<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: 333-63643


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

             DELAWARE
   (STATE OR OTHER JURISDICTION                          74-2750981
 OF INCORPORATION OR ORGANIZATION)          (I.R.S. EMPLOYER IDENTIFICATION NO.)


                           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 1,000 shares of Common Stock outstanding.



<PAGE>   2

                               CLASSIC CABLE, 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........10
Item 3     Quantitative and Qualitative Disclosures About Market Risk...................................17

PART II - OTHER INFORMATION

Item 1     Legal Proceedings............................................................................18
Item 2     Changes in Securities and Use of Proceeds....................................................18
Item 3     Defaults Upon Senior Securities..............................................................18
Item 4     Submission of Matters to a Vote of Security Holders..........................................18
Item 5     Other Information............................................................................18
Item 6     Exhibits and Reports on Form 8-K.............................................................18

SIGNATURES..............................................................................................19
</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 Cable, 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 Cable, 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
Advances to parent ...............................................              595               691
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 ............................................     $    711,941      $    744,627
                                                                       ============      ============

Liabilities and Stockholder's 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
Stockholder's equity:
  Common stock: $.01 par value; 2001 and 2000 - 1,000 shares
   authorized, issued and outstanding ............................               --                --
  Additional paid-in capital .....................................          281,143           281,143
  Accumulated deficit ............................................         (211,071)         (160,433)
                                                                       ------------      ------------
        Total stockholder's equity ...............................           70,072           120,710
                                                                       ------------      ------------
        Total liabilities and stockholder's equity ...............     $    711,941      $    744,627
                                                                       ============      ============
</Table>


                 See notes to consolidated financial statements.



                                       4
<PAGE>   5

                               Classic Cable, Inc.

                      Consolidated Statements of Operations
                                 (in thousands)
                                   (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)          (27,783)
Other income (expense) .....................               77               562               264             1,639
                                                 ------------      ------------      ------------      ------------
Loss before income taxes and
  extraordinary item .......................          (28,572)          (16,909)          (50,638)          (32,048)
Income tax benefit .........................               --             6,083                --            11,383
                                                 ------------      ------------      ------------      ------------
Loss before extraordinary item .............          (28,572)          (10,826)          (50,638)          (20,665)
Extraordinary loss on extinguishment
  of debt, net of taxes of $2,963 in
  2000 .....................................               --                --                --            (5,501)
                                                 ------------      ------------      ------------      ------------
Net loss ...................................     $    (28,572)     $    (10,826)     $    (50,638)     $    (26,166)
                                                 ============      ============      ============      ============
</Table>


                 See notes to consolidated financial statements.




                                       5
<PAGE>   6

                               Classic Cable, 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)     $    (26,166)
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             1,049
    Discount accretion on long-term debt .................................               --                 2
    Deferred tax benefit .................................................               --           (14,346)
    Loss on sale/disposal of property, plant and equipment ...............               47                --
    Extraordinary loss ...................................................               --             8,464
    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 advances to parent ........................................               96                89
     Change in other accruals and payables ...............................            6,636             3,464
     Change in accrued interest ..........................................            2,197             7,160
                                                                               ------------      ------------
Net cash provided by (used in) operating activities ......................            8,060            17,661

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)         (136,465)
Financing costs ..........................................................               --            (7,947)
Payment of premium on redeemed notes .....................................               --              (660)
                                                                               ------------      ------------
Net cash provided by (used in) financing activities ......................           19,494            79,928
                                                                               ------------      ------------
Increase (decrease) in cash and cash equivalents .........................          (15,769)          (42,538)
Cash and cash equivalents at beginning of period .........................           19,056            85,855
                                                                               ------------      ------------
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 Cable, Inc.
                   Notes to Consolidated Financial Statements
                               As of June 30, 2001


1. BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of Classic
Cable, 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

     As of June 30, 2001, the Company was not in compliance with certain
financial covenants specified in its credit facility. In addition, the Company
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, the Company
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 the Company's Senior
Subordinated Notes. If the Company's debt were accelerated under the current
senior credit agreement, neither the Company nor its parent, Classic
Communications, Inc. ("CCI"), would have sufficient liquidity to meet the
obligations as they become due. Accordingly, the Company 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 CCI 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 the
Company's lenders and holders of the Company'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.

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

     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.



                                       7
<PAGE>   8

     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. 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 CCI's 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. 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.

     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)
</Table>

5. 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, the Company borrowed an additional $19.5 million on its
revolver.

     The 1999 credit facility is collateralized by essentially all the assets of
the Company. The terms of the credit facility restrict certain activities of the
Company, including the incurrence of additional indebtedness and the payment of
certain dividends. Accordingly, substantially all the assets and operations of
the Company are restricted as to transfer to CCI and may not be available for
dividends and/or debt service of CCI.

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

     The Company is a holding company with no assets or operations other than
its investments in its subsidiaries. The subsidiary guarantors are wholly-owned
subsidiaries of the Company and have fully and



                                       8
<PAGE>   9

unconditionally guaranteed the notes (the 10.5% Senior Subordinated Notes, the
9.375% Senior Subordinated Notes, and the 9.875% Senior Subordinated Notes) on a
joint and several basis. The subsidiary guarantors comprise all of the direct
and indirect subsidiaries of the Company, other than inconsequential
subsidiaries. The Company has not presented separate financial statements and
other disclosures concerning each subsidiary guarantor because management has
determined that such information is not material to investors.

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

     See further discussion in footnote 2.

6. 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.

7.  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 6. 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.

8. 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.



                                       9
<PAGE>   10

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 and our parent, CCI, have raised a significant amount of funds through the
sale of debt and equity securities and bank borrowings. CCI 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 its 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 (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 borrowings under our 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.



                                       10
<PAGE>   11

     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 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
$6.1 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.



                                       11
<PAGE>   12

     As a result of the above described fluctuations in our results of
operations, the net loss of $28.6 million in 2001 increased by $17.7 million, as
compared to the net loss of $10.8 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 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 $3.5 million, or 13%, 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
$11.4 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 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 $24.5
million, as compared to the net loss of $26.2 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 $17.7 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
and $79.9 million for the six months ending June 30, 2001 and 2000,
respectively. 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, reinvestment or other discretionary uses;
and should not be considered in isolation or as a substitute for



                                       12
<PAGE>   13

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, we borrowed an additional $19.5 million on our revolver.

     All of our debt is fully and unconditionally guaranteed by our wholly owned
direct and indirect subsidiaries on a joint and several basis. There are
presently no restrictions on the ability of these subsidiaries to make
distributions to us.

     As of June 30, 2001, we were not in compliance with certain financial
covenants specified in our credit facility. In addition, we have not made any of
our scheduled interest payments on the credit facility since June 30, 2001. As a
result of the default under the credit facility, we are prohibited from making
interest payments on our 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 our Senior Subordinated
Notes. If our debt were accelerated under the current senior credit agreement,
neither we nor CCI would have sufficient liquidity to meet the obligations as
they become due. Accordingly, we would be required to refinance all or a portion
of our indebtedness on or before maturity. In such event, there is no assurance
that we or CCI 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 our lenders and holders of our
subordinated debentures to pursue a consensual restructuring of our 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 we are unable to
execute the actions discussed above in a timely manner, we may seek to
reorganize utilizing the protections available to us under the federal
bankruptcy laws.

     We have not generated earnings sufficient to cover our fixed charges.
However, in the past, we have generated cash and obtained financing sufficient
to meet our debt service, working capital, capital expenditure and acquisition
requirements. In light of our existing fixed charges requirements and capital
expenditure plan, we will be required to obtain additional financing or complete
certain asset transactions to be able to generate funds sufficient to service
our obligations and continue our current business plan. There can be no
assurance that we 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.

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



                                       13
<PAGE>   14

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;

     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.



                                       14
<PAGE>   15

     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 could 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 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.



                                       15
<PAGE>   16

     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.

     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.



                                       16
<PAGE>   17

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.





                                       17
<PAGE>   18

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 5 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






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<PAGE>   19

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 CABLE, INC.


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



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