UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

~~SECURITIES~~For the ~~EXCHANGE~~Quarterly ~~ACT~~Period OFEnded ~~1934~~June 30, 2006

For the Quarterly Period Ended June 30, 2002

Commission file numbers		333-33540
		333-33540-1

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

INSIGHT CAPITAL, INC.

(Exact name of registrants as specified in their charters)

Delaware	13-4079232	~~13-4079232~~
Delaware	13-4079679	~~13-4079679~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Nos.)
(State or other jurisdiction of	(I.R.S. Employer
810 7th Avenue New York, New York		10019
incorporation or organization)	Identification No.)
(Address of principal executive offices)		(Zip code)
810 7th Avenue
New York, New York	10019
(Address of principal executive offices)	(Zip code)

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

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

Indicate by check mark whether each 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. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Indicate by check mark whether the registrants are a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x

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

Insight Midwest, L.P. – —Not Applicable Insight Capital, Inc. —Not Applicable

Insight Capital, Inc. – Not Applicable

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2001~~2005.

INSIGHT MIDWEST, ~~L.P.~~LP CONSOLIDATED BALANCE SHEETS (dollars in thousands)

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2006			2005
	(unaudited)
Assets
Cash and cash equivalents	$	2,426			$	24,853
Investments	5,219				4,701
Trade accounts receivable, net of allowance for doubtful accounts of $813 and $1,079 as of June 30, 2006 and December 31, 2005	24,824				27,233
Launch funds receivable	470				974
Prepaid expenses and other current assets	11,677				8,860
Total current assets	44,616				66,621
Fixed assets, net	1,121,244				1,107,571
Goodwill	14,684				14,684
Franchise costs	2,357,535				2,357,535
Deferred financing costs, net of accumulated amortization of $22,181 and $19,769 as of June 30, 2006 and December 31, 2005	17,502				19,910
Other non-current assets	2,145				1,582
Total assets	$	3,557,726			$	3,567,903
Liabilities and partners’ capital
Accounts payable	$	42,003			$	40,843
Accrued expenses and other current liabilities	39,560				38,535
Accrued property taxes	13,287				12,792
Accrued programming costs (inclusive of $30,245 and $29,878 due to related parties as of June 30, 2006 and December 31, 2005)	46,654				43,705
Deferred revenue	2,804				4,978
Interest payable	20,601				20,459
Debt—current portion	83,500				83,500
Due to affiliates	58,398				46,013
Total current liabilities	306,807				290,825
Deferred revenue	1,066				1,499
Debt	2,413,414				2,432,811
Other non-current liabilities	5,207				2,382
Partners’ capital:
Deferred stock compensation	(459		)		(535		)
Partners’ accumulated capital	831,691				840,921
Total partners’ capital	831,232				840,386
Total liabilities and partners’ capital	$	3,557,726			$	3,567,903

~~(in~~See ~~thousands)~~accompanying notes

	June 30, 2002			December 31, 2001
	(unaudited)
Assets
Cash and cash equivalents	$	1,421		$	12,146
Trade accounts receivable, net of allowance for doubtful accounts of $2,543 and $2,818 as of June 30, 2002 and December 31, 2001		21,722			22,918
Launch funds receivable		7,263			12,980
Prepaid expenses and other assets		14,609			20,647
Total current assets		45,015			68,691
Fixed assets, net		1,162,268			1,133,627
Goodwill		15,198			15,198
Franchise costs		2,285,545			2,278,465
Other intangible assets, net of accumulated amortization of $3,403 and $2,260 as of June 30, 2002 and December 31, 2001		40,272			41,223
Deferred financing costs, net of accumulated amortization of $5,334 and $3,885 as of June 30, 2002 and December 31, 2001		24,315			23,876
Total assets	$	3,572,613		$	3,561,080
Liabilities and partners’ capital
Accounts payable	$	27,927		$	66,712
Accrued expenses and other liabilities		19,570			21,225
Accrued property taxes		17,573			11,030
Accrued programming costs		25,532			24,287
Deferred revenue		6,023			8,673
Interest payable		21,279			21,940
Debt – current portion		2,500			—
Preferred interest distribution payable		5,250			5,250
Due to affiliates		16,259			22,040
Total current liabilities		141,913			181,157
Deferred revenue		9,330			12,262
Debt		2,377,232			2,298,362
Other non-current liabilities		58,122			62,964
Total liabilities		2,586,597			2,554,745
Commitments and contingencies
Preferred interests		188,670			185,713
Partners’ capital:
Partners’ accumulated capital		815,200			843,377
Accumulated other comprehensive loss		(17,854	)		(22,755	)
Total partners’ capital		797,346			820,622
Total liabilities and partners’ capital	$	3,572,613		$	3,561,080

~~See~~INSIGHT MIDWEST, ~~accompanying~~LP CONSOLIDATED ~~notes~~STATEMENTS OF OPERATIONS (unaudited) (dollars in thousands)

	Three months ended June 30,						Six months ended June 30,
	2006			2005			2006			2005
Revenue	$	311,717		$	279,278		$	612,998		$	548,605
Operating costs and expenses:
Programming and other operating costs (exclusive of depreciation and amortization) (inclusive of $44,257 and $87,338, and $39,176 and $80,675 of programming expense incurred through related parties for the three and six months ended June 30, 2006 and 2005)	112,483			92,325			222,738			191,098
Selling, general and administrative (inclusive of $38 and $76, and $0 and $0 of stock-based compensation for the three and six months ended June 30, 2006 and 2005)	74,647			59,588			146,783			117,016
Management fees	9,345			8,361			18,383			16,459
Depreciation and amortization	66,016			59,952			128,969			119,636
Total operating costs and expenses	262,491			220,226			516,873			444,209
Operating income	49,226			59,052			96,125			104,396
Other income (expense):
Interest expense	(53,689		)	(49,763		)	(106,052		)	(98,104		)
Interest income	154			565			667			670
Other income	89			599			30			691
Total other expense, net	(53,446		)	(48,599		)	(105,355		)	(96,743		)
Net income (loss)	$	(4,220	)	$	10,453		$	(9,230	)	$	7,653

~~INSIGHT~~See ~~MIDWEST,~~accompanying ~~L.P.~~ notes

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~ 3

~~(unaudited)~~INSIGHT MIDWEST, LP

(inCONSOLIDATED thousands)STATEMENTS OF CASH FLOWS

	Three months ended June 30,						Six months ended June 30,
	2002			2001			2002			2001
Revenue	$	198,885		$	180,840		$	390,004		$	354,679
Operating costs and expenses:
Programming and other operating costs		68,423			65,036			136,971			127,028
Selling, general and administrative		36,600			34,781			72,706			67,306
Management fees		5,650			5,152			11,070			10,091
Non-recurring high-speed data service charges		—			—			4,116			—
Depreciation and amortization		48,337			89,300			95,638			175,070
Total operating costs and expenses		159,010			194,269			320,501			379,495
Operating income (loss)		39,875			(13,429	)		69,503			(24,816	)
Other income (expense):
Interest expense		(43,259	)		(46,889	)		(87,845	)		(94,644	)
Interest income		48			136			98			554
Other		21			(306	)		24			(536	)
Total other expense, net		(43,190	)		(47,059	)		(87,723	)		(94,626	)
Net loss before extraordinary item		(3,315	)		(60,488	)		(18,220	)		(119,442	)
Extraordinary loss from early extinguishment of debt		—			—			—			(10,315	)
Net loss		(3,315	)		(60,488	)		(18,220	)		(129,757	)
Accrual of preferred interests		(5,002	)		(4,807	)		(9,957	)		(9,573	)
Net loss attributable to common interests	$	(8,317	)	$	(65,295	)	$	(28,177	)	$	(139,330	)

(unaudited)

See(dollars accompanyingin notes thousands)

	Six Months Ended June 30,
	2006			2005
Operating activities:
Net income (loss)	$	(9,230	)	$	7,653
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	128,969			119,636
Stock-based compensation	76			—
Provision for losses on trade accounts receivable	7,026			8,220
Amortization of note discount	178			162
Gain on interest rate swaps	—			(812		)
Changes in operating assets and liabilities:
Trade accounts receivable	(4,617		)	(1,065		)
Launch funds receivable	504			2,194
Prepaid expenses and other assets	(3,426		)	(6,351		)
Accounts payable	1,160			11,608
Interest payable	142			42
Accrued expenses and other liabilities	14,247			(6,114		)
Net cash provided by operating activities	135,029			135,173
Investing activities:
Purchase of fixed assets	(140,687		)	(90,112		)
Sale of fixed assets	503			957
Purchase of investments	(518		)	(1,307		)
Net cash used in investing activities	(140,702		)	(90,462		)
Financing activities:
Repayment of credit facilities	(41,750		)	(41,750		)
Net proceeds from borrowings under credit facility	25,000			—
Other	(4		)	—
Net cash used in financing activities	(16,754		)	(41,750		)
Net increase (decrease) in cash and cash equivalents	(22,427		)	2,961
Cash and cash equivalents, beginning of period	24,853			72,476
Cash and cash equivalents, end of period	$	2,426		$	75,437

~~INSIGHT~~See ~~MIDWEST,~~accompanying ~~L.P.~~ notes

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~ 4

~~(unaudited)~~INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(in~~1. ~~thousands)~~Organization and Basis of Presentation

	Six months ended June 30,
	2002			2001
Operating activities:
Net loss	$	(18,220	)	$	(129,757	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		95,638			175,070
Extraordinary loss from early extinguishments of debt		—			10,315
Provision for losses on trade accounts receivable		6,120			5,146
Amortization of note discount		370			369
Changes in operating assets and liabilities, net of the effects of acquisitions:
Trade accounts receivable		(4,815	)		(6,137	)
Launch fund receivable		5,717			7,156
Prepaid expenses and other assets		6,067			2,816
Accounts payable		(38,785	)		(14,409	)
Accrued expenses and other liabilities		(5,415	)		27,723
Net cash provided by operating activities		46,677			78,292
Investing activities:
Purchase of fixed assets		(119,365	)		(145,462	)
Purchase of intangible assets		(877	)		—
Purchase of cable television systems, net of cash acquired		(8,822	)		(61,982	)
Net cash used in investing activities		(129,064	)		(207,444	)
Financing activities:
Distributions of preferred interests		(7,000	)		(7,000	)
Proceeds from borrowings under credit facilities		76,000			1,467,000
Repayments of credit facilities		(95,000	)		(654,900	)
Borrowings from parent under inter-company loan		100,000			—
Repayment of debt in connection with cable system transactions		—			(659,165	)
Principal payments on capital leases and other non-current liabilities		(450	)		—
Debt issuance costs		(1,888	)		(11,202	)
Net cash provided by financing activities		71,662			134,733
Net increase (decrease) in cash and cash equivalents		(10,725	)		5,581
Cash and cash equivalents, beginning of period		12,146			5,735
Cash and cash equivalents, end of period	$	1,421		$	11,316

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

~~See~~Through ~~accompanying~~our ~~notes~~wholly owned operating subsidiaries, Insight Communications Midwest, LLC (“Insight Communications Midwest”), Insight Communications of Central Ohio, LLC (“Insight Ohio”) and Insight Kentucky Partners II, L.P. (“Insight Kentucky”), we own and operate cable television systems in Indiana, Kentucky, Ohio, and Illinois which passed approximately 2.4 million homes and served approximately 1.3 million customers as of June 30, 2006.

4The accompanying consolidated financial statements include the accounts of Insight Midwest Holdings, LLC, our wholly-owned subsidiary which owns 100% of the outstanding equity of our operating subsidiaries, and Insight Capital, Inc., our wholly-owned subsidiary formed for the sole purpose of being the co-issuer of our senior notes, which allows certain investors the ability to be holders of the debt.

~~INSIGHT~~Reclassifications ~~MIDWEST,~~have been ~~L.P.~~made to the prior year’s financial statements to conform to those classifications used in 2006.

~~NOTES~~2. TOResponsibility ~~CONSOLIDATED~~for Interim ~~FINANCIAL~~Financial ~~STATEMENTS~~ Statements

~~1. Organization~~The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with ~~Basis~~the instructions to Form 10-Q and Article 10 of ~~Presentation~~Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements.

WeIn ~~were~~management’s ~~formed~~opinion, inthe ~~September~~consolidated ~~1999~~financial statements toreflect ~~serve~~all asadjustments ~~the~~considered ~~holding~~necessary ~~company~~for ~~and~~ a ~~financing~~fair ~~vehicle~~presentation of ~~for~~the ~~Insight~~consolidated ~~Communications~~results ~~Company,~~of ~~Inc.’s (“Insight~~operations ~~Inc.”)~~and ~~cable~~financial ~~television~~position ~~system~~for ~~joint~~the interim ~~venture~~periods ~~with~~presented. ~~AT&T~~All ~~Broadband,~~such ~~LLC~~adjustments ~~(“AT&T~~are ~~Broadband”).~~of Wea ~~are~~normal ~~owned~~recurring nature. ~~50%~~These byunaudited ~~Insight~~interim ~~Communications~~consolidated ~~Company,~~financial ~~L.P.~~statements ~~(“Insight~~should ~~LP”),~~be read ~~which~~in isconjunction ~~wholly~~with ~~owned~~the byaudited ~~Insight~~consolidated ~~Inc.,~~ financial statements and notes ~~50%~~to byconsolidated ~~AT&T~~financial ~~Broadband,~~statements ~~through~~contained ~~its~~in ~~indirect~~our ~~subsidiary~~Annual ~~TCI~~Report ofon ~~Indiana~~Form 10-K for ~~Holdings,~~the ~~LLC~~year ~~(“TCI”).~~ended December 31, 2005.

~~Through~~The ~~our~~preparation ~~wholly owned~~of ~~subsidiaries~~financial ~~Insight~~statements ~~Communications~~in ofconformity ~~Central~~with ~~Ohio,~~accounting ~~LLC~~principles ~~(“Insight~~generally accepted ~~Ohio”)~~in ~~and~~the ~~Insight~~United ~~Midwest~~States ~~Holdings,~~requires ~~LLC~~us ~~(“Insight~~to ~~Midwest~~make ~~Holdings”),~~estimates ~~which~~and ~~wholly~~assumptions that ~~owns~~affect ~~Insight~~the ~~Communications~~reported ~~Midwest,~~amounts ~~LLC~~of ~~(“Insight~~assets ~~Communications Midwest”)~~ and ~~Insight~~liabilities ~~Communications~~and disclosure of contingent ~~Kentucky,~~assets ~~L.P.~~and ~~(“Insight~~liabilities ~~Kentucky”),~~at wethe ~~own~~date ~~and~~of ~~operate~~the ~~cable~~financial ~~television~~statements ~~systems~~and the inreported ~~Indiana,~~amounts ~~Kentucky,~~of ~~Ohio,~~revenues ~~Illinois~~ and ~~Georgia~~expenses ~~which~~during ~~passed~~the ~~approximately~~reporting 2period.2 ~~million~~Actual results ~~homes~~could ~~and~~differ ~~served approximately~~from 1those estimates.3 ~~million~~The ~~customers~~results as of operations for the three and six months ended June 30, ~~2002.~~2006 ~~Insight~~are LPnot isnecessarily ~~our~~indicative ~~general~~of the ~~partner~~results ~~and~~to ~~effectively~~be ~~controls~~expected ~~all~~for ~~our~~the ~~operating~~year ~~and~~ending ~~financial~~December 31, ~~decisions.~~2006 or any other interim period.

~~The accompanying consolidated financial statements include the accounts of Insight Ohio and Insight Midwest Holdings.~~ 5

~~2. Responsibility~~INSIGHT ~~for~~MIDWEST, ~~Interim~~LP ~~Financial~~NOTES ~~Statements~~TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X3. ~~Accordingly,~~Recent ~~they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United Sates for complete financial statements.~~ Accounting Pronouncements

In ~~our opinion~~ December 2004, the ~~consolidated~~Financial ~~financial~~Accounting ~~statements~~Standards ~~reflect~~Board ~~all~~(“FASB”) ~~adjustments~~issued Statement ~~considered~~of ~~necessary~~Financial ~~for~~Accounting aStandards ~~fair~~No. 123 ~~statement~~(revised of2004), Share-Based Payment, (“SFAS 123R”). SFAS 123R establishes the ~~consolidated~~accounting ~~results~~for oftransactions ~~operations and~~in ~~financial~~which ~~position~~an entity pays for employee ~~the~~services ~~interim~~in ~~periods~~share-based ~~presented~~payment transactions. ~~All~~SFAS ~~such~~123R ~~adjustments~~requires companies ~~are~~to recognize the cost of aemployee ~~normal~~services ~~recurring~~received ~~nature~~in exchange for awards of equity instruments, ~~except~~based ason ~~described~~the ingrant ~~Note~~date 9.fair ~~These~~value ~~unaudited~~of ~~interim~~those awards, ~~consolidated~~in the financial statements. ~~should~~The beCompany ~~read~~adopted inSFAS ~~conjunction~~123R ~~with~~effective January 1, 2006 using the ~~audited~~modified-prospective transition method. Under this method ~~consolidated~~stock-based ~~financial~~compensation ~~statements~~is ~~and~~recognized ~~notes~~for toawards ~~consolidated~~granted in the period after adoption. Prior year financial statements ~~contained~~are innot ~~our~~restated. ~~Annual~~The ~~Report~~adoption onof this ~~Form~~standard ~~10-K~~did ~~for~~not ~~the~~have ~~year~~a ~~ended~~material ~~December~~impact ~~31,~~on ~~2001.~~our consolidated financial statements.

~~The~~In ~~preparation~~May 2005, ofFASB issued ~~financial~~SFAS ~~statements~~No. 154, inAccounting Changes ~~conformity~~and ~~with~~Error ~~accounting~~Corrections. ~~principles~~SFAS ~~generally~~No. 154 ~~accepted~~replaces Accounting inPrinciples ~~the~~Board ~~United~~(“APB”) ~~States~~Opinion ~~requires~~No. 20, usAccounting Changes, ~~to make estimates~~ and ~~assumptions~~SFAS ~~that~~No. 3, ~~affect~~Reporting ~~the~~Accounting Changes ~~reported~~in ~~amounts of~~Interim ~~assets~~Financial Statements and ~~liabilities~~changes ~~and~~the ~~disclosure~~requirements for ofthe ~~contingent~~accounting ~~assets~~for and ~~liabilities~~reporting ~~at the date~~ of ~~the~~a ~~financial~~change ~~statements~~in ~~and~~accounting ~~the~~principles. ~~reported~~SFAS No. 154 ~~amounts~~applies ofto ~~revenues~~all ~~and~~voluntary ~~expenses~~changes ~~during~~in ~~the~~an ~~reporting~~accounting ~~period~~principle. ~~Actual~~It also ~~results~~applies ~~could~~to ~~differ~~changes ~~from~~required ~~those~~by ~~estimates. The~~an ~~results~~accounting ofpronouncement ~~operations~~in ~~for~~the unusual instance that the ~~six~~pronouncement ~~months~~does ~~ended~~not ~~June~~include ~~30,~~specific ~~2002~~transition provisions. ~~are~~When ~~not~~a ~~necessarily~~pronouncement ~~indicative~~includes ofspecific ~~the~~provisions, ~~results~~those toprovisions should be ~~expected~~followed. SFAS 154 is effective for ~~the~~accounting ~~year~~changes ~~ending~~and corrections ~~December~~of ~~31,~~errors ~~2002~~made orin ~~any~~fiscal ~~other~~years ~~interim~~beginning ~~period.~~in 2006.

5 4. Investments

~~INSIGHT~~Oxygen ~~MIDWEST~~Cable, ~~L.P.~~ LLC

~~NOTES~~Oxygen TOCable, ~~CONSOLIDATED~~LLC ~~FINANCIAL STATEMENTS—~~(~~CONTINUED~~“Oxygen”) is an independent cable television network with programming tailored to the interests of women. On July 9, 2002 we entered into a carriage agreement with Oxygen, whereby we agreed to carry programming content from Oxygen. The term of the carriage agreement expires on December 31, 2006.

Concurrently with the carriage agreement, we entered into an equity issuance agreement with Oxygen. The agreement calls for Oxygen to deliver to us shares having an aggregate fair market value as of December 31, 2005 of $3. ~~Recent~~8 ~~Accounting~~million, ~~Pronouncements~~and by December 1, 2006 deliver to us additional shares having an aggregate fair market value as of the December 31, 2005 valuation of $2.0 million. Pursuant to the equity issuance agreement, a portion of the monthly programming fees represent our equity investment in Oxygen. As of June 30, 2006 and December 31, 2005, our carrying value in this investment was $5.2 million and $4.7 million. We and Oxygen are currently in the process of negotiating the fair market value of Oxygen which will be used to determine the number of shares that we will receive. As of June 30, 2006, no shares have been delivered to us.

~~In May 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No~~5. ~~145,~~Fixed “Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections”. SFAS No. 145 eliminates the requirement under SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, to report gains and losses from extinguishments of debt as extraordinary items in the income statement. Accordingly, gains or losses from extinguishments of debt for fiscal years beginning after May 15, 2002 shall not be reported as extraordinary items unless the extinguishment qualifies as an extraordinary item under the provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions”. Upon adoption of this pronouncement, any gain or loss on extinguishment of debt previously classified as an extraordinary item in prior periods presented that does not meet the criteria of Opinion 30 for such classification should be reclassified to conform with the provisions of SFAS No. 145. Accordingly, upon adoption of this pronouncement, we expect to reclassify a loss from early extinguishment of debt of $10.3 million recorded during the three months ended March 31, 2001, to results from continuing operations. Assets

~~4. Accounting~~Fixed ~~for~~assets consisted ~~Franchise Fees~~ of:

Under our franchise agreements, we are obligated to pay to local franchising authorities up to 5% of our gross revenue derived from providing cable and other services the majority of which are passed through to customers. We have historically recorded revenue net of franchise fees charged to our customers. Staff announcement D-103, issued by the Financial Accounting Standards Board staff in November 2001, specifies that reimbursements received from a customer should be reflected as revenues and not as a reduction of expenses. This staff announcement applies to financial reporting periods beginning after December 15, 2001. Upon application of this staff announcement, comparative financial statements for prior periods are required to be reclassified to comply with the guidance in this staff announcement. Consequently, we have reclassified the amounts in the accompanying consolidated statements of operations to reflect franchise fees on a gross basis for all periods presented with reimbursements as revenue and payments as expense. The effect on the prior period statement of operations for the three and six months ended June 30, 2001 was to increase both revenue and selling, general and administrative costs by $5.9 million and $11.6 million.

	June 30,			December 31,
	2006			2005
	(in thousands)
Land, buildings and improvements	$	38,399		$	36,768
Cable system equipment	2,502,964			2,365,956
Furniture, fixtures and office equipment	20,425			19,079
	2,561,788			2,421,803
Less: accumulated depreciation and amortization	(1,440,544		)	(1,314,232		)
Total fixed assets, net	$	1,121,244		$	1,107,571

~~In addition, certain other prior period amounts have been reclassified to conform to the current period presentation.~~ 6

6INSIGHT MIDWEST, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~INSIGHT MIDWEST, L~~5.P. Fixed Assets (Continued)

~~NOTES~~We TOrecorded ~~CONSOLIDATED~~depreciation expense ~~FINANCIAL~~of ~~STATEMENTS—(CONTINUED)~~$64.8 million and $126.5 million for the three and six months ended June 30, 2006 and $58.8 million and $117.4 million for the three and six months ended June 30, 2005.

56. ~~Long-Lived Assets~~ Debt

Fixed assets consisted of:

	June 30,			December 31,
	2006			2005
	(in thousands)
Note payable to Insight Inc.	$	100,000			$	100,000
Insight Midwest Holdings Credit Facility	1,387,500				1,404,250
Insight Midwest 9¾% Senior Notes	385,000				385,000
Insight Midwest 10½% Senior Notes	630,000				630,000
	2,502,500				2,519,250
Net unamortized discount/premium on notes	(379		)		(557		)
Market value of interest rate swaps	(5,207		)		(2,382		)
Total debt	$	2,496,914			$	2,516,311

	June 30, 2002			December 31, 2001
	(in thousands)
Land, buildings and improvements	$	31,938		$	31,233
Cable system equipment		1,675,918			1,555,244
Furniture, fixtures and office equipment		14,203			13,893
		1,722,059			1,600,370
Less accumulated depreciation and amortization		(559,791	)		(466,743	)
Total fixed assets, net	$	1,162,268		$	1,133,627

Insight Midwest Holdings Credit Facility

InOur ~~July~~wholly ~~2001~~owned subsidiary, Insight ~~the~~Midwest ~~FASB~~Holdings, ~~issued~~LLC, ~~SFAS~~serves ~~No.~~as ~~142,~~borrower ~~“Goodwill~~under ~~and~~a ~~Other~~credit ~~Intangible~~facility. Obligations ~~Assets,”~~under ~~which~~this ~~became~~credit ~~effective~~facility ~~for~~are ussecured ~~beginning~~by ~~January~~a 1,pledge ~~2002~~of ~~and~~the ~~changes~~outstanding ~~the~~equity interests ~~accounting~~of ~~for~~Insight ~~goodwill~~Midwest Holdings and ~~franchise~~its ~~costs~~subsidiaries. ~~from~~On anMarch 28, 2002, ~~amortization~~we ~~method~~borrowed to$100.0 anmillion ~~impairment~~from ~~only~~Insight ~~approach~~Inc. InThe ~~addition,~~loan ~~the~~bears ~~standard~~annual interest ~~includes~~of ~~provisions~~9%, ~~upon adoption~~compounded semi-annually, ~~for~~has ~~the~~a ~~reclassification~~scheduled ofmaturity ~~certain~~date ~~existing~~of ~~recognized~~January 31, 2011 ~~intangibles~~and aspermits ~~goodwill~~prepayments. ~~and~~Insight ~~franchise~~Midwest ~~costs,~~Holdings ~~reassessment~~is ofpermitted under the credit ~~useful~~facility ~~lives~~to make distributions to us for the purpose of ~~existing~~repaying ~~recognized~~this loan, ~~intangibles~~including accrued interest, ~~reclassification~~provided ofthat ~~certain~~there ~~intangibles~~are ~~out~~no defaults existing under the credit facility. As of ~~previously~~June 30, ~~reported goodwill~~2006 and ~~franchise~~December 31, ~~costs~~2005, the ~~and~~balance of the ~~testing~~$100.0 ~~for~~million ~~impairment~~loan, ofincluding ~~existing~~accrued ~~goodwill~~interest, ~~and~~was ~~franchise~~$145.4 million ~~costs~~and $139.1 million.

~~SFAS~~Debt ~~No. 142 requires that~~Principal goodwill and franchise costs be tested annually for impairment using a two-step process. The first step is to identify a potential impairment and, in transition, this step must be measured as of the beginning of the fiscal year. The second step of the impairment test measures the amount of the impairment loss, if any, measured as of the beginning of the year of adoption, and must be completed by the end of our fiscal year. Based on our analysis, there was no impairment of goodwill or franchise costs upon the adoption of SFAS No. 142 on January 1, 2002. Payments

~~Applying~~As ~~the effects~~ of ~~the adoption of SFAS No. 142 to the three and six month period ended~~ June 30, ~~2001~~ 2006, would have resulted in loss before extraordinary items of $(12.7) million and $(23.9) million and net loss of $(12.7) million and $(34.2) million. The reconciliation of reported net loss to pro forma net loss adjusted for the ~~effects~~remaining ofprincipal ~~SFAS~~payments ~~No.~~required ~~142~~on ~~for~~our ~~the~~debt ~~three~~were ~~and six months ended June 30, 2001 is~~ as follows (in thousands):

	Three Months Ended June 30, 2001			Six Months Ended June 30, 2001
2006	$	41,750
Net loss as reported	$	(60,488	)	$	(129,757	)
2007	83,500
Less amortization for:
2008	104,750
Franchise costs		42,111			84,222
2009	1,542,500
Goodwill		5,664			11,328
2010	630,000
Pro forma net loss	$	(12,713	)	$	(34,207	)
Thereafter	100,000
Total	$	2,502,500

INSIGHT MIDWEST, ~~L.P.~~LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTES~~7. Derivative ~~TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~ Instruments

~~5. Long~~We enter into derivative instruments, typically interest-~~Lived~~rate ~~Assets~~swap ~~(continued)~~agreements, to modify the interest characteristics of our outstanding debt to either a floating or fixed rate basis. These agreements involve fixed rate interest payments in exchange for floating rate interest receipts, known as cash flow hedges, and floating rate interest payments in exchange for fixed rate interest receipts, known as fair value hedges, over the life of the agreement without an exchange of the underlying principal amount. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense related to the debt. The related amount payable or receivable is included in other liabilities or assets.

WeGains ~~recorded~~and ~~amortization~~losses ~~expense~~related to offair ~~$1.3~~value ~~million~~hedges ~~and~~that ~~$2.6~~are ~~million~~determined ~~for~~to ~~the~~be ~~three~~effective ~~and~~hedges ~~six~~are ~~months~~recorded ~~ended~~in the ~~June 30,~~consolidated ~~2002~~statements ~~and~~of ~~$48.8 million~~operations ~~and~~as ~~$96.9~~an ~~million for~~adjustment to the ~~three~~swap instrument and ~~six~~an ~~months~~offsetting ~~ended~~adjustment ~~June~~to ~~30,~~the ~~2001~~carrying value of the underlying debt. WeGains ~~estimate~~and ~~aggregate~~losses ~~amortization~~related ~~expense~~to interest rate swaps that are determined not to be ~~approximately~~effective ~~$5.2~~hedges ~~million~~and do not qualify for ~~each~~hedge accounting are recorded in our consolidated statements of ~~the~~operations ~~five~~as ~~succeeding~~other ~~fiscal~~income ~~years.~~or expense.

~~6. Debt~~Fair Value Hedges

~~Debt~~In ~~consisted~~July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under a tranche of: our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expired on November 1, 2005. We recorded a gain on these swaps of $1.1 million and $812,000 for the three and six months ended June 30, 2005, which is included in other income.

	June 30, 2002			December 31, 2001
	(in thousands)
Insight Ohio Credit Facility	$	25,000		$	25,000
Note Payable to Insight LP		100,000			—
Insight Midwest Holdings Credit Facility		1,561,000			1,580,000
Insight Midwest 9¾% Senior Notes		200,000			200,000
Insight Midwest 10½% Senior Notes		500,000			500,000
		2,386,000			2,305,000
Less unamortized discount on notes		(6,268	)		(6,638	)
Total debt	$	2,379,732		$	2,298,362

In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under a different tranche of our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated balance sheets. The cost, if terminated, of this swap as of June 30, 2006 and December 31, 2005 was $5.2 million and $2.4 million and has been recorded in other non-current liabilities and as an adjustment to the carrying value of debt.

~~Insight~~8. Related ~~Midwest~~Party ~~Holdings Credit Facility~~ Transactions

Insight Midwest Holdings is party to a $1.75 billion credit facility. On March 25, 2002, we formally requested approval from the lenders of amendments to the leverage ratio covenant to allow Insight Midwest Holdings more flexibility and to increase the aggregate amount that can be distributed to us for the purpose of making investments in Insight Ohio. In addition, on March 28, 2002, we borrowed $100.0 million from Insight Inc. to lower its effective interest rates, $97.0 million of which was contributed to Insight Midwest Holdings in April 2002 for use in paying down the credit facility balance and in funding financing costs associated with the amendments, and $3.0 million of which was contributed to Insight Ohio on March 28, 2002. Pursuant to the credit facility amendments, Insight Midwest Holdings is permitted to make distributions to us for the purpose of repaying this loan provided that the leverage ratio is less than 4.25 to 1.0 and there are no defaults existing under the credit facility. This loan bears annual interest of 9%, has a scheduled maturity date of January 31, 2011 and permits prepayments. On April 18, 2002, the lenders approved these amendments to the credit facility. Programming

OnWe ~~June~~purchase ~~6, 2002, a further amendment to~~ the ~~credit facility was entered into~~majority ~~which~~of ~~permits~~our ~~distributions~~programming bythrough ~~Insight~~affiliates ~~Midwest~~of ~~Holdings~~Comcast toCable. usCharges for ~~the~~such ~~purpose~~programming, including ofa ~~repaying~~1½% ~~the~~administrative fee, were $~~100~~44.03 million ~~loan~~and ~~from~~$87.3 ~~Insight~~million ~~Inc.,~~for the ~~without~~three ~~regard~~and tosix ~~the~~months ~~minimum~~ended ~~leverage~~June 30, ~~ratio~~2006 ~~requirement~~and $39.2 ~~This~~million ~~amendment~~and ~~will~~$80.7 million ~~become~~for ~~effective~~the ~~upon~~three ~~the~~and ~~completion of~~six amonths ~~debt~~ended ~~offering~~June 30, by2005. usAs of atJune 30, 2006 ~~least~~and December 31, 2005, $~~175~~30.02 million and ~~the~~$29.9 ~~contribution~~million of ~~the~~accrued programming ~~proceeds~~costs towere ~~Insight~~due ~~Midwest~~to ~~Holdings.~~affiliates Inof ~~the~~Comcast ~~event~~Cable. weWe dobelieve ~~not~~that ~~complete~~ the programming ~~debt~~rates ~~offering~~charged bythrough ~~December~~these ~~31,~~affiliates ~~2002,~~are ~~this~~lower ~~amendment~~than ~~will~~those available ~~not~~from ~~become~~independent ~~effective~~parties.

INSIGHT MIDWEST, ~~L.P.~~LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTES~~8. TORelated Party ~~CONSOLIDATED~~Transactions ~~FINANCIAL STATEMENTS—~~(~~CONTINUED~~Continued)

~~6. Debt~~Insight ~~(continued)~~ Interactive

~~Debt~~Effective November 17, ~~Principal~~1999, ~~Payments~~Insight Cable Services entered into a Contribution Agreement with Source Media, Inc., providing for the creation of a joint venture, Insight Interactive LLC. Under the terms of the Contribution Agreement, Source Media contributed its Virtual Modem 2.5 software and the Interactive Channel products and services, including SourceGuide and LocalSource television content. On March 14, 2002, Insight Cable Services purchased the remaining 50% equity interest in Insight Interactive that it did not already own from Source Media. We are currently providing Insight Interactive’s services to customers in some of our systems. Fees for such services totaled $879,000 and $1.7 million for the three and six months ended June 30, 2006 and $649,000 and $1.4 million for the three and six months ended June 30, 2005.

AsDue ofTo ~~June 30, 2002, principal payments required on our debt were as follows (in thousands):~~ Affiliates

2002	$	—
2003		5,000
2004		80,000
2005		81,250
2006		87,750
Thereafter		2,132,000
Total	$	2,386,000

As of June 30, 2006 and December 31, 2005, we had amounts owed to Insight LP, our manager, primarily comprised of accrued interest related to our $100.0 million note payable to Insight Inc., incurred but unpaid management fees, calculated as approximately 3% of revenues, and other operational expenses.

~~Interest~~9. Commitments ~~Rate Swap~~ and ~~Collar Agreements~~ Contingencies

~~We enter into interest-rate swap agreements to modify the interest characteristics of our outstanding debt from a floating rate to a fixed rate basis. These~~Programming agreements involve the payment of fixed rate amounts in exchange for floating rate interest receipts over the life of the agreement without an exchange of the underlying principal amount. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense related to the debt. The related amount payable or receivable is included in other liabilities or assets. Contracts

AsWe ofenter ~~June~~into ~~30,~~long-term contracts ~~2002~~with ~~and~~third ~~December~~parties ~~31,~~who ~~2001,~~provide weus ~~had~~with ~~entered~~programming ~~into~~for ~~various~~distribution over ~~interest~~our ~~rate~~cable ~~swap~~television ~~and~~systems. ~~collar~~These ~~agreements~~programming ~~included~~contracts inare ~~other~~a significant ~~liabilities~~part of ~~$17.9~~our ~~million~~business and ~~$22.8~~represent ~~million,~~a ~~effectively~~substantial ~~fixing interest~~portion ~~rates~~of ~~between~~our operating 4costs.7% ~~and~~Since ~~5.9%,~~future ~~plus~~fees ~~the~~under ~~applicable~~such ~~margin,~~contracts onare ~~$435.0~~based ~~million~~on ~~and $500.0 million notional value of debt. The agreements outstanding as of June 30~~numerous variables, ~~2002~~including ~~expire~~number inand ~~July~~type ~~2003. As~~ of ~~June 30~~customers, ~~2002,~~ we ~~had~~have ~~$2.6~~not ~~million~~recorded ~~of accrued~~any ~~interest~~liabilities ~~related~~with respect to ~~these~~such ~~agreements~~contracts.

~~7. Comprehensive Loss~~ Litigation

~~Comprehensive~~In ~~loss~~April 2005, ~~totaled~~Acacia Media ~~$4.4~~Technologies ~~million~~Corporation filed a lawsuit against us and ~~$13.3~~others ~~million~~in the United States District Court for the ~~three~~Southern ~~and~~District ~~six~~of ~~months~~New ~~ended~~York. ~~June~~The complaint 30alleges, ~~2002~~among other things, infringement of certain United States patents that allegedly relate to systems and ~~$63~~methods for transmitting and/or receiving digital audio and video content.3 ~~million~~The complaint seeks injunctive relief and ~~$144~~damages in an unspecified amount.2 ~~million~~In ~~for~~the event that a Court ultimately determines that we infringe on any of the ~~three~~patents, we may be subject to substantial damages, which may include treble damages and/or an injunction ~~six~~that ~~months~~could ~~ended~~require ~~June 30,~~us ~~2001~~to materially modify certain products and services that we currently offer to subscribers. ~~Comprehensive~~We ~~loss~~believe ~~for~~that the ~~six~~claims ~~months~~are ~~ended~~without ~~June~~merit and ~~30,~~intend ~~2001~~to ~~included~~defend athe $1action vigorously.9 ~~million~~The ~~transition~~final ~~adjustment~~disposition ~~loss~~of ~~representing~~this ~~the~~claim is ~~cumulative~~not expected to have a material adverse effect ofon ~~adopting~~our ~~Statement~~consolidated financial position but could possibly be material to our consolidated results of operations ~~Financial~~of ~~Accounting~~any ~~Standards~~one Noperiod. ~~133.~~Further, ~~We record~~at ~~the~~this ~~effective~~time ~~portion~~the outcome of ~~interest~~the litigation ~~rate~~is ~~swaps’~~impossible ~~gains~~to orpredict, ~~losses~~and asno ~~accumulated~~assurance ~~other~~can ~~comprehensive~~be ~~income~~given orthat ~~loss~~any adverse inoutcome ~~the~~would ~~accompanying~~not be material to our consolidated ~~balance~~financial ~~sheets~~position.

9We are subject to various legal proceedings that arise in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of these matters, it is our opinion that the resolution of these matters will not have a material adverse affect on our consolidated financial condition.

~~INSIGHT MIDWEST, L.P.~~ 9

~~NOTES~~INSIGHT TOCAPITAL, ~~CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~ INC.

~~8. Related~~BALANCE ~~Party Transactions~~ SHEETS

~~Programming~~(dollars in thousands, except share and per share amounts)

We purchase substantially all of our pay television and other programming from affiliates of AT&T Broadband. Charges for such programming, including a 1½% administrative fee, were $33.2 million and $64.2 million for the three and six months ended June 30, 2002 and $28.1 million and $55.1 million for the three and six months ended June 30, 2001. As of June 30, 2002 and December 31, 2001, $10.6 million and $10.3 million of accrued programming costs were due to affiliates of AT&T Broadband. We believe that the programming rates charged by the affiliates of AT&T Broadband are lower than those available from independent parties.

	June 30,			December 31,
	2006			2005
	(unaudited)
Assets
Cash	$	1		$	1
Deferred financing costs, net of accumulated amortization of $12,993 and $11,689 as of June 30, 2006 and December 31, 2005	9,788			11,092
Total assets	$	9,789		$	11,093

Liabilities and shareholder’s deficit
Accrued interest	$	20,409		$	20,409
Total current liabilities	20,409			20,409

Senior notes, to be paid by Insight Midwest, LP	1,014,621			1,014,443
Total liabilities	1,035,030			1,034,852

Shareholder’s deficit:
Common stock; $.01 par value; 1,000 shares authorized, issued and outstanding	—			—
Paid-in-capital	1			1
In-substance allocation of proceeds related to senior notes to be paid by Insight Midwest	(479,772		)	(531,616		)
Accumulated deficit	(545,470		)	(492,144		)
Total shareholder’s deficit	(1,025,241		)	(1,023,759		)
Total liabilities and shareholder’s deficit	$	9,789		$	11,093

~~Telephony~~See ~~Agreements~~accompanying notes

In July 2000, to facilitate delivery of telephone services, we entered into a ten-year agreement with AT&T Broadband that allows us to deliver to our customers local telephone service under the AT&T Digital Phone brand. Under the terms of the agreement, we lease for a fee certain capacity on our network to AT&T Broadband. We provide certain services and support for which we receive additional payments. We began providing telephony services to a limited number of our customers in 2001. Revenue related to telephony services was $339,000 and $581,000 for the three and six months ended June 30, 2002 and $4,000 and $5,000 for the three and six months ended June 30, 2001. The capital required to deploy telephone services over our networks is shared, with AT&T Broadband responsible for switching and transport facilities. AT&T also pays us for installations, marketing and billing support that amounted to $1.6 million and $2.8 million for the three and six months ended June 30, 2002 and $173,000 for the three and six months ended June 30, 2001. 10

~~Advertising~~INSIGHT ~~Services~~CAPITAL, INC.

InSTATEMENTS OctoberOF 1999, to facilitate the administration of our advertising services in our Kentucky Systems, we entered into an agreement expiring on January 1, 2004 with TCI Media Services LLC (“TCI Media Services”), a subsidiary of AT&T Corp., which provides for TCI Media Services to perform all of our Kentucky advertising sale and related administrative services. We recorded advertising revenues from TCI Media Services derived from our Kentucky Systems of $3.8 million and $7.1 million for the three and six months ended June 30, 2002 and $3.2 million and $5.5 million for the three and six months ended June 30, 2001. As of June 30, 2002 and December 31, 2001, we had $6.4 million and $6.9 million recorded as a receivable due from TCI Media Services included in prepaid and other current assets. We pay TCI Media Services a fixed and variable fee based on advertising sales cash flow growth for providing this service. As of June 30, 2002 and December 31, 2001, we had $245,000 and $666,000 recorded as payables to TCI Media Services related to such services. OPERATIONS

10 (unaudited)

~~INSIGHT~~(dollars ~~MIDWEST,~~in ~~L.P.~~ thousands)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Three months Ended June 30,						Six months Ended June 30,
	2006			2005			2006			2005
Expenses:
Amortization	$	(652	)	$	(652	)	$	(1,304	)	$	(1,304	)
Interest	(26,012		)	(26,004		)	(52,022		)	(52,007		)
Net loss	$	(26,664	)	$	(26,656	)	$	(53,326	)	$	(53,311	)

9.See Ataccompanying ~~Home Corporation~~notes

Non-recurring high-speed data service charges were incurred through February 28, 2002 as a result of payments made to At Home Corporation (“@Home”), the former provider of high-speed data services for all of our systems, except for those located in Ohio. On September 28, 2001, @Home filed for protection under Chapter 11 of the Bankruptcy Code. For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim service arrangement that required that we pay $10.0 million to @Home to extend service for three months through February 28, 2002. As a result of this arrangement we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered from January 1, 2002 through February 28, 2002.

~~10.~~INSIGHT CAPITAL, ~~Commitments and Contingencies~~INC.

~~Programming~~STATEMENTS OF ~~Contracts~~CASH FLOWS

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

~~Litigation~~(dollars in thousands)

The prior owners of the Kentucky systems have named Insight Kentucky and certain prior owners of the Kentucky Systems in class actions regarding the pass-through of state and local property tax charges to approximately 320,000 customers. The plaintiffs seek monetary damages and the enjoinment of the collection of such taxes. We have entered into agreements with the plaintiffs to settle these lawsuits. Such settlement agreements have been preliminarily approved by the courts and are subject to a determination of fairness and final court approval. The settlements will not have a material effect on our results of operations or cash flows.

	Six Months Ended June 30,
	2006			2005
Cash flows from operating activities:
Net loss	$	(53,326	)	$	(53,311	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Accretion of discount on notes	178			163
Amortization	1,304			1,304
Interest expense assumed by affiliate	51,844			51,844
Net cash provided by operating activities	—			—
Net increase in cash	—			—
Cash, beginning of period	1			1
Cash, end of period	$	1		$	1

WeSee ~~are~~accompanying ~~subject to various legal proceedings that arise in the ordinary course of business. While it is impossible to determine with certainty the ultimate outcome of these matters, it is our opinion that the~~ notes

11 12

INSIGHT ~~MIDWEST~~CAPITAL, LINC.P. NOTES TO FINANCIAL STATEMENTS

~~NOTES~~1. Nature TOof ~~CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~ Business

10Insight Capital, Inc. (the ~~Commitments~~“Company”), ~~and~~a ~~Contingencies~~Delaware corporation, was formed on September 23, 1999, for the sole purpose of being a co-issuer with Insight Midwest, L.P. (~~continued~~“Insight Midwest”) of senior notes which allows certain investors the ability to be holders of the debt. The Company has no operations. The outstanding shares of the Company are owned by Insight Midwest.

~~resolution~~2. Responsibility offor ~~these~~Interim ~~matters~~Financial ~~will not have a material adverse affect on our consolidated financial condition.~~ Statements

12The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements.

~~INSIGHT~~In ~~CAPITAL~~management’s opinion, the ~~INC~~financial statements reflect all adjustments considered necessary for a fair presentation of the statement of financial position as of the interim dates presented. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

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

~~(in thousands)~~ 13

	June 30, 2002			December 31, 2001
	(unaudited)
Assets
Cash	$	1		$	1
Deferred financing costs, net		11,272			12,004
Total assets	$	11,273		$	12,005
Liabilities and shareholders’ deficit
Accrued interest	$	13,625		$	13,625
Total current liabilities		13,625			13,625
Senior notes, to be paid by Insight Midwest, LP		693,732			693,362
Total liabilities		707,357			706,987
Shareholders’ deficit:
Common stock; $.01 par value; 1,000 shares authorized, issued and outstanding		—			—
Paid-in-capital		1			1
In-substance allocation of proceeds related to senior notes to be paid by Insight Midwest		(550,430	)		(586,430	)
Accumulated deficit		(145,655	)		(108,553	)
Total shareholders’ deficit		(696,084	)		(694,982	)
Total liabilities and shareholders’ deficit	$	11,273		$	12,005

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

~~See~~Cautionary ~~accompanying~~Statement ~~notes~~Regarding Forward-Looking Information

13This quarterly report on Form 10-Q contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of our company, including, without limitation, statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “estimates” or similar expressions. We believe it is important to communicate management’s expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2005, as well as any other cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this quarterly report could have a material adverse effect on our business, operating results and financial condition. Examples of these risks include:

~~INSIGHT~~· All of ~~CAPITAL,~~the ~~INC.~~services offered by our company face a wide range of competition that could adversely affect our future results of operations;

~~STATEMENTS~~· We have OFsubstantial ~~OPERATIONS~~debt and have significant interest payment requirements, which may adversely affect our ability to obtain financing in the future to finance our operations and our ability to react to changes in our business;

~~(unaudited)~~· There is uncertainty surrounding our potential dissolution, the process for which may be triggered by either of our partners;

~~(in~~· The terms ~~thousands)~~of Insight Midwest Holdings’ credit facility may limit our ability to access the cash flow of our subsidiaries;

	Three months endedJune 30,						Six months endedJune 30,
	2002			2001			2002			2001
Expenses:
Amortization	$	(366	)	$	(366	)	$	(732	)	$	(732	)
Interest expense		(18,185	)		(18,185	)		(36,370	)		(36,370	)
Net loss	$	(18,551	)	$	(18,551	)	$	(37,102	)	$	(37,102	)

· Our programming costs are substantial, and they are expected to increase; and

~~See~~· General business ~~accompanying~~conditions, ~~notes~~economic uncertainty or slowdown, and the effects of governmental regulation could adversely affect our future results of operations.

14We do not u ndertake any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date that this report is filed with the SEC or to reflect the occurrence of unanticipated events, except as required by law.

~~INSIGHT CAPITAL, INC.~~ Overview

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

~~(unaudited)~~ 14

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

	Six months ended June 30,
	Three Months Ended June 30,			Six Months Ended June 30,
	2002			2001
	2006		2005	2006		2005
Cash flows from operating activities:
	(in thousands)
Net loss	$	(37,102	)	$	(37,102	)
Revenue	$311,717		$279,278	$612,998		$548,605
Adjustments to reconcile net loss to net cash provided by operating activities:
Operating costs and expenses:
Amortization		732			732
Programming and other operating costs	112,483		93,325	222,738		191,098
Interest expense assumed by affiliate		36,370			36,370
Selling, general and administrative	74,647		59,588	146,783		117,016
Net cash provided by operating activities		—			—
Management fees	9,345		8,361	18,383		16,459
Net increase in cash		—			—
Depreciation and amortization	66,016		59,952	128,969		119,636
Cash, beginning of period		1			1
Total operating costs and expenses	262,491		220,226	516,873		444,209
Cash, end of period	$	1		$	1
Operating income	49,226		59,052	96,125		104,396
Interest expense	53,689		49,763	106,052		98,104
Net income (loss)	(4,220	)	10,453	(9,230	)	7,653
Net cash provided by operating activities	47,720		63,246	135,029		135,173
Net cash used in investing activities	83,680		52,947	140,702		90,462
Net cash used in (provided by) financing activities	(4,125	)	20,875	16,754		41,750
Capital expenditures	83,587		52,597	140,687		90,112

~~See~~Use ~~accompanying~~of ~~notes~~Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow

15We utilize Adjusted Operating Income before Depreciation and Amortization, (defined as operating income before depreciation, amortization and non-cash stock-based compensation) among other measures, to evaluate the performance of our businesses. Adjusted Operating Income before Depreciation and Amortization is considered an important indicator of the operational strength of our businesses and is a component of our annual compensation programs. In addition, our debt agreements use Adjusted Operating Income before Depreciation and Amortization, adjusted for certain non-recurring items, in our leverage and other covenant calculations. We also use this measure to determine how we will allocate resources and capital. Our management finds this measure helpful because it captures all of the revenue and ongoing operating expenses of our businesses and therefore provides a means to directly evaluate the ability of our business operations to generate returns and to compare operating capabilities across our businesses. This measure is also used by equity and fixed income research analysts in their reports to investors evaluating our businesses and other companies in the cable television industry. We believe Adjusted Operating Income before Depreciation and Amortization is useful to investors because it enables them to assess our performance in a manner similar to the methods used by our management and provides a measure that can be used to analyze, value and compare companies in the cable television industry, which may have different depreciation, amortization and stock-based compensation policies.

~~INSIGHT~~A ~~CAPITAL~~limitation of Adjusted Operating Income before Depreciation and Amortization, ~~INC~~however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures, investment spending and Free Cash Flow. Management also evaluates the costs of capitalized tangible and intangible assets by analyzing returns provided on the capital dollars deployed. Another limitation of Adjusted Operating Income before Depreciation and Amortization is that it does not reflect income net of interest expense, which is a significant expense for us because of the substantial debt we incurred to acquire cable television systems and finance capital expenditures to upgrade our cable network. Management evaluates the impact of

~~NOTES TO FINANCIAL STATEMENTS—(CONTINUED)~~ 15

~~1. Nature~~interest expense ofthrough ~~Business~~measures including interest expense, Free Cash Flow, the returns analysis discussed above and debt service covenant ratios under our credit facility.

~~Insight~~Free ~~Capital,~~Cash ~~Inc.~~Flow is net cash provided by operating activities (as defined by accounting principles generally accepted in the ~~“Company”~~United States), aless ~~Delaware~~capital ~~corporation,~~expenditures. ~~was~~Free ~~formed~~Cash onFlow ~~September~~is considered ~~23,~~to ~~1999,~~be ~~for~~an ~~the~~important ~~sole~~indicator ~~purpose~~ of ~~being~~our aliquidity, ~~co-issuer~~including ~~with~~our ability ~~Insight~~to ~~Midwest,~~repay Lindebtedness.P. ~~(“Insight~~We ~~Midwest”)~~believe ofFree ~~senior~~Cash ~~notes~~Flow ~~which~~is ~~allows~~useful ~~certain~~for investors because ~~the~~it ~~ability~~enables them to beassess ~~holders~~our ofability ~~the~~to service our debt. ~~The~~and ~~Company~~to ~~has~~fund continued nogrowth ~~operations.~~with ~~The~~internally ~~outstanding~~generated ~~shares~~funds ofin ~~the~~a ~~Company~~manner ~~are~~similar ~~owned~~to the methods used by ~~Insight~~our ~~Midwest.~~management, and provides a measure that can be used to analyze, value and compare companies in the cable television industry.

~~2. Responsibility~~Both Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, ~~Interim~~Operating ~~Financial~~Income, ~~Statements~~Net Income and various cash flow measures (e.g., Net Cash Provided by Operating Activities), as well as other measures of financial performance and liquidity reported in accordance with accounting principles generally accepted in the United States.

~~The~~Reconciliation ~~accompanying unaudited financial statements~~ of ~~the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial~~ ~~information~~Net ~~and~~Income ~~with~~(Loss) ~~the instructions~~ to ~~Form~~Adjusted ~~10-Q~~Operating ~~and~~Income ~~Article~~before 10Depreciation ~~of Regulation S-X. Accordingly, they do not include all of the information~~ and ~~footnote disclosures required by accounting principles generally accepted in the United States for~~ ~~complete financial statements.~~ Amortization

InThe following ~~management’s~~table ~~opinion,~~reconciles ~~the~~Net ~~financial~~Income ~~statements~~(Loss) ~~reflect~~to ~~all~~Adjusted ~~adjustments~~Operating ~~considered necessary for a~~Income ~~fair~~before ~~statement~~Depreciation ofand ~~the financial position as of the interim dates presented~~Amortization. ~~These~~In ~~unaudited~~addition, ~~interim financial statements should be read in conjunction with~~ the ~~audited~~table ~~financial~~provides ~~statements and notes to financial statements contained in~~ the ~~Company’s~~components ~~Annual~~from ~~Report~~Net onIncome ~~Form~~(Loss) ~~10-K~~to ~~for~~Operating ~~the year ended December 31, 2001~~Income.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
	(in thousands)
Net Income (Loss)	$	(4,220	)	$	10,453		$	(9,230	)	$	7,653
Other (income) expense:
Other income	(89		)	(599		)	(30		)	(691		)
Interest income	(154		)	(565		)	(667		)	(670		)
Interest expense	53,689			49,763			106,052			98,104
Total other expense, net	53,446			48,599			105,355			96,743
Operating income	49,226			59,052			96,125			104,396
Depreciation and amortization	66,016			59,952			128,969			119,636
Stock-based compensation	38			—			76			—
Adjusted Operating Income before Depreciation and Amortization	$	115,280		$	119,004		$	225,170		$	224,032

~~Item~~Reconciliation ~~2. Management’s~~of ~~Discussion~~Net ~~and~~Cash ~~Analysis~~Provided ofby ~~Financial Condition and~~Operating ~~Results~~Activities ofto ~~Operations~~Free Cash Flow

~~Forward-Looking~~The following ~~Statements~~table provides a reconciliation from net cash provided by operating activities to Free Cash Flow. In addition, the table provides the components from net cash provided by operating activities to operating income.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
	(in thousands)
Operating income	$	49,226		$	59,052		$	96,125		$	104,396
Depreciation and amortization	66,016			59,952			128,969			119,636
Stock-based compensation	38			—			76			—
Adjusted Operating Income before Depreciation and Amortization	115,280			119,004			225,170			224,032
Changes in working capital accounts(1)	8,824			(1,722		)	9,330			3,259
Cash paid for interest	(76,384		)	(54,036		)(2)	(99,471		)	(92,118		)
Net cash provided by operating activities	47,720			63,246			135,029			135,173
Capital expenditures	(83,587		)	(52,597		)	(140,687		)	(90,112		)
Free Cash Flow	$	(35,867	)	$	10,649		$	(5,658	)	$	45,061

·(1) Changes ~~discuss~~in ~~our~~working capital ~~future~~accounts ~~expectations;~~are based on the net cash changes in current assets and current liabilities, excluding charges related to interest and taxes and other non-cash expenses.

·(2) Excludes ~~contain~~bond ~~projections~~interest ofpayments ~~our~~due April 1, ~~future~~2005 ~~results~~that ofwere ~~operations~~made oron ofMarch 31, ~~our~~2005. ~~financial~~Had ~~condition;~~the orpayments been made on April 1, 2005, Free Cash Flow for the three months ended June 30, 2005 would have been ($9,427).

·Results ~~state other “forward-looking” information.~~of Operations

WeThree ~~believe~~Months itEnded ~~is important to communicate our expectations to our investors. However~~June 30, ~~there~~2006 ~~may~~Compared ~~be events in the future that we are not able~~ to ~~accurately predict or over which we have no control. The risk factors listed in~~ ~~our~~Three ~~Annual~~Months ~~Report~~Ended ~~on Form 10-K for the year ended December 31~~June 30, 2001, as well as any cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Examples of these risks include our history and expectation of future net losses, our substantial debt, increasing programming costs and competition. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this quarterly report could have a material adverse effect on our business, operating results and financial condition. 2005

~~Results~~Revenue for the three months ended June 30, 2006 totaled $311.7 million, an increase of ~~Operations~~12% over the prior year, due primarily to customer gains in all services, as well as video rate increases. High-speed Internet service revenue increased 27% over the prior year, which was attributable to an increased customer base and was partially offset by lower average revenue per customer due to promotional discounts. We added a net 19,700 high-speed Internet customers during the quarter to end at 534,500 customers.

ABasic ~~substantial~~cable ~~portion~~service ofrevenue ~~our~~increased ~~revenues~~7% ~~are~~due ~~earned~~to ~~from~~an increased customer ~~fees~~base ~~for~~and ~~cable~~video ~~television~~rate ~~programming~~increases, ~~services~~partially ~~including~~offset ~~premium~~by promotional discounts. Historically, ~~digital~~we ~~and~~have ~~pay-per-view~~experienced ~~services~~a ~~and~~seasonal ~~ancillary~~decline ~~services,~~in basic ~~such~~customers asduring ~~rental~~the ofsecond ~~converters~~quarter ~~and~~primarily ~~remote~~as ~~control~~a ~~devices,~~result ~~installations~~of ~~and~~students leaving ~~from~~the ~~selling~~university ~~advertising~~communities we serve. In addition, wedigital service ~~earn~~revenue ~~revenues~~increased ~~from~~23% ~~providing~~over ~~high-speed~~the ~~data~~prior ~~and~~year ~~telephone~~due ~~services~~to asan ~~well~~increased ascustomer ~~from~~base. ~~commissions~~We added ~~for~~a ~~products~~net ~~sold~~11,700 ~~through~~digital ~~home~~customers ~~shopping~~during ~~networks.~~the quarter to end at 572,200 customers.

~~Under~~We ~~our franchise agreements, we~~ are ~~obligated~~increasing tocustomer growth ~~pay~~and toretention ~~local~~efforts ~~franchising~~by ~~authorities~~increasing upspending toon 5%sales ofand ~~our~~marketing efforts, ~~gross~~emphasizing ~~revenue~~bundling ~~derived~~and ~~from~~enhancing ~~providing cable~~ and ~~other~~differentiating ~~services the majority of which are passed through to~~ our ~~customers. We have~~video ~~historically~~services ~~recorded~~by ~~revenue~~providing ~~net of franchise fees charged to our customers. Staff announcement D~~video-~~103~~on-demand, ~~issued~~high bydefinition ~~the~~television ~~Financial~~and ~~Accounting Standards Board staff in November 2001, specifies that reimbursements received from a customer should be~~digital ~~reflected~~video ~~as revenues and not as a reduction of expenses~~recorders. ~~This~~We ~~staff announcement applies to financial reporting periods beginning after December 15, 2001. Upon application of this staff announcement, comparative financial statements for prior periods~~ are ~~required~~also tocontinuing ~~be reclassified~~ to ~~comply~~focus ~~with the guidance in this staff announcement. Consequently, we have reclassified the amounts in the accompanying consolidated statements of operations to reflect franchise fees~~ on aimproving ~~gross basis for~~custoomer ~~all~~satisfaction ~~periods~~through ~~presented~~higher ~~with~~service ~~reimbursements~~levels ~~as revenue~~ and ~~payments~~increased aseducation ~~expense. The effect on the prior period statement~~ of ~~operations for the three and six months ended June 30, 2001 was to increase both revenue and selling, general and~~product ~~administrative costs by $5~~offerings.~~9 million and $11.6 million.~~

~~Some of the principal reasons for our net losses through December 31, 2001 include depreciation and~~Revenue ~~amortization~~by ~~associated~~service ~~with~~offering ~~our~~was ~~acquisitions~~as ~~and~~follows capital expenditures related to construction and upgrading of our systems, and interest costs on borrowed money. Beginning January 1, 2002, we no longer record amortization expense associated with goodwill and franchise costs; however, we expect to continue to report net losses for the ~~foreseeable~~three ~~future.~~months Weended ~~cannot~~June 30 (dollars ~~predict what impact, if any, continued losses will have on our ability to finance our operations~~ in ~~the future.~~ thousands):

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

	Revenue by Service Offering
	Three Months Ended June 30, 2006			% of Total Revenue			Three Months Ended June 30, 2005			% of Total Revenue			% Change in Revenue
Basic		$	160,328		51.5	%		$	150,071		53.7	%		6.8	%
High-Speed Internet		58,616			18.8	%		46,318			16.6	%		26.6	%
Digital		34,307			11.0	%		27,838			10.0	%		23.2	%
Advertising		20,020			6.4	%		19,749			7.1	%		1.4	%
Premium		13,852			4.4	%		13,746			4.9	%		0.8	%
Telephone		12,528			4.0	%		8,387			3.0	%		49.4	%
Franchise fees		7,384			2.4	%		7,782			2.8	%		-5.1	%
Other		4,682			1.5	%		5,387			1.9	%		-13.1	%
Total		$	311,717		100.0	%		$	279,278		100.0	%		11.6	%

	Three MonthsEnded June 30,						Six MonthsEnded June 30,
	2002			2001			2002			2001
Revenue	$	198,885		$	180,840		$	390,004		$	354,679
Operating costs and expenses:
Programming and other operating costs		68,423			65,036			136,971			127,028
Selling, general and administrative		36,600			34,781			72,706			67,306
Management fees		5,650			5,152			11,070			10,091
Non-recurring high-speed data charges		—			—			4,116			—
Depreciation and amortization		48,337			89,300			95,638			175,070
Total operating costs and expenses		159,010			194,269			320,501			379,495
Operating income (loss)		39,875			(13,429	)		69,503			(24,816	)
Operating cash flow		88,212			75,871			169,257			150,254
Interest expense		(43,259	)		(46,889	)		(87,845	)		(94,644	)
Net loss		(3,315	)		(60,488	)		(18,220	)		(129,757	)
Net cash provided by operating activities		8,844			3,515			46,677			78,292
Net cash used in investing activities		74,759			82,239			129,064			207,444
Net cash provided by financing activities		51,003			88,000			71,662			134,733

Total Customer Relationships were 1,375,100 as of June 30, 2006, an increase of 59,700 from 1,315,400 as of June 30, 2005. Total Customer Relationships represent the number of customers who receive one or more of our products (i.e., basic cable, high-speed Internet or telephone) without regard to which product they purchase. Total Revenue Generating Units (“RGUs”) which represent the sum of basic, digital, high-speed Internet and telephone customers, as of June 30, 2006 increased 15% as compared to June 30, 2005. RGUs by category were as follows (in thousands):

Operating Cash Flow (“OCF”) represents earnings before interest, taxes, depreciation and amortization, other income and expense, non-recurring high-speed data costs and extraordinary items. We believe that OCF is commonly used in the cable television industry to analyze and compare cable television companies on the basis of operating performance, leverage and liquidity. However, OCF is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either operating income or net income as an indicator of operating performance or cash flows as a measure of liquidity, as determined in accordance with accounting principles generally accepted in the United States. Refer to our consolidated financial statements, including our consolidated statements of cash flows, which appear elsewhere in this report.

	June 30, 2006		June 30, 2005
Basic		1,302.4		1,257.2
Digital		572.2		460.8
High-Speed Internet		534.5		391.3
Telephone		107.2		73.5
Total RGUs		2,516.3		2,182.8

18Average monthly revenue per basic customer was $79.65 for the three months ended June 30, 2006 compared to $73.63 for the three months ended June 30, 2005. This primarily reflects the continued growth of high-speed Internet and digital product offerings in all markets, as well as video rate increases.

~~The~~Programming ~~following~~and ~~calculations~~other operating costs increased $20.2 million, or 22%. Increases in customers and substantial increases in programming rates were significant drivers of ~~OCF~~the (cost increase for the three months ended June 30, 2006. For the three months ended June 30, 2005 our programming costs reflected certain programming credits. These credits resulted from favorable resolution of pricing negotiations related to certain prior period programming costs that were accrued at a higher rate than the amount actually paid. Programming credits for the three months ended June 30, 2006, were significantly lower, causing our overall programming cost increases to be greater. In addition, direct operating costs increased due to an increase in ~~thousands)~~our ~~are~~high-speed ~~not~~Internet ~~necessarily~~service ~~comparable~~costs as we continued to ~~similarly~~transition ~~titled~~our ~~amounts~~Internet services in-house. Other operating costs increased primarily as a result of ~~other~~increases ~~companies:~~in repair, maintenance and warranty costs; an increase in taxes due to a change in the tax law in Kentucky; and an increase in installation labor due to increased customer activity.

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Net loss	$	(3,315	)	$	(60,488	)	$	(18,220	)	$	(129,757	)
Adjustments:
Interest expense		43,259			46,889			87,845			94,644
Interest income		(48	)		(136	)		(98	)		(554	)
Depreciation and amortization		48,337			89,300			95,638			175,070
Other expense		(21	)		306			(24	)		536
Non-recurring high-speed data costs		—			—			4,116			—
Extraordinary loss from early extinguishment of debt		—			—			—			10,315
Operating cash flow	$	88,212		$	75,871		$	169,257		$	150,254

Selling, general and administrative expenses increased $15.1 million, or 25%, primarily due to increased payroll, payroll related costs and temporary help associated with an increase in the number of employees and salary increases for existing employees. Marketing expenses increased over the prior year to support the continued rollout of high-speed Internet, digital and telephone products, and to grow our core video customer base. Professional fees also increased due to increased legal activity for the three months ended June 30, 2006.

~~Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001~~ 18

~~Revenue~~Management fees increased $~~18.0~~900,000 ~~million~~ or ~~10.0~~12% to $~~198.~~9 .3 million for the three months ended June 30, ~~2002~~2006 from $~~180.~~8.4 million for the three months ended June 30, ~~2001~~2005. ~~The~~Management ~~increase~~fees, inequal ~~revenue~~to ~~was~~approximately 3% ~~primarily the result~~ of ~~gains in our high-speed data and digital services with revenue increases over the prior year quarter of 66.2% and 43.2%. In addition~~revenues, ~~our~~are ~~basic~~paid ~~cable service revenue increased primarily due~~ to ~~basic~~Insight ~~cable rate increases~~LP.

~~Revenue~~Depreciation byand ~~service~~amortization ~~offering~~expense ~~were~~increased $6.1 million or 10% primarily as ~~follows~~a ~~for~~result ~~the~~of ~~three~~additional ~~months~~capital ~~ended~~expenditures through June 30, (2006. These expenditures were primarily for purchases of customer premise equipment, installation materials, capitalized labor, headend equipment and network extensions, all of which we consider necessary in ~~thousands):~~order to continue to maintain and grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2005.

	2002			2001
	Revenue by Service Offering		% of Total Revenue	Revenue by Service Offering		% of Total Revenue
Basic	$	125,034	62.9%	$	118,155	65.3%
Digital		16,550	8.3%		11,555	6.4%
High-speed data		14,080	7.1%		8,471	4.7%
Premium		15,215	7.6%		14,401	8.0%
Analog pay-per-view		422	0.2%		1,245	0.7%
Advertising		13,292	6.7%		12,130	6.7%
Franchise fees		6,163	3.1%		5,937	3.3%
Other		8,129	4.1%		8,946	4.9%
Total	$	198,885	100.0%	$	180,840	100.0%

As a result of the factors discussed above, Adjusted Operating Income before Depreciation and Amortization decreased $3.7 million to $115.3 million, a decrease of 3% over the prior year’s second quarter.

19Interest expense increased $3.9 million, or 8%, due to higher interest rates, which averaged 8.6% for the three months ended June 30, 2006, as compared to 7.8% for the three months ended June 30, 2005.

~~RGUs~~Six ~~(Revenue~~Months ~~Generating~~Ended ~~Units) were approximately 1,707,000 as of~~ June 30, ~~2002~~2006 ~~compared~~Compared to Six ~~approximately~~Months ~~1,555,200~~Ended ~~as of~~ June 30, ~~2001 on a same-store basis. This represents an annualized growth rate of 9.8%. RGUs represent the sum of basic, digital, high-speed data, and telephone customers.~~ 2005

~~Average~~Revenue ~~monthly revenue per basic customer was $51.13~~ for the ~~three~~six months ended June 30, ~~2002~~2006 ~~compared~~totaled to $47613.190 ~~for~~million, ~~the~~an increase ~~three~~of ~~months~~12% ~~ended~~over ~~June~~the ~~30,~~prior ~~2001~~year, due primarily ~~reflecting~~to ~~the~~customer ~~continued~~gains ~~successful~~in ~~rollout~~all services, ofas ~~new~~well ~~product~~as ~~offerings~~video inrate ~~the~~increases. ~~Indiana,~~High-speed ~~Kentucky~~Internet ~~and~~service ~~Ohio~~revenue increased ~~markets.~~30% ~~Average~~over ~~monthly~~the ~~revenue~~prior ~~per~~year, ~~basic~~which ~~customer~~was ~~for~~attributable ~~high-speed~~to ~~data~~an increased customer base and ~~interactive~~was ~~digital~~partially ~~video~~offset ~~increased~~by tolower ~~$7.87~~average ~~for~~revenue ~~the~~per ~~three~~customer ~~months~~due ~~ended~~to ~~June~~promotional ~~30,~~discounts. ~~2002~~We upadded ~~from~~a ~~$5.22~~net ~~for~~64,100 high-speed Internet customers during the ~~three~~six months ended June 30, ~~2001.~~2006 to end at 534,500 customers.

~~Programming~~Basic ~~and~~cable ~~other~~service ~~operating~~revenue ~~costs~~ increased ~~$3.4 million or 5.2~~7% due to ~~$68.4~~an increased ~~million~~customer ~~for~~base ~~the~~and ~~three~~video ~~months~~rate ~~ended June 30~~increases, ~~2002~~partially ~~from~~offset ~~$65~~by promotional discounts.0 ~~million~~In ~~for the three months ended June 30~~addition, ~~2001.~~digital ~~The~~service ~~increase~~revenue ~~in programming and other operating costs was primarily the result of~~ increased ~~programming~~21% ~~rates~~over ~~for~~the ~~our~~prior ~~classic~~year ~~and~~due ~~digital~~to ~~service~~an asincreased ~~well~~customer asbase. ~~for~~We ~~additional programming~~ added ina ~~rebuilt~~net ~~systems.~~53,400 ~~Programming~~digital customers ~~costs~~during ~~increased 11.9% for~~ the ~~three~~six months ended June 30, ~~2002~~2006 ~~from~~to ~~the~~end ~~three~~at ~~months ended June 30~~572, ~~2001~~200 customers.

~~Selling,~~Revenue by ~~general~~service ~~and~~offering ~~administrative~~was ~~expenses~~as ~~increased~~follows ~~$1.8 million or 5.2% to $36.6 million~~ for the ~~three~~six months ended June 30~~, 2002 from $34.8 million for~~ ~~the~~(dollars ~~three months ended June 30, 2001. The increase~~ in selling, general and administrative expense was primarily the result of increased employee compensation and employment levels associated with new services partially offset by a decrease in marketing costs. thousands):

Depreciation and amortization expense decreased $41.0 million or 45.9% to $48.3 million for the three months ended June 30, 2002 from $89.3 million for the three months ended June 30, 2001. The decrease in depreciation and amortization expense was primarily the result of ceasing the amortization of goodwill and indefinite lived intangible assets associated with the adoption of SFAS No. 142, effective January 1, 2002, partially offset by depreciation of capital expenditures purchased subsequent to June 30, 2001.

	Revenue by Service Offering
	Six Months Ended June 30, 2006			% of Total Revenue			Six Months Ended June 30, 2005			% of Total Revenue			% Change in Revenue
Basic		$	318,535		52.0	%		$	297,703		54.3	%		7.0	%
High-Speed Internet		115,113			18.8	%		88,431			16.1	%		30.2	%
Digital		66,030			10.8	%		54,599			10.0	%		20.9	%
Advertising		37,717			6.2	%		36,737			6.7	%		2.7	%
Premium		27,246			4.4	%		28,090			5.1	%		-3.0	%
Telephone		23,883			3.9	%		16,119			2.9	%		48.2	%
Franchise fees		14,738			2.4	%		15,202			2.8	%		-3.1	%
Other		9,736			1.5	%		11,724			2.1	%		-17.0	%
Total		$	612,998		100.0	%		$	548,605		100.0	%		11.7	%

~~OCF~~Average ~~increased~~monthly ~~$12.3~~revenue ~~million~~per orbasic ~~16.3%~~customer towas $8878.~~2 million~~ 77 for the ~~three~~six months ended June 30, ~~2002~~2006 ~~from~~compared to $7572.916 ~~million~~ for the ~~three~~ six months ended June 30, ~~2001,~~2005. This primarily ~~due~~reflects tothe ~~increased~~continued ~~digital and~~growth of high-speed ~~data~~Internet ~~revenue~~and ~~partially~~digital ~~offset~~product byofferings ~~increases~~ in ~~programming~~all ~~and other operating costs and selling~~markets, ~~general~~as ~~and~~well ~~administrative~~as video ~~costs.~~rate increases.

~~Interest~~Programming ~~expense~~and ~~decreased~~other ~~$3.6~~operating ~~million~~costs orincreased ~~7.7% to~~ $4331.3 6 million ~~for the three months ended June 30~~, ~~2002~~or ~~from $46~~17%.9 ~~million~~Increases ~~for~~in ~~the~~customers ~~three~~and ~~months~~substantial ~~ended~~increases ~~June~~in programming ~~30,~~rates ~~2001.~~were ~~The~~significant ~~decrease~~drivers ~~is the result~~ of ~~lower average interest rates of 7.4% for~~ the ~~three~~cost ~~months~~increase ~~ended June 30, 2002 from 8.8%~~ for the ~~three~~ six months ended June 30, 2001 partially offset by higher outstanding debt of $2.4 billion during the three months ended June 30, 2002 from $2.1 billion during the three months ended June 30, 2001, resulting from the funding of capital expenditures.

~~For the three months ended June 30, 2002, the net loss was $3.3 million.~~ 19

20ended June 30, 2006. In addition, direct operating costs increased due to an increase in our high-speed Internet service costs. This increase is primarily attributable to the growth in our high-speed Internet customer base and the payment of contractually obligated and other one-time transition costs to bring Internet services in-house. Other operating costs increased primarily as a result of increases in repair, maintenance and warranty costs; an increase in taxes due to a change in the tax law in Kentucky; and an increase in installation labor due to increased customer activity.

~~Six~~Selling, ~~Months~~general ~~Ended~~and ~~June~~administrative 30expenses increased $29.8 million, ~~2002~~or ~~Compared~~25%, primarily due to ~~Six~~increased ~~Months~~payroll, ~~Ended~~payroll ~~June~~related costs, temporary help and travel and entertainment expenses associated with an increase in the number of employees and salary increases for existing employees. Marketing expenses increased over the prior year to support the continued rollout of high-speed Internet, digital and telephone products, and to grow our core video customer base. Professional fees also increased due to increased legal activity for the six months ended June 30, ~~2001~~2006. Billing and credit card fees also increased due to increased customer and revenue growth.

~~Revenue~~Management fees increased $351.39 million or ~~10.0~~12% to $~~390~~18.0 4 million for the six months ended June 30, ~~2002~~2006 from $~~354~~16.75 million for the six months ended June 30, ~~2001~~2005. ~~The~~Management ~~increase~~fees, inequal ~~revenue~~to ~~was~~approximately ~~primarily the result~~ 3% of ~~gains in our high-speed data and digital services with revenue increases over the prior year period of 72.2% and 51.8%. In addition~~revenues, ~~our~~are ~~basic~~paid ~~cable service revenue increased primarily due~~ to ~~basic~~Insight ~~cable rate increases~~LP.

~~Revenue~~Depreciation byand ~~service~~amortization ~~offering~~expense ~~were~~increased $9.3 million or 8% primarily as ~~follows~~a ~~for~~result ~~the~~of ~~six~~additional ~~months~~capital ~~ended~~expenditures ~~June~~through June 30, 2006. (These expenditures were primarily for purchases of customer premise equipment, installation materials, capitalized labor, headend equipment and network extensions, all of which we consider necessary in ~~thousands):~~order to continue to maintain and grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2005.

	2002 Revenue by Service Offering		% of Total Revenue	2001 Revenue by Service Offering		% of Total Revenue
Basic	$	247,340	63.4%	$	234,943	66.2%
Digital		31,982	8.2%		21,074	6.0%
High-speed data		25,732	6.6%		14,947	4.2%
Premium		30,053	7.7%		29,406	8.3%
Analog pay-per-view		961	0.2%		2,531	0.7%
Advertising		24,823	6.4%		21,729	6.1%
Franchise fees		12,552	3.2%		11,626	3.3%
Other		16,561	4.3%		18,423	5.2%
Total	$	390,004	100.0%	$	354,679	100.0%

As a result of the factors discussed above, Adjusted Operating Income before Depreciation and Amortization increased $1.1 million to $225.2 million, an increase of 1%.

~~Average~~Interest ~~monthly~~expense ~~revenue per basic customer was~~ increased $507.249 ~~for~~million, ~~the~~or ~~six~~8%, ~~months~~due ~~ended~~to ~~June~~higher 30interest rates, ~~2002~~ ~~compared~~which toaveraged ~~$46~~8.295% for the six months ended June 30, ~~2001~~2006, ~~primarily~~as ~~reflecting~~compared the continued successful rollout of new product offerings in the Indiana, Kentucky and Ohio markets. Average monthly revenue per basic customer for high-speed data and interactive digital video increased to $7.436% for the six months ended June 30, ~~2002 up from $4~~2005.70 ~~for the six months ended June 30, 2001.~~

~~Programming~~Liquidity and other operating costs increased $9.9 million or 7.8% to $137.0 million for the six months ended June 30, 2002 from $127.0 million for the six months ended June 30, 2001. The increase in programming and other operating ~~costs~~Capital was primarily the result of increased programming rates for our classic and digital service as well as for additional programming added in rebuilt systems. Programming costs increased 13.7% for the six months ended June 30, 2002 from the six months ended June 30, 2001. Resources

~~Selling~~Our business requires cash for operations, ~~general~~debt service and ~~administrative~~capital ~~expenses~~expenditures. ~~increased~~The ~~$5.4~~cable ~~million~~television orbusiness ~~8.0%~~has tosubstantial ongoing ~~$72.7~~capital ~~million~~requirements for the ~~six~~construction, expansion and maintenance of ~~months~~its ~~ended~~broadband ~~June~~networks ~~30,~~and ~~2002~~provision ~~from~~of ~~$67~~new services.3 ~~million~~In the past, expenditures have been made for various purposes, including the ~~six~~upgrade ~~months~~of ~~ended~~the ~~June~~existing cable 30network, ~~2001.~~and ~~The~~will ~~increase~~continue into ~~selling~~be made for network extensions, installation ~~general~~of ~~and~~new ~~administrative~~services, ~~expense~~customer ~~was~~premise ~~primarily~~equipment ~~the~~(e.g., ~~result~~set-top boxes), deployment of ~~increased~~new ~~employee~~product ~~compensation~~and service offerings, and, ~~employment~~to ~~levels~~a ~~associated~~lesser ~~with~~extent, network ~~new~~upgrades. Historically, we have been able to meet our cash requirements ~~services~~with ~~partially~~cash ~~offset~~flow byfrom aoperations, ~~decrease~~borrowings inunder ~~marketing~~our ~~costs.~~credit facilities and issuances of private and public debt and equity.

~~Non-recurring~~Cash ~~high-speed~~provided ~~data~~by ~~service~~operations ~~charges~~for ~~were~~the ~~incurred~~six ~~through~~months ~~February 28~~ended June 30, 2006 ~~2002~~and as2005 awas ~~result~~$135.0 ofmillion ~~payments~~and ~~made~~$135.2 tomillion. AtThis ~~Home~~slight ~~Corporation~~decrease ~~(“@Home”),~~was attributable to the ~~former~~increase ~~provider~~in our net loss almost entirely offset by the timing of ~~high-speed~~cash ~~data~~receipts ~~services~~and payments related to our working capital accounts.

21Cash used in investing activities for the six months ended June 30, 2006 and 2005 was $140.7 million and $90.5 million. The increase primarily was due to increases in capital expenditures. For the six months ended June 30, 2006 and 2005, we spent $140.7 million and $90.1 million in capital expenditures. These expenditures principally constituted purchases of customer premise equipment, capitalized labor, installation materials, headend equipment and system upgrades and rebuilds, all of which are necessary to maintain our existing network, grow our customer base and expand our service offerings.

for all of our systems, except for those located in Ohio. On September 28, 2001, @Home filed for protection under Chapter 11 of the Bankruptcy Code. For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim service arrangement that required us to pay $10.0 million to @Home to extend service for three months through February 28, 2002. As a result of this arrangement we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered through February 28, 2002. 20

~~Depreciation~~Cash ~~and~~used ~~amortization~~in ~~expense~~financing ~~decreased~~activities ~~$79.4 million or 45.4% to $95.6 million~~ for the six months ended June 30, ~~2002~~2006 ~~from~~ and 2005 was $~~175~~16.18 million ~~for~~and ~~the~~$41.8 ~~six months ended June 30, 2001~~million. The decrease inwas ~~depreciation~~due ~~and~~to ~~amortization~~$25.0 ~~expense~~million ~~was~~in ~~primarily~~net ~~the~~proceeds ~~result~~from ofborrowings ~~ceasing~~under the Midwest ~~amortization~~Holdings ofcredit ~~goodwill~~facility ~~and~~for ~~indefinite~~the ~~lived~~three ~~intangible~~months ~~assets~~ended ~~associated with the adoption of SFAS~~June ~~No. 142~~30, ~~effective January 1, 2002, partially offset by capital expenditures made to rebuild the existing cable equipment~~2006.

~~OCF~~Free ~~increased~~Cash ~~$19.0~~Flow ~~million or 12.6% to $169.3 million~~ for the six months ended June 30, ~~2002~~2006 ~~from~~totaled ($~~150~~5.37) million compared to $45.1 million for the six months ended June 30, ~~2001,~~2005. ~~primarily~~The ~~due~~decrease toin ~~increased digital and high-speed data revenue partially offset~~Free byCash ~~increases~~Flow infrom ~~programming~~June 30, ~~and~~2005 ~~other~~to ~~operating~~June 30, ~~costs~~2006 ~~and~~of ~~selling,~~$50.8 ~~general~~million ~~and~~was primarily ~~administrative~~driven ~~costs.~~by the following:

~~Interest expense decreased $6.8~~· A ~~million or 7.2% to~~ $8750.85 million ~~for~~increase ~~the~~in six months ended June 30, 2002 from $94.6 million for the six months ended June 30, 2001. The decrease is the result of lower average interest rates of 7.5% for the six months ended June 30, 2002 from 10.1% for the six months ended June 30, 2001 partially offset by higher outstanding debt of $2.3 billion during the six months ended June 30, 2002 from $1.9 billion during the six months ended June 30, 2001, resulting from the funding of capital expenditures; ~~subsequent to June 30, 2001.~~ and

~~For~~· A $7.4 ~~the~~million ~~six~~increase ~~months~~in ~~ended~~cash ~~June~~interest ~~30,~~expense ~~2002,~~paid ~~the~~primarily ~~net~~driven ~~loss~~by ~~was~~an increase ~~$18.2~~in ~~million.~~interest rates.

22These uses of cash were offset by:

~~Liquidity~~· A $9.3 ~~and~~million ~~Capital~~source ~~Resources~~of Free Cash Flow for the six months ended June 30, 2006 compared to a $3.3 million source for the six months ended June 30, 2005 from changes in working capital accounts; and

~~Our business requires cash for operations, debt service, capital expenditures and acquisitions. The cable television business has substantial on-going capital requirements for the construction,~~· A ~~expansion and maintenance of its broadband networks~~$1.1 ~~Expenditures~~million ~~have~~increase ~~primarily been used to upgrade our existing cable network, and~~ in ~~the~~Adjusted ~~future~~Operating ~~will~~Income bebefore ~~used~~Depreciation ~~for network extensions, new services, converters~~ and ~~network upgrades. Historically, we~~ ~~have been able to meet our cash requirements with cash flow from operations, borrowings under our credit facilities and issuances of private and public debt~~Amortization.

~~Cash~~We ~~provided~~have bya ~~operations~~substantial amount of debt. Our high level of debt could have important consequences for you. Our principal source of cash we need to pay our obligations and to repay the ~~six~~principal ~~months~~amount ~~ended~~of ~~June~~our 30debt obligations is the cash that our subsidiaries generate from their operations and their borrowings. We believe that the Insight Midwest Holdings credit facility, ~~2002~~cash on-hand and ~~2001~~our ~~was~~cash ~~$46~~flow from operations are sufficient to support our current operating plan.7 ~~million~~We ~~and~~had the ability to draw upon $78231.34 million. ~~The~~of ~~decrease~~unused ~~was~~availability ~~primarily~~under ~~attributable~~the Insight Midwest Holdings credit facility as of June 30, 2006 to ~~decrease~~fund inany shortfall ~~depreciation~~resulting ~~and~~from ~~amortization~~the ~~expense.~~inability of Insight Midwest’s cash from operations to fund its capital expenditures, meet its debt service requirements, including mandatory redemptions, or otherwise fund its operations.

~~Cash~~The following ~~used~~table insummarizes ~~investing~~our ~~activities~~contractual ~~for~~obligations ~~the~~and ~~six months ended June 30~~commitments, excluding ~~2002~~interest and ~~2001~~commitments ~~was~~for ~~$129.1~~programming, ~~million~~as ~~and $207.4 million. The decrease was primarily attributable to no significant acquisitions~~ of ~~cable~~June 30, ~~television~~2006 ~~systems and reduced capital expenditures~~ (in ~~2002.~~ thousands):

Cash provided by financing activities for the six months ended June 30, 2002 and 2001 was $71.7 million and $134.7 million. The decrease was primarily attributable to lower borrowings on our credit facilities offset by an inter-company loan of $100.0 million from Insight Inc. made on March 28, 2002.

	Contractual Obligations
	Long-Term Debt		Operating Leases			Total
2006	$	41,750		$	1,644	$	43,394
2007	83,500			2,075		85,575
2008	104,750			1,531		106,281
2009	1,542,500			1,151		1,543,651
2010	630,000			622		630,622
Thereafter	100,000			1,408		101,408
Total cash obligations	$	2,502,500		$	8,431	$	2,510,931

~~For~~Item ~~the six months ended June 30, 2002 and 2001, we spent $119~~3.4 ~~million~~Quantitative and ~~$145.5~~Qualitative ~~million~~Disclosures ~~in capital~~About ~~expenditures~~Market largely to support our plant rebuild in Illinois which is estimated to be substantially completed by year-end, telephone deployment and success-based capital including interactive digital and high-speed data expansion. Risk

OnOur ~~April~~revolving ~~18, 2002, we entered into an amendment to the Insight Midwest Holdings~~ credit ~~facility~~and ~~which~~term ~~delayed~~loan byagreements ~~six months the~~bear ~~scheduled~~interest ~~reduction~~at tofloating ~~the~~rates. ~~leverage ratio covenant to allow Insight Midwest Holdings more financing flexibility~~Accordingly, ~~and~~we ~~increased~~are ~~the~~exposed ~~aggregate amount that can be distributed~~ to uspotential ~~for the purpose of making investments in Insight Ohio. Previously, on~~losses ~~March~~related ~~28, 2002, Insight Inc. loaned $100.0 million~~ to uschanges toin ~~lower its effective~~ interest rates~~, $97~~.0 ~~million~~In oforder ~~which was contributed~~ to ~~Insight~~manage ~~Midwest~~our ~~Holdings~~exposure ~~on April 18, 2002 for use in paying down the credit facility balance and in funding~~to ~~financing~~interest ~~costs~~rate ~~associated with the amendments~~risk, ~~and~~we ~~$3.0~~enter ~~million~~into ofderivative ~~which~~financial ~~was contributed to Insight Ohio on March 28~~instruments, ~~2002. Pursuant to the credit facility amendments, Insight Midwest Holdings is permitted to make distributions to us for the~~typically ~~purpose~~interest ofrate ~~repaying~~swaps. ~~this~~The ~~loan~~counter-parties ~~provided that the leverage ratio is less than 4.25~~ to ~~1.0~~our ~~and~~swap ~~there~~agreements are nomajor ~~defaults existing under the credit facility~~financial institutions. ~~This~~We ~~loan~~do ~~bears~~not ~~annual~~enter ~~interest~~into ofderivatives ~~9%,~~or ~~has~~other afinancial ~~scheduled~~instruments for ~~maturity~~trading ~~date~~or ofspeculative ~~January 31, 2011 and permits prepayments~~purposes.

OnThe ~~June~~aggregate 6,fair ~~2002,~~market value aand ~~further~~aggregate ~~amendment~~carrying tovalue ~~the~~of ~~credit~~our ~~facility~~9¾% ~~was~~and ~~entered~~10½% ~~into~~senior ~~which~~notes ~~permits~~was ~~distributions by Insight~~$1.1 ~~Midwest~~billion ~~Holdings~~and ~~to us for the purpose of repaying the~~ $~~100~~1.0 ~~million~~billion ~~loan~~as ~~from~~of ~~Insight Inc.~~June 30, ~~without regard to the minimum leverage ratio requirement~~2006. ~~This~~The ~~amendment~~fair ~~will~~market ~~become~~value ~~effective upon the completion~~ of aour ~~debt~~credit ~~offering~~facility byborrowings ~~us of at least $175.0 million and the contribution of the proceeds to Insight Midwest Holdings.~~

We have a substantial amount of debt. Our high level of debt could have important consequences for you. Our principal source of cash we need to pay our obligations and to repay the principal amount of our debt obligations is the cash that our subsidiaries generate from their operations and their borrowings. 21

23approximates its carrying value as the credit facility borrowings bear interest at floating rates of interest. As of June 30, 2006 and December 31, 2005, the cost, if terminated, of our interest rate swap agreements was approximately $5.2 million and $2.4 million and is reflected in our financial statements as an other non-current liability.

WeItem ~~believe~~4. ~~that~~Controls ~~the Midwest Holdings Credit Facility, cash on-hand~~ and our cash flow from operations are sufficient to support our current operating plan. We have the ability to draw upon the $189.0 million of unused availability under the Midwest Holdings Credit Facility as of June 30, 2002 to fund any shortfall resulting from the inability of our cash from operations to fund capital expenditures, meet our debt service requirements or otherwise fund our operations. Procedures

~~The~~Insight ~~following~~Midwest’s management carried out an ~~table~~evaluation, ~~summarizes~~with ~~our~~the ~~contractual~~participation ~~obligations~~of its Chief Executive Officer and ~~commitments~~Chief Financial Officer, ~~excluding~~of ~~interest,~~the ~~preferred~~effectiveness ~~dividends~~of ~~and~~its ~~commitments~~disclosure ~~for~~controls ~~programming,~~and procedures as of June 30, ~~2002~~2006. Based upon that evaluation, ~~including~~its Chief Executive Officer and Chief Financial Officer concluded that (i) Insight Midwest’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in ~~which~~the rules and forms of the ~~related~~Securities ~~payments~~and ~~are~~Exchange Commission, ~~due~~and (ii) Insight Midwest’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports ~~thousands):~~that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Midwest’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

	LONG-TERM DEBT		PREFERRED INTERESTS		OPERATING LEASES		CAPITAL LEASES		Total
2002	$	—	$	—	$	1,402	$	369	$	1,771
2003		5,000		—		2,361		738		8,099
2004		80,000		—		1,911		738		82,649
2005		81,250		—		1,171		738		83,159
2006		87,750		140,000		864		838		229,452
Thereafter		2,132,000		55,869		1,404		4,672		2,193,945
Total cash obligations	$	2,386,000	$	195,869	$	9,113	$	8,093	$	2,599,075

There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

~~The~~Insight ~~following~~Capital’s ~~tables~~management ~~summarize~~carried ~~our~~out ~~capital~~an evaluation, ~~expenditures~~with ~~for~~the participation of its Chief Executive Officer and Chief Financial Officer, of the ~~year~~effectiveness ~~ended~~of ~~December~~its 31disclosure controls and procedures as of June 30, 2006. ~~2001~~Based upon that evaluation, its Chief Executive Officer and ~~projected~~Chief ~~capital~~Financial Officer ~~expenditures~~concluded ~~for~~that (i) Insight Capital’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the ~~year~~Securities ~~ending~~Exchange ~~December~~Act 31of 1934 is recorded, ~~2002~~processed, ~~both~~summarized ~~including~~and reported, within the time periods specified in the rules and ~~excluding~~forms ~~capitalized~~of ~~labor~~the ~~allocations~~Securities byand ~~category~~Exchange Commission, and (ii) Insight Capital’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports ~~thousands):~~that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Capital’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

	2001 Actual		2002 Projected
Success-based (1)	$	112,033	$	83,789
Upgrades (2)		90,934		78,623
Telephone (3)		60,412		66,922
Line extensions (4)		31,514		37,789
Maintenance (5)		25,064		25,687
Total capital expenditures	$	319,957	$	292,810

24 22

	2001 Actual		2002 Projected
Success-based (1)	$	91,990	$	62,276
Upgrades (2)		89,314		73,901
Telephone (3)		57,114		59,576
Line extensions (4)		8,891		18,899
Maintenance (5)		25,532		25,687
Capitalized labor and overhead (6)		47,116		52,471
Total capital expenditures	$	319,957	$	292,810

PART II. OTHER INFORMATION

~~(1)~~Item ~~Success-based consists primarily of costs for converters, remotes, modems and other high-speed data equipment, in addition to materials and contract labor for new customer connections~~1. ~~Excludes success-based capital expenditures for telephone.~~ Legal Proceedings

~~(2)~~See ~~Upgrades~~Note ~~consist~~9 ~~primarily~~in ofItem ~~costs~~1 toof ~~rebuild and/or upgrade distribution systems~~PART I, Notes ~~head-end towers, antennas and related equipment, in addition~~ to ~~contract~~Consolidated ~~labor~~Financial Statements.

~~(3)~~Item ~~Telephone~~1A. ~~consists~~Risk primarily of costs to construct telephone service infrastructures, as well as costs to upgrade headends with host digital terminals, plant and billing systems to accommodate telephone services and all success-based capital expenditures.Factors

~~(4)~~There ~~Line~~have ~~extensions~~been ~~consist~~no material ~~primarily~~changes ofin ~~costs~~our ~~associated~~risk ~~with~~factors ~~entering~~from ~~new~~those ~~service~~disclosed ~~areas~~in ~~including~~our ~~costs~~annual ofreport on ~~fiber,~~Form 10-K ~~coaxial~~for ~~cable,~~the ~~amplifiers~~year ~~and~~ended ~~electronic~~December 31, ~~equipment~~2005.

~~(5)~~Item ~~Maintenance consists primarily of costs of buildings, building improvements, computer and office equipment, vehicles, tools and other equipment~~6. Exhibits

(6) Capitalized labor and overhead consists primarily of internal payroll and overhead costs capitalized based on the percentage of time technical employees work directly on capital projects including construction, rebuilds and new customer connections. The allocation of capitalized labor to the capital expenditure categories in the above table is based on the composite percentage of time incurred on such respective categories.Exhibits:

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

~~Item 3. Quantitative and Qualitative Disclosure About Market Risk~~ 23

Our revolving credit and term loan agreements bear interest at floating rates. Accordingly, we are exposed to potential losses related to changes in interest rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes. In order to manage our exposure to interest rate risk, we enter into derivative financial instruments, typically interest rate swaps and collars. The counter-parties to our swap and collar agreements are major financial institutions. As of June 30, 2002, our interest rate swap and collar agreements expire in July 2003. SIGNATURES

~~The~~Pursuant to ~~fair~~the ~~market~~requirements ~~value and carrying value~~ of ~~our 9¾% and 10½% senior notes was $650.6 million and $693.7 million as of June 30, 2002. The fair market value of our credit facility borrowings approximates its carrying value as~~ the ~~credit~~Securities ~~facility~~Exchange ~~borrowings~~Act ~~bear interest at floating rates~~ of ~~interest. As of June 30~~1934, ~~2002,~~ the ~~estimated~~registrant ~~fair value (cost if terminated) of our interest rate~~has ~~swap~~duly ~~and~~caused ~~collar~~this ~~agreements~~report ~~was approximately $(17.9) million, which represents the amount required~~ to ~~enter~~be ~~into~~signed ~~offsetting contracts with similar remaining maturities based~~ on ~~quoted~~its ~~market~~behalf ~~prices~~by ~~and is reflected in our financial statements as other non-current liabilities. Changes in~~ the ~~fair~~undersigned ~~value of derivative financial instruments are either recognized in income or in stockholders’ equity as a component of other comprehensive loss depending on whether the derivative financial~~thereunto ~~instruments~~duly ~~qualify for hedge accounting~~authorized.

As of June 30, 2002, we had entered into interest rate swaps that approximated $435.0 million, or 27.4%, of our borrowings under all of our credit facilities. A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense by approximately $11.5 million.

Date: August 14, 2006	INSIGHT MIDWEST, L.P.
	By:	/s/ JOHN ABBOT
		John Abbot
		Executive Vice President and Chief
		Financial Officer
		(Principal Financial Officer)

26Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PART II. OTHER INFORMATION

Date: August 14, 2006	INSIGHT CAPITAL, INC.
	By:	/s/ JOHN ABBOT
		John Abbot
		Executive Vice President and Chief
		Financial Officer
		(Principal Financial Officer)

~~Item 6. Exhibits and Reports on Form 8-K~~ 24

(a) Exhibits:

10.1 Amendment No. 2 to Credit Agreement and Amendment No. 2 to Guarantee Agreement, dated as of June 6, 2002, among Insight Midwest Holdings, LLC, several banks and financial institutions or entities, and The Bank of New York, as Administrative Agent. (Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002 of Insight Communications Company, Inc. and incorporated herein by reference.)

99.1 Certification by Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002

99.2 Certification by Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K:

None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

Date: August 8, 2002						INSIGHT MIDWEST, L.P.
						By: /s/ Dinesh C. Jain
						Dinesh C. Jain
						Senior Vice President and Chief
						Financial Officer
						(Principal Financial Officer)
						INSIGHT CAPITAL, INC.
						By: /s/ Dinesh C. Jain
						Dinesh C. Jain
						Senior Vice President and Chief
						Financial Officer
						(Principal Financial Officer)

Filing Compare · INSIGHT MIDWEST LP