		500,662		502,596
Internet-ready homes passed	473,017		490,696		493,881
Telephone-ready homes passed	365,276		406,927		456,692
Basic subscribers	285,650		286,593		285,471
Basic penetration of homes passed	57.6	%	57.2	%	56.8	%
Digital penetration of basic subscribers	28.2	%	29.2	%	30.5	%
HSD penetration of internet-ready homes passed	21.5	%	22.7	%	24.2	%
Telephone penetration of telephone-ready homes passed	5.8	%	7.5	%	9.1	%

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Results of Operations

The following tables set forth a summary of the Systems’ operations for the periods indicated and their percentages of total revenue:

	Three Months Ended June 30.										Six Months Ended June 30.
	2007					2008					2007					2008
	Amount			%		Amount			%		Amount			%		Amount			%
	(dollars in thousands)										(dollars in thousands)
Revenue:
Video	$	38,055		61.3	%	$	39,997		57.6	%	$	75,442		61.8	%	$	79,407		58.1	%
High Speed Data		9,640		15.5			11,482		16.6			18,860		15.5			22,517		16.5
Telephone		2,206		3.6			4,325		6.2			3,854		3.2			8,054		5.9
Advertising Sales		1,687		2.7			1,789		2.6			3,318		2.7			3,323		2.4
Commercial		5,237		8.5			6,050		8.7			10,320		8.5			11,916		8.7
Other		5,235		8.4			5,771		8.3			10,183		8.3			11,456		8.4
Total revenue	$	62,060		100.0	%	$	69,414		100.0	%	$	121,977		100.0	%	$	136,673		100.0	%
Costs and expenses:
Operating (excluding depreciation and amortization and selling, general and administrative listed below)		29,641		47.8	%		31,885		45.9	%		58,114		47.6	%		63,158		46.2	%
Selling, general and administrative		9,432		15.2	%		10,817		15.6	%		18,646		15.3	%		20,452		15.0	%
Depreciation and amortization		13,843		22.3	%		10,428		15.0	%		26,755		21.9	%		21,646		15.8	%
Income from operations		9,144					16,284					18,462					31,417
Other Income (expenses):
Gain (loss) from derivative instruments		1,412					2,706					(24	)				(457	)
Loss on extinguishment of debt		—					—					(370	)				—
Interest expense		(12,903	)				(11,545	)				(25,170	)				(24,561	)
Net (loss) income	$	(2,347	)			$	7,445				$	(7,102	)			$	6,399

Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007.

Revenue for the three months ended June 30, 2008 was $69.4 million as compared to $62.1 million for the three months ended June 30, 2007, an increase of $7.3 million or 11.8%. This increase was mainly the result of (i) a $1.9 million increase in video revenue resulting from increases in digital, Digital Video Recorder and high definition subscribers coupled with increased video on demand usage; (ii) an increase in high-speed data revenue of $1.8 million or 19.1% from continued marketing focus for this service offering driving HSD subscriber growth and (iii) a $2.1 million increase in telephone revenue generated by increases in subscriber levels. We expect revenues to continue to increase as video subscriber levels stabilize while we expect to continue to see subscriber growth in our digital, high-speed data and telephone service offerings.

Operating expenses for the three months ended June 30, 2008 were $31.9 million as compared to $29.6 million for the same period in 2007. The $2.3 million increase was mainly the result of increased programming costs in conjunction with annual contractual increases. We expect operating expenses to continue to increase as growth in total revenue generating units will result in increased direct expenses, while technical and customer support levels should remain relatively stable.

Selling, general and administrative expenses for the three months ended June 30, 2008 were $10.8 million as compared to $9.4 million for the three months ended June 30, 2007, an increase of $1.4 million. This increase resulted mainly from increases in staffing and related costs in sales and marketing to support the growth in our customer base. We expect to see continued increases in selling, general and administrative expenses as we increase marketing spending to continue subscriber growth trends, with levels remaining relatively consistent as a percentage of revenues.

Depreciation of property and equipment and amortization expense was $10.4 million for the three months ended June 30, 2008, compared with $13.8 million for the same period in 2007, a decrease of $3.4 million. This decrease was the

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result of reduced amortization expense as certain finite lived intangible assets reached the end of their initial estimated lives. This decrease in amortization expense is slightly offset by an overall increase in depreciation expense as a result of higher capital expenditures in 2007 due mainly to the system rebuild in Aiken and additional deployment of customer premise equipment, offset by approximately $3.7 million of plant assets which were written off in conjunction with the Aiken Cluster rebuild in 2007.

Income from operations for the three months ended June 30, 2008 was $16.3 million as compared to $9.1 million for the same period in 2007 for the reasons described above.

The marking-to-market of the interest rate swap agreements resulted in the recognition of $2.7 million in other income for the three months ended June 30, 2008 as compared to other income of $1.4 million for the three months ended June 30, 2007 due to fluctuations in market interest rates.

Interest expense, including amortization of debt financing costs, for the three months ended June 30, 2008 was $11.5 million as compared to $12.9 million for the three months ended June 30, 2007. This decrease was primarily attributable to lower market interest rates.

As a result of the factors described above, the net income was $7.4 million for the three months ended June 30, 2008 as compared to a net loss of $2.3 million for the three months ended June 30, 2007.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Revenue for the six months ended June 30, 2008 was $136.7 million as compared to $122.0 million for the six months ended June 30, 2007, an increase of $14.7 million or 12.0%. This increase was mainly the result of a (i) $4.0 million in video revenue from increased digital subscriber levels, along with increased usage of Digital Video Recorders, high definition converters and video-on-demand products; (ii) a 19.4% increase in high-speed data revenue resulting from continued marketing focus for this service offering driving HSD subscriber growth and (iii) a $4.2 million increase in telephone revenue generated by this service offering through subscriber growth.

Operating expenses for the six months ended June 30, 2008 were $63.2 million as compared to $58.1 million for the same period in 2007. The $5.1 million increase was mainly the result of increased programming costs in conjunction with annual contractual increases, coupled with the incurrence of costs associated with our continued expansion of cable telephony services.

Selling, general and administrative expenses for the six months ended June 30, 2008 were $20.5 million as compared to $18.6 million for the six months ended June 30, 2007, an increase of $1.9 million. This increase resulted mainly from increases in sales and marketing costs to continue to drive revenue and subscriber levels.

Depreciation of property and equipment and amortization expense was $21.6 million for the six months ended June 30, 2008, compared with $26.8 million for the same period in 2007, a decrease of $5.2 million. This decrease was the result of reduced amortization expense as certain finite lived intangible assets reached the end of their initial estimated lives. This decrease in amortization expense is slightly offset by an overall increase in depreciation expense as a result of higher capital expenditures in 2007 due mainly to the system rebuild in Aiken and additional deployment of customer premise equipment, offset by approximately $3.7 million of plant assets which were written off in conjunction with the Aiken Cluster rebuild in 2007.

Income from operations for the six months ended June 30, 2008 was $31.4 million as compared to $18.5 million for the same period in 2007 for the reasons described above.

The marking-to-market of the interest rate swap agreements resulted in the recognition of $0.5 million in other expense for the six months ended June 30, 2008 as compared to $24 thousand for the six months ended June 30, 2007 due to fluctuations in market interest rates.

Interest expense, including amortization of debt financing costs, for the six months ended June 30, 2008 was $24.6 million as compared to $25.2 million for the six months ended June 30, 2007. This $0.6 million decrease was primarily attributable lower market interest rates, offset by interest associated with increased borrowing to finance the acquisition of G Force LLC and the March 2007 members dividend.

In connection with the March 2007 refinancing, the Company recognized a loss of $0.4 million related to the expensing of previously capitalized debt issuance costs.

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As a result of the factors described above, the net income was $6.4 million for the six months ended June 30, 2008 as compared to a net loss of $7.1 million for the six months ended June 30, 2007.

Liquidity and Capital Resources

The Company’s primary source of liquidity is cash flow from operations. We also have available funds under our revolving credit facility, subject to certain conditions. Our primary liquidity requirements will be for debt service, capital expenditures and working capital.

In connection with the acquisition of the Systems, we have incurred substantial amounts of debt, including amounts outstanding under our senior credit facility and our 9³/8% Senior Subordinated Notes. Interest payments on this indebtedness will significantly reduce our cash flows from operations. As of June 30, 2008, the Company has total debt outstanding of $623.3 million (including capital lease obligations).

We have a $537.2 million senior credit facility, consisting of a $90 million revolving credit facility and a $447.2 million term loan B tranche. At June 30, 2008, $18.9 million of the revolving credit facility (the “Revolver”) was outstanding, with $71.1 million of unused senior credit commitments under the revolving credit facility. The Revolver shall be paid such that the amount outstanding shall not exceed $67,500 from March 1, 2009 until the termination date of March 1, 2010. We will be able to prepay revolving credit loans and reborrow amounts that are repaid, up to the amount of the revolving credit commitment then in effect, subject to customary conditions.

The borrowings under the term loan B mature on October 1, 2011 and are payable in quarterly installments which began on June 30, 2006.

We expect to incur capital expenditures in 2008 at a level less than 2007 as we completed the approximate $7.0 million upgrade of the Aiken Cluster during 2007. We expect subsequent year capital expenditure levels to remain relatively consistent, reflecting more maintenance and discretionary capital spending.

We believe that the cash generated from operations will be sufficient to meet our debt service, capital expenditures and working capital requirements for the foreseeable future. Subject to restrictions on our senior secured credit facilities and the indenture governing our Senior Subordinated Notes, we may incur more debt for working capital, capital expenditures, acquisitions and for other purposes. In addition, we may require additional financing if our plans materially change in an adverse manner or prove to be materially inaccurate. There can be no assurance that such financing, if permitted under the terms of our debt agreement, will be available on terms acceptable to us or at all.

Contractual Obligations

The following table sets forth our long-term contractual cash obligations as of June 30, 2008 (dollars in thousands):

	Years Ending December 31,
	Total		Remainder of 2008		2009		2010		2011		2012		Thereafter
Senior secured credit facilities	$	466,069	$	2,264	$	4,528	$	130,422	$	328,855	$	—	$	—
6% Seller Note		6,845		—		6,845		—		—		—		—
9 3/8% Senior Subordinated Notes due 2014		150,000		—		—		—		—		—		150,000
Cash interest		147,828		21,664		39,041		36,447		21,965		14,063		14,648
Capitalized leases (including interest)		378		175		193		10		—		—		—
Operating leases		1,900		331		508		411		315		155		180
Total cash contractual obligations	$	773,020	$	24,434	$	51,115	$	167,290	$	351,135	$	14,218	$	164,828

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Cash Flows

Cash provided by operations increased to $26.0 million for the six months ended June 30, 2008 as compared to $17.0 million for the same period in 2007. This is mainly the result of the decrease in the Company’s Net Loss as discussed above.

Cash used in investing activities decreased to $17.7 million for the six months ended June 30, 2008 from $21.8 million for the same period in 2007. This decrease is mainly the result of the completion of the rebuild of the South Carolina systems in 2007.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In making these estimates and assumptions, management employs critical accounting policies. Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the year ended December 31, 2007 and we have updated our critical accounting policy with respect to the valuation of investments as follows:

Fair Value Measurements

We have derivative instruments outstanding as of June 30, 2008. SFAS No. 157 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. SFAS No. 157 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. .Judgment is required in estimating the fair value of the asset or liability related to these instruments included in our balance sheet, and we have used these guidelines in determining such estimates.

Inflation and Changing Prices

Our costs and expenses will be subject to inflation and price fluctuations. We do not expect that such changes are likely to have a material effect on our results of operations.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks as part of our ongoing business operations. Primary exposure will include changes in interest rates as borrowings under our senior secured credit facilities bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin. We manage our interest rate risk by balancing the amount of fixed-rate and floating-rate debt. For fixed-rate debt, interest rate changes do not affect earnings or cash flows. Conversely, for floating-rate debt, interest rate changes generally impact our earnings and cash flows, assuming other factors are held constant.

The following table estimates the changes to cash flow from operations if interest rates were to fluctuate by 100 or 50 basis points, or BPS (where 100 basis points represents one percentage point), for a twelve-month period after giving effect to the interest rate swap agreements described below:

	Interest rate decrease				No change to interest rate		Interest rate increase
	100 BPS		50 BPS				50 BPS		100 BPS
	(dollars in thousands)
Senior credit facilities	$	26,472	$	27,677	$	28,883	$	30,088	$	31,293
9.375% senior subordinated notes due 2014		14,063		14,063		14,063		14,063		14,063
	$	40,535	$	41,740	$	42,946	$	44,151	$	45,356

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We use derivative instruments to manage our exposure to interest rate risks. Our objective for holding derivatives is to minimize the risks using the most effective methods to eliminate or reduce the impacts of these exposures. We use interest rate swap agreements, not designated as hedging instruments under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”, in connection with our variable rate senior credit facility. We do not use derivative financial instruments for speculative or trading purposes.

At June 30, 2008, we had in effect four interest rate swaps with three separate commercial banks, with a total notional amount of $225.0 million with a term of two years beginning March 2007 at a fixed rate of 5.08%. These interest rate swap agreements require us to pay a fixed rate and receive a floating rate thereby creating fixed rate debt. The difference to be paid or received on the swaps are accrued as an adjustment to interest expense. We are exposed to credit loss in the event of nonperformance by the counterparty. The net fair value of the interest rate swap agreements, which represents the cash we would receive or pay to settle the agreements, was a liability of approximately $3.5 million and $3.0 million at June 30, 2008 and December 31, 2007, respectively.

ITEM 4T. Controls and Procedures

The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2008. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of the Company’s disclosure controls and procedures as of June 30, 2008 the Company’s chief executive officer and chief financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

There was no change in the internal control over financial reporting that occurred during the period ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART 2. OTHER INFORMATION

ITEM 1. Legal Proceedings

In the normal course of business, the Company is party to various claims and legal proceedings. The Company records a reserve for these matters when an adverse outcome is probable and they can reasonably estimate its potential liability. Although the ultimate outcome of these matters is currently not determinable, the Company does not believe that the resolution of these matters in a manner adverse to their interest will have a material effect upon their financial condition, results of operations or cash flows for an interim or annual period.

ITEM 1A. Risk Factors

For a more detailed explanation of the factors affecting our business, please refer to the Risk Factors section in Item 1A of our 2007 Form 10-K.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults upon Senior Securities

None.

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ITEM 4. Submission of Matters to a Vote of Security Holders

None.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

(a) Exhibits

31.1	Certification of David J. Keefe pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Patrick Bratton pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Executive Officer.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Financial Officer.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934 the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized on August 6, 2008.

Atlantic Broadband Finance, LLC

/s/ David J. Keefe

David J. Keefe

Chief Executive Officer and Director

/s/ Patrick Bratton

Patrick Bratton

Chief Financial Officer

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