Northland Cable Properties Seven Limited Partnership 10-Q 2007 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2007

or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                    to                    

Commission File Number: 0-16718

Northland Cable Properties Seven Limited Partnership

(Exact Name of Registrant as Specified in Charter)

Washington	91-1366564
(State of Organization)	(I.R.S. Employer Identification No.)

101 Stewart Street, Suite 700, Seattle, Washington	98065
(Address of Principal Executive Offices)	(Zip Code)

(206)621-1351

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Yesþ      Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filero      Accelerated filero      Non-accelerated filerþ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso      Noþ

TABLE OF CONTENTS

PART 1 — FINANCIAL INFORMATION
	ITEM 1. Financial Statements
PART I(continued)
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Continuing Operations
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4. Controls and Procedures
PART II — OTHER INFORMATION
	ITEM 1 Legal proceedings
	ITEM 1A Risk Factors
	ITEM 2 Changes in securities
	ITEM 3 Defaults upon senior securities
	ITEM 4 Submission of matters to a vote of security holders
	ITEM 5 Other information
	ITEM 6 Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT 31.(A)
EXHIBIT 31.(B)
EXHIBIT 32.(A)
EXHIBIT 32.(B)

PART 1 — FINANCIAL INFORMATION

ITEM 1. Financial Statements

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS — (UNAUDITED)

	March 31,			December 31,
	2007			2006
ASSETS
Cash	$	501,387		$	324,241
Accounts receivable		179,490			174,855
Due from affiliates		58,550			60,334
Prepaid expenses		81,446			80,484
System sale receivable		—			926,027
Property and equipment, net of accumulated depreciation of $12,242,417 and $11,921,108, respectively		6,395,766			6,578,217
Franchise agreements, net of accumulated amortization of $9,995,974, respectively		9,606,966			9,606,966
Loan fees and other intangibles, net of accumulated amortization of $777,472 and $767,912, respectively		76,479			86,038
Total assets	$	16,900,084		$	17,837,162
LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT)
Accounts payable and accrued expenses	$	658,585		$	841,633
Due to Managing General Partner and affiliates		42,050			49,562
Deposits		20,165			16,665
Subscriber prepayments		216,940			167,464
Notes payable		1,000,306			2,096,676
Total liabilities		1,938,046			3,172,000
Partners’ capital (deficit):
General Partners:
Contributed capital, net		(25,367	)		(25,367	)
Accumulated deficit		(35,668	)		(38,637	)
		(61,035	)		(64,004	)
Limited Partners:
Contributed capital, net		18,554,382			18,554,382
Accumulated deficit		(3,531,309	)		(3,825,216	)
		15,023,073			14,729,166
Total partners’ capital		14,962,038			14,665,162
Total liabilities and partners’ capital	$	16,900,084		$	17,837,162

The accompanying notes are an integral part of these statements.

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS — (UNAUDITED)

	For the three months ended March 31,
	2007			2006
Service revenues	$	2,196,019		$	2,117,436
Expenses:
Cable system operations (including $28,528 and $35,566 to affiliates in 2007 and 2006, respectively), excluding depreciation and amortization shown below		202,176			196,385
General and administrative (including $213,028 and $215,011 to affiliates in 2007 and 2006, respectively)		568,586			582,265
Programming (including $1,890 and $994 to affiliates in 2007 and 2006, respectively)		792,007			715,787
Depreciation		358,696			394,760
(Gain) loss on disposal of assets		(1,202	)		272
		1,920,263			1,889,469
Income from operations		275,756			227,967
Other income (expense):
Interest expense and amortization of loan fees		(39,109	)		(95,046	)
Interest income and other, net		301			477
		(38,808	)		(94,569	)
Income from continuing operations	$	236,948		$	133,398
Income from discontinued operations (note 6)	$	59,928
Net income	$	296,876		$	133,398
Allocation of net income:
General Partners	$	2,969		$	1,334
Limited Partners	$	293,907		$	132,064
Net income from continuing operations per limited partnership unit:
(49,656 units)	$	5		$	3
Net income from discontinued operations per limited partnership unit:
(49,656 units)	$	1		$	0

The accompanying notes are an integral part of these statements.

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS — (UNAUDITED)

	For the three months ended March 31,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	296,876		$	133,398
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		358,696			394,760
Loan fee amortization		9,559			9,560
(Gain) loss on sale of assets		(1,202	)		272
Gain from discontinued operations		(59,928	)
(Increase) decrease in operating assets:
Accounts receivable		(4,635	)		99,426
Due from affiliates		1,784			17,837
Prepaid expenses		(962	)		(16,161	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(183,048	)		(272,496	)
Due to Managing General Partner and affiliates		(7,512	)		13,389
Deposits		3,500			1,165
Subscriber prepayments		49,476			(12,932	)
Net cash provided by operating activities		462,604			368,218
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(179,163	)		(385,670	)
Proceeds from sale of systems		985,955			—
Proceeds from the sale of assets		4,120			11,004
Net cash provided by (used in) investing activities		810,912			(374,666	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on borrowings		(1,096,370	)		(243,674	)
Net cash used in financing activities		(1,096,370	)		(243,674	)
INCREASE (DECREASE) IN CASH		177,146			(250,122	)
CASH, beginning of period		324,241			877,365
CASH, end of period	$	501,387		$	627,243
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	30,358		$	89,168

The accompanying notes are an integral part of these statements.

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(1) Basis of Presentation

These unaudited financial statements are being filed in conformity with Rule 10-01 of Regulation S-X regarding interim financial statement disclosure and do not contain all of the necessary footnote disclosures required for a full presentation of the balance sheets, statements of operations and statements of cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, these statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Partnership’s financial position at March 31, 2007, its statements of operations for the three months ended March 31, 2007 and 2006, and its statements of cash flows for the three months ended March 31, 2007 and 2006. Results of operations for these periods are not necessarily indicative of results to be expected for the full year. These financial statements and notes should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2006.

(2) Intangible Assets

In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the Partnership does not amortize goodwill or any other intangible assets determined to have indefinite lives. The Partnership has determined that its franchises meet the definition of indefinite lived assets. The Partnership tests these assets for impairment on an annual basis during the fourth quarter, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value.

Loan fees are being amortized using the straight-line method, which approximates the effective interest rate method. Future amortization of loan fees is expected to be approximately as follows:

2007 (9 months)		28,680
2008		38,240
2009		9,559
	$	76,479

(3) Notes Payable

In March of 2005, the Partnership agreed to certain terms and conditions with its existing lender and amended its credit agreement. The terms of the amendments modify the principal repayment schedule, the interest rate margins and various covenants (described below), and allowed the Partnership to retain $300,000 of the proceeds from the sale of the Brenham, TX system, to be used for capital spending purposes. The Partnership capitalized $137,062 of fees, which were paid to the lender in connection with these transactions. The term loan is collateralized by a first lien position on all present and future assets of the Partnership and matures March 31, 2009.

The interest rate per annum applicable to the Partnership’s existing credit facility (the Refinanced Credit Facility) is a fluctuating rate of interest measured by reference to either: (i) the U.S. dollar prime commercial lending rate announced by the lender (Base Rate), plus a borrowing margin; or (ii) the London interbank offered rate (LIBOR), plus a borrowing margin. Under the amendment to the term loan agreement, the applicable borrowing margins vary, based on the Partnership’s leverage ratio, from 2.75% to 3.50% for Base Rate loans and from 3.75% to 4.50% for LIBOR loans.

Annual maturities of the note payable after March 31, 2007, are as follows:

2007		337,008
2008		534,892
2009		128,406
	$	1,000,306

Under the terms of the amended loan agreement, the Partnership has agreed to restrictive covenants which require the maintenance of certain ratios, including a Maximum Total Leverage Ratio of not more than 2.25 to 1.00, a Minimum Interest Coverage Ratio of not less than 3.50 to 1.00, a Minimum Total Debt Service Coverage Ratio of not less than 1.10 to 1.00, and a Maximum Capital Expenditures limitation of not more than $2,500,000. As of March 31, 2007, the Partnership was in compliance with the terms of the loan agreement.

As of the date of this filing, the balance under the credit facility is $1,000,306 at a LIBOR based interest rate of 9.10%. This interest rate expires during the second quarter of 2007, at which time, new rates will be established.

(4) Litigation

In March 2005, Northland filed a complaint against one of its programming networks seeking a declaration that a December 2004 contract between Northland and the programmer was an enforceable contract related to rates Northland would pay for its programming and damages for breach of that contract. The programmer counter-claimed, alleging copyright infringement and breach of contract.

On September 14, 2006 Northland and the programmer entered into a Settlement Agreement, under which, (i) the parties mutually released each other from and against all claims, (ii) the parties agreed to dismiss the lawsuit, and (iii) the parties set forth the definitive terms of carriage of the programmers services for the period commencing December 1, 2004, through December 31, 2007.

In addition, under the terms of the Settlement Agreement, Northland shall make payment in full of all license fees from all Northland affiliates, including NCP-7, for the period of December 1, 2004, through July 31, 2006, all of which have been previously accrued. In addition, Northland shall pay to the programmer, in four installments, a Supplemental License fee, approximately $120,000 of which will be allocated to NCP-7. The Partnership recorded a charge of approximately $81,000 in expense associated with this supplemental license fee for the period ended December 31, 2006, and a charge of approximately $10,000 in expense for the three months ended March 31, 2007, which has been classified as programming expense. The remaining $29,000 will be recorded on a pro rata basis over the remaining contract period.

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

(5) Solicitation of Interest from Potential Purchasers

The General Partner has been working with a nationally recognized brokerage firm to solicit interests from potential buyers for the Partnership’s cable systems. The General Partner is currently in preliminary discussions with a potential buyer. However, no assurances can be given as to the likelihood that any sale or sales will ultimately be consummated. It is Management’s experience, after many years in the cable television industry, that it is difficult to forecast the likelihood of completing a sales transaction with a financially viable purchaser at any specific time.

(6) Discontinued Operations

In January 2007, the Partnership received proceeds totaling $985,955 as the result of the sale of the Bay City, TX system in June 2005. Amounts totaling $59,928, which are in excess of the amounts recorded as a system sale receivable at December 31, 2006, have been reflected as results of discontinued operations in the accompanying financial statements for the period ended March 31, 2007. These amounts are included in discontinued operations as they related to interest earned on amounts held in escrow for purposes of indemnification claims by the buyer pursuant to the terms of the purchase and sale agreement. The amounts were recorded in the quarter ended March 31, 2007 as they did not become fixed and determinable until the completion of the escrow period of January 2007.

PART I (continued)

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

Results of Continuing Operations — Three Months Ended March 31, 2007 and 2006

Total basic subscribers attributable to continuing operations decreased from 13,622 as of March 31, 2006 to 13,057 as of March 31, 2007. The loss in subscribers is a result of several factors including competition from Direct Broadcast Satellite (DBS) providers, availability of off-air signals in the Partnership’s markets and regional and local economic conditions. To reverse this customer trend, the Partnership is increasing its customer retention efforts and its emphasis on bundling its video and data products.

Revenue from continuing operations totaled $2,196,019 for the three months ended March 31, 2007, an increase of approximately 4% from $2,117,436 for the three months ended March 31, 2006. Revenues from continuing operations for the three months ended March 31, 2007 were comprised of the following sources:

• $1,726,589 (79%) from basic and expanded services,

• $129,408 (6%) from premium services

• $19,110 (1%) from digital services

• $154,864 (7%) from high speed Internet services

• $54,602 (2%) from advertising

• $43,554 (2%) from late fees

• $67,892 (3 %) from other sources.

Average monthly revenue per subscriber increased $4.13 or approximately 8% from $52.23 for three months ended March 31, 2006 to $56.36 for the three months ended March 31, 2007. This increase is attributable to rate increases implemented throughout the Partnership’s systems during the first quarter of 2007, and increased penetration of new products, specifically, high-speed Internet services. These increases in average monthly revenue per subscriber were offset by a decrease in total subscribers from 13,622 as of March 31, 2006 to 13,057 as of March 31, 2007.

Operating expenses, excluding general and administrative, programming, and depreciation expenses, attributable to continuing operations totaled $202,176 for the three months ended March 31, 2007, representing an increase of approximately 3% from $196,385 for the three months ended March 31, 2006. This increase is primarily attributable to increases in system utility and vehicle operating costs in certain of the Partnership’s systems, offset by a decrease in overtime salaries. Employee wages, which represent the primary component of operating expenses, are reviewed annually, and in most cases, increased based on cost of living adjustments and other factors. Therefore, assuming the number of operating and regional employees remains constant, management expects increases in operating expenses in the future.

General and administrative expenses attributable to continuing operations totaled $568,586 for the three months ended March 31, 2007, representing a decrease of approximately 2% from $582,265 for the same period in 2006. This decrease is primarily attributable to a reduction in legal expenses as a result of the settlement of litigation with one of the Partnership’s programmers in September 2006.

Programming expenses attributable to continuing operations totaled $792,007 for the three months ended March 31, 2007, an increase of 11% from $715,787 for the three months ended March 31, 2006. This increase is partially attributable to the recognition of approximately $10,000 in additional programming expense during 2007 associated with settlement of litigation with one of the Partnership’s programmers. The increase is also attributable to higher costs charged by various program suppliers, increased costs associated with high-speed Internet services, offset by decreased subscribers from 13,622 as of March 31, 2006 to 13,057 as of March 31, 2007. Rate increases from program suppliers, as well as new fees due to the launch of additional channels and high-speed Internet services, will contribute to the trend of increased programming costs in the future, assuming that the number of subscribers remains constant.

Depreciation expense allocated to continuing operations decreased approximately 9%, from $394,760 for the three months ended March 31, 2006 to $358,696 for the three months ended March 31, 2007. This decrease is attributable to certain assets becoming fully depreciated, offset by depreciation of recent purchases related to the upgrade of plant and equipment.

Interest expense and amortization of loan fees allocated to continuing operations decreased approximately 59% from $95,046 for the three months ended March 31, 2006 to $39,109 for the three months ended March 31, 2007. Lower average outstanding indebtedness, as a result of required principal repayments, was more than offset by higher interest rates in 2007 compared to 2006.

Liquidity and Capital Resources

The Partnership’s primary source of liquidity is cash flow provided by operations. The Partnership generates cash through the monthly billing of subscribers for cable and other services. Losses from uncollectible accounts have not been material. Based on management’s analysis, the Partnership’s cash flow from operations and cash on hand will be sufficient to cover future operating costs, debt service, planned capital expenditures and working capital needs over the next twelve-month period.

Net cash provided by operating activities totaled $462,604 for the three months ended March 31, 2007. Adjustments to the $296,876 net income for the period to reconcile to net cash provided by operating activities consisted primarily of depreciation of $358,696, loan fee amortization of $9,559, offset by changes in other operating assets and liabilities of $141,397 and gain from discontinued operations of $59,928.

Net cash provided by investing activities totaled $810,912 for the three months ended March 31, 2007 and consisted primarily of $985,955 in holdback proceeds from sale of Bay City, TX system offset by $179,163 in capital expenditures.

Net cash used in financing activities for the three months ended March 31, 2007 consisted of $1,096,370 in principal payments that were made under the amended term loan agreement.

Notes Payable

In March of 2005, the Partnership agreed to certain terms and conditions with its existing lender and amended its credit agreement. The terms of the amendments modify the principal repayment schedule, the interest rate margins and various covenants (described below), and allowed the Partnership to retain $300,000 of the proceeds from the sale of the Brenham, TX system, to be used for capital spending purposes. The Partnership capitalized $137,062 of fees, which were paid to the lender in connection with these transactions. The term loan is collateralized by a first lien position on all present and future assets of the Partnership and matures March 31, 2009.

The interest rate per annum applicable to the Partnership’s existing credit facility (the Refinanced Credit Facility) is a fluctuating rate of interest measured by reference to either: (i) the U.S. dollar prime commercial lending rate announced by the lender (Base Rate), plus a borrowing margin; or (ii) the London interbank offered rate (LIBOR), plus a borrowing margin. Under the amendment to the term loan agreement, the applicable borrowing margins vary, based on the Partnership’s leverage ratio, from 2.75% to 3.50% for Base Rate loans and from 3.75% to 4.50% for LIBOR loans.

Annual maturities of the note payable after March 31, 2007, are as follows:

2007		337,008
2008		534,892
2009		128,406
	$	1,000,306

Under the terms of the amended loan agreement, the Partnership has agreed to restrictive covenants which require the maintenance of certain ratios, including a Maximum Total Leverage Ratio of not more than 2.25 to 1.00, a Minimum Interest Coverage Ratio of not less than 3.50 to 1.00, a Minimum Total Debt Service Coverage Ratio of not less than 1.10 to 1.00, and a Maximum Capital Expenditures limitation of not more than $2,500,000. As of March 31, 2007, the Partnership was in compliance with the terms of the loan agreement.

As of the date of this filing, the balance under the credit facility is $1,000,306 at a LIBOR based interest rate of 9.10%. This interest rate expires during the second quarter of 2007, at which time, new rates will be established.

Obligations and Commitments

In addition to working capital needs for ongoing operations, the Partnership has capital requirements for annual maturities related to the Refinanced Credit Facility and required minimum operating lease payments. The following table summarizes the Partnership’s contractual obligations as of March 31, 2007:

			Payments Due By Period
			Less than 1		1 - 3		3 -` 5		More than
	Total		year		years		years		5 years
Notes payable	$	1,000,306	$	470,731	$	529,575		—		—
Minimum operating lease payments		29,667		11,940		17,727		—		—
Total	$	1,029,973	$	482,671	$	547,302

(a)	These contractual obligations do not include accounts payable and accrued liabilities, which are expected to be paid in 2007.
(b)	The Partnership also rents utility poles in its operations. Amounts due under these agreements are not included in the above minimum operating lease payments amounts as, generally, pole rentals are cancelable on short notice. The Partnership does however anticipate that such rentals will recur.
(c)	Note that obligations related to the Partnership’s notes payable exclude interest expense.

Capital Expenditures

During the first three months of 2007, the Partnership incurred $179,163 in capital expenditures. These expenditures include quality assurance projects to upgrade the plant in Vidalia, Sandersville, and Toccoa, GA systems.

Management has estimated that the Partnership will spend approximately $1,700,000 on capital expenditures during the remainder of 2007. Major planned expenditures include the continuation of distribution plant upgrades to increase channel capacity and two-way capability in Sandersville, Toccoa and Vidalia, GA, and the potential launch of HDTV (high definition) services in Toccoa and Vidalia, GA.

Critical Accounting Policies

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

Revenue Recognition

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

Property and Equipment

Property and equipment are recorded at cost. Costs of additions and substantial improvements, which include materials, labor, and other indirect costs associated with the construction of cable transmission and distribution facilities, are capitalized. Indirect costs include employee salaries and benefits, travel and other costs. These costs are estimated based on historical information and analysis. The Partnership performs evaluations of these estimates as warranted by events or changes in circumstances.

In accordance with SFAS No. 51, “Financial Reporting by Cable Television Companies,” the Partnership also capitalizes costs associated with initial customer installations. The costs of disconnecting service or reconnecting service to previously installed locations is expensed in the period incurred. Costs for repairs and maintenance are also charged to operating expense, while equipment replacements, including the replacement of drops, are capitalized.

Intangible Assets

In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the Partnership does not amortize goodwill or any other intangible assets determined to have indefinite lives. The Partnership has determined that its franchises meet the definition of indefinite lived assets. The Partnership tests these assets for impairment on an annual basis during the fourth quarter, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of the assets below its carrying value.

Management believes the franchises have indefinite lives because the franchises are expected to be used by the Partnership for the foreseeable future as determined based on an analysis of all pertinent factors, including changes in legal, regulatory or contractual provisions and effects of obsolescence, demand and competition. In addition, the level of maintenance expenditures required to obtain the future cash flows expected from the franchises is not material in relation to the carrying value of the franchises. While the franchises have defined lives based on the franchising authority, renewals are routinely granted, and management expects them to continue to be granted. This expectation is supported by management’s experience with the Partnership’s franchising authorities and the franchising authorities of the Partnership’s affiliates.

ITEM 3.Quantitative and Qualitative Disclosures About Market Risk

The Partnership is subject to market risks arising from changes in interest rates. The Partnership’s primary interest rate exposure results from changes in LIBOR or the prime rate, which are used to determine the interest rate applicable to the Partnership’s debt facilities. The Partnership has from time to time entered into interest rate swap agreements to partially hedge interest rate exposure. Interest rate swaps have the effect of converting the applicable variable rate obligations to fixed or other variable rate obligations. As of the date of this filing, the Partnership is not involved in any interest rate swap agreements. The potential loss over one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate of all of the Partnership’s variable rate obligations would be approximately $10,000.

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

ITEM 4.Controls and Procedures

The Partnership maintains disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Chief Executive Officer and President (Principal Financial and Accounting Officer) of the Managing General Partner have evaluated these disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q and have determined that such disclosure controls and procedures are effective.

There has been no change during the most recent quarter in the Partnership’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1Legal proceedings

In March 2005, Northland filed a complaint against one of its programming networks seeking a declaration that a December 2004 contract between Northland and the programmer was an enforceable contract related to rates Northland would pay for its programming and damages for breach of that contract. The programmer counter-claimed, alleging copyright infringement and breach of contract.

On September 14, 2006 Northland and the programmer entered into a Settlement Agreement, under which, (i) the parties mutually released each other from and against all claims, (ii) the parties agreed to dismiss the lawsuit, and (iii) the parties set forth the definitive terms of carriage of the programmers services for the period commencing December 1, 2004, through December 31, 2007.

In addition, under the terms of the Settlement Agreement, Northland shall make payment in full of all license fees from all Northland affiliates, including NCP-7, for the period of December 1, 2004, through July 31, 2006, all of which have been previously accrued. In addition, Northland shall pay to the programmer, in four installments, a Supplemental License fee, approximately $120,000 of which will be allocated to NCP-7. The Partnership recorded a charge of approximately $81,000 in expense associated with this supplemental license fee for the period ended December 31, 2006, and a charge of approximately $10,000 in expense for the three months ended March 31, 2007, which has been classified as programming expense. The remaining $29,000 will be recorded on a pro rata basis over the remaining contract period.

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

ITEM 1ARisk Factors

There have been no material changes from the Partnership’s risk factors as disclosed in the 2006 Form 10-K.

ITEM 2Changes in securities

     None

ITEM 3Defaults upon senior securities

     None

ITEM 4Submission of matters to a vote of security holders

     None

ITEM 5Other information

     None

ITEM 6Exhibits and Reports on Form 8-K

     (a) Exhibit Index

31 (a).	Certification of Chief Executive Officer of Northland Communications Corporation, the Managing General Partner, dated May 14, 2007 pursuant to section 302 of the Sarbanes-Oxley Act
31 (b).	Certification of President (Principal Financial and Accounting Officer) of Northland Communications Corporation, the Managing General Partner, dated May 14, 2007 pursuant to section 302 of the Sarbanes-Oxley Act

32 (a).	Certification of Chief Executive Officer of Northland Communications Corporation, the Managing General Partner, dated May 14, 2007 pursuant to section 906 of the Sarbanes-Oxley Act
32 (b).	Certification of President (Principal Financial and Accounting Officer) of Northland Communications Corporation, the Managing General Partner, dated May 14, 2007 pursuant to section 906 of the Sarbanes-Oxley Act

SIGNATURES

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

NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP

BY: Northland Communications Corporation,
Managing General Partner

SIGNATURES	CAPACITIES	DATE
/S/ RICHARD I. CLARKRichard I. Clark	Executive Vice President, Treasurer and Assistant Secretary	5-14-07
/S/ GARY S. JONESGary S. Jones	President	5-14-07