<PAGE>   1



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

              {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                                       OR

              { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

             FOR THE TRANSITION PERIOD FROM __________ TO__________

                         COMMISSION FILE NUMBER: 1-15427


                          CLASSIC COMMUNICATIONS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                                        <C>
                      DELAWARE
            (STATE OR OTHER JURISDICTION                                  74-2630019
          OF INCORPORATION OR ORGANIZATION)                  (I.R.S. EMPLOYER IDENTIFICATION NO.)
</Table>



                           6151 PALUXY ROAD BUILDING A
                               TYLER, TEXAS 75703
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)


       Registrant's telephone number, including area code: (903) 581-2121


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

   As of July 30, 2001, there were 10,585,572 shares of Class A Voting Common
  Stock, 7,149,792 shares of Class B Voting Common Stock and 56,928 shares of
                      Nonvoting Common Stock outstanding.


<PAGE>   2
                          CLASSIC COMMUNICATIONS, INC.

                                    FORM 10-Q
                           QUARTER ENDED JUNE 30, 2001
                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                         Page
                                                                                                         ----

<S>                                                                                                    <C>
PART I - FINANCIAL INFORMATION

Item 1     Financial Statements
           Consolidated Balance Sheets (Unaudited).......................................................4
           Consolidated Statements of Operations (Unaudited).............................................5
           Consolidated Statements of Cash Flows (Unaudited).............................................6
           Notes to Consolidated Financial Statements (Unaudited)........................................7
Item 2     Management's Discussion and Analysis of Financial Condition and Results of Operations........11
Item 3     Quantitative and Qualitative Disclosures About Market Risk...................................18

PART II - OTHER INFORMATION

Item 1     Legal Proceedings............................................................................19
Item 2     Changes in Securities and Use of Proceeds....................................................19
Item 3     Defaults Upon Senior Securities..............................................................19
Item 4     Submission of Matters to a Vote of Security Holders..........................................19
Item 5     Other Information............................................................................19
Item 6     Exhibits and Reports on Form 8-K.............................................................19

SIGNATURES .............................................................................................20
</Table>

                                   ----------

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2001. This
Quarterly Report modifies and supersedes documents filed prior to this Quarterly
Report. The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you directly to those documents. Information incorporated by reference
is considered to be part of this Quarterly Report. In addition, information that
we file with the SEC in the future will automatically update and supersede
information contained in this Quarterly Report. In this Quarterly Report,
"Classic," "we," "us" and "our" refer to Classic Communications, Inc. and its
subsidiaries.

You should carefully review the information contained in this Quarterly Report,
but should particularly consider any risk factors that we set forth in this
Quarterly Report and in other reports or documents that we file from time to
time with the SEC. The statements, other than statements of historical fact,
included in this Quarterly Report on Form 10-Q are forward-looking statements.
These statements include, but are not limited to:

         o        statements regarding our plans for future acquisitions;

         o        statements regarding integration of our cable systems and
                  future acquired systems;

         o        statements regarding future financing transactions;

         o        statements regarding our plans to obtain waivers and
                  amendments to our current financing arrangements;

         o        statements regarding our planned capital expenditures and
                  system upgrades; and

         o        statements regarding the offering of video and Internet access
                  on our systems.

Forward-looking statements generally can also be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "plan," "seek," or "believe." We believe that the
expectations reflected in such forward-looking statements are accurate. However,
we cannot assure you that such expectations will occur. Our actual future
performance could differ materially from such statements. Factors that could
cause such or contribute to such differences include, but are not limited to:

         o        the uncertainties and/or potential delays associated with
                  integrating past and future acquisitions;

         o        our ability to acquire additional cable systems on terms
                  favorable to us;

         o        the passage of legislation or court decisions adversely
                  affecting the cable industry;




                                       2
<PAGE>   3

         o        our ability to repay or refinance our outstanding
                  indebtedness;

         o        the timing, actual cost and allocation of our capital
                  expenditures and system upgrades;

         o        our potential need for additional capital;

         o        competition in the cable industry; and

         o        the advent of new technology.

You should not unduly rely on these forward-looking statements, which speak only
as of the date of this Quarterly Report on Form 10-Q. Except as required by law,
we are not obligated to publicly release any revisions to these forward-looking
statements to reflect events or circumstances occurring after the date of this
Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated
events.




                                       3
<PAGE>   4
PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                          Classic Communications, Inc.

                           Consolidated Balance Sheets
                        (in thousands, except share data)
                                   (unaudited)

<Table>
<Caption>
                                                                       JUNE 30,       DECEMBER 31,
                                                                        2001             2000
                                                                     ------------     ------------
<S>                                                                  <C>              <C>
Assets
Cash and cash equivalents .......................................    $      3,287     $     19,056
Accounts receivable, net ........................................          13,875           13,446
Prepaid expenses ................................................           1,387              283
Deferred financing costs, net ...................................          18,567           19,772
Investment in cable television systems:
  Inventory .....................................................          12,351           13,929
  Property, plant and equipment .................................         407,998          373,817
  Less accumulated depreciation .................................        (121,281)         (98,364)
                                                                     ------------     ------------
    Property, plant and equipment, net ..........................         286,717          275,453
  Intangible assets:
    Customer relationships ......................................         200,666          200,666
    Franchise marketing rights ..................................         204,744          204,744
    Noncompete agreements .......................................          24,900           28,375
    Goodwill ....................................................         110,070          109,927
                                                                     ------------     ------------
                                                                          540,380          543,712
    Less accumulated amortization ...............................        (165,218)        (141,715)
                                                                     ------------     ------------
    Intangible assets, net ......................................         375,162          401,997
                                                                     ------------     ------------
      Total investment in cable television systems ..............         674,230          691,379
                                                                     ------------     ------------
         Total assets ...........................................    $    711,346     $    743,936
                                                                     ============     ============

Liabilities and Stockholders' Equity
Liabilities:
  Accounts payable ..............................................    $     13,885     $     10,290
  Subscriber deposits and unearned income .......................           7,658            7,649
  Other accrued expenses ........................................          23,034           30,377
  Accrued interest ..............................................          18,762           16,565
  Long-term debt, net ...........................................         578,530          559,036
                                                                     ------------     ------------
        Total liabilities .......................................         641,869          623,917
Stockholders' equity:
 Preferred stock: $.01 par value; 10,000,000 shares
  authorized, none issued and outstanding .......................              --               --
 Class A voting common stock: $.01 par value; 120,000,000
  shares authorized; issued and outstanding: 2001--
  10,585,572 and 2000-- 10,411,494 ..............................             106              105
 Class B voting common stock, convertible to Class A voting
  common stock: $.01 par value; 45,000,000 shares
  authorized; issued and outstanding: 2001--
  7,149,792 and 2000-- 7,203,311 ................................              71               72
 Nonvoting common stock, convertible to voting common
  stock: $.01 par value; 7,500,000 shares authorized;
  issued and outstanding: 2001-- 56,928 and 2000-- 177,487 ......               1                2
 Additional paid-in capital .....................................         306,703          306,703
 Unearned compensation ..........................................            (547)            (644)
 Accumulated deficit ............................................        (236,857)        (186,219)
                                                                     ------------     ------------
        Total stockholders' equity ..............................          69,477          120,019
                                                                     ------------     ------------
        Total liabilities and stockholders' equity ..............    $    711,346     $    743,936
                                                                     ============     ============
</Table>


                See notes to consolidated financial statements.


                                       4


<PAGE>   5



                          Classic Communications, Inc.

                     Consolidated Statements of Operations
                     (in thousands, except per share data)
                                  (unaudited)




<Table>
<Caption>
                                               THREE MONTHS ENDED            SIX MONTHS ENDED
                                                    JUNE 30                      JUNE 30
                                           -------------------------     -------------------------
                                              2001           2000           2001           2000
                                           ----------     ----------     ----------     ----------

<S>                                        <C>            <C>            <C>            <C>
Revenues ..............................    $   46,114     $   47,117     $   92,146     $   90,420
Operating expenses:
  Programming .........................        15,607         14,259         31,191         27,469
  Plant and operating .................         5,942          5,409         11,413          9,753
  General and administrative ..........         6,283          6,629         11,536         13,665
  Marketing and advertising ...........           815            906          1,920          1,785
  Corporate overhead ..................         4,512            911          5,668          1,510
  Depreciation and amortization .......        25,351         22,351         50,050         42,142
                                           ----------     ----------     ----------     ----------
          Total operating expenses ....        58,510         50,465        111,778         96,324
                                           ----------     ----------     ----------     ----------
Loss from operations ..................       (12,396)        (3,348)       (19,632)        (5,904)
Interest expense ......................       (16,253)       (14,123)       (31,270)       (28,318)
Other income (expense) ................            77            562            264          1,639
                                           ----------     ----------     ----------     ----------
Loss before income taxes and
  extraordinary item ..................       (28,572)       (16,909)       (50,638)       (32,583)
Income tax benefit ....................            --          5,045             --         10,091
                                           ----------     ----------     ----------     ----------
Loss before extraordinary item ........       (28,572)       (11,864)       (50,638)       (22,492)
Extraordinary loss on
  extinguishment of debt, net of
  taxes of $7,010 in 2000 .............            --             --             --        (14,767)
                                           ----------     ----------     ----------     ----------
Net loss ..............................    $  (28,572)    $  (11,864)    $  (50,638)    $  (37,259)
                                           ==========     ==========     ==========     ==========
Basic and diluted loss per share:
Loss per share before
  extraordinary item ..................    $    (1.61)    $    (0.67)    $    (2.86)    $    (1.28)
Extraordinary loss on
  extinguishment of debt ..............            --             --             --          (0.84)
                                           ----------     ----------     ----------     ----------
Loss per share ........................    $    (1.61)    $    (0.67)    $    (2.86)    $    (2.12)
                                           ==========     ==========     ==========     ==========
</Table>


                See notes to consolidated financial statements.










                                       5
<PAGE>   6
                          Classic Communications, Inc.

                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)

<Table>
<Caption>
                                                                                    SIX MONTHS ENDED JUNE 30
                                                                                    -------------------------
                                                                                       2001           2000
                                                                                    ----------     ----------
<S>                                                                                 <C>            <C>
OPERATING ACTIVITIES
Net loss .......................................................................    $  (50,638)    $  (37,259)
Adjustments to reconcile net loss to net cash provided by (used in) operating
  activities:
    Provision for doubtful accounts ............................................         2,966          1,706
    Depreciation ...............................................................        23,072         17,926
    Amortization of intangibles ................................................        26,978         24,216
    Amortization of deferred financing costs ...................................         1,205          1,079
    Discount accretion on long-term debt .......................................            --            507
    Non-cash compensation ......................................................            97             --
    Deferred tax benefit .......................................................            --        (17,101)
    Loss on sale/disposal of property, plant and equipment .....................            47             --
    Extraordinary loss .........................................................            --         21,777
    Changes in working capital, net of acquisition amounts:
     Change in accounts receivable .............................................        (3,395)        (4,444)
     Change in prepaid expenses ................................................        (1,104)        (1,459)
     Change in other accruals and payables .....................................         6,635          3,564
     Change in accrued interest ................................................         2,197          6,711
                                                                                    ----------     ----------
Net cash provided by (used in) operating activities ............................         8,060         17,223

INVESTING ACTIVITIES
Acquisition of cable television systems ........................................            --       (113,592)
Purchases of inventory .........................................................        (8,797)            --
Purchases of property, plant and equipment .....................................       (34,788)       (25,341)
Proceeds from sales of property, plant and equipment ...........................           405             --
Payments for other intangibles .................................................          (143)        (1,194)
                                                                                    ----------     ----------
Net cash provided by (used in) investing activities ............................       (43,323)      (140,127)

FINANCING ACTIVITIES
Proceeds from long-term debt ...................................................        19,500        225,000
Repayments of long-term debt ...................................................            (6)      (208,944)
Financing costs ................................................................            --         (7,958)
Payment of premium on redeemed notes ...........................................            --        (10,265)
                                                                                    ----------     ----------
Net cash provided by (used in) financing activities ............................        19,494         (2,167)
                                                                                    ----------     ----------
Increase (decrease) in cash and cash equivalents ...............................       (15,769)      (125,071)
Cash and cash equivalents at beginning of period ...............................        19,056        168,388
                                                                                    ----------     ----------
Cash and cash equivalents at end of period .....................................    $    3,287     $   43,317
                                                                                    ==========     ==========

Non-cash financing activities:
Stock issued as partial payment for cable television purchase ..................    $       --     $   13,889
</Table>



                See notes to consolidated financial statements.


                                       6
<PAGE>   7




                          Classic Communications, Inc.
                   Notes to Consolidated Financial Statements
                               As of June 30, 2001


1. BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of Classic
Communications, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles 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 footnotes required
by generally accepted accounting principles for complete financial statements.
In our opinion, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended June 30, 2001 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2001.

    For further information, refer to the consolidated financial statements and
footnotes thereto for the year ended December 31, 2000 included in our Form
10-K.

    Certain reclassifications have been made in the 2000 financial statements to
conform to the 2001 presentation.

2. GOING CONCERN UNCERTAINTIES

    The Company's sole direct subsidiary is Classic Cable, Inc. ("Cable"). At
June 30, 2001, all of the Company's debt was held by Cable. As of June 30, 2001,
Cable was not in compliance with certain financial covenants specified in its
credit facility. In addition, Cable has not made any of its scheduled interest
payments on the credit facility since June 30, 2001. As a result of the default
under the credit facility, Cable is prohibited from making interest payments on
its Senior Subordinated Notes.

      Due to the default under the credit facility, the lenders can take actions
that would adversely impact the liquidity, financial condition and results of
operations, including accelerating the amounts due under the credit facility and
causing cross-defaults under the indentures governing Cable's Senior
Subordinated Notes. If Cable's debt were accelerated under the current senior
credit agreement, neither the Company nor Cable would have sufficient liquidity
to meet the obligations as they become due. Accordingly, Cable would be required
to refinance all or a portion of its indebtedness on or before maturity. In such
event, there is no assurance that the Company or Cable will be able to refinance
any of the indebtedness on commercially reasonable terms or at all.

     The Company has discontinued negotiations with respect to the potential
funding of a $75 million senior second secured loan package. The Company has
retained Credit Suisse First Boston Corporation ("CSFB") as a financial advisor
to consider options relating to refinancing, raising new capital and
restructuring existing debt. In this role, CSFB has begun discussions with
Cable's lenders and holders of Cable's subordinated debentures to pursue a
consensual restructuring of its debt. The Company continues to pursue other
alternatives to improve its liquidity position, including the sale of certain of
its small cable systems. These sales would require waivers or amendments to the
credit facility. If the Company is unable to execute the actions discussed above
in a timely manner, the Company may seek to reorganize utilizing the protections
available to it under the federal bankruptcy laws.

    Cable has not generated earnings sufficient to cover its fixed charges.
However, in the past, the Company and Cable have generated cash and obtained
financing sufficient to meet their debt service, working capital, capital
expenditure and acquisition requirements. In light of Cable's existing fixed
charges requirements and capital expenditure plan, the Company and/or Cable will
be required to obtain additional financing or complete certain asset
transactions to be able to generate funds sufficient to service Cable's
obligations and continue the Company's current business plan. There can be no
assurance that either the Company or Cable will be able to obtain sufficient
financing, or, if they were able to do so, that the terms would be favorable.




                                       7
<PAGE>   8



    If the Company is unable to arrange additional financing or improve its
liquidity position by some other means, there is serious doubt that the Company
will be able to continue its operations as they are currently conducted. Such
events would materially and adversely affect its business, financial condition
and results of operations and could require the Company to sell significant
assets or discontinue certain operations.

    Due to the Company's lack of sufficient funds, the Company has not made all
required payments related to certain agreements with various providers of
programming, goods and other services. As a result, the Company is not in
compliance with certain of these agreements and may have fines and penalties
levied against it or have services discontinued unless the Company can once
again comply with the terms of the related agreements. If the Company were to
lose certain services related to its customers, it could have an adverse impact
on the operations of the Company.

3. INCOME TAXES

    The effective tax rates for the three and six months ended June 30, 2001 and
2000 differ from the statutory rates primarily due to the impact of permanent
differences and increases in the valuation allowance on deferred tax assets. We
believe it is more likely than not that such deferred tax assets will not be
utilized in the near term.

4. EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):

<Table>
<Caption>
                                                       THREE MONTHS ENDED            SIX MONTHS ENDED
                                                             JUNE 30                      JUNE 30
                                                    -------------------------     -------------------------
                                                       2001           2000           2001           2000
                                                    ----------     ----------     ----------     ----------
<S>                                                 <C>            <C>            <C>            <C>
Loss before extraordinary item .................    $  (28,572)    $  (11,864)    $  (50,638)    $  (22,492)
Extraordinary loss .............................            --             --             --        (14,767)
                                                    ----------     ----------     ----------     ----------
Net loss .......................................    $  (28,572)    $  (11,864)    $  (50,638)    $  (37,259)
                                                    ==========     ==========     ==========     ==========
Weighted-average shares outstanding ............        17,792         17,728         17,792         17,585
Less unvested portion of restricted stock ......           (52)            --            (58)            --
                                                    ----------     ----------     ----------     ----------
Adjusted weighted-average shares outstanding ...        17,740         17,728         17,734         17,585
                                                    ==========     ==========     ==========     ==========
Basic and diluted loss per share:
Loss per share before extraordinary item .......    $    (1.61)    $    (0.67)    $    (2.86)    $    (1.28)
Extraordinary loss on extinguishment of debt ...            --             --             --          (0.84)
                                                    ----------     ----------     ----------     ----------
Loss per share .................................    $    (1.61)    $    (0.67)    $    (2.86)    $    (2.12)
                                                    ==========     ==========     ==========     ==========
</Table>

     Warrants to purchase 153,210 shares of nonvoting common stock at $.001 per
share outstanding at June 30, 2001 and 2000 were not included in the computation
of diluted earnings per share as the effect of their exercise would be
antidilutive. Options to purchase 2,671,748 and 1,716,996 shares of common stock
at a weighted average exercise price of $12.74 and $19.88 per share at June 30,
2001 and 2000, respectively, were not included in the computation of diluted
earnings per share as the effect of their exercise would be antidilutive.

5. STAR ACQUISITION

    In February 2000, a wholly owned subsidiary purchased substantially all of
the assets of Star Cable Associates ("Star"), which operates cable television
systems in Texas, Louisiana and Ohio, for an aggregate purchase price of
approximately $111 million in cash and 555,555 shares of our Class A Voting
Common Stock. The purchase was financed from proceeds of the $225 million
private debt offering of 10.5% Senior Subordinated Notes due 2010 and available
cash of Cable. The acquisition was accounted for using the purchase method and,
accordingly, the operating results of the systems acquired have been included in
our consolidated financial statements since the date of acquisition.




                                       8
<PAGE>   9



    The following summarized unaudited pro forma financial information for the
six months ended June 30, 2000 assumes the Star acquisition, the related
financing, and other changes to our debt structure had occurred on January 1,
2000. The following pro forma information is not necessarily indicative of the
results that would have occurred had the transactions been completed at the
beginning of the period indicated, nor is it indicative of future operating
results (in thousands, except per share data):

<Table>
<Caption>
                                                           SIX MONTHS
                                                              ENDED
                                                            JUNE 30,
                                                              2000
                                                           ----------
<S>                                                        <C>
Revenues ..............................................    $   93,575
Loss before extraordinary item ........................       (21,131)
Net loss ..............................................       (26,632)
Basic and diluted loss per share:
   Loss per share before extraordinary item ...........         (1.19)
   Loss per share .....................................         (1.50)
</Table>

6. LONG-TERM DEBT

     The Company's long-term debt consists of the following as of June 30, 2001
(in thousands):

<Table>
<S>                                         <C>
1999 credit facility:
  Revolver..............................    $   35,500
  Term loan B...........................        86,842
  Term loan C...........................        78,158
10.5% Senior Subordinated Notes.........       225,000
9.375% Senior Subordinated Notes........       150,000
9.875% Senior Subordinated Notes........         3,000
Other...................................            30
                                            ----------
                                            $  578,530
                                            ==========
</Table>

    In February 2001, Cable borrowed an additional $19.5 million on its
revolver.

    The 1999 credit facility is collateralized by essentially all the assets of
Cable. The Company has no operations of its own. The terms of the credit
facility restrict certain activities of Cable, including the incurrence of
additional indebtedness and the payment of certain dividends. Accordingly,
substantially all the assets and operations of Cable are restricted as to
transfer to the Company and may not be available for dividends and/or debt
service of the Company.

    As of June 30, 2001, the Company was not in compliance with certain
financial covenants specified in its credit facility.

    The holders of the 9.875% Senior Subordinated Notes have previously asserted
that Cable is in default of certain covenants with respect to unspecified
incurrences of indebtedness by Cable. The Company believes that Cable is not in
default of these covenants.

    See further discussion in footnote 2.

7. SEVERANCE COSTS

    During the first six months of 2001, the Company paid severance benefits of
$776,000, all of which were accrued during 2000, to 136 employees. There were no
other adjustments to the accrued benefits.

8. STOCKHOLDERS' EQUITY

    The Company has received a letter from the Nasdaq National Market indicating
that the Company's Class A voting common stock had failed to maintain a minimum
bid price of $1.00 over 30 consecutive trading days. If the price of the stock
does not match or exceed $1.00 for at least ten consecutive trading days by
September 18, 2001, the Company will be provided with written notification that
its securities will be delisted.




                                       9
<PAGE>   10



9. CORPORATE OVERHEAD

    As discussed in note 2, the Company has been engaged in various negotiations
related to potential financing and restructuring transactions. The Company has
incurred substantial fees related to the due diligence efforts and commitments
related to these potential transactions. During the first and second quarters of
2001, the Company incurred $123,000 and $2,686,000, respectively, related to
such activities.

    The Company initiated a reorganization plan in the fourth quarter of 2000.
See note 7. Other costs related to the Company's reorganization efforts incurred
during the first and second quarters of 2001 were $11,000 and $309,000,
respectively.

    In June 2001, the Company forgave certain indebtedness of an officer of the
Company. The amount forgiven was $443,000. Other costs incurred related to the
forgiveness totaled $325,000.

10. RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the Statement. Other intangible
assets will continue to be amortized over their useful lives.

    The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. During 2002, the
Company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002 and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company.








                                       10
<PAGE>   11



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    Reference is made to the "Risk Factors" below for a discussion of important
factors that could cause actual results to differ from expectations and any of
our forward-looking statements contained herein. In some cases, you can identify
those so-called "forward-looking statements" by words such as "may," "will,"
"should," "expects," "anticipates," "considering," "believe," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and other
comparable words. In addition, the following discussion should be read in
conjunction with our audited consolidated financial statements as of and for the
year ended December 31, 2000.

OVERVIEW

    We do not believe the discussion and analysis of our historical financial
condition and results of operations set forth below are indicative nor should
they be relied upon as an indicator of our future performance.

    We have experienced significant growth in recent years primarily through
strategic acquisitions. Since July 1999, we more than doubled with the
acquisitions of Buford Group, Inc., adding approximately 170,000 basic
subscribers in July 1999, and Star Cable Associates, adding approximately 57,000
basic subscribers in February 2000. In the past, cash requirements for
acquisitions and capital expenditures have been provided primarily through our
financing activities.

    In order to fund these acquisitions and our capital expenditure programs, we
have raised a significant amount of funds through the sale of debt and equity
securities and bank borrowings. We have raised approximately $261 million in net
proceeds from the sale of $100 million of common stock to Brera Classic, LLC in
July 1999 and the sale of approximately $181 million of common stock in our
initial public offering in December 1999. Since July 1999, we have increased our
outstanding indebtedness to approximately $578.5 million as of June 30, 2001
through the sale by our sole direct subsidiary, Classic Cable, Inc. ("Cable")
(including associated debt repurchases) of $150 million of 9.375% Senior
Subordinated Notes due 2009 and $225 million of 10.5% Senior Subordinated Notes
due 2010 and Cable's borrowings under its credit facility of approximately
$200.5 million as of June 30, 2001.

GENERAL

    REVENUES. Revenues are primarily attributable to monthly subscription fees
charged to subscribers for our basic, premium and digital cable television
product offerings. Basic revenues consist of monthly subscription fees for all
services, other than digital services and premium programming, as well as
monthly charges for customer equipment rental. Premium revenues consist of
monthly subscription fees for programming provided on a per channel basis.
Digital revenues consist of the incremental revenues over and above our full
basic revenues for digital based programming. In addition, other revenues are
derived from:

         o        Installation and reconnection fees charged to basic
                  subscribers to commence or reinstate service;

         o        pay-per-view charges;

         o        late payment fees;

         o        advertising revenues; and

         o        commissions related to the sale of merchandise by home
                  shopping services.




                                       11
<PAGE>   12



    At June 30, 2001, our collective systems served approximately 377,000 basic
subscribers, 235,000 premium subscribers and 42,000 digital subscribers. We have
a basic penetration rate of approximately 51.7%, a premium penetration rate of
approximately 62.3% and a digital penetration rate of approximately 11.1%. The
table below sets forth the percentage of our total revenues attributable to the
various sources for the six months ended June 30, 2001 and 2000:

<Table>
<Caption>
                                                2001           2000
<S>                                         <C>            <C>
Basic                                               81%            82%
Premium                                              9%            10%
Digital                                              3%             1%
Data                                                --%            --%
Other                                                7%             7%
                                            ----------     ----------
Total revenues                                     100%           100%
                                            ==========     ==========
</Table>

    OPERATING EXPENSES. Our operating expenses consist primarily of (a)
programming fees, (b) plant and operating costs, (c) general and administrative
expenses, (d) marketing costs, (e) corporate overhead, and (f) amortization and
depreciation of intangible assets and property, plant and equipment. Programming
fees have historically increased at rates in excess of inflation due to system
acquisitions and internal growth, as well as increases in the number, quality
and cost of programming services offered by us. Plant and operating costs
include expenses related to wages and employee benefits of technical personnel,
electricity, systems supplies, vehicles and other operating costs. General and
administrative expenses include wages and employee benefits for customer
service, accounting and administrative personnel, franchise fees and expenses
related to billing, payment processing, and office administration. Corporate
overhead consists primarily of expenses incurred by our executive management,
which are not directly attributable to any one system.

    NET LOSSES. The high level of depreciation and amortization associated with
our acquisitions and capital expenditures related to continued construction and
upgrading of the current systems, together with interest costs related to our
financing activities, have contributed to our net losses.

    The following discussion pertains to our results of operations and financial
condition for the three and six months ended June 30, 2001 and 2000.

THREE MONTHS ENDED JUNE 30, 2001 VS. JUNE 30, 2000

     Revenues decreased $1.0 million, or 2%, in 2001. Basic subscriber declines
of 19,000 were partially mitigated by rate increases implemented in the first
quarter of 2001, all of which resulted in basic revenue decline of $0.6 million.
Basic revenue per subscriber increased from $32.01 to $33.52. Digital
subscribers increased by 35,000 which led to increased revenue of $0.9 million.
Premium and other revenue sources declined $1.3 million. Revenue per subscriber
increased from $39.21 to $40.87.

     Operating expenses increased $8.0 million, or 16%, in 2001. Programming
expenses increased $1.3 million primarily due to increased rates charged by
programming vendors. Plant and operating and general and administrative costs
increased $0.2 million, or 2%. Capitalization of internal labor and overhead
increased as we completed significantly larger numbers of digital service
installations as compared to the second quarter of 2000. This positive impact on
the expenses was offset by increased labor costs, contract labor and bad debt
expense. Corporate overhead increased $3.6 million primarily due to $2.7 million
of professional fees incurred in 2001 related to Cable's various financing and
restructuring activities. Depreciation and amortization expense in 2001 was
$25.4 million, an increase of $3.0 million over the same period in 2000. The
increase is due to continuing capital spending on digital services and the
utilization of inventory balances.

     Interest expense increased $2.1 million, or 15%, in 2001. The increase is
primarily due to higher average debt balances and interest rates in 2001.

     Other income decreased $0.5 million in 2001. This decrease is primarily the
result of decreased interest income on cash reserves.

     No income tax benefit was recognized in 2001. The income tax benefit was
$5.0 million in 2000. The effective tax rates for 2001 and 2000 differ from the
statutory rates primarily due to increases in the valuation allowance on
deferred tax assets.




                                       12
<PAGE>   13

    As a result of the above described fluctuations in our results of
operations, the net loss of $28.6 million in 2001 increased by $16.7 million, as
compared to the net loss of $11.9 million in 2000.

SIX MONTHS ENDED JUNE 30, 2001 VS. JUNE 30, 2000

     Revenues increased $1.7 million, or 2%, in 2001. The Star acquisition added
approximately 57,000 subscribers in February 2000. Basic subscriber declines in
2001 were partially mitigated by rate increases implemented in the first quarter
of 2001, all of which resulted in basic revenue increase of $0.9 million.
Digital revenue increased $2.0 million. Premium and other revenue sources
declined $1.2 million.

     Operating expenses increased $15.5 million, or 16%, in 2001. Programming
expenses increased $3.7 million primarily due to increased rates charged by
programming vendors. Plant and operating and general and administrative costs
decreased $0.5 million, or 2%. Capitalization of internal labor and overhead
increased as we completed significantly larger numbers of digital service
installations as compared to the previous year. This positive impact on the
expenses was offset by increased labor costs, contract labor and bad debt
expense. Corporate overhead increased $4.2 million primarily due to $2.8 million
of professional fees incurred in 2001 related to Cable's various financing and
restructuring activities. Depreciation and amortization expense in 2001 was
$50.1 million, an increase of $7.9 million over the same period in 2000. The
increase is due to continuing capital spending on digital services and the
utilization of inventory balances.

     Interest expense increased $3.0 million, or 10%, in 2001. The increase is
primarily due to higher average debt balances and interest rates in 2001.

     Other income decreased $1.4 million in 2001. This decrease is primarily the
result of decreased interest income on cash reserves.

     No income tax benefit was recognized in 2001. The income tax benefit was
$10.1 million in 2000. The effective tax rates for 2001 and 2000 differ from the
statutory rates primarily due to increases in the valuation allowance on
deferred tax assets.

     In January 2000, the senior discount notes were redeemed resulting in an
extraordinary loss on early redemption of $13.3 million ($9.3 million, net of
taxes). In February 2000, the 1999 credit facility was amended resulting in an
extraordinary loss of $8.5 million ($5.5 million, net of taxes).

    As a result of the above described fluctuations in our results of operations
and extraordinary losses recognized in connection with the 2000 financing of
debt, the net loss of $50.6 million in 2001 increased by $13.4 million, as
compared to the net loss of $37.3 million in 2000.

LIQUIDITY AND CAPITAL RESOURCES

    The cable television industry is a capital intensive business that generally
requires financing for the upgrade, expansion and maintenance of the technical
infrastructure. Historically, we have funded our working capital requirements,
capital expenditures and acquisitions through a combination of internally
generated funds, long- and short-term borrowings and equity contributions. Our
ability to generate cash to meet our future needs will depend generally on our
results of operations and the continued availability of external financing.

    For the six months ended June 30, 2001 and 2000, cash provided by operating
activities totaled $8.1 million and $17.2 million, respectively. Cash used for
investing activities totaled $43.3 million and $140.1 million (including $111
million related to the Star acquisition) for the six months ended June 30, 2001
and 2000, respectively. Cash provided by financing activities was $19.5 million
for the six months ending June 30, 2001. For the six months ending June 30,
2000, cash used in financing activities was $2.2 million. The Company's
aggregate outstanding borrowings as of June 30, 2001 were $578.5 million.

    For the three months ended June 30, 2001 and 2000, EBITDA totaled $13.0
million and $19.0 million, respectively. EBITDA for the three months ended June
30, 2001 and 2000, before non-cash charges and restructuring and financing
related professional fees, was $16.8 million and $19.0 million, respectively.
EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is not intended to be a performance measure that should be
regarded as an alternative to, or more meaningful than, either operating income
or net income as an indicator of operating performance or to the statement of
cash flows as a measure of liquidity; is not intended to represent funds
available for debt service, dividends,







                                       13
<PAGE>   14

reinvestment or other discretionary uses; and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles. EBITDA is included herein because
our management believes that EBITDA is a meaningful measure of performance as it
is commonly used by the cable television industry and by the investment
community to analyze and compare cable television companies. Our definition of
EBITDA may not be identical to similarly titled measures reported by other
companies.

    Capital expenditures (excluding the Star acquisition) for the six months
ended June 30, 2001 and 2000 were approximately $34.8 million and $25.3 million,
respectively. This increase was primarily due to utilization of equipment for
digital services.

    In February 2001, Cable borrowed an additional $19.5 million on its
revolver.

    The credit facility is collateralized by a substantial portion of the assets
of Cable. We have no operations of our own. Consequently, we will rely on
dividends from, and cash flow of, Cable to meet any of our debt service
obligations. The terms of the credit facility restrict certain activities of
Cable, including the incurrence of additional indebtedness, limits on asset
sales, investments, affiliate transactions and the payment of certain dividends.

    At June 30, 2001, all our debt was held by Cable. As of June 30, 2001, Cable
was not in compliance with certain financial covenants specified in its credit
facility. In addition, Cable has not made any of its scheduled interest payments
on the credit facility since June 30, 2001. As a result of the default under the
credit facility, Cable is prohibited from making interest payments on its Senior
Subordinated Notes.

      Due to the default under the credit facility, the lenders can take actions
that would adversely impact the liquidity, financial condition and results of
operations, including accelerating the amounts due under the credit facility and
causing cross-defaults under the indentures governing Cable's Senior
Subordinated Notes. If Cable's debt were accelerated under the current senior
credit agreement, neither we nor Cable would have sufficient liquidity to meet
the obligations as they become due. Accordingly, Cable would be required to
refinance all or a portion of its indebtedness on or before maturity. In such
event, there is no assurance that we or Cable will be able to refinance any of
the indebtedness on commercially reasonable terms or at all.

    We have discontinued negotiations with respect to the potential funding of a
$75 million senior second secured loan package. We have retained Credit Suisse
First Boston Corporation ("CSFB") as a financial advisor to consider options
relating to refinancing, raising new capital and restructuring existing debt. In
this role, CSFB has begun discussions with Cable's lenders and holders of
Cable's subordinated debentures to pursue a consensual restructuring of its
debt. We continue to pursue other alternatives to improve our liquidity
position, including the sale of certain of our small cable systems. These sales
would require waivers or amendments to the credit facility. If the Company is
unable to execute the actions discussed above in a timely manner, the Company
may seek to reorganize utilizing the protections available to it under the
federal bankruptcy laws.

    Cable has not generated earnings sufficient to cover its fixed charges.
However, in the past, we and Cable have generated cash and obtained financing
sufficient to meet their debt service, working capital, capital expenditure and
acquisition requirements. In light of Cable's existing fixed charges
requirements and capital expenditure plan, we and/or Cable will be required to
obtain additional financing or complete certain asset transactions to be able to
generate funds sufficient to service Cable's obligations and continue our
current business plan. There can be no assurance that either we or Cable will be
able to obtain sufficient financing, or, if we are able to do so, that the terms
would be favorable.

    If we are unable to arrange additional financing or improve our liquidity
position by some other means, there is serious doubt that we will be able to
continue our operations as they are currently conducted. Such events would
materially and adversely affect our business, financial condition and results of
operations and could require us to sell significant assets or discontinue
certain operations.

    Due to our lack of sufficient funds, we have not made all required payments
related to certain agreements with various providers of programming, goods and
other services. As a result, we are not in compliance with certain of these
agreements and may have fines and penalties levied against us or have services
discontinued unless we can once again comply with the terms of the related
agreements. If we were to lose certain services related to our customers, it
could have an adverse impact on our operations.




                                       14
<PAGE>   15



    The holders of the 9.875% Senior Subordinated Notes have previously asserted
that Cable is in default of certain covenants with respect to unspecified
incurrences of indebtedness by Cable. We believe that Cable is not in default of
these covenants.

    We have received a letter from the Nasdaq National Market indicating that
our Class A voting common stock had failed to maintain a minimum bid price of
$1.00 over 30 consecutive trading days. If the price of the stock does not match
or exceed $1.00 for at least ten consecutive trading days by September 18, 2001,
we will be provided with written notification that this stock will be delisted.

INTANGIBLES

     At June 30, 2001, we have recorded net intangible assets of $375.2 million,
53% of total assets. These assets arose during the acquisition of cable systems
throughout our history. These intangible assets are amortized over their
estimated useful lives. We review the valuation and amortization periods of
these intangibles on a periodic basis, taking into consideration any events or
circumstances that might result in diminished fair value or revised useful life.
No events or circumstances have occurred to warrant a diminished fair value or
reduction in the useful life of the intangible assets.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the Statement. Other intangible
assets will continue to be amortized over their useful lives.

    We will apply the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of 2002. During 2002, we will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002 and have not yet determined what the
effect of these tests will be on our earnings and financial position.

RISK FACTORS

    WE HAVE HAD A HISTORY OF NET LOSSES AND EXPECT TO CONTINUE TO REPORT NET
LOSSES FOR THE FORESEEABLE FUTURE.

    We have grown rapidly and have a limited history of operating our current
cable systems, which may make it difficult for you to evaluate our performance.
We acquired a substantial portion of our operations in 1999 and early 2000. In
addition, the Star and Buford acquisitions more than doubled the number of
subscribers served by our cable systems. As a result, you have limited
information upon which to evaluate our performance in managing our current cable
systems, and our historical financial information may not be indicative of the
future results we can achieve with our cable systems.

    WE HAVE SUBSTANTIAL EXISTING DEBT AND MAY INCUR SUBSTANTIAL ADDITIONAL DEBT,
WHICH COULD ADVERSELY AFFECT OUR ABILITY TO OBTAIN FINANCING IN THE FUTURE AND
REQUIRE OUR OPERATING SUBSIDIARIES TO APPLY A SUBSTANTIAL PORTION OF THEIR CASH
FLOW TO DEBT SERVICE.

    Our total debt as of June 30, 2001 was approximately $578.5 million. Our
interest expense for the quarter ended June 30, 2001 was $16.3 million.

    This high level of debt and our debt service obligations could have material
consequences, including:

         o        we may have difficulty borrowing money for working capital,
                  capital expenditures, acquisitions or other purposes;

         o        we may need to use a large portion of our revenues to pay
                  interest on borrowings under the credit facility and our
                  Senior Subordinated Notes, which will reduce the amount of
                  money available to finance our operations, capital
                  expenditures and other activities;

         o        some of our debt has a variable rate of interest, which may
                  expose us to the risk of increased interest rates;

         o        we may be more vulnerable to economic downturns and adverse
                  developments in our business;




                                       15
<PAGE>   16
         o        we may be less flexible in responding to changing business and
                  economic conditions, including increased competition and
                  demand for new products and services;

         o        we may be at a disadvantage when compared to those of our
                  competitors that have less debt; and

         o        we may not be able to implement our strategy.

    A DEFAULT UNDER OUR INDENTURES OR OUR CREDIT FACILITY COULD RESULT IN AN
ACCELERATION OF OUR INDEBTEDNESS.

    The indentures governing our Senior Subordinated Notes and the credit
facility contain numerous financial and operating covenants. The breach of any
of these covenants will result in a default under the applicable indenture or
the senior credit agreement which could result in the indebtedness under our
indentures or agreements becoming immediately due and payable. As of June 30,
2001, we were in default under the senior credit agreement. No notification of
acceleration has been received. We are also currently prohibited from making
interest payments on the Senior Subordinated Notes. If such payments are not
made within thirty days of the due date, we will be in default under the
applicable indenture.

    THE TERMS OF OUR INDEBTEDNESS COULD MATERIALLY LIMIT OUR FINANCIAL AND
OPERATING FLEXIBILITY.

    Several of the covenants contained in our indentures and our credit facility
materially limit our financial and operating flexibility by restricting, among
other things, our ability to:

         o        incur additional indebtedness;

         o        create liens and other encumbrances;

         o        pay dividends and make other payments, investments, loans and
                  guarantees;

         o        enter into transactions with related parties;

         o        sell or otherwise dispose of assets and merge or consolidate
                  with another entity;

         o        repurchase or redeem capital stock or debt;

         o        pledge assets; and

         o        issue capital stock.

    WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO CONTINUE THE DEVELOPMENT
OF OUR BUSINESS.

    Our business requires substantial capital for the upgrade, expansion and
maintenance of our cable systems. We may not be able to obtain the funds
necessary to finance our capital improvement program through internally
generated funds, additional borrowings or other sources. If we are unable to
obtain these funds, our growth could be adversely affected.

    WE MAY NOT BE ABLE TO MAINTAIN OUR LISTING ON THE NASDAQ NATIONAL MARKET.

    Our common stock is currently listed on the Nasdaq National Market. We must
satisfy a number of requirements to maintain its listing on the Nasdaq National
Market, including maintaining a minimum bid price (for prescribed periods of
time) for our common stock of $1.00 per share. As of July 30, 2001, the closing
price for our Class A common stock was $0.28. If the price of the stock does not
match or exceed $1.00 for at least ten consecutive trading days by September 18,
2001, we will be provided with written notification that our securities will be
delisted. If our common stock is delisted from the Nasdaq National Market, it
may adversely affect the marketability of our common stock.

    BRERA CLASSIC HAS THE ABILITY TO CONTROL MATTERS ON WHICH CLASSIC'S
STOCKHOLDERS MAY VOTE.

    We have two classes of voting common stock - Class A common stock, which
carries one vote per share, and Class B common stock which carries ten votes per
share. As of December 31, 2000, holders of Class B common stock control
approximately 87% of the voting power of our outstanding common stock. Brera
Classic owns approximately 91% of our Class B common stock. As a result, Brera
Classic controls us and has the ability to elect the majority of our directors.
The board, in turn, may appoint new senior management and decide which matters
will be submitted to our stockholders for approval. These actions include
adopting amendments to our certificate of incorporation and approving mergers or
sales of substantially all of our assets. The interests of Brera Classic and its
respective affiliates may conflict with the interests of the holders of Class A
common stock.



                                       16
<PAGE>   17


    Brera Classic will have the ability to delay or prevent a change of control
or changes in our management that stockholders consider favorable or beneficial.
Provisions in our organizational documents may also have the effect of delaying
or preventing these changes, including provisions authorizing issuance of "blank
check" preferred stock, restricting the calling of special meetings of
stockholders and requiring advanced notice of proposals for stockholder
meetings. If a change of control or change in management is delayed or
prevented, the market price of our Class A common stock could suffer or holders
may not receive a premium over the then-current market price of the Class A
common stock.

    WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN THE HIGHLY COMPETITIVE CABLE
INDUSTRY.

    Our industry is highly competitive. The nature and level of the competition
we face affects, among other things, how much we must spend to upgrade our cable
systems, how much we must spend on marketing and promotions and the prices we
can charge our customers. We may not have the resources necessary to compete
effectively. Many of our present and potential competitors may have fewer
regulatory burdens, substantially greater resources, greater brand name
recognition and long-standing relationships with regulatory authorities. We
expect advancements in communications technology, as well as changes in the
marketplace, to occur in the future which may compete with services that our
cable systems offer. The success of these ongoing and future developments could
have an adverse impact on our business and operations.

    Continued growth of direct broadcast satellite operators could adversely
affect our growth and profitability. Direct broadcast satellite operators have
grown at a rate far exceeding the cable television industry growth rate and have
emerged as a significant competitor to cable operators. Direct broadcast
satellite service consists of television programming transmitted via
high-powered satellites to individual homes, each served by a small satellite
dish. The continued growth of direct broadcast satellite operators may adversely
affect our growth and profitability.

    Legislation permitting direct broadcast satellite operators to transmit
local broadcast signals was enacted on November 29, 1999. This eliminated a
significant competitive advantage which cable system operators have had over
direct broadcast satellite operators. Direct broadcast satellite operators
deliver local broadcast signals in many markets which we serve. These companies
and others are also developing ways to bring advanced communications services to
their customers. They are currently offering satellite-delivered high-speed
Internet access services with a telephone return path and are beginning to
provide true two-way interactivity. We are unable to predict the effects these
competitive developments might have on our business and operations.

    RECENT CHANGES IN THE REGULATORY ENVIRONMENT MAY INTRODUCE ADDITIONAL
COMPETITORS IN OUR MARKETS.

    Recent changes in federal law and recent administrative and judicial
decisions have removed restrictions that have limited entry into the cable
television industry by potential competitors such as telephone companies and
registered utility holding companies. As a result, competition may materialize
in our franchise areas from other cable television operators, other video
programming distribution systems and other broadband telecommunications services
to the home. For example, these developments will enable local telephone and
utility companies to provide a wide variety of video services in their service
areas which will be directly competitive with the services provided by cable
systems in the same area.

    OUR FRANCHISES ARE NON-EXCLUSIVE AND LOCAL FRANCHISING AUTHORITIES MAY GRANT
COMPETING FRANCHISES IN OUR MARKETS.

    Our cable systems are operated under non-exclusive franchises granted by
local franchising authorities. As a result, competing operators of cable systems
and other potential competitors, such as municipal utility providers, may be
granted franchises and may build cable systems in markets where we hold
franchises. Any such competition could adversely affect our business. The
existence of multiple cable systems in the same geographic area is generally
referred to as an overbuild. While we currently face overbuilds in a limited
number of our markets, we are unable to predict whether competitors will develop
in other franchise areas that we serve. Moreover, we are unable to predict the
impact these competitive ventures might have on our business and operations.




                                       17
<PAGE>   18



    WE MAY BE REQUIRED TO PROVIDE ACCESS TO OUR NETWORKS TO OTHER INTERNET
SERVICE PROVIDERS, WHICH COULD SIGNIFICANTLY INCREASE OUR COMPETITION AND
ADVERSELY AFFECT OUR ABILITY TO PROVIDE NEW PRODUCTS AND SERVICES.

    The U.S. Congress and the Federal Communications Commission have been asked
to require cable operators to provide access over their cable systems to other
Internet service providers. If we are required to provide open access, it could
prohibit us from entering into or limit our existing agreements with Internet
service providers, adversely impact our anticipated revenues from high-speed
Internet access services and complicate marketing and technical issues
associated with the introduction of these services. To date, the U.S. Congress
and the Federal Communications Commission have declined to impose these
requirements. This same open access issue is also being considered by some local
franchising authorities and several courts. Franchise renewals and transfers
could become more difficult depending upon the outcome of this issue.

    OUR FRANCHISES ARE SUBJECT TO NON-RENEWAL OR TERMINATION BY LOCAL
AUTHORITIES, WHICH COULD CAUSE US TO LOSE OUR RIGHT TO OPERATE SOME OF OUR
SYSTEMS.

    Cable television companies operate under non-exclusive franchises granted by
local authorities that are subject to renewal, renegotiation and termination
from time to time. Our cable systems are dependent upon the retention and
renewal of their respective local franchises. We may not be able to retain or
renew our franchises and any renewals may not be on terms favorable to us. The
non-renewal or termination of franchises with respect to a significant portion
of any of our cable systems would have a material adverse effect on our
business.

    WE COULD LOSE ACCESS TO CERTAIN SERVICES OR BE UNABLE TO ACQUIRE NEEDED
GOODS, WHICH COULD HAVE AN ADVERSE IMPACT ON OUR OPERATIONS.

    Due to our lack of sufficient funds, we have not made all required payments
related to certain agreements with various providers of programming, goods and
other services. As a result, we are not in compliance with certain of these
agreements and may have fines and penalties levied against us or have services
discontinued unless we can once again comply with the terms of the related
agreements. If we were to lose certain services related to our customers, it
could have an adverse impact on our operations.

    IF WE CANNOT MATERIALLY IMPROVE OUR PRESENT LIQUIDITY POSITION IN THE VERY
NEAR FUTURE, WE WILL EITHER SEEK TO RESTRUCTURE OUR EXISTING INDEBTEDNESS OR, IF
NECESSARY, SEEK TO REORGANIZE UTILIZING THE PROTECTIONS AVAILABLE TO US UNDER
THE FEDERAL BANKRUPTCY LAWS.

    Such events would materially and adversely affect our business, financial
condition and results of operations and could require us to sell significant
assets or discontinue certain operations.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk including changes in interest rates. To
manage the volatility relating to these exposures, we enter into various
derivative transactions pursuant to our policies in areas such as counterparty
exposure and hedging practices. Positions are monitored using techniques
including market value and sensitivity analyses. We do not hold or issue any
derivative financial instruments for trading purposes and are not a party to
leveraged instruments. The credit risks associated with our derivative financial
instruments are controlled through the evaluation and monitoring of the
creditworthiness of the counterparties. Although we may be exposed to losses in
the event of nonperformance by the counterparties, we do not expect such losses,
if any, to be significant.




                                       18
<PAGE>   19



PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     There are no material pending legal proceedings to which we are a party or
to which any of our respective properties are subject.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

    As of June 30, 2001, we were in default under the senior credit agreement.
We are also currently prohibited from making interest payments on the Senior
Subordinated Notes. If such payments are not made within thirty days of the due
date, we will be in default under the applicable indenture.

    See notes 2 and 6 to the consolidated financial statements in Part 1 of this
Form 10-Q and "Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations" for additional information regarding these
defaults. Such information is incorporated herein by reference.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None

ITEM 5 - OTHER INFORMATION

     None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

         None

     (b) Reports on Form 8-K

         None






                                       19
<PAGE>   20



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.


                                     CLASSIC COMMUNICATIONS, INC.


Date: August 14, 2001                /s/ JIMMIE TAYLOR
                                     --------------------------------------
                                     Jimmie Taylor
                                     Chief Financial Officer




                                       20