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FORM 10-K—ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

For the fiscal year ended DECEMBER 31, 2002

For the transition period from       to

Commission file number 333-43157

NORTHLAND CABLE TELEVISION, INC.

AND SUBSIDIARY GUARANTOR:

NORTHLAND CABLE NEWS, INC.

Registrant’s telephone number, including area code: (206) 621-1351

Securities registered pursuant to including Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

10 1/4% Senior Subordinated Notes due 2007

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

Yes [X] No [   ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes [   ] No [ X ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes [   ] No [ X ]

     As of December 31, 2002 the Company had 10,000 shares outstanding, all of which are held by an affiliate.

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

PART I

ITEM 1.    BUSINESS

Northland Cable Television, Inc. (the “Company”), a Washington Corporation, was formed in October 1985 and owns and operates 36 cable television systems serving small cities, towns, and rural communities in California, Georgia, South Carolina, North Carolina, Texas and Washington (collectively the “Systems”). The Company is a wholly owned subsidiary of Northland Telecommunications Corporation (“NTC”), which, together with the Company and its other affiliates, has specialized in providing cable television and related services in non-urban markets since 1981. Other subsidiaries of NTC include:

			NORTHLAND COMMUNICATIONS CORPORATION (“NCC”) - formed in March 1981 and principally involved in the ownership and management of cable television systems. NCC is the sole shareholder of Northland Cable Properties, Inc.

NORTHLAND CABLE PROPERTIES, INC. (“NCPI”) - formed in February 1995 and principally involved in the direct ownership of local cable television systems. NCPI is the majority member of Northland Cable Ventures LLC.

			NORTHLAND CABLE VENTURES LLC (“NCV”) - formed in June 1998 and principally involved in the direct ownership of local cable television systems. NCV’s minority member is an LLC principally owned by executives of the Company.

			NORTHLAND CABLE SERVICES CORPORATION (“NCSC”) - formed in August 1993 and principally involved in the development and production of computer software used in billing and financial record keeping for Northland-affiliated cable systems. Also provides technical support associated with the build out and upgrade of Northland affiliated cable systems. Sole shareholder of Cable Ad-Concepts.

CABLE AD-CONCEPTS, INC. (CAC) - formed in November 1993 and principally involved in the sale, development and production of video commercial advertisements that are cablecast on Northland- affiliated cable systems.

			NORTHLAND MEDIA, INC. - formed in April 1995 as a holding company. Sole shareholder of the two following entities:

			STATESBORO MEDIA, INC. - formed in April 1995 and principally involved in operating an AM radio station serving the community of Statesboro, Georgia and surrounding areas.

CORSICANA MEDIA, INC. - purchased in September 1998 from an affiliate and principally involved in operating an AM radio station serving the community of Corsicana, Texas and surrounding areas.

		Since closing its initial acquisition in 1986, the Company has continued to target, negotiate and complete acquisitions of cable systems and integrate the operation of such systems. The Company has increased its basic and premium subscribers through strategic acquisitions, selective system upgrades and extensions of its cable systems. As of December 31, 2002, the total number of basic subscribers served by the Systems was 108,269, and the Company’s penetration rate (basic subscribers as a percentage of homes passed) was approximately 56%.
		The Company has 88 non-exclusive franchises to operate the Systems. These franchises, which will expire at various dates through 2022, have been granted by local and county authorities in the areas in which the Systems operate. The Company has historically been able to renew its franchises without incurring significant costs, and management believes that any particular franchise will be renewed or that it can be renewed on commercially favorable terms, however, no assurances can be given.

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		Franchise fees are paid to the granting governmental authorities. These fees vary between 1% and 5% and are generally based on the respective gross revenues of the Systems in a particular community. The franchises may be terminated for failure to comply with their respective conditions.
		THE SYSTEMS
		The Company’s systems are divided into four geographical regions. Unless otherwise indicated, all operating statistical data set forth in the following table and the region-by-region description of the Systems, which follows, is as of December 31, 2002. The system serving the area of Port Angeles, Washington was sold to an unaffiliated third party on March 11, 2003.

	(1)	Homes passed refers to estimates of the number of dwelling units in a particular community that can be connected to the distribution system without any further extension of principal transmission lines. Such estimates are based upon a variety of sources, including billing records, house counts, city directories and other local sources.
	(2)	The number of basic subscribers has been computed by adding the actual number of subscribers for all non-bulk accounts and the equivalent subscribers for all bulk accounts. The number of such equivalent subscribers has been calculated by dividing aggregate basic service revenue for bulk accounts by the full basic service rate for the community in which the account is located.
	(3)	Percentage of all basic subscribers based on an aggregate of all Systems.
	(4)	Premium service units represent the number of subscriptions to premium channels.
	(5)	EBITDA represents income from operations excluding the effect of depreciation and amortization expense. EBITDA margin represents EBITDA as a percentage of revenue. EBITDA is commonly used to analyze companies on the basis of leverage and liquidity. However, EBITDA is not a measure determined under generally accepted accounting principles, or GAAP, in the United States and may not be comparable to similarly titled measures reported by other companies. EBITDA should not be construed as a substitute for operating income or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. We have presented EBITDA to provide additional information with respect to our ability to meet future debt service, capital expenditure and working capital requirements (See reconciliation of EBITDA to cash flow from operations included in the Liquidity and Capital Resources section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”).
		The South Carolina/North Carolina/Georgia Region. The South Carolina/North Carolina/Georgia Region consists of eight headends serving 58,022 subscribers. Four headends, located in Aiken, Greenwood and Clemson, South Carolina and Statesboro, Georgia, serve 53,507 subscribers or 92.2% of the total subscribers in the region. The region is currently operated from five primary local offices located in Aiken, Greenwood, Clemson, Statesboro and Highlands, North Carolina.
		Clemson, South Carolina. The Clemson area systems serve 13,119 subscribers from two headends. The Clemson system, which is home to Clemson University, is the largest system, serving 12,925 subscribers. Approximately 85% of the homes passed are served by plant with 450 MHz or better channel capacity. The Company began offering digital television service in the Clemson system during 2000. Additionally, the Clemson area systems have a strong advertising sales effort, and their principal office and headend sites are owned by the Company.
		Aiken, South Carolina. The Aiken area systems serve 17,955 subscribers from three headends. The Aiken headend serves 89.8% of the subscribers, has a 550 MHz channel capacity and is addressable. The Company began offering digital television service in the Aiken system during 2001. The Aiken area has a diversified industrial base consisting of local, national and foreign manufacturing companies covering such diverse industries such as pharmaceuticals, textiles, industrial

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		robotics, gardening seeds and prefabricated homes. The largest employer in the Aiken area is the Westinghouse Savannah River Company. The office and two of the headend sites are owned by the Company.
		Greenwood, South Carolina. The Greenwood system serves 15,932 subscribers from a single headend and has a minimum of 450 MHz channel capacity. The Company began the upgrade of the Greenwood system to 550 MHz channel capacity in 2000, with approximately 69% of the homes passed being served by plant with 550 MHz channel capacity by year-end 2002. Although this system employed fiber optic technology, the Company has constructed an expansion of the fiber optic backbone designed to support 860 MHz capacity. Additionally, a fiber optic backbone interconnect was constructed to the Saluda and Edgefield systems for system upgrades and connection, currently in process. The Company began offering digital television service in the Greenwood system during 2001. The Greenwood area has a diversified industrial base consisting of local, national and foreign manufacturing companies covering such diverse industries such as pharmaceuticals, photo film textiles, industrial robotics, gardening seeds and prefabricated homes. The Company owns its office and headend site.
		Statesboro, Georgia. The Statesboro system serves 8,526 subscribers from a single headend with approximately 95% of the subscribers served by 450 MHz channel capacity. The Company began offering digital television service in the Statesboro system during 2000. The Statesboro system has a strong advertising sales effort and its office and headend site are owned by the Company. Statesboro is home to Georgia Southern University.
		Highlands, North Carolina. The Highlands system serves 2,490 subscribers from a single headend with approximately 83% of the subscribers served by 330 MHz channel capacity and 17% served by 450 MHz capacity. The system currently utilizes and plans to expand a fiber backbone designed to ultimately support 860 MHz capacity. Highlands is located on a plateau of the Blue Ridge Mountains where Georgia, North Carolina and South Carolina meet. The Highlands area has long been a vacation destination for affluent families from many Southern cities. The area is encircled by 200,000 acres of the End National Forest. One of the main attractions of Highlands is the area’s exclusive golf clubs. The system experiences seasonality in its subscriber base, the area’s low season (winter) and high season (summer) fluctuate by approximately 700 basic subscribers.
		The Washington Region. The Washington Region serves 15,206 subscribers from four headends and is operated from two offices located in Port Angeles and Moses Lake, Washington. The two largest headends serve 11,656 subscribers, or 76.7% of the Company’s total subscribers in the region.
		Port Angeles, Washington. The Port Angeles system serves 5,718 subscribers from one headend. The system utilizes a fiber optic backbone designed to support a 750 MHz capacity with 63% of the subscribers served by 550 MHz capacity plant and 37% served by 450 MHz capacity plant. The Company began offering digital television service in the Port Angeles system during 2000. Port Angeles is located near the Olympic National Park and is the county seat for Clallam County. The system’s office and headend sites are owned by the Company.
		Moses Lake, Washington. The Moses Lake area systems serve 9,488 subscribers from three headends. The Moses Lake headend serves 62.6% of the subscribers and was recently upgraded to 450 MHz channel capacity, which included the expansion of the fiber optic backbone designed to support a 750 MHz capacity. The Company began offering digital television service in the Moses Lake system during 1999. The office, three headend sites and a microwave site are owned by the Company. The three headends are interconnected via microwave for the delivery of certain off-air broadcast signals imported from the Seattle and Spokane, Washington markets. Each system maintains a separate headend facility for reception and distribution of satellite signals. An upgrade of the Othello system to 450 MHz was recently completed. The Ephrata system is currently being upgraded to 550 MHz capacity with completion projected by the end of 2003.
		The Texas Region. The Texas Region is characterized by smaller systems, with 17 headends serving 24,141 subscribers. Eight headends currently serve 83.9% of the subscribers. Additionally, the Company’s management structure allows it to achieve operating efficiencies, as only five local offices are required to service the region.
		Stephenville, Texas. The Stephenville area systems serve 5,333 subscribers from a cluster of four headends. Stephenville is home to Tarleton State College, an affiliate of Texas A&M University. All of the subscribers are currently served by plant with 450 MHz or better channel capacity. The Company began offering digital television service in the Stephenville system during 2001. The office and three of the headend sites are owned by the Company.
		Mexia, Texas. The Mexia area systems serve 10,497 subscribers from a cluster of nine headends, with the two largest headends, Mexia and Crockett, serving 54.1% of the subscribers. Approximately 87.7% of subscribers currently are serviced by plant with 400 MHz capacity, with the Mexia headend utilizing a fiber optic backbone. The Company began

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		offering digital television service in the Mexia system during 2001. The Mexia area has a diversified economy with Nucor Steel, Inc. as a major employer.
		Marble Falls, Texas. The Marble Falls area systems serve 6,948 subscribers from a cluster of three headends. In June 2000 the Company completed a fiber optic interconnect of the Burnet system to the Marble Falls system, thereby eliminating an additional headend. With the completion of the Burnet interconnect, approximately 80.9% of the subscribers in the area are served from a single headend. The combination office and headend site in Marble Falls is owned by the Company. Over the next two to three years the remaining systems in the Marble Falls area are scheduled to be upgraded to 400 MHz or 550 MHz capacity. The Company began offering digital television service in the Marble Falls system during 2001. The Marble Falls region is a popular outdoor recreation and retirement area for families from nearby Austin and San Antonio.
		The remaining headend in the Texas region, located in the Navasota, serves 1,363 subscribers, with all of the subscribers served by plant with 400 MHz capacity or better.
		The California Region. The California Region serves 10,900 subscribers from seven headends, which are operated from three offices located in Yreka, Oakhurst and Mount Shasta, California. Three headends serve 9,530 subscribers or 87.4% of the total subscribers in the region.
		Oakhurst, California. The Oakhurst, California area is one of the entrances to Yosemite National Park. The Oakhurst area systems serve 3,874 subscribers from a cluster of five headends. The Oakhurst headend serves 64.6% of the subscribers in the area. An upgrade of the Oakhurst system to 450 MHz capacity with approximately 90.0% of the system’s subscribers served was recently completed. The Company began offering digital television service in the Oakhurst system during 2001.
		Yreka, California. The Yreka, California system, located near Mt. Shasta National Park, serves 2,918 subscribers from a single headend. Yreka is the county seat of Siskiyou County. The Yreka system currently has a plant capacity of 75% 450 MHz and 25% 400 MHz. An ongoing upgrade of the system to 450 MHz capacity is in process with completion projected by year-end 2004. The Company began offering digital television service in the Yreka system during 2001. The Yreka office and headend sites are owned by the Company.
		Mount Shasta, California. The Mount Shasta, California system, serves 4,108 subscribers from a primary headend and is located in close proximity to the Company’s Yreka system. The system sits at the base of 14,162 foot Mt. Shasta, which attracts tourists year round with skiing, hiking and golf courses nearby. The communities of Mount Shasta, Dunsmuir and Weed are connected by fiber optic backbone and the community of McCloud is connected via AML microwave. Portions of the system serving approximately 85% of the subscribers are currently at 330 MHz capacity with the remaining 15% at 550 MHz. The completion of an upgrade to 550 MHz is planned. The Company began offering digital television service in the Mount Shasta system in 2000. The Mount Shasta area has a strong economic base. Forestry, forest services and tourism are the major industries.
		As of December 31, 2002, the Company had approximately 171 full-time employees and 6 part-time employees. Nine of the Company’s employees at its Moses Lake, Washington system are represented by a labor union. The Company considers its relations with its employees to be good.
		The Company’s cable television business generally is not considered seasonal. Its business is not dependent upon a single customer or a few customers, the loss of any one or more of which would have a material adverse effect on its business. No customer accounts for 10% or more of revenues. No material portion of the Company’s business is subject to re-negotiation of profits or termination of contracts or subcontracts at the election of any governmental unit, except that franchise agreements may be terminated or modified by the franchising authorities as noted above. During the last year, the Company did not engage in any research and development activities.
		Company revenues are derived primarily from monthly payments received from cable television subscribers. Subscribers are divided into four categories: basic subscribers, expanded basic subscribers, premium subscribers, and digital subscribers. “Basic subscribers” are households that subscribe to the basic level of service, which generally provides access to the three major television networks (ABC, NBC and CBS), a few independent local stations, PBS (the Public Broadcasting System) and certain satellite programming services, such as ESPN, CNN or The Discovery Channel. “Expanded basic subscribers” are households that subscribe to an additional level of programming service, the content of which varies from system to system. “Premium subscribers” are households that subscribe to one or more “pay channels” in addition to the basic service. These pay channels include such services as Showtime, Home Box Office, Cinemax, The

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		Movie Channel, Encore and Starz. “Digital subscribers” are those who subscribe to digitally delivered video and audio services where offered.
		COMPETITION
		Cable television systems currently experience competition from several sources, including broadcast television, cable overbuilds, direct broadcast satellite services, private cable and multichannel multipoint distribution service systems. Cable television systems are also in competition in various degrees with other communications and entertainment media, including motion pictures, home video cassette recorders, Internet data delivery and Internet video delivery. The following provides a summary description of these sources of competition.
		Broadcast Television
		Cable television systems have traditionally competed with broadcast television, which consists of television signals that the viewer is able to receive directly on the viewer’s television without charge using an “off-air” antenna. The extent of this competition is dependent in part upon the quality and quantity of signals available by antenna reception as compared to the services provided by the local cable system. Accordingly, cable operators find it less difficult to obtain higher penetration rates in rural areas (where signals available off-air are limited) than in metropolitan areas where numerous, high quality off-air signals are often available without the aid of cable television systems. The recent licensing of digital spectrum by the FCC will provide incumbent broadcast licensees with the ability to deliver high definition television pictures and multiple digital-quality program streams, as well as advanced digital services such as subscription video.
		Overbuilds
		Cable television franchises are not exclusive, so that more than one cable television system may be built in the same area. This is known as an “overbuild.” Overbuilds have the potential to result in loss of revenues to the operator of the original cable television system. Constructing and developing a cable television system is a capital intensive process, and it is often difficult for a new cable system operator to create a marketing edge over the existing system. Generally, an overbuilder would be required to obtain franchises from the local governmental authorities, although in some instances, the overbuilder could be the local government itself. In any case, an overbuilder would be required to obtain programming contracts from entertainment programmers and, in most cases, would have to build a complete cable system such as headends, trunk lines and drops to individual subscribers homes throughout the franchise areas.
		Federal cross-ownership restrictions historically limited entry by local telephone companies into the cable television business. The 1996 Telecom Act eliminated this cross-ownership restriction. See “Regulation and Legislation” below. It is therefore possible for companies with considerable resources to overbuild existing cable operators and enter the business. Several telephone companies have begun seeking cable television franchises from local governmental authorities and constructing cable television systems. The Company cannot predict at this time the extent of telephone company competition that will emerge in areas served by the Company’s cable television systems. The entry of electric utility companies into the cable television business, as now authorized by the 1996 Telecom Act, could have a similar adverse effect.
		Direct Broadcast Satellite Service
		High powered direct-to-home satellites have made possible the wide-scale delivery of programming to individuals throughout the United States using small roof-top or wall-mounted antennas. The two leading DBS providers have experienced dramatic growth over the last several years and together now serve over 17 million customers nationwide. Companies offering direct broadcast satellite service use video compression technology to increase channel capacity of their systems to more than 200 channels and to provide packages of movies, satellite networks and other program services which are competitive to those of cable television systems. DBS companies historically faced significant legal and technological impediments to providing popular local broadcast programming to their customers. Recent federal legislation reduced this competitive disadvantage. Nevertheless, technological limitations still affect DBS companies, and it is expected that DBS companies will offer local broadcast programming only in the top 50 to 100 U.S. markets for the foreseeable future. The availability of DBS equipment at reasonable prices (often free with promotions), and the relative attractiveness of the programming options offered by the cable television industry and direct broadcast satellite competitors will impact the ability of providers of DBS service to compete successfully with the cable television industry. Recently, the two leading DBS providers announced their intent to merge into one DBS provider, which, according to the companies’ FCC filings, would enable the merged company to offer services such as local broadcast programming in all U.S. markets

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		and high-speed Internet access nationwide; if this merger is approved by both the FCC and Department of Justice, DBS may become a stronger competitor to the cable television industry.
		Private Cable
		Additional competition is provided by private cable television systems, known as satellite master antenna television, serving multi-unit dwellings such as condominiums, apartment complexes, and private residential communities. These private cable systems may enter into exclusive agreements with apartment owners and homeowners associations, which may preclude operators of franchised systems from serving residents of these private complexes. Operators of private cable, which do not cross public rights of way, are free from the federal, state and local regulatory requirements imposed on franchised cable television operators.
		Multichannel Multipoint Distribution Service Systems
		Cable television systems also compete with wireless program distribution services such as multichannel, multipoint distribution service systems, commonly called wireless cable, which are licensed to serve specific areas. Multichannel, multipoint distribution service systems use low-power microwave frequencies to transmit television programming over-the-air to paying subscribers. This industry is less capital intensive than the cable television industry, and it is therefore more practical to construct systems using this technology in areas of lower subscriber penetration.
		REGULATION AND LEGISLATION
		Summary
		The following summary addresses the key regulatory developments and legislation affecting the cable television industry. Other existing federal legislation and regulations, copyright licensing and, in many jurisdictions, state and local franchise requirements are currently the subject of a variety of judicial proceedings, legislative hearings and administrative and legislative proposals, which could change, in varying degrees, the manner in which cable television systems operate. Neither the outcome of these proceedings nor their impact upon the cable television industry or the Company can be predicted at this time.
		The Company expects to adapt its business to adjust to the changes that may be required under any scenario of regulation. At this time, the Company cannot assess the effects, if any, that present regulation may have on the Company’s operations and potential appreciation of its Systems. There can be no assurance that the final form of regulation will not have a material adverse impact on the Company’s operations.
		The operation of a cable system is extensively regulated by the FCC, some state governments and most local governments. The 1996 Telecommunications Act has altered the regulatory structure governing the nation’s communications providers. It removes barriers to competition in both the cable television market and the local telephone market. Among other things, it also reduces the scope of cable rate regulation and encourages additional competition in the video programming industry by allowing local telephone companies to provide video programming in their own telephone service areas.
		The 1996 Telecommunications Act requires the FCC to undertake a host of implementing rulemakings. Moreover, Congress and the FCC have frequently revisited the subject of cable regulation. Future legislative and regulatory changes could adversely affect the Company’s operations.
		Cable Rate Regulation
		The 1992 Cable Act imposed an extensive rate regulation regime on the cable television industry, which limited the ability of cable companies to increase subscriber fees. Under that regime, all cable systems were subject to rate regulation, unless they face “effective competition” in their local franchise area. Federal law now defines “effective competition” on a community-specific basis as requiring satisfaction of conditions rarely satisfied in the current marketplace, although this may change in light of emerging DBS competition.
		Although the FCC established the underlying regulatory scheme, local government units, commonly referred to as local franchising authorities, are primarily responsible for administering the regulation of the lowest level of cable service called the basic service tier. The basic service tier typically contains local broadcast stations and public, educational, and government access channels. Before a local franchising authority begins basic service rate regulation, it must certify to the FCC that it will follow applicable federal rules. Many local franchising authorities have voluntarily declined to exercise

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		their authority to regulate basic service rates. Local franchising authorities also have primary responsibility for regulating cable equipment rates. Under federal law, charges for various types of cable equipment must be unbundled from each other and from monthly charges for programming services.
		As of December 31, 2002, approximately 10% of the Company’s local franchising authorities were certified to regulate basic tier rates. The 1992 Cable Act permits communities to certify and regulate rates at any time, so that it is possible that additional localities served by the systems may choose to certify and regulate rates in the future.
		The FCC itself historically administered rate regulation of cable programming service tiers, which represent the expanded level of packaged, non-“premium”, programming services typically containing satellite-delivered programming. The FCC’s authority, however, with respect to smaller operators like the Company ended in 1996.
		Under the rate regulations of the FCC, most cable systems were required to reduce their basic service tier and cable programming service tier rates in 1993 and 1994, and have since had their rate increases governed by a complicated price cap scheme that allows for the recovery of inflation and certain increased costs, as well as providing some incentive for expanding channel carriage. The FCC has modified its rate adjustment regulations to allow for annual rate increases and to minimize previous problems associated with regulatory lag. Operators also have the opportunity to bypass this “benchmark” regulatory scheme in favor of traditional “cost-of-service” regulation in cases where the latter methodology appears favorable. Cost of service regulation is a traditional form of rate regulation, under which a utility is allowed to recover its costs of providing the regulated service, plus a reasonable profit. In a particular effort to ease the regulatory burden on small cable systems, the FCC created special rate rules applicable for systems with fewer than 15,000 subscribers owned by an operator with fewer than 400,000 subscribers. The special rate rules allow for a simplified cost-of-service showing. All of the Company’s systems are eligible for these simplified cost-of-service rules (two pursuant to waivers granted by the FCC), and have calculated rates generally in accordance with those rules. To the extent the Company’s systems remain rate regulated on the basic service tier, this regulatory option affords the Company significant regulatory options.
		The FCC and Congress have provided various forms of rate relief for smaller cable systems owned by smaller operators. Premium cable services offered on a per-channel or per-program basis remain unregulated, as do affirmatively marketed packages consisting entirely of new programming product. However, federal law requires that the basic service tier be offered to all cable subscribers and limits the ability of operators to require purchase of any cable programming service tier if a customer seeks to purchase premium services offered on a per-channel or per-program basis, subject to a technology exception which sunsets in October 2002.
		Regulation by the FCC of cable programming service tier rates for all systems, regardless of size, sunset pursuant to the 1996 Telecom Act on March 31, 1999. Certain legislators, however, have called for new rate regulations if unregulated cost rates increase dramatically. Should this occur, all rate deregulation including that applicable to small operators like the Company could be jeopardized. The 1996 Telecom Act also relaxes existing “uniform rate” requirements by specifying that uniform rate requirements do not apply where the operator faces “effective competition,” and by exempting bulk discounts to multiple dwelling units, although complaints about predatory pricing still may be made to the FCC.
		Cable Entry Into Telecommunication
		The 1996 Telecom Act creates a more favorable environment for us to provide telecommunications services beyond traditional video delivery. It provides that no state or local laws or regulations may prohibit or have the effect of prohibiting any entity from providing any interstate or intrastate telecommunications service. A cable operator is authorized under the 1996 Telecom Act to provide telecommunications services without obtaining a separate local franchise. States are authorized, however, to impose “competitively neutral” requirements regarding universal service, public safety and welfare, service quality, and consumer protection. State and local governments also retain their authority to manage the public rights-of-way and may require reasonable, competitively neutral compensation for management of the public rights-of-way when cable operators provide telecommunications service. The favorable pole attachment rates afforded cable operators under federal law can be gradually increased by utility companies owning the poles, beginning in 2001, if the operator provides telecommunications service, as well as cable service, over its plant.
		Internet Service
		There is at present no significant federal regulation of cable system delivery of Internet services. So far, cable operators are experiencing many victories where regulation is attempted. For example, many local franchising authorities were unsuccessful in their attempts to impose mandatory Internet access requirements as part of cable franchise renewals or transfers. A federal district court in Portland, Oregon upheld the legal ability of local franchising authority to impose these

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		types of conditions, but such ruling was reversed by the Ninth Circuit Court of Appeals. Additionally, In March 2002, the FCC adopted a Declaratory Ruling, concluding that cable modem service is properly classified as an interstate information service and is therefore subject to FCC jurisdiction. For now, this leaves cable modem service exempt from open access requirements. However, the FCC simultaneously adopted a Notice of Proposed Rulemaking to determine whether, in light of marketplace developments, it is necessary or appropriate at this time to require access over cable systems by multiple Internet service providers, and whether (and to what extent) cable modem service should be regulated by state and local franchising authorities. Any increased regulation could burden the capacity of cable systems and complicate any plans the Company may have or develop for providing Internet service.
		Many utilities were unsuccessful in attempting to impose unduly burdensome pole attachment rental fees for cable operator’s provision of Internet access services when the U.S. Supreme Court recently ruled that cable television systems may deliver high-speed Internet access and remain within the protections of Section 703 of the Telecommunications Act of 1996 (the “Pole Attachment Act”). National Cable & Telecommunications Assoc. v. Gulf Power Co., Nos. 00-832 and 00-843, 534 U.S. (January 16, 2002). The U.S. Supreme Court reversed the Eleventh Circuit’s decision to the contrary and sustained the FCC decision that applied the Pole Attachment Act’s rate formula and other regulatory protections to cable television systems’ attachments over which commingled cable television and cable modem services are provided.
		Telephone Entry Into Cable Television
		The 1996 Telecom Act allows telephone companies to compete directly with cable operators by repealing the historic telephone company/cable cross-ownership ban. Local exchange carriers, including the regional telephone companies, can now compete with cable operators both inside and outside their telephone service areas with certain regulatory safeguards. Because of their resources, local exchange carriers could be formidable competitors to traditional cable operators. Various local exchange carriers currently are providing video programming services within their telephone service areas through a variety of distribution methods, including both the deployment of broadband wire facilities and the use of wireless transmission.
		Under the 1996 Telecom Act, local exchange carriers or any other cable competitor providing video programming to subscribers through broadband wire should be regulated as a traditional cable operator, subject to local franchising and federal regulatory requirements, unless the local exchange carrier or other cable competitor elects to deploy its broadband plant as an open video system. To qualify for favorable open video system status, the competitor must reserve two-thirds of the system’s activated channels for unaffiliated entities. The Fifth Circuit Court of Appeals reversed certain of the FCC’s open video system rules, including its preemption of local franchising. The FCC revised its OVS rules to eliminate this general preemption, thereby leaving franchising discretion to local and state authorities. It is unclear what effect this ruling will have on entities pursuing open video system operation.
		Although local exchange carriers and cable operators can now expand their offerings across traditional service boundaries, the general prohibition remains on local exchange carrier buyouts of co-located cable systems. Co-located cable systems are cable systems serving an overlapping territory. Cable operator buyouts of co-located local exchange carrier systems, and joint ventures between cable operators and local exchange carriers in the same market also are prohibited. The 1996 Telecom Act provides a few limited exceptions to this buyout prohibition, including a carefully circumscribed “rural exemption.” The 1996 Telecom Act also provides the FCC with the limited authority to grant waivers of the buyout prohibition.
		Electric Utility Entry Into Telecommunications/Cable Television
		The 1996 Telecom Act provides that registered utility holding companies and subsidiaries may provide telecommunications services, including cable television, notwithstanding the Public Utility Holding Company Act. Electric utilities must establish separate subsidiaries, known as “exempt telecommunications companies” and must apply to the FCC for operating authority. Like telephone companies, electric utilities have substantial resources at their disposal, and could be formidable competitors to traditional cable systems. Several of these utilities have been granted broad authority by the FCC to engage in activities, which could include the provision of video programming.
		Additional Ownership Restrictions
		The 1996 Telecom Act eliminates statutory restrictions on broadcast/cable cross-ownership, including broadcast network/cable restrictions, but leaves in place existing FCC regulations prohibiting local cross-ownership between co-located television stations and cable systems. However, in February 2002, the U.S. Court of Appeals for the D.C. Circuit found such local cross-ownership rule to be unlawful and vacated such rule. The 1996 Telecommunications Act also eliminates the three year holding period required under the 1992 Cable Act’s “anti-trafficking” provision. The 1996 Cable

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		Act leaves in place existing restrictions on cable cross-ownership with satellite master antenna television and multichannel multipoint distribution service facilities, but lifts those restrictions where the cable operator is subject to effective competition. FCC regulations permit cable operators to own and operate satellite master antenna television systems within their franchise area, provided that their operation is consistent with local cable franchise requirements.
		Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable system from devoting more than 40% of its activated channel capacity to the carriage of affiliated national video program services. Although the 1992 Cable Act also precluded any cable operator from serving more than 30% of all U.S. domestic cable subscribers, this provision was stayed pending further judicial review and FCC rulemaking. In May 2000, the U.S. Court of Appeals for the D.C. Circuit struck down both of these provisions. The FCC is now considering whether it can fashion new such laws to withstand judicial review.
		Must Carry/Retransmission Consent
		The 1992 Cable Act contains broadcast signal carriage requirements. Broadcast signal carriage is the transmission of broadcast television signals over a cable system to cable customers. These requirements, among other things, allow local commercial television broadcast stations to elect once every three years between a “must carry” status or a “retransmission consent” status; the next such three-year period commencing January 1, 2003 and ending December 31, 2005. Less popular stations typically elect must carry, which is the broadcast signal carriage requirement that allows local commercial television broadcast stations to require a cable system to carry the station. More popular stations, such as those affiliated with a national network, typically elect retransmission consent, which is the broadcast signal carriage requirement that allows local commercial television broadcast stations to negotiate for payments for granting permission to the cable operator to carry the stations. Must carry requests can dilute the appeal of a cable system’s programming offerings because a cable system with limited channel capacity may be required to forego carriage of popular channels in favor of less popular broadcast stations electing must carry. Retransmission consent demands may require substantial payments or other concessions. Either option has a potentially adverse effect on the Company’s business.
		To date, compliance with the “retransmission consent” and “must carry” provisions of the 1992 Cable Act has not had a material effect on the Company, although these provisions may affect the operations of the Company in the future, depending on factors as market conditions, the implementation of digital broadcasts, channel capacity and similar matters when these arrangements are renegotiated.
		The burden associated with must carry may increase substantially if broadcasters proceed with conversion to digital transmission and the FCC determines that cable systems must carry all analog and digital broadcasts in their entirety. This burden would reduce capacity available for more popular video programming and new Internet and telecommunication offerings. The FCC initially ruled against the imposition of dual digital and analog “must carry” rules, but is conducting a further factual inquiry into whether such rules should be promulgated.
		Access Channels
		Local franchising authorities can include franchise provisions requiring cable operators to set aside certain channels for public, educational and governmental access programming. Federal law also requires cable systems to designate a portion of their channel capacity, up to 15% in some cases, for commercial leased access by unaffiliated third parties. The FCC has adopted rules regulating the terms, conditions and maximum rates a cable operator may charge for commercial leased access use. We believe that requests for commercial leased access carriages have been relatively limited.
		Access to Programming
		To spur the development of independent cable programmers and competition to incumbent cable operators, the 1992 Cable Act imposed restrictions on the dealings between cable operators and cable programmers. Of special significance from a competitive business posture, the 1992 Cable Act precludes video programmers affiliated with cable companies from favoring their cable operators over new competitors and requires these programmers to sell their programming to other multichannel video distributors. This provision limits the ability of vertically integrated cable programmers to offer exclusive programming arrangements to cable companies. This prohibition is scheduled to sunset in October 2002, subject to FCC review. There also has been interest expressed in further restricting the marketing practices of cable programmers, including subjecting programmers who are not affiliated with cable operators to all of the existing program access requirements, and subjecting terrestrially delivered programming to the program access requirements. Terrestrially delivered programming is programming delivered other than by satellite. These changes should not have a dramatic impact on the Company, but would limit potential competitive advantages the Company enjoys.

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		Inside Wiring; Subscriber Access
		In an order issued in 1997, the FCC established rules that require an incumbent cable operator upon expiration of a multiple dwelling unit service contract to sell, abandon, or remove “home run” wiring that was installed by the cable operator in a multiple dwelling unit building. These inside wiring rules are expected to assist building owners in their attempts to replace existing cable operators with new programming providers who are willing to pay the building owner a higher fee, where this fee is permissible. The FCC has also proposed abrogating all exclusive multiple dwelling unit service agreements held by incumbent operators, but allowing such contracts when held by new entrants. In another proceeding, the FCC has preempted restrictions on the deployment of private antenna on rental property within the exclusive use of a tenant, such as balconies and patios. This ruling by the FCC may limit the extent to which we along with multiple dwelling unit owners may enforce certain aspects of multiple dwelling unit agreements which otherwise prohibit, for example, placement of digital broadcast satellite receiver antennae in multiple dwelling unit areas under the exclusive occupancy of a renter. These developments may make it even more difficult for us to provide service in multiple dwelling unit complexes.
		Other Regulations of the Federal Communications Commission
		In addition to the FCC regulations noted above, there are other FCC regulations covering such areas as:

		•	equal employment opportunity,
		•	subscriber privacy,
		•	programming practices, including, among other things,
		•	syndicated program exclusivity
		•	network program nonduplication,
		•	local sports blackouts,
		•	indecent programming,
		•	lottery programming,
		•	political programming,
		•	sponsorship identification,
		•	children’s programming advertisements, and
		•	closed captioning,
		•	registration of cable systems and facilities licensing,
		•	maintenance of various records and public inspection files,
		•	aeronautical frequency usage,
		•	lockbox availability,
		•	antenna structure notification,
		•	tower marking and lighting,
		•	consumer protection and customer service standards,
		•	technical standards,

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		•	consumer electronics equipment compatibility, and
		•	emergency alert systems.

		The FCC recently ruled that cable customers must be allowed to purchase cable converters from third parties and established a multi-year phase-in during which security functions, which would remain in the operator’s exclusive control, would be unbundled from basic converter functions, which could then be satisfied by third party vendors.
		The FCC has the authority to enforce its regulations through the imposition of substantial fines, the issuance of cease and desist orders and/or the imposition of other administrative sanctions, such as the revocation of FCC licenses needed to operate certain transmission facilities used in connection with cable operations.
		Copyright
		Cable television systems are subject to federal copyright licensing covering carriage of television and radio broadcast signals. In exchange for filing certain reports and contributing a percentage of their revenues to a federal copyright royalty pool, cable operators can obtain blanket permission to retransmit copyrighted material included in broadcast signals. The possible modification or elimination of this compulsory copyright license is the subject of continuing legislative review and could adversely affect the Company’s ability to obtain desired broadcast programming. We cannot predict the outcome of this legislative activity. Copyright clearances for nonbroadcast programming services are arranged through private negotiations.
		Cable operators distribute locally originated programming and advertising that use music controlled by major music performing rights organizations, such as Broadcast Music, Inc. (BMI). The cable industry has had a long series of negotiations and adjudications with certain of such organizations. The Company recently entered into an agreement with BMI setting forth, among other things, an agreed upon rate through 2004. Although we cannot predict the ultimate outcome of other industry proceedings or the amount of any license fees the Company may be required to pay for past and future use of association-controlled music, we do not believe these license fees will be significant to the Company’s business and operations.
		State and Local Regulation
		Cable television systems generally are operated pursuant to nonexclusive franchises granted by a municipality or other state or local government entity in order to cross public rights-of-way. Federal law now prohibits local franchising authorities from granting exclusive franchises or from unreasonably refusing to award additional franchises. Cable franchises generally are granted for fixed terms and in many cases include monetary penalties for non-compliance and may be terminable if the franchisee failed to comply with material provisions.
		The specific terms and conditions of franchises vary materially between jurisdictions. Each franchise generally contains provisions governing cable operations, service rates, franchising fees, system construction and maintenance obligations, system channel capacity, design and technical performance, customer service standards, and indemnification protections. A number of states, including Connecticut, subject cable systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. Although local franchising authorities have considerable discretion in establishing franchise terms, there are certain federal limitations. For example, local franchising authorities cannot insist on franchise fees exceeding 5% of the system’s gross cable-related revenues, cannot dictate the particular technology used by the system, and cannot specify video programming other than identifying broad categories of programming.
		Federal law contains renewal procedures designed to protect incumbent franchisees against arbitrary denials of renewal. Even if a franchise is renewed, the local franchising authority may seek to impose new and more onerous requirements such as significant upgrades in facilities and service or increased franchise fees as a condition of renewal. Similarly, if a local franchising authority’s consent is required for the purchase or sale of a cable system or franchise, the local franchising authority may attempt to impose more burdensome or onerous franchise requirements in connection with a request for consent. Historically, most franchises have been renewed for and consents granted to cable operators that have provided satisfactory services and have complied with the terms of their franchise.

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Under the 1996 Telecom Act, cable operators are not required to obtain franchises for the provision of telecommunications services, and local franchising authorities are prohibited from limiting, restricting, or conditioning the provision of these services. In addition, local franchising authorities may not require a cable operator to provide any telecommunications service or facilities, other than institutional networks under certain circumstances, as a condition of an initial franchise grant, a franchise renewal, or a franchise transfer. The 1996 Telecom Act also provides that franchising fees are limited to an operator’s cable-related revenues and do not apply to revenues that a cable operator derives from providing new telecommunications services.

		ITEM 2.     PROPERTIES
		The Company’s cable television systems are located in and around Stephenville, Marble Falls, Mexia and Navasota, Texas; Moses Lake and Port Angeles, Washington; Clemson, Aiken and Greenwood, South Carolina; Highlands, North Carolina; Statesboro, Georgia; and Yreka, Mount Shasta and Oakhurst, California.
		A cable television system consists of three principal operating components. The first component, known as the headend, receives television, radio and information signals generally by means of special antennas and satellite earth stations. The second component, the distribution network, which originates at the headend and extends throughout the system’s service area, consists of microwave relays, coaxial or fiber optic cables and associated electronic equipment placed on utility poles or buried underground. The third component of the system is a “drop cable,” which extends from the distribution network into each customer’s home and connects the distribution system to the customer’s television set. An additional component used in certain systems is the home terminal device, or converter, that expands channel capacity to permit reception of more than twelve channels of programming on a non-cable ready television set.
		The Company’s principal physical assets consist of cable television systems, including signal-receiving, encoding and decoding apparatus, headends, distribution systems and subscriber house drop equipment for each of its systems. The signal receiving apparatus typically includes a tower, antennas, ancillary electronic equipment and earth stations for reception of satellite signals. Headends, consisting of associated electronic equipment necessary for the reception, amplification and modulation of signals, typically are located near the receiving devices. The Company’s distribution systems consist primarily of coaxial cable and related electronic equipment. As upgrades are completed, the systems will generally incorporate fiber optic cable. Subscriber equipment consists of traps, house drops and, in some cases, converters. The Company owns its distribution systems, various office fixtures, test equipment and certain service vehicles. The physical components of the systems require maintenance and periodic upgrading to keep pace with technological advances.
		The Company’s cables are generally attached to utility poles under pole rental agreements with local public utilities, although in some areas the distribution cable is buried in trenches or placed in underground ducts. The FCC regulates most pole attachment rates under the federal Pole Attachment Act although in certain cases attachment rates are regulated by state law.
		The Company owns or leases parcels of real property for signal reception sites (antenna towers and headends), microwave complexes and business offices. The Company believes that its properties, both owned and leased, are in good condition and are suitable and adequate for the Company’s business operations as presently conducted.

		ITEM 3.     LEGAL PROCEEDINGS
		The Company is a party to ordinary and routine litigation proceedings that are incidental to the Company’s business. Management believes that the outcome of all pending legal proceedings will not, individually or in the aggregate, have a material adverse effect on the Company, its financial condition, prospects and debt service ability.

		ITEM 4.     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
		None.

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PART II

		ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
		(a)  There is no established public trading market for the Company’s common equity.
		(b)  The Company has one common equity holder as of December 31, 2002.
		(c)  During 2002, the Company did not pay cash dividends and has no intentions of paying cash dividends in the foreseeable future, due to restrictions in its loan agreement.

		ITEM 6.     SELECTED FINANCIAL DATA
		The data set forth below should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

(1)  As of December 31, 2001, the Company discontinued amortization of its franchise agreements and goodwill in accordance with SFAS No. 142. Amortization of these items was $10,515,590 and 10,524,474 for the year ended December 31, 2001 and 2000, respectively.

[Additional columns below]

[Continued from above table, first column(s) repeated]

						Quarters Ended
		December 31,				September 30,				June 30,				March 31,
		2001				2001				2001				2001
Revenue		$	15,683,176			$	15,454,301			$	15,524,527			$	15,405,655
Operating income			1,206,240				1,502,413				1,710,917				1,721,467
Gain (loss) on sale of assets			12,731,008				43,704				(12,194	)			(3,189	)
Net income (loss)			9,337,234				(3,238,976	)			(3,003,921	)			(4,959,055	)

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		ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
		RESULTS OF OPERATIONS
		2002 AND 2001
		Basic subscribers decreased 5,669 or 5.0%, from 113,938 at December 31, 2001 to 108,269 at December 31, 2002. Revenues decreased $800,000 or 1.3%, from $62.1 million to $61.3 million in 2002. Average monthly revenue per basic subscriber increased $3.13 or 7.3%, from $42.92 to $46.05 for the year ended December 31, 2002. On a pro forma basis, adjusting for the acquisition of the Highlands, NC system and the disposition of the Bainbridge, WA system in 2001, revenues would have increased $1.7 million or 2.9%, from $59.6 million to $61.3 million and revenue per average basic subscriber would have increased $3.46 or 8.1%, from $42.59 to $46.05. This pro forma increase was attributable to rate increases implemented in a majority of the Company’s systems during the year and increased penetration of new product tiers.
		Operating expenses, which include costs related to programming, technical personnel, repairs and maintenance and advertising sales, increased approximately $1.0 million or 4.5%, from $22.1 million to $23.1 million for the year ended December 31, 2002. Operating expenses as a percentage of revenues increased from 35.6% to 37.7% for the year ended December 31, 2002. Such increase is primarily attributable to annual wage and benefit increases and higher programming costs resulting from rate increases by certain programming vendors and the launch of new programming services in various systems. On a pro forma basis, operating expenses would have increased $2.0 million or 9.5%, from $21.1 million to $23.1 million and operating expenses as a percentage of revenue would have increased from 35.4% to 37.7%.
		General and administrative expenses, which include on-site office and customer service personnel costs, customer billing, postage and marketing expenses and franchise fees decreased approximately $1.1 million or 11.0%, from $10.0 million to $8.9 million for the year ended December 31, 2002. The results are due primarily to decreases in expenses associated with accounting, legal and administrative services. On a pro forma basis, general and administrative expenses would have decreased $700,000 or 7.3%, from $9.6 million to $8.9 million.
		Management fees decreased from $3.1 million to $3.0 million for the year ended December 31, 2002. Such decrease was directly attributable to the revenue decreases discussed above. Management fees are calculated at 5.0% of gross revenues.
		Depreciation and amortization expense decreased approximately 48.3%, from $20.7 million in 2001 to $10.7 million in 2002. The decrease is primarily attributable to the Company’s implementation of Statement of Financial Accounting Standards (“SFAS”) No. 142 “ Goodwill and Other Intangible Assets.” As of December 31, 2001, the Company discontinued amortizing its franchise agreements and goodwill resulting in a decrease of approximately $10.5 million in amortization expense for the year ended December 31, 2002. This is offset by depreciation and amortization of plant, equipment and other intangible assets acquired during 2002.
		Interest expense decreased approximately $2.6 million or 14.1%, from $18.5 million to $15.9 million for the year ended December 31, 2002. The Company’s average bank balance decreased from approximately $183.7 million in 2001 to $170.1 million in 2002. In addition, the Company’s effective interest rate decreased from approximately 9.72% in 2001 to 8.95 % in 2002.
		2001 AND 2000
		Basic subscribers decreased 10,356 or 8.3%, from 124,294 at December 31, 2000 to 113,938 at December 31, 2001. On a pro forma basis, excluding the effects of system sales and acquisitions, basic subscribers decreased 4.8%, from 119,721 at December 31, 2000 to 113,938 at December 31, 2001.
		Revenues increased $1.6 million or 2.6%, from $60.5 million to $62.1 million in 2001. Average monthly revenue per basic subscriber increased $2.64 or 6.6%, from $40.28 to $42.92 for the year ended December 31, 2001. Such increase was attributable to rate increases implemented in a majority of the Company’s systems during the year, revenue from the increase in penetration of new product tiers, and the Highlands, North Carolina acquisition which accounted for approximately $321,000 of the 2001 revenue increase. On a pro forma basis, adjusting for the acquisition of the Highlands, NC System and the disposition of the Bainbridge, WA system revenues would have increased $1.1 million or 1.9%, from $58.5 million to $59.6 million and revenue per average basic subscriber would have increased $2.65 or 6.6%, from $39.94 to $42.59.

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		Operating expenses increased approximately $1.1 million or 5.2%, from $21.0 million to $22.1 million for the year ended December 31, 2001. Operating expenses as a percentage of revenues increased from 34.7% to 35.6% for the year ended December 31, 2001. Such increase is primarily attributable to annual wage and benefit increases, higher programming costs resulting from rate increases by certain programming vendors and the launch of new programming services in various systems and expenses associated with the Highlands system acquisition. On a pro forma basis, operating expenses would have increased $1.0 million or 5.0%, from $20.1 million to $21.1 million and operating expenses as a percentage of revenue would have increased from 34.5% to 35.5%.
		General and administrative expenses decreased approximately $300,000 or 2.9%, from $10.3 million to $10.0 million for the year ended December 31, 2001. The results are due to decreases in expenses associated with accounting, legal and administrative services off-set by increased expenses associated with the Highlands system acquisition. On a pro forma basis, general and administrative expenses would have decreased $400,000 or 4.0%, from $10 million to $9.6 million.
		Management fees increased $100,000 or 3.3%, from $3.0 million to $3.1 million for the year ended December 31, 2001. Such increase was directly attributable to the revenue increases discussed above. Management fees are calculated at 5.0% of gross revenues.
		Depreciation and amortization expense increased approximately $900,000 or 4.5%, from $19.8 million to $20.7 million for the year ended December 31, 2001. Such increase is attributable to depreciation of recent equipment purchases in upgrading plant and equipment.
		Interest expense increased approximately $100,000 or .5%, from $18.4 million to $18.5 million for the year ended December 31, 2001. The Company’s average bank balance increased from approximately $182.5 million in 2000 to $183.7 million in 2001. In addition, the Company’s effective interest rate increased from approximately 9.48% in 2000 to 9.72% in 2001.
		LIQUIDITY AND CAPITAL RESOURCES
		The cable television business generally requires substantial capital for the construction, expansion, improvement and maintenance of the signal distribution system. In addition, the Company has pursued, and intends to pursue, a business strategy, which includes selective acquisitions. The Company has financed these expenditures through a combination of cash flow from operations and borrowings under the revolving credit and term loan facility provided by a group of banks. For the years ended December 31, 2002, 2001 and 2000, the Company’s net cash provided from operations was $9.1 million, $10.1 million and $8.5 million, respectively, all of which were sufficient to meet the Company’s debt service obligations and capital expenditure requirements for the respective periods, excluding acquisitions. Acquisitions of cable television systems during these periods primarily were financed through bank borrowings. Based on amounts outstanding as of December 31, 2002, the Company’s debt service obligations for the years ended December 31, 2003 and 2004 are expected to be approximately $16 million and $22 million, respectively. The Company believes that cash flow from operations will be adequate to meet the Company’s long-term liquidity requirements, excluding acquisitions, prior to the maturity of its long-term indebtedness, although no assurance can be given in this regard.
		2002
		Net cash provided by operating activities was $9.1 million for the year ended December 31, 2002. Adjustments to the $1.5 million net income for the period to reconcile to net cash provided by operating activities consisted primarily of $11.4 million of depreciation and amortization, off-set by $2.1 million in unrealized gains on interest rate swap agreements and changes in other operating assets and liabilities of $1.9 million.
		Net cash used in investing activities was $7.2 million for the year ended December 31, 2002, and consisted primarily of $8.3 million in capital expenditures off-set by $1.0 million in proceeds related to the disposition of the Bainbridge Island, Washington system.
		Net cash used in financing activities was $3.0 million for the year ended December 31, 2002, and consisted primarily of principal payments on notes payable.

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		EBITDA decreased approximately $700,000 or 2.6%, from $26.9 million to $26.2 million for the year ended December 31, 2002. On a pro forma basis, adjusting for the 2001 acquisition of the Highlands system and disposition of the Bainbridge system, EBITDA would have increased approximately $300,000 or 1.2% from $25.9 million to $26.2 million and EBITDA margin would have decreased from 43.5% to 42.8% for the year ended December 31, 2002. The aforementioned increases in revenues were offset by increased operating expenses resulting from rate increases by certain programming vendors and the launch of new programming services.
		EBITDA represents income from operations excluding the effect of depreciation and amortization expense. EBITDA margin represents EBITDA as a percentage of revenue. EBITDA is commonly used to analyze companies on the basis of leverage and liquidity. However, EBITDA is not a measure determined under generally accepted accounting principles, or GAAP, in the United States and may not be comparable to similarly titled measures reported by other companies. EBITDA should not be construed as a substitute for operating income or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. We have presented EBITDA to provide additional information with respect to our ability to meet future debt service, capital expenditure and working capital requirements. A reconciliation of net cash provided by operating activities to EBITDA follows:

		Senior Subordinated Notes
		In November 1997, the Company issued $100 million of 10 -1/4% senior subordinated notes due November 15, 2007. Proceeds from the offering were utilized to pay transaction costs and reduce amounts outstanding under the Company’s Senior Credit Facility by $95 million. The indenture pursuant to which the notes were issued will, among other things, limit the ability of the Company and its subsidiaries to: (i) incur additional indebtedness or issue preferred stock; (ii) make certain restricted payments as defined in the indenture; (iii) grant liens on assets; (iv) merge, consolidate or transfer substantially all of their assets; (v) enter into transactions with certain related parties; (vi) make certain payments affecting subsidiaries; (vii) sell assets; and (viii) issue capital stock of subsidiaries. Additionally, the Company has agreed to restrictive covenants, which require the maintenance of certain ratios, including a debt to annualized operating cash flow ratio of 6.00 to 1. As of December 31, 2002, the Company was in compliance with the terms of the Notes.
		Revised Senior Credit Facility
		On August 14, 2000, the Company refinanced its existing senior bank indebtedness (the “Revised Senior Credit Facility”). The Revised Senior Credit Facility establishes a 364-day revolving credit loan with a term-out option in the aggregate principal amount of $35 million, a seven-year revolving credit loan in the aggregate principal amount of $40 million and a seven-year term loan in the aggregate principal amount of $35 million. During 2001 the Company reduced the amount of unborrowed commitments under the Revised Senior Credit Facility. At December 31, 2002 approximately $53 million was outstanding under term loans and approximately $15 million was outstanding under the revolving credit loan. Amounts outstanding under the Revised Senior Credit Facility mature on June 30, 2007. The Revised Senior Credit Facility is collateralized by a first lien position on all present and future assets and stock of the Company.
		At the Company’s election, the interest rate per annum applicable to the Revised Senior Credit Facility is a fluctuating rate of interest measured by reference to either: (i) an adjusted London interbank offered rate (“LIBOR”) plus a borrowing margin; or (ii) the base rate of the managing agent bank (the “Base Rate”), which Base Rate is equal to the greater of the Federal Funds Effective Rate plus 0.50% or the corporate base rate announced by the managing agent bank, plus a

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		borrowing margin. The applicable borrowing margins vary, based upon the Company’s leverage ratio, from 1.00% to 2.75% for LIBOR loans and from 0.00% to 1.75% for Base Rate loans.
		The Revised Senior Credit Facility contains a number of covenants which, among other things, require the Company to comply with specified financial ratios and tests, including continuing maintenance, as tested on a quarterly basis, of: (A) an interest coverage ratio (the ratio of Annualized Operating Cash Flow (as defined) to interest expense) of at least 1.4 to 1.0 initially, increasing over time to 2.0 to 1.0; (B) a fixed charge coverage ratio (the rate of the Company’s Annual Operating Cash Flow (as defined) to capital expenditures and principal and interest payments) of at least 1.05 to 1.0 commencing January 1, 2003; (C) a pro forma debt service ratio (the ratio of the Company’s current Operating Cash Flow (as defined) to the Company’s debt service obligations for the following twelve months) of 1.25 to 1.0; and (D) a leverage ratio (the ratio of total Debt (as defined) to Annualized Operating Cash Flow) of not more than 6.75 to 1.0 initially, 6.00 at December 31, 2002, decreasing over time to 4.5 to 1.0. The Company expects that cash provided from operations will be sufficient to cover its future debt service obligations and debt covenant requirements.
		At December 31, 2002, the outstanding balance under the Revised Senior Credit Facility was $68,031,182. Interest rates on the Revised Senior Credit Facility were as follows: $27,000,000 fixed at 5.668% under the terms of an interest rate swap with the Company’s lender expiring February 20, 2003; $20,000,000 at a LIBOR based rate of 4.25% expiring on February 20, 2003; $14,926,398 at a LIBOR based rate of 3.92% expiring on January 21, 2003; $5,518,386 at a LIBOR based rate of 4.19% expiring on February 18, 2003; $586,398 at a LIBOR based rate of 3.92% expiring on January 21, 2003. The above rates include a margin paid to the lender based on overall leverage and may increase or decrease as the Company’s overall leverage fluctuates.
		Obligations and Commitments
		In addition to working capital needs for ongoing operations, the Company has capital requirements for (i) annual maturities and interest payments related to the term loan and (ii) required minimum operating lease payments. The following table summarizes the Company’s contractual obligations as of December 31, 2002 and the anticipated effect of these obligations on its liquidity in future years:

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Expected Maturity Date
		2006				Thereafter				Total
Debt maturity		$	126,241,917			$	—			$	168,031,182
Interest payments (weighted average interest rate of 8.016% as of December 31, 2002)			8,532,578				—				57,808,716
Minimum operating lease payments			37,006				53,831				356,277
Total contractual cash obligations (a)		$	134,811,501			$	53,831			$	226,196,175

		(a)    These contractual obligations do not include accounts payable and accrued liabilities, which are expected to be paid in 2003.
		Capital Expenditures
		For the year ended December 31, 2002, the Company had capital expenditures of approximately $8.3 million excluding acquisitions. Capital expenditures included: (i) expansion and improvements of cable properties including new product digital launches; (ii) additions to plant and equipment; (iii) maintenance of existing equipment; (iv) cable line drops and extensions and installations of cable plant facilities; and (v) vehicle replacements.
		The Company plans to invest approximately $5.6 million in capital expenditures for 2003. This represents anticipated expenditures for upgrading and rebuilding certain distribution facilities, continued new product digital deployment, extensions of distribution facilities to add new subscribers and vehicle replacements. It is expected that cash flow from operations will be sufficient to fund planned capital expenditures.

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		SYSTEM SALE
		On March 11, 2003, the Company sold the operating assets and franchise rights of its cable system serving the community of Port Angeles, Washington, which served approximately 5,700 basic subscribers to Wave Division Networks, LLC. The system was sold at a purchase price of approximately $11,400,000. Net proceeds from the transaction were used to repay amounts outstanding under the Company’s Revised Senior Credit Facility, and effectively reduce the required principal payments and management’s estimate of debt service obligations over the remaining term of the facility. The required principal payments due in 2003 have been reduced by approximately $390,000.
		CRITICAL ACCOUNTING POLICIES
		This discussion and analysis of our financial condition and results of operations is based on the Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following critical accounting policies, which have been chosen among alternatives, require a more significant amount of management judgment than other accounting policies the Company employs.
		Revenue Recognition
		Cable television service revenue, including service and maintenance, is recognized in the month service is provided to customers. Advance payments on cable services to be rendered are recorded as subscriber prepayments. Revenues resulting from the sale of local spot advertising are recognized when the related advertisements or commercials appear before the public.
		Property and Equipment
		Property and equipment are recorded at cost. Costs of additions and substantial improvements, which include materials, labor, and other indirect costs associated with the construction of cable transmission and distribution facilities, are capitalized. Indirect costs include employee salaries and benefits, travel and other costs. These costs are estimated based on historical information and analysis. The Company periodically performs evaluations of these estimates as warranted by events or changes in circumstances.
		In accordance with SFAS No. 51, “Financial Reporting by Cable Television Companies,” the Company also capitalizes costs associated with initial customer installations. The costs of disconnecting service or reconnecting service to previously installed locations is expensed in the period incurred. Costs for repairs and maintenance are also charged to operating expense, while equipment replacements are capitalized.
		Intangible Assets
		Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 required that the Company cease amortization of goodwill and any other intangible assets determined to have indefinite lives, and established a new method of testing these assets for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value or if the fair value of intangible assets with indefinite lives falls below their carrying value on an annual basis. The amortization of existing goodwill ceased on December 31, 2001. The Company determined that its franchise agreements met the definition of indefinite lived assets due to the history of obtaining franchise renewals, among other considerations. Accordingly, amortization of these assets ceased on December 31, 2001. The Company tested these intangibles for impairment as of January 1, 2002 and again during the fourth quarter of 2002 and determined that the fair value of the assets exceeded their carrying value. The Company will continue to test these assets for impairment annually, or more frequently as warranted by events or changes in circumstances.
		Management believes the franchises have indefinite lives because the franchises are expected to be used by the Company for the foreseeable future and effects of obsolescence, competition and other factors are minimal. In addition, the level of maintenance expenditures required to obtain the future cash flows expected from the franchises are not material in relation to the carrying value of the franchises. While the franchises have defined lives based on the franchising authority, renewals

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		are routinely granted, and management expects them to continue to be granted, without substantial cost. This expectation is supported by management’s experience with the Company’s franchising authorities and the franchising authorities of the Company’s affiliates.
		RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
		Statement of Financial Accounting Standards No. 143
		In September 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Statement No. 143 will be effective for the Company beginning January 1, 2003. The Company has not yet estimated the impact of implementation on its financial position or results of operations.
		Statement of Financial Accounting Standards No. 145
		In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 provides for the rescission of several previously issued accounting standards (including the treatment of loss on extinguishment of debt), new accounting guidance for the accounting for certain lease modifications and various technical corrections that are not substantive in nature to existing pronouncements. SFAS No. 145 will be effective beginning January 1, 2003, except for the provisions relating to the amendment of SFAS No. 13, which will be effective for transactions occurring subsequent to May 15, 2002. Adoption of SFAS No. 145 will not have a material impact on the Company’s financial statements.
		Statement of Financial Accounting Standards No. 146
		In September 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized at fair value when the liability is incurred and is effective for exit or disposal activities that are initiated after December 31, 2002. Adoption of SFAS No. 146 will not have a material impact on the Company’s financial statements.
		FASB Interpretation No. 45
		In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” The interpretation establishes disclosure requirements for December 31, 2002 financial statements for companies that make certain types of guarantees. Beginning in 2003, the interpretation requires that companies record the fair value of certain types of guarantees as a liability in the financial statements. The Company has reviewed the interpretation and has concluded that its 2002 disclosures are adequate and does not expect the interpretation to have a material impact on the Company’s financial position or results of operations in 2003.
		ECONOMIC CONDITIONS
		Historically, the effects of inflation have been considered in determining to what extent rates will be increased for various services provided. It is expected that the future rate of inflation will continue to be a significant variable in determining rates charged for services provided, subject to the provisions of the 1996 Telecom Act. Because of the deregulatory nature of the 1996 Telecom Act, the Company does not expect the future rate of inflation to have a material adverse impact on operations.
		TRANSACTIONS WITH RELATED PARTIES
		Management Fees
		The Company pays management fees to NTC equal to 5% of NCTV’s gross revenues, excluding revenues from the sale of cable television systems or franchises.

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		Reimbursements
		NTC provides or causes to be provided certain centralized services to the Company and other affiliated entities. NTC is entitled to reimbursement from the Company for various expenses incurred by it or its affiliates on behalf of the Company allocable to its management of the Company, including travel expenses, pole and site rental, lease payments, legal expenses, billing expenses, insurance, governmental fees and licenses, headquarters supplies and expenses, pay television expenses, equipment and vehicle charges, operating salaries and expenses, administrative salaries and expenses, postage and office maintenance. NTC has historically assigned its reimbursement rights to NCC. In addition, Northland Cable Service Corporation (NCSC), an affiliate of the Parent, was formed to provide billing system support to cable systems owned and managed by the Parent. Further, NCSC provides technical support associated with the build out and upgrade of Northland affiliated cable systems. Cable Ad Concepts, a subsidiary of NCSC, assists in the development of local advertising as well as billing for video commercial advertisements to be cablecast on Northland affiliated cable systems.
		The amounts billed to the Company are based on costs incurred by affiliates in rendering the services. The costs of certain services are allocated to the Company, based upon the personnel time spent by the employees rendering the service. The cost of other services is allocated to the Company and affiliates based upon relative size and revenue. NTC has, from time to time, reduced the amount of costs allocated to the Company, to the extent the allocated costs would result in noncompliance with debt covenants. Management believes that the combination of management fees and allocated costs shown in the accompanying consolidated statements of operations exceed direct costs for all periods presented. The Company reflected $269,527, $869,582 and $1,903,306 of expenses on the accompanying statements of operations for these services for the years ended December 31, 2002, 2001, and 2000, respectively.
		The Company has operating management agreements with affiliated entities managed by NCC. Under the terms of these agreements, the Company or an affiliate serves as the managing agent for certain cable television systems and is reimbursed for certain operating, administrative, and programming expenses. The Company paid $175,163, $90,098, and $84,526, net, under the terms of these agreements during 2002, 2001, and 2000, respectively.
		Certain Business Relationships
		John E. Iverson, a Director and Assistant Secretary of the Company, is a member of the law firm of Ryan, Swanson & Cleveland P.L.L.C., which has rendered and is expected to continue to render legal services to the Company and its affiliates.

		ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
		The Company is subject to market risks arising from changes in interest rates. The Company’s primary interest rate exposure results from changes in LIBOR or the prime rate, which are used to determine the interest rate applicable to the Company’s Revised Senior Credit Facility. As of December 31, 2002, the Company had entered into one interest rate swap agreement for $27.0 million to partially mitigate interest rate exposure. Interest rate swap agreements have the effect of converting the applicable variable rate obligations to fixed or other variable rate obligations. The potential loss over one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate of all the Company’s variable rate obligations would be approximately $680,000, of which, approximately $270,000 would be mitigated by interest rate swap agreements in place as of December 31, 2002.
		The Company does not use financial instruments for trading or other speculative purposes.

		ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
		Previous Independent Accountant
		The Company dismissed Arthur Andersen LLP as its independent auditor on July 10, 2002. The decision to dismiss Arthur Andersen was approved by the Board of Directors.

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		During the two most recent fiscal years and through July 10, 2002, there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersen’s satisfaction, would have caused Arthur Andersen to make reference to the subject matter in connection with its report on the Company’s financial statements for such years; and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. Arthur Andersen’s reports on the financial statements of the Company for 2000 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles.
		The Company requested that Arthur Andersen provide a currently dated letter confirming its agreement with the above statements. Arthur Andersen informed the Company that, because of Arthur Andersen’s current situation, it is unable to provide such letter.
		New Independent Accountant
		On July 10, 2002, the Company engaged KPMG LLP as the firm of independent auditors to audit the Company’s financial statements for the fiscal year ending December 31, 2002. The decision to engage KPMG was approved by the Board of Directors. During the period from January 2000 to April 1, 2002, The Company did not consult KPMG regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, that was an important factor the Company considered in reaching a decision on an accounting, auditing, or financial reporting issue, or the type of audit opinion that might be rendered on our financial statements, or (ii) any matter that was the subject of either a disagreement

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PART III

		ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
		The following table sets forth certain information concerning directors and executive officers of the Company, none of whom are compensated by the Company for their respective services to the Company and all but one of whom devotes a substantial amount of his time to the affairs of affiliated entities other than the Company. Each director holds office until the next annual meeting of shareholders or until his successor is elected or appointed and qualified.

		JOHN S. WHETZELL (AGE 61). Mr. Whetzell is the founder of Northland Communications Corporation, its Chief Executive Officer and has been a Director since March 1982. Mr. Whetzell became Chairman of the Board of Directors in December 1984. He also serves as Chief Executive Officer and Chairman of the Board of Northland Telecommunications Corporation and each of its subsidiaries. He has been involved with the cable television industry for over 28 years. Between March 1979 and February 1982 he was in charge of the Ernst & Whinney national cable television consulting services. Mr. Whetzell first became involved in the cable television industry when he served as the Chief Economist of the Cable Television Bureau of the Federal Communications Commission (FCC) from May 1974 to February 1979. He provided economic studies to support the deregulation of cable television both in federal and state arenas. He participated in the formulation of accounting standards for the industry and assisted the FCC in negotiating and developing the pole attachment rate formula for cable television. His undergraduate degree is in economics from George Washington University, and he has an MBA degree from New York University.
		JOHN E. IVERSON (AGE 66). Mr. Iverson is the Secretary of Northland Communications Corporation and has served on the Board of Directors since December 1984. He also is the Secretary and serves on the Board of Directors of Northland Telecommunications Corporation and each of its subsidiaries. He is currently a member in the law firm of Ryan, Swanson & Cleveland, P.L.L.C. He is a member of the Washington State Bar Association and American Bar Association and has been practicing law for more than 40 years. Mr. Iverson is the past President and a Trustee of the Pacific Northwest Ballet Association. Mr. Iverson has a Juris Doctor degree from the University of Washington.
		RICHARD I. CLARK (AGE 45). Mr. Clark is an original incorporator of Northland Communications Corporation and serves as Executive Vice President, Assistant Secretary and Assistant Treasurer of Northland Communications Corporation. He also serves as Vice President, Assistant Secretary and Treasurer of Northland Telecommunications Corporation. Mr. Clark has served on the Board of Directors of both Northland Communications Corporation and Northland Telecommunications Corporation since July 1985. In addition to his other responsibilities, Mr. Clark is responsible for the administration and investor relations activities of Northland, including financial planning and corporate development. From July 1979 to February 1982, Mr. Clark was employed by Ernst & Whinney in the area of providing cable television consultation services and has been involved with the cable television industry for nearly 24 years. He has directed cable television feasibility studies and on-site market surveys. Mr. Clark has assisted in the design and maintenance of financial and budget computer programs, and he has prepared documents for major cable television companies in franchising and budgeting projects through the application of these programs. In 1979, Mr. Clark graduated cum laude from Pacific Lutheran University with a Bachelor of Arts degree in accounting.
		GARY S. JONES (AGE 45). Mr. Jones is the President of Northland Telecommunications Corporation and each of its subsidiaries. Mr. Jones joined Northland in March 1986 and had previously served as Vice President and Chief Financial Officer for Northland. Mr. Jones is responsible for cash management, financial reporting and banking relations for Northland and is involved in the acquisition and financing of new cable systems. Prior to joining Northland, Mr. Jones was

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		employed as a Certified Public Accountant with Laventhol & Horwath from 1980 to 1986. Mr. Jones received his Bachelor of Arts degree in Business Administration with a major in accounting from the University of Washington in 1979.
		RICHARD J. DYSTE (AGE 57). Mr. Dyste serves as Senior Vice President-Technical Services of Northland Telecommunications Corporation and each of its subsidiaries. He joined Northland in April 1986. Mr. Dyste is responsible for planning and advising all Northland cable systems with regard to technical performance as well as system upgrades and rebuilds. He is a past president of the Mt Rainier chapter and a current member of the Society of Cable Telecommunications Engineers, Inc. Mr. Dyste joined Northland in 1986 as an engineer and served as Operations Consultant to Northland Communications Corporation from August 1986 until April 1987. From 1977 to 1985, Mr. Dyste owned and operated Bainbridge TV Cable. He is a graduate of Washington Technology Institute.
		H. LEE JOHNSON (AGE 59). Mr. Johnson has served as Divisional Vice President for Northland since March 1994. He is responsible for the management of systems serving subscribers in Alabama, Georgia, Mississippi, North Carolina and South Carolina. Prior to his association with Northland he served as Regional Manager for Warner Communications, managing four cable systems in Georgia from 1968 to 1973. Mr. Johnson has also served as President of Sunbelt Finance Corporation and was employed as a System Manager for Statesboro CATV when Northland purchased the system in 1986. Mr. Johnson has been involved in the cable television industry for over 33 years and is a current member of the Society of Cable Television Engineers. He is a graduate of Swainsboro Technical Institute and has attended numerous training seminars, including courses sponsored by Jerrold Electronics, Scientific Atlanta, The Society of Cable Television Engineers and CATA.
		R. GREGORY FERRER (AGE 47). Mr. Ferrer joined Northland in March 1984 as Assistant Controller and currently serves as Vice President and Treasurer of Northland Communications Corporation. Mr. Ferrer also serves as Vice President and Assistant Treasurer of Northland Telecommunications Corporation. Mr. Ferrer is responsible for coordinating all of Northland’s property tax filing, insurance requirements and system programming contracts as well as interest rate management and other treasury functions. Prior to joining Northland, he was a Certified Public Accountant at Benson & McLaughlin, a local public accounting firm, from 1981 to 1984. Mr. Ferrer received his Bachelor of Arts in Business Administration from Washington State University with majors in marketing in 1978 and accounting and finance in 1981.
		MATTHEW J. CRYAN (AGE 38). Mr. Cryan is Vice President - Budgets and Planning and has been with Northland since September 1990. Mr. Cryan is responsible for the development of current and long-term operating budgets for all Northland entities. Additional responsibilities include the development of financial models used in support of acquisition financing, analytical support for system and regional managers, financial performance monitoring and reporting and programming analysis and supervision of all billing related matters of Northland. Prior to joining Northland, Mr. Cryan was employed as an analyst with NKV Corp., a securities litigation support firm located in Redmond, Washington. Mr. Cryan graduated from the University of Montana in 1988 with honors and holds a Bachelor of Arts in Business Administration with a major in finance.
		RICK J. MCELWEE (AGE 41). Mr. McElwee is Vice President and Controller for Northland. He joined Northland in May 1987 as System Accountant and was promoted to Assistant Controller of Northland Cable Television, Inc. in 1993. Mr. McElwee became Divisional Controller of Northland Telecommunications Corporation in 1997 and in January 2001, he was promoted to Vice President and Controller of Northland Telecommunications Corporation. Mr. McElwee is responsible for managing all facets of the accounting and financial reporting process for Northland. Prior to joining Northland, he was employed as an accountant with Pay n’ Save Stores, Inc., a regional drugstore chain. Mr. McElwee graduated from Central Washington University in 1985 and holds a Bachelor of Science in Business Administration with a major in accounting.

		ITEM 11.    EXECUTIVE COMPENSATION
		None of the employees of the Company are deemed to be executive officers of the Company. Services of the executive officers and other employees of NTC are provided to the Company for which the Company pays NTC a fee pursuant to the Management Agreement and overhead reimbursements. The executive officers and other employees of NTC who provide services to the Company are compensated in their capacity as executive officers and employees of NTC and therefore receive no compensation from the Company. No portion of the management fee paid by the Company is allocated to specific employees for the services performed by such employees.

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		DIRECTOR COMPENSATION
		The Company does not currently compensate members of its Board of Directors for their services as directors.

		ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
		(a) CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Security ownership of management as of December 31, 2002 is as follows:
		The Company is a wholly owned subsidiary of Northland Telecommunication Corporation, a Washington corporation.
		The following table sets forth certain information with respect to the beneficial ownership of common stock of NTC as of the date of this filing by: (i) each person who is known by the Company to beneficially own 5% or more of the outstanding shares of common stock of NTC; (ii) each director of the Company; (iii) each executive officer of the Company; and (iv) the Company’s executive officers and directors as a group. The address of each such person is in care of the Company, 101 Stewart Street, Suite 700, Seattle, Washington 98101.

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		ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
		(a)    TRANSACTIONS WITH MANAGEMENT AND OTHERS.
		The Company is part of an affiliated group of corporations and limited partnerships controlled, directly or indirectly, by NTC (the “NTC Affiliates”). NTC, in turn, is owned by the individuals and in the percentages set forth in the table above. In addition to the Company, NTC has three other direct, wholly owned subsidiaries: Northland Communications Corporation (“NCC”); Northland Cable Services Corporation (“NCSC”); and Northland Media, Inc. (“NMI”). In turn, NCC is the sole shareholder of Northland Cable Properties, Inc. (“NCPI”) and is the managing general partner of Northland Cable Properties Seven Limited Partnership (“NCP-7”) and Northland Cable Properties Eight Limited Partnership (“NCP-8”). NCC is also the managing member of Northland Cable Networks, LLC (“NCN LLC”). In addition, NCPI is the majority member and manager of Northland Cable Ventures, LLC (“NCV”), NCSC is the sole shareholder of Cable Ad-Concepts, Inc. (“CAC”) and NMI is the sole shareholder of Statesboro Media, Inc. and Corsicana Media, Inc. Each of the Company’s directors is also a director of NTC and each of its wholly-owned direct subsidiaries and certain other NTC Affiliates and the Company’s officers are also officers of certain of the NTC Affiliates.
		MANAGEMENT AGREEMENT WITH NTC AND AFFILIATES
		NTC currently supervises all aspects of the business and operations of the Company pursuant to an Operating Management Agreement between the Company and NTC dated August 23, 1994 (the “Management Agreement”). The Management Agreement continues in effect until terminated by either party on 30-days’ written notice.
		The Management Agreement provides that NTC shall render or cause to be rendered supervisory services to the Company, including, among other things supervising and monitoring: (i) the affairs, management and operations of the Company and its systems; (ii) the accounting and other financial books and records of the Company and its systems; (iii) the hiring, training and supervision of the Company’s employees; and (iv) the Company’s fulfillment of its contractual obligations in connection with its systems. In return for its management services, NTC receives a management fee, payable monthly, equal to 5.0% of the Company’s gross revenues (the “Management Fee”). For the years ended December 31, 2002, 2001 and 2000, the Company paid a Management Fee of $3.1 million, $3.1 million and $3.0 million, respectively.
		NTC provides or causes to be provided certain centralized services to the Company and other affiliated entities. NTC is entitled to reimbursement from the Company for various expenses incurred by it or its affiliates on behalf of the Company allocable to its management of the Company, including travel expenses, pole and site rental, lease payments, legal expenses, billing expenses, insurance, governmental fees and licenses, headquarters supplies and expenses, pay television expenses, equipment and vehicle charges, operating salaries and expenses, administrative salaries and expenses, postage and office maintenance. NTC has historically assigned its reimbursement rights to NCC. In addition, Northland Cable Service Corporation (NCSC), an affiliate of the Parent, was formed to provide billing system support to cable systems owned and managed by the Parent. Further, NCSC provides technical support associated with the build out and upgrade of Northland affiliated cable systems. Cable Ad Concepts, a subsidiary of NCSC, assists in the development of local advertising as well as billing for video commercial advertisements to be cablecast on Northland affiliated cable systems.
		The amounts billed to the Company are based on costs incurred by affiliates in rendering the services. The costs of certain services are allocated to the Company, based upon the personnel time spent by the employees rendering the service. The cost of other services is allocated to the Company and affiliates based upon relative size and revenue. NTC has, from time to time, reduced the amount of costs allocated to the Company, to the extent the allocated costs would result in noncompliance with debt covenants. Management believes that the combination of management fees and allocated costs shown in the accompanying consolidated statements of operations exceed direct costs for all periods presented. The Company reflected $269,527, $869,582 and $1,903,306 of expenses on the accompanying statements of operations for these services for the years ended December 31, 2002, 2001, and 2000, respectively.
		ARRANGEMENTS BETWEEN NORTHLAND CABLE NEWS, INC. AND AFFILIATES
		Pursuant to an arrangement, which commenced in July 1994, Northland Cable News, Inc. receives monthly program license fees from the Company as well as NCP-7, NCPI and NCV as payment for Northland Cable News programming provided to such affiliates. The aggregate amount of such fees is based upon costs incurred in providing such programming, and is allocated among the Participating Affiliates based upon relative subscriber counts. Total license fees received from affiliates for the year ended December 31, 2000, were $363,475. As of January 2001 the Company ceased operations of NCN.

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		OPERATING AGREEMENTS WITH AFFILIATES
		The Company has operating management agreements with affiliated entities managed by NCC. Under the terms of these agreements, the Company or an affiliate serves as the managing agent for certain cable television systems and is reimbursed for certain operating, administrative, and programming expenses. The Company paid $175,163, $90,098, and $84,526, net, under the terms of these agreements during 2002, 2001, and 2000, respectively.
		(b)  CERTAIN BUSINESS RELATIONSHIPS. John E. Iverson, a Director and Assistant Secretary of the Company, is a member of the law firm of Ryan, Swanson & Cleveland P.L.L.C., which has rendered and is expected to continue to render legal services to the Company and its affiliates.
		(c)  INDEBTEDNESS OF MANAGEMENT. None.

		ITEM 14.    CONTROLS AND PROCEDURES
		Within 90 days prior to the date of filing this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and President (Principal Financial and Accounting Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) of the Exchange Act). Based on and as of the time of such evaluation, the Company’s management, including the Chief Executive Officer and President (Principal Financial and Accounting Officer), concluded that the Company’s disclosure controls and procedures were effective in timely alerting them to material information relating to the Company required to be included in the Company’s reports filed or submitted by it under the Exchange Act. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the time of such evaluation.

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PART IV

ITEM15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(b)	REPORTS ON FORM 8-K :
	Form 8-K filed on March 25, 2003 announcing the sale of the Port Angeles, Washington systems to Wave Division Networks, LLC
(c)	EXHIBITS:

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SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:     3/31/03

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

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CERTIFICATIONS

I, Gary Jones certify that:

1.		I have reviewed this annual report on Form 10-K of Northland Cable Television, Inc. and Subsidiary;
2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

		a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
		b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
		c)	Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of directors:

		a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weakness in internal controls; and
		b)	Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.		The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
		Date: 3-31-03

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I, John Whetzell certify that:

1.		I have reviewed this annual report on Form 10-K of Northland Cable Properties Television, Inc. and Subsidiary;
2.		Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.		Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

		a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
		b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
		c)	Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of directors:

		a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weakness in internal controls; and
		b)	Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.		The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
		Date: 3-31-03

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Independent Auditors’ Report

The Shareholder
Northland Cable Television, Inc.:

We have audited the accompanying consolidated balance sheets of Northland Cable Television, Inc. and subsidiary (a Washington Corporation and wholly owned subsidiary of Northland Telecommunications Corporation) as of December 31, 2002 and 2001, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholder’s deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The 2000 consolidated financial statements of Northland Cable Television, Inc. and subsidiary were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those consolidated financial statements, before the revision described in note 2 to the 2002 consolidated financial statements, in their 2000 report dated February 23, 2001.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2002 and 2001 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Northland Cable Television, Inc. and subsidiary as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed above, the 2000 consolidated financial statements of Northland Cable Television, Inc. and subsidiary were audited by other auditors who have ceased operations. As described in note 2, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. In our opinion, the disclosures for 2000 in note 2 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2000 consolidated financial statements of Northland Cable Television, Inc. and subsidiary other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2000 consolidated financial statements taken as a whole.

Seattle, Washington
February 14, 2003, except as to note 12, which is as of March 11, 2003

F.1

Table of Contents

Report of Prior Independent Public Accountants

To the Shareholder of
Northland Cable Television, Inc.:

We have audited the accompanying consolidated balance sheets of Northland Cable Television, Inc. (a Washington corporation and a wholly owned subsidiary of Northland Telecommunications Corporation) and subsidiary as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in shareholder’s deficit and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Northland Cable Television, Inc. and subsidiary as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

Seattle, Washington
February 23, 2001

This audit report of Arthur Andersen LLP, our former independent public accountants, is a copy of the original report dated February 23, 2001 rendered by Arthur Andersen LLP on our consolidated financial statements included in our Form 10-K filed on March 30, 2001, and has not been reissued by Arthur Andersen LLP since that date. We are including this copy of the February 23, 2001 Arthur Andersen LLP audit report pursuant to Rule 2-02 (e) of Regulation S-X under the Securities Act of 1933.

F.2

Table of Contents

NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A Wholly Owned Subsidiary of Northland Telecommunications Corporation)

Consolidated Balance Sheets

December 31, 2002 and 2001