10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2005

Commission file numbers     333-33540

                                                     333-33540-1

INSIGHT MIDWEST, L.P.

INSIGHT CAPITAL, INC.

(Exact name of registrants as specified in their charters)

Delaware Delaware	13-4079232 13-4079679
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

810 7th Avenue New York, New York	10019
(Address of principal executive offices)	(Zip code)

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

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

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

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

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2004.

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INSIGHT MIDWEST, LP

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30, 2005		December 31, 2004
	(unaudited)
Assets
Cash and cash equivalents	$	75,437	$	72,476
Investments		5,408		4,100
Trade accounts receivable, net of allowance for doubtful accounts of $1,273 and $1,050 as of June 30, 2005 and December 31, 2004		24,197		31,352
Launch funds receivable		555		2,749
Prepaid expenses and other current assets		15,555		9,300
Total current assets		121,152		119,977
Fixed assets, net		1,102,362		1,130,600
Goodwill		14,684		14,684
Franchise costs		2,357,535		2,357,535
Deferred financing costs, net of accumulated amortization of $17,362 and $15,170 as of June 30, 2005 and December 31, 2004		20,584		22,776
Other non-current assets		1,887		1,843
Total assets	$	3,618,204	$	3,647,415
Liabilities and partners’ capital
Accounts payable	$	38,755	$	27,147
Accrued expenses and other current liabilities		32,948		36,092
Accrued property taxes		11,592		13,049
Accrued programming costs (inclusive of $38,872 and $36,838 due to related parties as of June 30, 2005 and December 31, 2004)		55,143		51,328
Deferred revenue		6,293		8,996
Interest payable		20,685		20,643
Debt – current portion		83,500		83,500
Due to affiliates		53,144		55,177
Total current liabilities		302,060		295,932
Deferred revenue		2,180		2,904
Debt		2,477,423		2,518,879
Other non-current liabilities		1,266		2,078
Partners’ capital:
Partners’ accumulated capital		835,275		827,622
Total partners’ capital		835,275		827,622
Total liabilities and partners’ capital	$	3,618,204	$	3,647,415

See accompanying notes

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INSIGHT MIDWEST, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
Revenue	$	279,278		$	249,952		$	548,605		$	488,036
Operating costs and expenses:
Programming and other operating costs (exclusive of depreciation and amortization) (inclusive of $39,176 and $80,675 and $36,734 and $73,479 of programming expense incurred through related parties for the three and six months ended June 30, 2005 and 2004)		93,445			88,513			192,443			176,004
Selling, general and administrative		58,468			48,757			115,671			92,831
Management fees		8,361			7,323			16,459			14,326
Depreciation and amortization		59,952			58,959			119,636			115,948
Total operating costs and expenses		220,226			203,552			444,209			399,109
Operating income		59,052			46,400			104,396			88,927
Other income (expense):
Interest expense		(49,763	)		(44,769	)		(98,104	)		(89,125	)
Interest income		565			27			670			83
Other income (expense)		599			(3,340	)		691			(1,326	)
Total other expense, net		(48,599	)		(48,082	)		(96,743	)		(90,368	)
Net income (loss)	$	10,453		$	(1,682	)	$	7,653		$	(1,441	)

See accompanying notes

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INSIGHT MIDWEST, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six months ended June 30,
	2005			2004
Operating activities:
Net income (loss)	$	7,653		$	(1,441	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		119,636			115,948
Provision for losses on trade accounts receivable		8,220			8,070
Amortization of note discount		162			148
(Gain) loss on interest rate swaps		(812	)		1,235
Changes in operating assets and liabilities:
Trade accounts receivable		(1,065	)		(2,706	)
Launch funds receivable		2,194			4,693
Prepaid expenses and other assets		(6,351	)		1,808
Accounts payable		11,608			(9,524	)
Accrued expenses and other liabilities		(6,072	)		15,929
Net cash provided by operating activities		135,173			134,160
Investing activities:
Purchase of fixed assets		(90,112	)		(82,232	)
Sale of fixed assets		957			892
Purchase of investments		(1,307	)		—
Net cash used in investing activities		(90,462	)		(81,340	)
Financing activities:
Net repayments under credit facilities		(41,750	)		(37,125	)
Debt issuance costs		—			(10	)
Net cash used in financing activities		(41,750	)		(37,135	)
Net increase in cash and cash equivalents		2,961			15,685
Cash and cash equivalents, beginning of period		72,476			22,679
Cash and cash equivalents, end of period	$	75,437		$	38,364

See accompanying notes

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

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

Through our wholly owned operating subsidiaries, Insight Communications Midwest, LLC (“Insight Communications Midwest”), Insight Communications of Central Ohio, LLC (“Insight Ohio”) and Insight Kentucky Partners II, L.P. (“Insight Kentucky”), we own and operate cable television systems in Indiana, Kentucky, Ohio, and Illinois which passed approximately 2.4 million homes and served approximately 1.3 million customers as of June 30, 2005.

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

On July 28, 2005, Insight Inc. entered into a definitive merger agreement providing for Insight Acquisition Corp. to acquire all of Insight Inc.’s publicly held shares. See Subsequent Events Note 10.

2. Responsibility for Interim Financial Statements

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

In management’s opinion, the consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2004.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2005 are not necessarily indicative of the results to be expected for the year ending December 31, 2005 or any other interim period.

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Recent Accounting Pronouncements

In May 2005, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 154, Accounting Changes and Error Corrections. SFAS No. 154 requires retrospective application of a voluntary change in accounting principle to prior period financial statements unless it is impracticable. This Statement also requires that a change in method of depreciation, amortization, or depletion for long-lived, non-financial assets be accounted for as a change in accounting estimate that is affected by a change in accounting principle and requires retrospective application to prior period financial statements. SFAS No. 154 replaces Accounting Principles Board (“APB”) Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning in 2007.

4. Fixed Assets

Fixed assets consisted of:

	June 30, 2005			December 31, 2004
	(unaudited)
	(in thousands)
Land, buildings and improvements	$	35,249		$	35,649
Cable system equipment		2,244,025			2,155,193
Furniture, fixtures and office equipment		18,411			17,867
		2,297,685			2,208,709
Less accumulated depreciation and amortization		(1,195,323	)		(1,078,109	)
Total fixed assets, net	$	1,102,362		$	1,130,600

We recorded depreciation expense of $58.8 million and $117.4 million for the three and six months ended June 30, 2005 and $57.8 million and $113.7 million for the three and six months ended June 30, 2004.

5. Debt

	June 30, 2005			December 31, 2004
	(unaudited)
	(in thousands)
Note payable to Insight Inc.	$	100,000		$	100,000
Insight Midwest Holdings Credit Facility		1,446,000			1,487,750
Insight Midwest 9¾% Senior Notes		385,000			385,000
Insight Midwest 10½% Senior Notes		630,000			630,000
		2,561,000			2,602,750
Net unamortized discount/premium on notes		(728	)		(890	)
Market value of interest rate swaps		651			519
Total debt	$	2,560,923		$	2,602,379

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INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Debt (continued)

Insight Midwest Holdings $1.975 Billion Credit Facility

Our wholly owned subsidiary, Insight Midwest Holdings, LLC, serves as borrower under a $1.975 billion credit facility. On March 28, 2002, we loaned $100.0 million to Insight Midwest. The loan bears annual interest of 9%, compounded semi-annually, has a scheduled maturity date of January 31, 2011 and permits prepayments. Insight Midwest Holdings is permitted under the credit facility to make distributions to us for the purpose of repaying this loan, including accrued interest, provided that there are no defaults existing under the credit facility. As of June 30, 2005 and 2004, the balance of the $100.0 million loan, including accrued interest, was $133.0 million and $127.0 million.

On June 27, 2005 Insight Inc. announced plans to refinance the existing $1.1 billion Term B loan under Insight Midwest’s credit facility. The refinancing was completed on July 21, 2005. See Subsequent Events Note 10.

Debt Principal Payments

As of June 30, 2005, principal payments required on our debt were as follows (in thousands):

2005	$	41,750
2006		83,500
2007		83,500
2008		104,750
2009		1,517,500
Thereafter		730,000
Total	$	2,561,000

6. Derivative Instruments

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

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

7

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Derivative Instruments (continued)

Fair Value Hedges

In July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expire November 1, 2005. We recorded a gain on these swaps of $1.1 million and $812,000 for the three and six months ended June 30, 2005 and a loss of $3.0 million and $1.2 million for the three and six months ended June 30, 2004, which is included in other income (expense). As of June 30, 2005 and December 31, 2004, we recorded $486,000 and $364,000 of interest payable related to these agreements. The cost, if terminated, of these agreements was $1.3 million and $2.1 million as of June 30, 2005 and December 31, 2004.

In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated statements of operations. The fair value of this swap as of June 30, 2005 and December 31, 2004 was $650,000 and $519,000, and has been recorded in other non-current assets and as an adjustment to the carrying value of debt.

7. Comprehensive Income (Loss)

We record the effective portion of certain derivatives’ gains or losses as accumulated other comprehensive income or loss in the accompanying consolidated balance sheets.

The following is a reconciliation of net income (loss) to comprehensive income (loss) (in thousands):

	Three months ended June 30,					Six months ended June 30,
	2005		2004			2005		2004
	(unaudited)					(unaudited)
Net income (loss)	$	10,453	$	(1,682	)	$	7,653	$	(1,441	)
Unrealized gain on interest rate swaps		—		1,462			—		2,807
Comprehensive income (loss)	$	10,453	$	(220	)	$	7,653	$	1,366

8. Related Party Transactions

Managed Systems

On March 17, 2000, Insight LP entered into a management agreement with Comcast of Montana/Indiana/Kentucky/Ohio (“Comcast”) (formerly known as InterMedia Partners Southeast), an affiliate of Comcast Cable, to provide management services to cable television systems owned by Comcast. Certain of our employees operate these managed systems. Overhead costs incurred by us were allocated ratably and charged to

8

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Related Party Transactions (continued)

them on a monthly basis. Effective July 31, 2004, the management agreement was terminated by mutual agreement.

Programming

We purchase the majority of our programming through affiliates of Comcast Cable. Charges for such programming, including a 1½% administrative fee, were approximately $39.2 million and $80.7 million for the three and six months ended June 30, 2005 and approximately $36.7 million and $73.5 million for the three and six months ended June 30, 2004. As of June 30, 2005 and December 31, 2004, approximately $38.9 million and $36.8 million, of accrued programming costs were due to affiliates of Comcast Cable. We believe that the programming rates charged through these affiliates are lower than those available from independent parties.

Telephone Agreements

Prior to December 31, 2004, to facilitate delivery of telephone services, Insight LP was a party to a joint operating agreement with Comcast Cable that allowed us to deliver to our residential customers, in certain of our service areas, local telephone service provided by Comcast Cable. Under the terms of the agreement, we leased certain capacity on our local network to Comcast Cable. In addition, we provided certain services and support for which we received additional payments related to installations, marketing and billing support. Fee revenue earned in connection with installations was deferred and amortized over the term a telephone customer was expected to maintain their telephone service, then estimated to be three years. Marketing and billing support revenue was recognized in the period such services were performed.

On December 31, 2004, we acquired the telephone business conducted by Comcast Cable in the markets served under our joint operating agreement and terminated the joint operating agreement. Subsequent to December 31, 2004, we no longer earn revenue from the services described above, but rather we record the continued amortization of installation fee revenue and revenues earned directly from our customers for providing telephone and telephone related services.

Advertising Services

In October 1999, to facilitate the administration of our advertising services in our Kentucky Systems, we entered into an agreement with an affiliate of AT&T Broadband (now known as Comcast Cable), which provided for this affiliate to perform all of our Kentucky advertising sales and related administrative services. Effective September 26, 2004, this agreement was terminated by mutual agreement.

We earned advertising revenues through this affiliate of approximately $5.1 million and $9.1 million for the three and six months ended June 30, 2004. Through September 26, 2004 we paid this affiliate a fixed and variable fee for providing this service based on advertising sales cash flow growth.

9

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Related Party Transactions (continued)

Due To Affiliates

As of June 30, 2005 and December 31, 2004, we owed Insight LP, certain amounts comprised primarily of incurred but unpaid management fees, calculated as approximately 3% of revenues, accrued interest related to our $100.0 million note payable to Insight Inc. and other operational expenses.

9. Commitments and Contingencies

Programming Contracts

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

Litigation

In November 2000, we filed a state court action against the City of Louisville for its grant, in September 2000, of a more favorable franchise to Knology of Louisville, Inc. Upon commencement of this action, the City pursuant to a provision in its franchise agreement with Knology, automatically suspended Knology’s franchise pending a final, non-appealable court determination as to whether Knology’s franchise was more favorable than the franchise under which we operated. In November 2000, Knology filed a federal court action against us seeking monetary damages and other relief for alleged violations of federal laws arising out of our having filed, pursuant to the provisions of our own franchise agreement with the City, the state court action. In March 2001, the federal court preliminarily set aside the suspension of Knology’s franchise. In March 2002, a state circuit court ruled against our claim that Knology’s franchise was more favorable. We appealed the circuit court’s order to the state court of appeals which, in June 2003, upheld the lower court ruling. We filed a motion for discretionary review of the appeals court’s ruling which was denied by the Kentucky Supreme Court.

In May 2003, the federal court granted us summary judgment and dismissed six of Knology’s 11 claims. The court granted summary judgment to Knology on three claims, two of which resulted in permanently enjoining enforcement of the automatic suspension provision of Knology’s franchise agreement and did not involve damages. The third such claim was for violation of Knology’s first amendment rights, which was to proceed to trial solely on the issue of damages, and could have resulted in an award of legal fees and court costs specific to such claim if upheld. The remaining undecided claims related to allegations of anticompetitive conduct arising from the state court lawsuit and were to proceed to trial on the merits. In August 2003, the court agreed, in part, with our Motion for Reconsideration, that the stay provision provides no justification for an injunction since the language was severed. Further, the court granted our Motion to Certify Questions for an Immediate Appeal to the Sixth Circuit Court of Appeals. The Sixth Circuit Court of Appeals granted our Motion to Certify, and ruled in our favor overturning the trial court’s rulings in favor of Knology. The Sixth Circuit found that our right to file the state court lawsuit against the City was protected and thus we were immune from liability arising from that

10

INSIGHT MIDWEST, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Commitments and Contingencies (continued)

lawsuit. Knology filed a motion for an en banc review by the Sixth Circuit which was denied in March 2005. The matter has returned to the trial court for final rulings consistent with the Sixth Circuit opinion.

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

10. Subsequent Events

On July 21, 2005 we completed a refinancing of the existing $1.1 billion Term B loan facility under the Insight Midwest Credit Agreement which reduced the applicable margins for LIBOR rate borrowings and raised the maximum total leverage ratio covenant.

On July 28, 2005, Insight Inc. entered into a definitive merger agreement providing for Insight Acquisition Corp. to acquire all of Insight Inc.’s publicly held shares. Under the terms of the agreement, Insight Inc.’s public shareholders would receive $11.75 per share in cash.

Insight Acquisition Corp., the acquiring entity, was organized by Insight Inc.’s co-founders Sidney R. Knafel and Michael S. Willner and affiliates of The Carlyle Group in order to effect the transactions contemplated by the merger agreement.

Consummation of the transaction is subject to certain conditions, including (i) approval of the merger agreement and merger by holders of a majority of the outstanding shares of Insight Inc.’s Class A common stock not held by Insight Acquisition Corp., its affiliates or Insight Inc.’s officers and directors and (ii) termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

11

INSIGHT CAPITAL, INC.

BALANCE SHEETS

(in thousands)

	June 30, 2005			December 31, 2004
	unaudited
Assets
Cash	$	1		$	1
Deferred financing costs, net of accumulated amortization of $10,384 and $9,081 as of June 30, 2005 and December 31, 2004		12,396			13,700
Total assets	$	12,397		$	13,701
Liabilities and shareholder deficit
Accrued interest	$	20,409		$	20,409
Total current liabilities		20,409			20,409
Senior notes, to be paid by Insight Midwest, LP		1,014,273			1,014,110
Total liabilities		1,034,682			1,034,519
Shareholder deficit:
Common stock; $.01 par value; 1,000 shares authorized, issued and outstanding		—			—
Paid-in-capital		1			1
In-substance allocation of proceeds related to senior notes to be paid by Insight Midwest		(583,460	)		(635,304	)
Accumulated deficit		(438,826	)		(385,515	)
Total shareholder deficit		(1,022,285	)		(1,020,818	)
Total liabilities and shareholder deficit	$	12,397		$	13,701

See accompanying notes

12

INSIGHT CAPITAL, INC.

STATEMENTS OF OPERATIONS

(unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Expenses:
Amortization	$	(652	)	$	(652	)	$	(1,304	)	$	(1,304	)
Interest		(26,004	)		(25,997	)		(52,007	)		(51,992	)
Net loss	$	(26,656	)	$	(26,649	)	$	(53,311	)	$	(53,296	)

See accompanying notes

13

INSIGHT CAPITAL, INC.

STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net loss	$	(53,311	)	$	(53,296	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Accretion of discount on notes		163			148
Amortization		1,304			1,304
Interest expense assumed by affiliate		51,844			51,844
Net cash provided by operating activities		—			—
Net increase in cash		—			—
Cash, beginning of period		1			1
Cash, end of period	$	1		$	1

See accompanying notes

14

INSIGHT CAPITAL, INC.

NOTES TO FINANCIAL STATEMENTS

1. Nature of Business

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

2. Responsibility for Interim Financial Statements

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

In management’s opinion, the financial statements reflect all adjustments considered necessary for a fair presentation of the statement of financial position as of the interim dates presented. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

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

15

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

Forward-Looking Statements

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

• discuss our future expectations;

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

• state other “forward-looking” information.

We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2004, as well as any cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Examples of these risks include our history and expectation of future net losses, our substantial debt, changes in laws and regulations, increasing programming costs and competition. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this quarterly report could have a material adverse effect on our business, operating results and financial condition. We assume no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.

Recent Developments

On July 28, 2005, Insight Inc. entered into a definitive merger agreement providing for Insight Acquisition Corp. to acquire all of Insight Inc.’s publicly held shares. Under the terms of the agreement, Insight Inc.’s public shareholders would receive $11.75 per share in cash.

Insight Acquisition Corp., the acquiring entity, was organized by Insight Inc.’s co-founders Sidney R. Knafel and Michael S. Willner and affiliates of The Carlyle Group in order to effect the transactions contemplated by the merger agreement.

Consummation of the transaction is subject to certain conditions, including (i) approval of the merger agreement and merger by holders of a majority of the outstanding shares of Insight Inc.’s Class A common stock not held by Insight Acquisition Corp., its affiliates or Insight Inc.’s officers and directors and (ii) termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Overview

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

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Some of the principle reasons for our net losses through June 30, 2005 include depreciation and amortization associated with capital expenditures for the construction, expansion and maintenance of our systems, and interest costs on borrowed money. We expect to continue to report net losses for the foreseeable future. We cannot predict what impact, if any, continued losses will have on our ability to finance our operations in the future.

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

	Three Months Ended June 30,					Six Months Ended June 30,
	2005		2004			2005		2004
	(in thousands)
Revenue	$	279,278	$	249,952		$	548,605	$	488,036
Operating costs and expenses:
Programming and other operating costs		93,445		88,513			192,443		176,004
Selling, general and administrative		58,468		48,757			115,671		92,831
Management fees		8,361		7,323			16,459		14,326
Depreciation and amortization		59,952		58,959			119,636		115,948
Total operating costs and expenses		220,226		203,552			444,209		399,109
Operating income		59,052		46,400			104,396		88,927
Interest expense		49,763		44,769			98,104		89,125
Net income (loss)		10,453		(1,682	)		7,653		(1,441	)
Net cash provided by operating activities		63,246		39,295			135,173		134,160
Net cash used in investing activities		52,947		38,276			90,462		81,340
Net cash used in financing activities		20,875		21,572			41,750		37,135
Capital expenditures		52,597		38,788			90,112		82,232

Use of Operating Income before Depreciation and Amortization and Free Cash Flow

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

A limitation of Operating Income before Depreciation and Amortization, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures, investment spending and Free Cash Flow. Management also evaluates the costs of

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capitalized tangible and intangible assets by analyzing returns provided on the capital dollars deployed. Another limitation of Operating Income before Depreciation and Amortization is that it does not reflect income net of interest expense, which is a significant expense for us because of the substantial debt we incurred to acquire cable television systems and finance capital expenditures to upgrade our cable network. Management evaluates the impact of interest expense through measures including interest expense, Free Cash Flow, the returns analysis discussed above and debt service covenant ratios under our credit facility.

Free Cash Flow is net cash provided by operating activities (as defined by accounting principles generally accepted in the United States) less capital expenditures. Free Cash Flow is considered to be an important indicator of our liquidity, including our ability to repay indebtedness. We believe Free Cash Flow is useful for investors because it enables them to assess our ability to service our debt and to fund continued growth with internally generated funds in a manner similar to the methods used by our management, and provides a measure that can be used to analyze, value and compare companies in the cable television industry.

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

Reconciliation of Net Income (Loss) to Operating Income before Depreciation and Amortization

The following table reconciles Net Income (Loss) to Operating Income before Depreciation and Amortization. In addition, the table provides the components from Net Income (Loss) to Operating Income for purposes of the discussions that follow.

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(in thousands)
Net Income (Loss)	$	10,453		$	(1,682	)	$	7,653		$	(1,441	)
Other income (expense):
Other		599			(3,340	)		691			(1,326	)
Interest income		565			27			670			83
Interest expense		(49,763	)		(44,769	)		(98,104	)		(89,125	)
Total other expense, net		48,599			48,082			96,743			90,368
Operating income		59,052			46,400			104,396			88,927
Depreciation and amortization		59,952			58,959			119,636			115,948
Operating Income before Depreciation and Amortization	$	119,004		$	105,359		$	224,032		$	204,875

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Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

The following table provides a reconciliation from net cash provided by operating activities to Free Cash Flow. In addition, the table provides the components from net cash provided by operating activities to operating income for purposes of the discussions that follow.

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(in thousands)
Operating income	$	59,052		$	46,400		$	104,396		$	88,927
Depreciation and amortization		59,952			58,959			119,636			115,948
Operating Income before Depreciation and Amortization		119,004			105,359			224,032			204,875
Changes in working capital accounts(1)		(3,029	)		(613	)		1,952			11,600
Cash paid for interest		(54,036	)(2)		(65,451	)		(92,118	)		(82,315	)
Net cash provided by operating activities		61,939			39,295			133,866			134,160
Capital expenditures		(52,597	)		(38,788	)		(90,112	)		(82,232	)
Free Cash Flow	$	9,342		$	507		$	43,754		$	51,928

Results of Operations

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004

Revenue for the three months ended June 30, 2005 totaled $279.3 million, an increase of 12% over the prior year, due primarily to customer gains in our high-speed Internet and digital services, as well as basic rate increases. High-speed Internet service revenue increased 49% over the prior year, primarily due to an increased customer base. We added a net 23,500 high-speed Internet customers during the quarter to end at 391,300 customers. In addition, digital service revenue increased 13% over the prior year, primarily due to an increased customer base. We added a net 1,800 digital customers during the quarter to end at 460,800 customers.

Basic cable service revenue increased 3%, due to basic rate increases partially offset by customer losses. Historically, we experience a seasonal decline in basic customers during the second quarter primarily as a result of students leaving the university communities we serve at the end of the school year. Compounding this loss for the three months ended June 30, 2005, were continued competitive pressures from Direct Broadcast Satellite (“DBS”) service providers, including the continuing effects of earlier “local-to-local” launches and bundled offers with Digital Subscriber Line (“DSL”) providers. To reverse this trend, we are increasing our customer retention efforts by emphasizing bundling, enhancing and differentiating our video services and providing video-on-demand, high definition television and digital video recorders. We are also continuing our focus on improving customer service through quicker response times, increased education of our product offerings and spending on marketing and sales efforts.

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

⁽²⁾ Excludes bond interest payments due April 1, 2005 that were made on March 31, 2005. Had the payments been made on April 1, 2005, Free Cash Flow for the three months ended June 30, 2005 would have been ($9,427). Cash paid for interest for the three months ended June 30, 2005 is lower than for the three months ended June 30, 2004 because it does not include this interest payment.

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Revenue by service offering was as follows for the three months ended June 30 (in thousands):

	Revenue by Service Offering
	Three Months Ended June 30, 2005		% of Total Revenue		Three Months Ended June 30, 2004		% of Total Revenue		% Change in Revenue
Basic	$	150,071	53.7	%	$	145,446	58.2	%	3.2	%
High-speed Internet		46,318	16.6	%		31,095	12.4	%	49.0	%
Digital		27,838	10.0	%		24,679	9.9	%	12.8	%
Advertising		19,749	7.1	%		16,883	6.8	%	17.0	%
Premium		13,746	4.9	%		14,612	5.8	%	(5.9	)%
Telephone		8,387	3.0	%		3,802	1.5	%	120.6	%
Franchise fees		7,782	2.8	%		7,264	2.9	%	7.1	%
Other		5,387	1.9	%		6,171	2.5	%	(12.7	)%
Total	$	279,278	100.0	%	$	249,952	100.0	%	11.7	%

Total Customer Relationships were 1,315,400 as of June 30, 2005 compared to 1,324,800 as of June 30, 2004. Total Customer Relationships represent the number of customers who receive one or more of our products (i.e. basic cable, high-speed Internet or telephone) without regard to which product they purchase. Revenue Generating Units (“RGUs”), which represent the sum of basic, digital, high-speed Internet, and telephone customers, as of June 30, 2005 increased 7% as compared to June 30, 2004. RGUs by category were as follows (in thousands):

	June 30, 2005	June 30, 2004
Basic	1,257.2	1,282.4
Digital	460.8	418.2
High-speed Internet	391.3	273.9
Telephone	73.5	61.6
Total RGUs	2,182.8	2,036.1

Average monthly revenue per basic customer was $73.63 for the three months ended June 30, 2005, compared to $64.58 for the three months ended June 30, 2004 primarily reflecting the continued growth of our high-speed Internet and digital product offerings in all markets as well as basic rate increases. In addition, telephone revenues for the three months ended June 30, 2005 reflect service revenues earned from our customers compared to the three months ended June 30, 2004 which reflected revenues billed to Comcast under our previous contractual arrangement that was terminated effective December 31, 2004. Also included in telephone revenues for the three months ended June 30, 2005 is the continued amortization of installation revenues under our previous arrangement with Comcast in the amount of $834,000.

Programming and other operating costs increased $4.9 million or 6%. Total programming costs for our video products decreased for the three months ended June 30, 2005 from the three months ended June 30, 2004. Annual programming rate increases were more than offset by a credit of approximately $6.0 million resulting from favorable resolution of pricing negotiations related to certain prior period programming costs that were accrued at a higher rate than the amount actually paid. Other operating costs increased primarily as a result of increases in technical salaries for new and existing employees, in addition to decreased capitalized labor costs

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due to the continued transition from upgrade and new connect activities to maintenance and reconnect activities. Other operating costs also increased as a result of cost of sales associated with telephone that were previously paid by Comcast. Despite an increase of 117,000 high-speed Internet customers, high-speed Internet service provider costs decreased due to more favorable per customer charges under an agreement with our Internet service provider entered into in the third quarter of 2004. However, as we continue to add high-speed Internet customers, we expect our Internet service provider costs to increase.

Selling, general and administrative expenses increased $9.7 million or 20%, primarily due to increased payroll and payroll related costs, including annual salary increases for existing employees and increases in health insurance costs. Marketing support funds (recorded as a reduction to selling, general and administrative expenses) decreased over the prior year’s quarter. A decrease in expenses previously allocated to Comcast, under our prior agreement to manage certain Comcast systems, also contributed to the increase in selling, general and administrative expenses. As this agreement was terminated effective July 31, 2004, the period ended June 30, 2005 does not include any of these expense allocations. Some cost savings have been realized upon termination of the management agreement, and the impact of certain of these savings is reflected in programming and other operating costs.

Management fees increased $1.1 million or 14% to $8.4 million for the three months ended June 30, 2005 from $7.3 million for the three months ended June 30, 2004. Management fees, equal to approximately 3% of revenues, are paid to Insight LP.

Depreciation and amortization expense increased $1.0 million or 2% primarily as a result of additional capital expenditures through June 30, 2005. These expenditures were primarily for network extensions, capitalized payroll, upgrades to our headends, telephone equipment and purchases of customer premise equipment, all of which we consider necessary in order to continue to maintain and grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2004.

As a result of the factors discussed above, Operating Income before Depreciation and Amortization increased $13.6 million, or 13%.

Interest expense increased $5.0 million or 11% primarily due to higher interest rates, which averaged 7.8% for the three months ended June 30, 2005 as compared to 6.8% for the three months ended June 30, 2004.

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

Revenue for the six months ended June 30, 2005 totaled $548.6 million, an increase of 12% over the prior year, due primarily to customer gains in high-speed Internet and digital services, as well as basic rate increases. High-speed Internet service revenue increased 47% over the prior year, primarily due to an increased customer base. We added a net 60,800 high-speed Internet customers during the six months ended June 30, 2005 to end at 391,300 customers. In addition, digital service revenue increased 13% over the prior year, primarily due to an increased customer base. We added a net 9,500 digital customers during the six months ended June 30, 2005 to end at 460,800 customers. Basic cable service revenue increased 5%, due to basic rate increases partially offset by customer losses.

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

	Revenue by Service Offering
	Six Months Ended June 30, 2005		% of Total Revenue		Six Months Ended June 30, 2004		% of Total Revenue		% Change in Revenue
Basic	$	297,703	54.3	%	$	284,451	58.3	%	4.7	%
High-speed Internet		88,431	16.1	%		60,035	12.3	%	47.3	%
Digital		54,599	10.0	%		48,400	9.9	%	12.8	%
Advertising		36,737	6.7	%		30,870	6.3	%	19.0	%
Premium		28,090	5.1	%		29,518	6.1	%	(4.8	)%
Telephone		16,119	2.9	%		7,560	1.6	%	113.2	%
Franchise fees		15,202	2.8	%		14,272	2.9	%	6.5	%
Other		11,724	2.1	%		12,930	2.6	%	(9.3	)%
Total	$	548,605	100.0	%	$	488,036	100.0	%	12.4	%

Average monthly revenue per basic customer was $72.16 for the six months ended June 30, 2005, compared to $62.99 for the six months ended June 30, 2004 primarily reflecting the continued growth of our high-speed Internet and digital product offerings in all markets as well as basic rate increases.

Programming and other operating costs increased $16.4 million or 9%. Programming costs increased primarily as a result of increased programming rates. These increased costs were partially offset by the favorable finalization of contract resolutions that were accrued at a higher rate than the amount actually paid. Other operating costs increased primarily as a result of increases in technical salaries for new and existing employees, in addition to decreased capitalized labor costs due to the continued transition from upgrade and new connect activities to maintenance and reconnect activities. Other operating costs also increased as a result of cost of sales associated with telephone that were previously paid by Comcast. Despite an increase of 117,000 high-speed Internet customers, high-speed Internet service provider costs decreased due to more favorable per customer charges under an agreement with our Internet service provider entered into in the third quarter of 2004. However, as we continue to add high-speed Internet customers, we expect our Internet service provider costs to increase.

Selling, general and administrative expenses increased $22.8 million or 25%, primarily due to increased payroll and payroll related costs, including annual salary increases for existing employees and increases in health insurance costs. Marketing support funds (recorded as a reduction to selling, general and administrative expenses) decreased over the prior year. A decrease in expenses previously allocated to Comcast, under our prior agreement to manage certain Comcast systems, also contributed to the increase in selling, general and administrative expenses. As this agreement was terminated effective July 31, 2004, the period ended June 30, 2005 does not include any of these expense allocations. Some cost savings have been realized upon termination of the management agreement, and the impact of certain of these savings is reflected in programming and other operating costs.

Management fees increased $2.1 million or 15% to $16.5 million for the six months ended June 30, 2005 from $14.3 million for the six months ended June 30, 2004. Management fees, equal to approximately 3% of revenues, are paid to Insight LP.

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Depreciation and amortization expense increased $3.7 million or 3% primarily as a result of additional capital expenditures through June 30, 2005. These expenditures were primarily for network extensions, upgrades to our headends and purchases of customer premise equipment, all of which we consider necessary in order to continue to grow our customer base and expand our service offerings. Partially offsetting this increase was a decrease in depreciation expense related to certain assets that have become fully depreciated since June 30, 2004.

As a result of the factors discussed above, Operating Income before Depreciation and Amortization increased $19.2 million, or 9%.

Interest expense increased $9.0 million or 10% primarily due to higher interest rates, which averaged 7.6% for the six months ended June 30, 2005 as compared to 6.7% for the six months ended June 30, 2004.

Liquidity and Capital Resources

Our business requires cash for operations, debt service, capital expenditures and acquisitions. The cable television business has substantial on-going capital requirements for the construction, expansion and maintenance of its broadband networks and provision of new services. In the past, expenditures have been made for various purposes including the upgrade of our existing cable network, and in the future will be made for network extensions, installation of new services, converters and, to a lesser extent, network upgrades. Historically, we have been able to meet our cash requirements with cash flow from operations, borrowings under our credit facilities and issuances of private and public debt and equity.

Cash provided by operations for the six months ended June 30, 2005 and 2004 remained essentially flat at $135.2 million and $134.2 million.

Cash used in investing activities for the six months ended June 30, 2005 and 2004 was $90.5 million and $81.3 million. The increase was due to amounts spent on capital expenditures primarily for the build out of our telephone product.

Cash used in financing activities for the six months ended June 30, 2005 and 2004 was $41.8 million and $37.1 million. The increase is due to greater amortization payments of our credit facility in 2005.

For the six months ended June 30, 2005 and 2004 we spent $90.1 million and $82.2 million in capital expenditures. These expenditures principally constituted network extensions, upgrades to our headends, telephone equipment, purchases of customer premise equipment and capitalized labor, all of which is considered necessary in order to maintain our existing network, to grow our customer base and expand our service offerings.

Free Cash Flow for the six months ended June 30, 2005 totaled $43.8 million compared to $51.9 million for the six months ended June 30, 2004. The decrease was primarily driven by the following:

• A $2.0 million source of Free Cash Flow for the six months ended June 30, 2005 compared to an $11.6 million source for the six months ended June 30, 2004 from changes in working capital accounts;

• A $9.8 million increase in cash interest expense paid primarily driven by an increase in interest rates; and

• A $7.9 million increase in capital expenditures.

The above fluctuations resulted in a $27.3 million decrease in Free Cash Flow and were offset by an increase in operating income before depreciation and amortization of $19.2 million.

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While we expect to continue to use Free Cash Flow to repay our indebtedness, as interest rates continue to increase, we expect our interest costs will also be higher. On July 21, 2005 we completed a refinancing of the existing $1.1 billion Term B loan facility under Insight Midwest’s Credit Agreement, which reduced the applicable margins for LIBOR rate borrowings and raised the maximum total leverage ratio covenant.

We have a substantial amount of debt. Our high level of debt could have important consequences for you. Our principal source of cash we need to pay our obligations and to repay the principal amount of our debt obligations is the cash that our subsidiaries generate from their operations and their borrowings. We believe that the Insight Midwest Holdings credit facility, cash on-hand and our cash flow from operations are sufficient to support our current operating plan. With the completed refinancing of our Term B loan facility our maximum leverage ratio covenant reset from 3.75 to 4.50 on July 1, 2005. We had the ability to draw upon $338 million of unused availability under the Insight Midwest Holdings credit facility as of June 30, 2005 to fund any shortfall resulting from the inability of Insight Midwest’s cash from operations to fund its capital expenditures, meet its debt service requirements or otherwise fund its operations.

The following table summarizes our contractual obligations and commitments, excluding interest and commitments for programming, as of June 30, 2005, including periods in which the related payments are due (in thousands):

	Contractual Obligations
	Long-Term Debt		Operating Leases		Total
2005	$	41,750	$	1,520	$	43,270
2006		83,500		2,403		85,903
2007		83,500		1,430		84,930
2008		104,750		1,018		105,768
2009		1,517,500		700		1,518,200
Thereafter		730,000		1,373		731,373
Total cash obligations	$	2,561,000	$	8,444	$	2,569,444

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

In July 2003, we entered into three interest rate swap agreements whereby we swapped fixed rates under our 10½% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 8.3%, on $185.0 million notional value of debt. These agreements expire November 1, 2005. We recorded a gain on these swaps of $1.1 million and $812,000 for the three and six months ended June 30, 2005, which is included in other income (expense). The cost if terminated of this swap as of June 30, 2005 and December 31, 2004 was $486,000 and $364,000. A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense for these three swaps by approximately $1.9 million.

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In December 2003, we entered into an interest rate swap agreement whereby we swapped fixed rates under our 10 ¹/2% senior notes due in December 2010 for variable rates equal to six-month LIBOR, plus the applicable margin of approximately 5.9%, on $130.0 million notional value of debt. This agreement expires November 1, 2010. This swap has been determined to be perfectly effective in hedging against fluctuations in the fair value of the underlying debt. As such, changes in the fair value of the underlying debt equally offset changes in the value of the interest rate swap in our consolidated statements of operations. The fair value of this swap as of June 30, 2005 and December 31, 2004 was $650,000 and $519,000 and has been recorded in other non-current assets and as an adjustment to the carrying value of debt. A hypothetical 100 basis point increase in interest rates along the entire interest rate yield curve would increase our annual interest expense for this swap by approximately $1.3 million.

The aggregate fair market value and aggregate carrying value of our 9 ³/4% and 10 ¹/2% senior notes was $1.1 billion and $1.0 billion as of June 30, 2005. The fair market value of our credit facility borrowings approximates its carrying value as the credit facility borrowings bear interest at floating rates of interest. As of June 30, 2005, the estimated fair value (cost if terminated) of our interest rate swap agreements was approximately $650,000 and ($1.3) million and is reflected in our financial statements as other non-current assets or (liabilities). Changes in the fair value of our interest rate swaps are either recognized in income or in stockholders’ equity as a component of other comprehensive income (loss), depending upon the type of swap and whether it qualifies for hedge accounting.

Item 4. Controls and Procedures

Insight Midwest’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of June 30, 2005. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that (i) Insight Midwest’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (ii) Insight Midwest’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Midwest’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Insight Capital’s management carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of June 30, 2005. Based upon that evaluation, its Chief Executive Officer and Chief Financial Officer concluded that (i) Insight Capital’s disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (ii) Insight Capital’s disclosure controls and procedures were designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to Insight Midwest’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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There has not been any change in its internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 9 to Notes to Consolidated Financial Statements.

Item 6. Exhibits

Exhibits:

10	Amendment No. 1 and form of Additional Term Loan Supplement to the Amended and Restated Credit Agreement of Insight Midwest Holdings, LLC (Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 of Insight Communications Company, Inc. and incorporated herein by reference.)
31.1	Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer of Insight Midwest, L.P.
31.2	Rule 13a-14(a)/15d-14(a) Certifications of the Chief Financial Officer of Insight Midwest, L.P.
31.3	Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer of Insight Capital, Inc.
31.4	Rule 13a-14(a)/15d-14(a) Certifications of the Chief Financial Officer of Insight Capital, Inc.
32.1	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer of Insight Midwest, L.P.
32.2	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer of Insight Capital, Inc.

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SIGNATURES

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

Date: August 12, 2005	INSIGHT MIDWEST, L.P.
	By:	/s/ John Abbot
		John Abbot
		Senior Vice President and Chief
		Financial Officer
		(Principal Financial Officer)

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

Date: August 12, 2005	INSIGHT CAPITAL, INC.
	By:	/s/ John Abbot
		John Abbot
		Senior Vice President and Chief
		Financial Officer
		(Principal Financial Officer)

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EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, Michael S. Willner certify that:

1) I have reviewed this quarterly report on Form 10-Q of Insight Midwest, L.P. (the “Registrant”);

2) Based on my knowledge, this 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 report;

3) Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael S. Willner

Michael S. Willner

Chairman, President and Chief Executive Officer

Insight Midwest, L.P.

August 12, 2005

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, John Abbot, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Insight Midwest, L.P. (the “Registrant”);

2) Based on my knowledge, this 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 report;

3) Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John Abbot

John Abbot

Senior Vice President and Chief Financial Officer

Insight Midwest, L.P.

August 12, 2005

EX-31.3

Exhibit 31.3

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, Michael S. Willner certify that:

1) I have reviewed this quarterly report on Form 10-Q of Insight Capital, Inc. (the “Registrant”);

2) Based on my knowledge, this 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 report;

3) Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael S. Willner

Michael S. Willner

Chairman, President and

Chief Executive Officer

Insight Capital, Inc.

August 12, 2005

EX-31.4

Exhibit 31.4

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, John Abbot, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Insight Capital, Inc. (the “Registrant”);

2) Based on my knowledge, this 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 report;

3) Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John Abbot

John Abbot

Senior Vice President and Chief Financial Officer

Insight Capital, Inc.

August 12, 2005

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATIONS

The undersigned hereby certify that the quarterly report on Form 10-Q of Insight Midwest, L.P. (the “Registrant”) for the quarter ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Michael S. Willner

Michael S. Willner

Chairman, President and Chief Executive Officer

Insight Midwest, L.P.

August 12, 2005

/s/ John Abbot

John Abbot

Senior Vice President and Chief Financial Officer

Insight Midwest, L.P.

August 12, 2005

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATIONS

The undersigned hereby certify that the quarterly report on Form 10-Q of Insight Capital, Inc. (the “Registrant”) for the quarter ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Michael S. Willner

Michael S. Willner

Chairman, President and Chief Executive Officer

Insight Capital, Inc.

August 12, 2005

/s/ John Abbot

John Abbot

Senior Vice President and Chief Financial Officer

Insight Capital, Inc.

August 12, 2005