<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       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 0-14505

                        ENSTAR INCOME PROGRAM II-2, L.P.
        -----------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                                                                      <C>
                              GEORGIA                                                                58-1628872
--------------------------------------------------------------------                     -----------------------------------
                  (State or other jurisdiction of                                                 (I.R.S. Employer
                  incorporation or organization)                                               Identification Number)

                 12444 POWERSCOURT DR., SUITE 100
                        ST. LOUIS, MISSOURI                                                            63131
--------------------------------------------------------------------                     -----------------------------------
             (Address of principal executive offices)                                                (Zip Code)

Registrant's telephone number, including area code:                                                (314) 965-0555
                                                                                         -----------------------------------
Securities registered pursuant to Section 12 (b) of the Act:                                            NONE
Securities registered pursuant to Section 12 (g) of the Act
                                                                                               Name of each exchange
                        Title of each Class                                                     on which registered
                        -------------------                                                     -------------------

               UNITS OF LIMITED PARTNERSHIP INTEREST                                                    NONE
</TABLE>

                  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. Yes X  No
                                                     ---   ---

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

                  State the aggregate market value of the voting equity
securities held by non-affiliates of the registrant - all of the registrant's
29,880 units of limited partnership interests, its only class of equity
securities, are held by non-affiliates. There is no public trading market for
the units, and transfers of units are subject to certain restrictions;
accordingly, the registrant is unable to state the market value of the units
held by non-affiliates.

================================================================================

                    The Exhibit Index is located at Page E-1.


<PAGE>   2


                                     PART I

ITEM 1. BUSINESS

INTRODUCTION

                  Enstar Income Program II-2, L.P., a Georgia limited
partnership, is engaged in the ownership and operation of cable television
systems in small to medium-sized communities. The Partnership was formed on July
3, 1984. The general partners of the Partnership are Enstar Communications
Corporation, a Georgia corporation (the "Corporate General Partner"), and Robert
T. Graff, Jr. (the "individual general partner"). On November 12, 1999, Charter
Communications Holdings Company, LLC, an entity controlled by Charter
Communications, Inc., acquired both the Corporate General Partner, as well as
Falcon Communications, L.P., the entity that provided management and certain
other services to the Partnership. Charter is the nation's fourth largest cable
operator, serving 6.35 million customers and files periodic reports with the
Securities and Exchange Commission. Charter and its affiliates (principally CC
VII Holdings, LLC, the successor-by-merger to Falcon Communications, L.P.) now
provide management and other services to the Partnership. See Item 13., "Certain
Relationships and Related Transactions." See "Employees" below. In this annual
report, the terms "we" and "our" refer to the Partnership.

                  In accordance with the partnership agreement, the Corporate
General Partner has implemented a plan for liquidating the Partnership. On
August 8, 2000 (as amended on September 29, 2000), the Partnership, together
with certain affiliates (collectively, the "Sellers") entered into a purchase
and sales agreement (the "Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership (the "Purchaser"). The Agreement
provides for the Purchaser to acquire the assets comprising the Partnership's
cable systems serving Hillsboro, Illinois, and Malden, Missouri, as well as
certain assets of other affiliates.

                  The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $95,574,600 in cash (subject to normal closing adjustments).
Of that amount, $15,770,600 (subject to normal closing adjustments) is payable
to the Partnership. The allocation of the purchase price among each of the
Sellers was assigned by the Purchaser for each of the systems.

                  The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all the Sellers; (b) receipt of
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the limited partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the limited partners of
the Partnership and the other selling affiliates voting to approve the sale.
Furthermore, the Partnership is currently negotiating additional amendments to
the purchase and sale agreement with the Purchaser. Accordiingly, there can be
no assurance that the sale will close.

                  A cable television system receives television, radio and data
signals at the system's "headend" site by means of over-the-air antennas,
microwave relay systems and satellite earth stations. These signals are then
modulated, amplified and distributed, primarily through coaxial and fiber optic
distribution systems, to customers who pay a fee for this service. Cable
television systems may also originate their own television programming and other
information services for distribution through the system. Cable television
systems generally are constructed and operated pursuant to non-exclusive
franchises or similar licenses granted by local governmental authorities for a
specified term of years.


                                      -2-
<PAGE>   3


                  Our cable television systems offer customers various levels,
or "tiers," of cable services consisting of:

o  broadcast television signals of local network, independent and educational
   stations
o  a limited number of television signals from so-called "super stations"
   originating from distant cities, such as WGN
o  various satellite - delivered, non-broadcast channels, such as
   -   Cable News Network, or "CNN"
   -   MTV: Music Television, or "MTV"
   -   The USA Network
   -   ESPN
   -   Turner Network Television, or "TNT" and
   -   The Disney Channel

o  programming originated locally by the cable television system, such as
   public, educational and government access programs, and
o  information displays featuring news, weather, stock market and financial
   reports, and public service announcements.

                  For an extra monthly charge, our cable television systems also
offer "premium" television services to their customers. These services, such as
Home Box Office, or "HBO," and Showtime are satellite channels that consist
principally of feature films, live sporting events, concerts and other special
entertainment features, usually presented without commercial interruption. See
"Legislation and Regulation."

                  A customer generally pays an initial installation charge and
fixed monthly fees for basic, expanded basic, other tiers of satellite services
and premium programming services. Such monthly service fees constitute the
primary source of revenues for our cable television systems. In addition to
customer revenues, our cable television systems receive revenue from the sale of
available advertising spots on advertiser-supported programming and also offer
to our customers home shopping services, which pay the Partnership a share of
revenues from sales of products to our customers, in addition to paying us a
separate fee in return for carrying their shopping service. Certain other
channels have also offered the cable systems managed by Charter, including those
of the Partnership, fees in return for carrying their service, but due to our
pending sale, our management cannot predict the impact of such potential
payments on our business. See Item 7., "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

                  We began our cable television business operations in February
1986 with the acquisition of certain cable television systems that provide
service to customers in the cities of Pana, Hillsboro, Nokomis and Jerseyville,
Illinois. In January 1987, we expanded our operations by acquiring a cable
television system that provides service to customers in the cities of Malden and
Campbell, Missouri. As of December 31, 2000, we served approximately 8,427 basic
subscribers in these areas. We do not expect to make any additional acquisitions
during the remaining term of the Partnership.

                  Charter receives a management fee and reimbursement of
expenses from the Corporate General Partner for managing our cable television
operations. See Item 11., "Executive Compensation."

                  The Chief Executive Officer of the Corporate General Partner
is Jerald L. Kent. The principal executive offices of the Partnership and the
general partner are located at 12444 Powerscourt Drive, Suite 100, St. Louis, MO
63131-0555 and their telephone number is (314) 965-0555. See Item 10.,
"Directors and Executive Officers of the Registrant."


                                      -3-
<PAGE>   4


BUSINESS STRATEGY

                  Historically, the Partnership has followed a systematic
approach to acquiring, operating and developing cable television systems based
on the primary goal of increasing operating cash flow while maintaining the
quality of services offered by its cable television systems. Our business
strategy has focused on serving small to medium-sized communities.
See "Competition."

                  Adoption of rules implementing certain provisions of the Cable
Television Consumer Protection and Competition Act of 1992, or the "1992 Cable
Act," by the FCC has had a negative impact on our revenues and cash flow. These
rules are subject to further amendment to give effect to the Telecommunications
Act of 1996. Among other changes, the 1996 Telecommunications Act caused the
regulation of certain cable programming service tier rates to terminate on March
31, 1999. There can be no assurance as to what, if any, further action may be
taken by the FCC, Congress or any other regulatory authority or court, or their
effect on our business. See "Legislation and Regulation" and Item 7.,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                  Capital Expenditures

                  As noted in "Technological Developments," certain of our cable
television systems have no available channel capacity with which to add new
channels or to provide pay-per-view offerings to customers. As a result, in the
event we are unable to sell our cable television systems to a third party,
significant amounts of capital for future upgrades will be required in order to
increase available channel capacity in those systems, improve quality of service
and facilitate the expansion of new services such as advertising, pay-per-view,
new unregulated tiers of satellite-delivered services and home shopping, so that
our cable television systems remain competitive within the industry.

                  Our management has selected a technical standard that
incorporates the use of fiber optic technology where applicable in its
engineering design for the majority of our cable television systems that are to
be rebuilt. A system built with this type of architecture can provide for future
channels of analog service as well as new digital services. Such a system will
also permit the introduction of high speed data transmission/Internet access and
telephony services in the future after incurring incremental capital
expenditures related to these services. We are also evaluating the use of
digital compression technology in our cable television systems. See
"Technological Developments" and "Digital Compression."


                                      -4-
<PAGE>   5


                  We completed the rebuild of our Jerseyville, Illinois, and
surrounding cable systems in 1998 at a total cost of approximately $2.1 million.
Capital expenditures in 2000 were approximately $310,000 for the improvement and
upgrade of other assets, and capital spending of $318,000 is planned for 2001 to
upgrade additional plant assets and equipment. See "Legislation and Regulation"
and Item 7., "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."

                  Decentralized Management

                  The Corporate General Partner manages the Partnership's cable
television systems on a decentralized basis. The Corporate General Partner
believes that its decentralized management structure, by enhancing management
presence at the system level, increases its sensitivity to the needs of its
customers, enhances the effectiveness of its customer service efforts,
eliminates the need for maintaining a large centralized corporate staff and
facilitates the maintenance of good relations with local governmental
authorities.

                  Marketing

                  Our marketing strategy is to provide added value to increasing
levels of subscription services through "packaging." In addition to the basic
service package, customers in substantially all of our cable television systems
may purchase additional unregulated packages of satellite-delivered services and
premium services. We have employed a variety of targeted marketing techniques to
attract new customers by focusing on delivering value, choice, convenience and
quality. We employed direct mail, radio and local newspaper advertising,
telemarketing and door-to-door selling utilizing demographic "cluster codes" to
target specific messages to target audiences. In some cable television systems,
we offer discounts to customers who purchase premium services on a limited trial
basis in order to encourage a higher level of service subscription. We also have
a coordinated strategy for retaining customers that includes televised retention
advertising to reinforce the initial decision to subscribe and encourage
customers to purchase higher service levels.

                  Customer Service and Community Relations

                  We place a strong emphasis on customer service and community
relations and believe that success in these areas is critical to our business.
We have developed and implemented a wide range of monthly internal training
programs for employees, including our regional managers, that focus on our
operations and employee interaction with customers. The effectiveness of our
training program as it relates to the employees' interaction with customers is
monitored on an ongoing basis. We are also committed to fostering strong
community relations in the towns and cities we serve. We support many local
charities and community causes in various ways, including marketing promotions
to raise money and supplies for persons in need, and in-kind donations that
include production services and free air-time on major cable networks. We also
participate in the "Cable in the Classroom" program, whereby cable television
companies throughout the United States provide schools with free cable
television service. In addition, we install and provide free basic cable service
to public schools, government buildings and non-profit hospitals in many of the
communities in which we operate.



                                      -5-
<PAGE>   6


DESCRIPTION OF THE PARTNERSHIP'S SYSTEMS

                  The table below sets forth certain operating statistics for
the Partnership's cable systems as of December 31, 2000.

<TABLE>
<CAPTION>
                                                                Premium                        Average Monthly
                     Homes        Basic           Basic         Service         Premium       Revenue Per Basic
System             Passed(1)   Subscribers    Penetration(2)    Units(3)      Penetration(4)   Subscriber(5)
------             ---------   -----------    --------------    --------     ---------------  -----------------
<S>                <C>         <C>            <C>               <C>          <C>              <C>
Hillsboro, IL        11,649       6,123            52.6%          1,603           26.2%              $39.93

Malden, MO            3,636       2,304            63.4%            533           23.1%              $35.23
                   --------     -------                         -------
Total                15,285       8,427            55.1%          2,136           25.3%              $38.64
                   ========     =======                         =======
</TABLE>

         (1) Homes passed refers to our estimates of the approximate number of
dwelling units in a particular community that can be connected to the
distribution system without any further extension of principal transmission
lines. Such estimates are based upon a variety of sources, including billing
records, house counts, city directories and other local sources.

         (2) Basic subscribers as a percentage of homes passed by cable.

         (3) Premium service units include only single channel services offered
for a monthly fee per channel and do not include tiers of channels offered as a
package for a single monthly fee.

         (4) Premium service units as a percentage of homes subscribing to cable
service. A customer may purchase more than one premium service, each of which is
counted as a separate premium service unit. This ratio may be greater than 100%
if the average customer subscribes for more than one premium service.

         (5) Average monthly revenue per basic subscriber has been computed
based on revenue for the year ended December 31, 2000.

CUSTOMER RATES AND SERVICES

                  Our cable television systems offer customers packages of
services that include the local area network, independent and educational
television stations, a limited number of television signals from distant cities,
numerous satellite-delivered, non-broadcast channels such as CNN, MTV, USA,
ESPN, TNT and The Disney Channel and certain information and public access
channels. For an extra monthly charge, we also provide certain premium
television services, such as HBO and Showtime. We also offer other cable
television services to our customers. For additional charges, in most of our
cable television systems, we also rent remote control devices and VCR compatible
devices, which are devices that make it easier for a customer to tape a program
from one channel while watching a program on another.

                  Our service options vary from system to system, depending upon
a cable system's channel capacity and viewer interests. Rates for services also
vary from market to market and according to the type of services selected.

                  Under the 1992 Cable Act, most cable television systems are
subject to rate regulation of the basic service tier, the charges for
installation of cable service, and the rental rates for customer premises
equipment such as converter boxes and remote control devices. These rate
regulation provisions affect all of our cable television systems not deemed to
be subject to effective competition under the FCC's definition. Currently, none
of our cable television systems are subject to effective competition. See
"Legislation and Regulation."

                  At December 31, 2000, our monthly rates for basic cable
service for residential customers, including certain discounted rates, ranged
from $23.40 to $24.95 and our premium service rate was $11.95, excluding special
promotions offered periodically in conjunction with our marketing programs. A
one-time


                                      -6-
<PAGE>   7


installation fee, which we may wholly or partially waive during a promotional
period, is usually charged to new customers. We charge commercial customers,
such as hotels, motels and hospitals, a negotiated, non-recurring fee for
installation of service and monthly fees based upon a standard discounting
procedure. We offer most multi-unit dwellings a negotiated bulk rate in exchange
for single-point billing and basic service to all units. These rates are also
subject to regulation.

EMPLOYEES

                  The various personnel required to operate our business are
employed by the Partnership, the Corporate General Partner, its subsidiary
corporation and Charter. The Partnership believes that its relations with its
employees are good. The employment costs incurred by the Corporate General
Partner, its subsidiary corporation and Charter are allocated and charged to the
Partnership for reimbursement pursuant to the partnership agreement and
management agreement. Other personnel required to operate the Partnership's
business are employed by an affiliate of the Corporate General Partner. The cost
of such employment is allocated and charged to the Partnership. The amounts of
these reimbursable costs are set forth below in Item 11., "Executive
Compensation."

TECHNOLOGICAL DEVELOPMENTS

                  As part of our commitment to customer service, we seek to
apply technological advances in cable television industry to our cable
television systems on the basis of cost effectiveness, capital availability,
enhancement of product quality and service delivery and industry-wide
acceptance. Our Jerseyville, Illinois, system, which serves approximately 76% of
our customers, has channel capacity of 123 and utilizes only 52 channels as of
December 31, 2000. Our Malden, Missouri, system, which serves approximately 24%
of our customers, has a channel capacity of 37% of which was utilized at
December 31, 2000. Our remaining systems have an average channel capacity of 62
and, on average, utilize 70% of their channel capacity. We believe that our
cable television system upgrades will enable us to provide customers with
greater programming diversity, better picture quality and alternative
communications delivery systems made possible by the introduction of fiber optic
technology and by the application of digital compression. The implementation of
the Partnership's capital expenditure plans is, however, dependent in part on
the availability of adequate capital on terms satisfactory to the Partnership,
of which there can be no assurance. See "Legislation and Regulation" and Item
7., "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                  The use of fiber optic cable as an alternative to coaxial
cable is playing a major role in expanding channel capacity and improving the
performance of cable television systems. Fiber optic cable is capable of
carrying hundreds of video, data and voice channels and, accordingly, its
utilization is essential to the enhancement of a cable television system's
technical capabilities. The Partnership's current policy is to


                                      -7-
<PAGE>   8


utilize fiber optic technology where applicable in rebuild projects which it
undertakes. The benefits of fiber optic technology over traditional coaxial
cable distribution plant include lower ongoing maintenance and power costs and
improved picture quality and reliability.

DIGITAL COMPRESSION

                  We have been closely monitoring developments in the area of
digital compression, a technology that enables cable operators to increase the
channel capacity of cable television systems by permitting a significantly
increased number of video signals to fit in a cable television system's existing
bandwidth. Depending on the technical characteristics of the existing system, we
believe that the utilization of digital compression technology will enable our
cable television systems to increase channel capacity in a manner that could, in
the short term, be more cost efficient than rebuilding such cable television
systems with higher capacity distribution plant. However, we believe that unless
the cable television system has sufficient unused channel capacity and
bandwidth, the use of digital compression to increase channel offerings is not a
substitute for the rebuild of the cable television system, which will improve
picture quality, system reliability and quality of service. The use of digital
compression will expand the number and types of services these cable television
systems offer and enhance the development of current and future revenue sources.
This technology has been under frequent management review.

PROGRAMMING

                  We purchase basic and premium programming for our systems from
Charter. In turn, Charter charges the Partnership for these costs at its costs
which are generally based on a fixed fee per customer or a percentage of the
gross receipts for the particular service. Prior to the acquisition of the
Corporate General Partner, Falcon Communications charged the Partnership for
these services based on an estimate of what the Corporate General Partner could
negotiate for such programming services for the 14 partnerships managed by the
Corporate General Partner as a group (approximately 76,046 basic subscribers at
December 31, 2000). Other channels have also offered Charter and the
Partnership's cable systems fees in return for carrying their service. Due to
our pending sale, our management cannot predict the impact of such potential
payments on our business. In addition, the FCC may require that such payments
from programmers be offset against the programming fee increases which can be
passed through to subscribers under the FCC's rate regulations. Charter's
programming contracts are generally for a fixed period of time and are subject
to negotiated renewal. Accordingly, no assurances can be given that its, and
correspondingly our, programming costs will not continue to increase
substantially in the near future, or that other materially adverse terms will
not be added to Charter's programming contracts. Management believes, however,
that Charter's relations with its programming suppliers generally are good.

                  Our cable programming costs have increased in recent years and
are expected to continue to increase due to additional programming being
provided to basic customers, requirements to carry channels under retransmission
carriage agreements entered into with some programming sources, increased costs
to produce or purchase cable programming generally (including sports
programming), inflationary increases and other factors. The 1996 retransmission
carriage agreement negotiations resulted in the Partnership agreeing to carry
one new service in its Hillsboro system, for which it expects to receive
reimbursement of certain costs related to launching the service. All other
negotiations were completed with essentially no change to the previous
agreements. Under the FCC's rate regulations, increases in programming costs for
regulated cable services occurring after the earlier of March 1, 1994, or the
date a system's basic cable service became regulated, may be passed through to
customers. Generally, programming costs are charged among systems on a per
customer basis.


                                      -8-
<PAGE>   9


FRANCHISES

                  Cable television systems are generally constructed and
operated under non-exclusive franchises granted by local governmental
authorities. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction; conditions of
service, including number of channels, types of programming and the provision of
free service to schools and other public institutions; and the maintenance of
insurance and indemnity bonds. The provisions of local franchises are subject to
federal regulation under the Cable Communications Policy Act of 1984, or the
"1984 Cable Act," the 1992 Cable Act and the 1996 Telecommunications Act. See
"Legislation and Regulation."

                  As of December 31, 2000, we operated cable systems in 11
franchise areas. These franchises, all of which are non-exclusive, provide for
the payment of fees to the issuing authority. Annual franchise fees imposed on
our systems range up to 5% of the gross revenues generated by a system. The 1984
Cable Act prohibits franchising authorities from imposing franchise fees in
excess of 5% of gross revenues and also permits the cable system operator to
seek renegotiation and modification of franchise requirements if warranted by
changed circumstances.

                  The following table groups the franchises of our cable
television systems by date of expiration and presents the number of franchises
for each group of franchises and the approximate number and percentage of basic
subscribers for each group as of December 31, 2000.

<TABLE>
<CAPTION>
                                                     Number of       Percentage of
      Year of                    Number of            Basic             Basic
Franchise Expiration             Franchises         Subscribers       Subscribers
--------------------             ----------         -----------      -------------
<S>                              <C>                <C>              <C>
Prior to 2002                           7               5,718             67.9%
2002 - 2006                             2                 321              3.8%
2007 and after                          2               2,388             28.3%
                                 ----------         -----------      -------------
Total                                  11               8,427            100.0%
                                 ==========         ===========      =============
</TABLE>

                  As of December 31, 2000, the franchise agreements have expired
in six of our franchise areas where we serve 5,498 basic subscribers. We
continue to serve these customers while we are in negotiations to extend the
franchise agreements and continue to pay franchise fees to the franchise
authorities. We operate cable television systems which serve multiple
communities and, in some circumstances, portions of such systems extend into
jurisdictions for which we believe no franchise is necessary. In the aggregate,
approximately 403 customers, comprising approximately 5% of our customers, are
served by unfranchised portions of such systems. In certain instances, where a
single franchise comprises a large percentage of the customers in an operating
region, the loss of such franchise could decrease the economies of scale
achieved by our clustering strategy. We have never had a franchise revoked for
any of our systems and we believe that we have satisfactory relationships with
substantially all of our franchising authorities.

                  The 1984 Cable Act provides, among other things, for an
orderly franchise renewal process in which franchise renewal will not be
unreasonably withheld or, if renewal is denied and the franchising authority
acquires ownership of the system or effects a transfer of the system to another
person, the operator generally is entitled to the "fair market value" for the
system covered by such franchise, but no value may be attributed to the
franchise itself. In addition, the 1984 Cable Act, as amended by the 1992 Cable
Act, establishes comprehensive renewal procedures which require that an
incumbent franchisee's renewal application be assessed on its own merit and not
as part of a comparative process with competing applications. See "Legislation
and Regulation."


                                      -9-
<PAGE>   10


COMPETITION

                  We face competition in the areas of price, service offerings,
and service reliability. We compete with other providers of television signals
and other sources of home entertainment. In addition, as we expand into
additional services such as Internet access, interactive services and telephony,
we will face competition from other providers of each type of service.

                  To date, we believe that we have not lost a significant number
of customers, or a significant amount of revenue, to our competitors' systems.
However, competition from other providers of the technologies we expect to offer
in the future may have a negative impact on our business in the future.

                  Through mergers such as the recent merger of
Tele-Communications, Inc. and AT&T, customers will come to expect a variety of
services from a single provider. While the TCI/AT&T merger has no direct or
immediate impact on our business, it encourages providers of cable and
telecommunications services to expand their service offerings. It also
encourages consolidation in the cable industry as cable operators recognize the
competitive benefits of a large customer base and expanded financial resources.

                  Key competitors today include:

                  BROADCAST TELEVISION. Cable television has long competed with
broadcast television, which consists of television signals that the viewer is
able to receive without charge using an "off-air" antenna. The extent of such
competition is dependent upon the quality and quantity of broadcast signals
available through "off-air" reception compared to the services provided by the
local cable system. The recent licensing of digital spectrum by the FCC will
provide incumbent television licenses with the ability to deliver high
definition television pictures and multiple digital-quality program streams, as
well as advanced digital services such as subscription video.

                  DBS. Direct broadcast satellite, known as DBS, has emerged as
significant competition to cable systems. The DBS industry has grown rapidly
over the last several years, far exceeding the growth rate of the cable
television industry, and now serves approximately 15 million subscribers
nationwide. DBS service allows the subscriber to receive video services directly
via satellite using a relatively small dish antenna. Moreover, video compression
technology allows DBS providers to offer more than 100 digital channels, thereby
surpassing the typical analog cable system. DBS companies historically were
prohibited from retransmitting popular local broadcast programming, but a change
to the existing copyright laws in November 1999 eliminated this legal
impediment. After an initial six-month grace period, DBS companies will need to
secure retransmission consent from the popular broadcast stations they wish to
carry, and they will face mandatory carriage obligations of less popular
broadcast stations as of January 2002. In response to the legislation, DirecTV,
Inc. and EchoStar Communications Corporation already have initiated plans to
carry the major network stations in the nation's top television markets. DBS,
however, is limited in the local programming it can provide because of the
current capacity limitations of satellite technology. It is, therefore, expected
that DBS companies will offer local broadcast programming only in the larger
U.S. markets for the foreseeable future. The same legislation providing for DBS
carriage of local broadcast stations reduced the compulsory copyright fees paid
by DBS companies and allows them to continue offering distant network signals to
rural customers.

                  DSL. The deployment of digital subscriber line technology,
known as DSL, will allow Internet access to subscribers at data transmission
speeds greater than those of modems over conventional telephone lines. Several
telephone companies and other companies are introducing DSL service. The FCC
recently released an order in which it mandated that incumbent telephone
companies grant access to the high frequency portion of the local loop over
which they provide voice services. This will enable competitive carriers to
provide DSL services over the same telephone lines simultaneously used by
incumbent telephone


                                      -10-
<PAGE>   11


companies to provide basic telephone service. However, in a separate order the
FCC declined to mandate that incumbent telephone companies unbundle their
internal packet switching functionality or related equipment for the benefit of
competitive carriers. This functionality or equipment could otherwise have been
used by competitive carriers directly to provide DSL or other high-speed
broadband services. We are unable to predict whether the FCC's decisions will be
sustained upon administrative or judicial appeal, the likelihood of success of
the Internet access offered by our competitors or the impact on our business and
operations of these competitive ventures.

                  TRADITIONAL OVERBUILDS. Cable television systems are operated
under non-exclusive franchises granted by local authorities. More than one cable
system may legally be built in the same area. It is possible that a franchising
authority might grant a second franchise to another cable operator and that
franchise might contain terms and conditions more favorable than those afforded
us. In addition, entities willing to establish an open video system, under which
they offer unaffiliated programmers non-discriminatory access to a portion of
the system's cable system may be able to avoid local franchising requirements.
Well financed businesses from outside the cable industry, such as public
utilities which already possess fiber optic and other transmission lines in the
areas they serve may over time become competitors. There has been a recent
increase in the number of cities that have constructed their own cable systems,
in a manner similar to city-provided utility services. Constructing a competing
cable system is a capital intensive process which involves a high degree of
risk. We believe that in order to be successful, a competitor's overbuild would
need to be able to serve the homes and businesses in the overbuilt area on a
more cost-effective basis than us. Any such overbuild operation would require
either significant access to capital or access to facilities already in place
that are capable of delivering cable television programming.

                  TELEPHONE COMPANIES AND UTILITIES. The competitive environment
has been significantly affected by both technological developments and
regulatory changes enacted in the 1996 Telecommunications Act, which were
designed to enhance competition in the cable television and local telephone
markets. Federal cross-ownership restrictions historically limited entry by
local telephone companies into the cable television business. The 1996
Telecommunications Act modified this cross-ownership restriction, making it
possible for local exchange carriers who have considerable resources to provide
a wide variety of video services competitive with services offered by cable
systems.

                  If we expand our offerings to include Internet and other
telecommunications services, we will be subject to competition from other
telecommunications providers. The telecommunications industry is highly
competitive and includes competitors with greater financial and personnel
resources, who have brand name recognition and long-standing relationships with
regulatory authorities. Moreover, mergers, joint ventures and alliances among
franchise, wireless or private cable television operators, local exchange
carriers and others may result in providers capable of offering cable
television, Internet, and telecommunications services in direct competition with
us.

                  Several telephone companies have obtained or are seeking cable
television franchises from local governmental authorities and are constructing
cable systems. Cross-subsidization by local exchange carriers of video and
telephony services poses a strategic advantage over cable operators seeking to
compete with local exchange carriers that provide video services. Some local
exchange carriers may choose to make broadband services available under the open
video regulatory framework of the FCC. In addition, local exchange carriers
provide facilities for the transmission and distribution of voice and data
services, including Internet services, in competition with our existing or
potential interactive services ventures and businesses, including Internet
service, as well as data and other non-video services. We cannot predict the
likelihood of success of the broadband services offered by our competitors or
the impact on us of such competitive ventures. The entry of telephone companies
as direct competitors in the video marketplace, however, is likely to become
more widespread and could adversely affect the profitability and valuation of
the systems.


                                      -11-
<PAGE>   12


                  Additionally, we are subject to competition from utilities
which possess fiber optic transmission lines capable of transmitting signals
with minimal signal distortion.

                  SMATV. Additional competition is posed by satellite master
antenna television systems known as "SMATV systems" serving multiple dwelling
units, referred to in the cable industry as "MDU's," such as condominiums,
apartment complexes, and private residential communities. These private cable
systems may enter into exclusive agreements with such MDUs, which may preclude
operators of franchise systems from serving residents of such private complexes.
Such private cable systems can offer both improved reception of local television
stations and many of the same satellite-delivered program services which are
offered by cable systems. SMATV systems currently benefit from operating
advantages not available to franchised cable systems, including fewer regulatory
burdens and no requirement to service low density or economically depressed
communities. Exemption from regulation may provide a competitive advantage to
certain of our current and potential competitors.

                  WIRELESS DISTRIBUTION. Cable television systems also compete
with wireless program distribution services such as multi-channel multipoint
distribution systems or "wireless cable," known as MMDS. MMDS uses low-power
microwave frequencies to transmit television programming over-the-air to paying
customers. Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital compression
technology is likely to increase significantly the channel capacity of their
systems. Both analog and digital MMDS services require unobstructed "line of
sight" transmission paths.


                                      -12-
<PAGE>   13


                           LEGISLATION AND REGULATION

                  The following summary addresses the key regulatory
developments and legislation affecting the cable television industry.

                  The operation of a cable system is extensively regulated by
the FCC, some state governments and most local governments. The 1996
Telecommunications Act has altered the regulatory structure governing the
nation's communications providers. It removes barriers to competition in both
the cable television market and the local telephone market. Among other things,
it also reduces the scope of cable rate regulation and encourages additional
competition in the video programming industry by allowing local telephone
companies to provide video programming in their own telephone service areas.

                  The 1996 Telecommunications Act requires the FCC to undertake
a host of implementing rulemakings. Moreover, Congress and the FCC have
frequently revisited the subject of cable regulation. Future legislative and
regulatory changes could adversely affect our operations, and there have been
calls in Congress and at the FCC to maintain or even tighten cable regulation in
the absence of widespread effective competition.

                  CABLE RATE REGULATION. The 1992 Cable Act imposed an extensive
rate regulation regime on the cable television industry, which limited the
ability of cable companies to increase subscriber fees. Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
competition" in their local franchise area. Federal law now defines "effective
competition" on a community-specific basis as requiring satisfaction of
conditions rarely satisfied in the current marketplace.

                  Although the FCC has established the underlying regulatory
scheme, local government units, commonly referred to as local franchising
authorities, are primarily responsible for administering the regulation of the
lowest level of cable--the basic service tier, which typically contains local
broadcast stations and public, educational, and government access channels.
Before a local franchising authority begins basic service rate regulation, it
must certify to the FCC that it will follow applicable federal rules. Many local
franchising authorities have voluntarily declined to exercise their authority to
regulate basic service rates. Local franchising authorities also have primary
responsibility for regulating cable equipment rates. Under federal law, charges
for various types of cable equipment must be unbundled from each other and from
monthly charges for programming services.

                  As of December 31, 2000, none of our local franchising
authorities were certified to regulate basic tier rates. The 1992 Cable Act
permits communities to certify and regulate rates at any time, so that it is
possible that localities served by the systems may choose to certify and
regulate rates in the future.

                  The FCC historically administered rate regulation of cable
programming service tiers, which is the expanded basic programming package that
offers services other than basic programming and which typically contains
satellite-delivered programming. As of December 31, 2000, we had no cable
programming service tier rate complaints pending at the FCC. Under the 1996
Telecommunications Act, however, the FCC's authority to regulate cable
programming service tier rates terminated on March 31, 1999. The FCC has taken
the position that it will still adjudicate pending cable programming service
tier complaints but will strictly limit its review, and possible refund orders,
to the time period predating the termination date. The elimination of cable
programming service tier regulation on a prospective basis affords us
substantially greater pricing flexibility.

                  Under the rate regulations of the FCC, most cable systems were
required to reduce their basic service tier and cable programming service tier
rates in 1993 and 1994, and have since had their rate increases governed by a
complicated price cap scheme that allows for the recovery of inflation and
certain increased costs, as well as providing some incentive for expanding
channel carriage. The FCC has modified its rate


                                      -13-
<PAGE>   14


adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity to bypass this "benchmark" regulatory scheme in favor of traditional
"cost-of-service" regulation in cases where the latter methodology appears
favorable. Cost of service regulation is a traditional form of rate regulation,
under which a utility is allowed to recover its costs of providing the regulated
service, plus a reasonable profit. The FCC and Congress have provided various
forms of rate relief for smaller cable systems owned by smaller operators.
Premium cable services offered on a per-channel or per program basis remain
unregulated. However, federal law requires that the basic service tier be
offered to all cable subscribers and limits the ability of operators to require
purchase of any cable programming service tier if a customer seeks to purchase
premium services offered on a per-channel or per-program basis, subject to a
technology exception which terminates in 2002.

                  As noted above, FCC regulation of cable programming service
tier rates for all systems, regardless of size, terminated under the 1996
Telecommunications Act on March 31, 1999. As a result, the regulatory regime
just discussed is now essentially applicable only to basic services tier and
cable equipment. Some legislators, however, have called for new rate regulations
if unregulated rates increase dramatically. The 1996 Telecommunications Act also
relaxes existing "uniform rate" requirements by specifying that uniform rate
requirements do not apply where the operator faces "effective competition," and
by exempting bulk discounts to multiple dwelling units, although complaints
about predatory pricing still may be made to the FCC.

                  CABLE ENTRY INTO TELECOMMUNICATIONS. The 1996
Telecommunications Act creates a more favorable environment for us to provide
telecommunications services beyond traditional video delivery. It provides that
no state or local laws or regulations may prohibit or have the effect of
prohibiting any entity from providing any interstate or intrastate
telecommunications service. A cable operator is authorized under the 1996
Telecommunications Act to provide telecommunications services without obtaining
a separate local franchise. States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public safety
and welfare, service quality, and consumer protection. State and local
governments also retain their authority to manage the public rights-of-way and
may require reasonable, competitively neutral compensation for management of the
public rights-of-way when cable operators provide telecommunications service.
The favorable pole attachment rates afforded cable operators under federal law
can be gradually increased by utility companies owning the poles, beginning in
2001, if the operator provides telecommunications service, as well as cable
service, over its plant. The FCC recently clarified that a cable operator's
favorable pole rates are not endangered by the provision of Internet access.

                  Cable entry into telecommunications will be affected by the
regulatory landscape now being developed by the FCC and state regulators. One
critical component of the 1996 Telecommunications Act to facilitate the entry of
new telecommunications providers, including cable operators, is the
interconnection obligation imposed on all telecommunications carriers. In July
1997, the Eighth Circuit Court of Appeals vacated certain aspects of the FCC
initial interconnection order but most of that decision was reversed by the U.S.
Supreme Court in January 1999. The Supreme Court effectively upheld most of the
FCC interconnection regulations. Although these regulations should enable new
telecommunications entrants to reach viable interconnection agreements with
incumbent carriers, many issues, including which specific network elements the
FCC can mandate that incumbent carriers make available to competitors, remain
subject to administrative and judicial appeal. If the FCC's current list of
unbundled network elements is upheld on appeal, it would make it easier for us
to provide telecommunications service.

                  INTERNET SERVICE. Although there is at present no significant
federal regulation of cable system delivery of Internet services, and the FCC
recently issued several reports finding no immediate need to impose such
regulation, this situation may change as cable systems expand their broadband
delivery of Internet services. In particular, proposals have been advanced at
the FCC and Congress that would require cable operators to provide access to
unaffiliated Internet service providers and online service providers.


                                      -14-
<PAGE>   15


Certain Internet service providers also are attempting to use existing modes of
access that are commercially leased to gain access to cable system delivery. A
petition on this issue is now pending before the FCC. Finally, some local
franchising authorities are considering the imposition of mandatory Internet
access requirements as part of cable franchise renewals or transfers. A federal
district court in Portland, Oregon recently upheld the legal ability of local
franchising authorities to impose such conditions, but an appeal was filed with
the Ninth Circuit Court of Appeals, oral argument has been held and the parties
are awaiting a decision. Other local authorities have imposed or may impose
mandatory Internet access requirements on cable operators. These developments
could, if they become widespread, burden the capacity of cable systems and
complicate our own plans for providing Internet service.

                  TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION. The 1996
Telecommunications Act allows telephone companies to compete directly with cable
operators by repealing the historic telephone company/cable cross-ownership ban.
Local exchange carriers, including the regional telephone companies, can now
compete with cable operators both inside and outside their telephone service
areas with certain regulatory safeguards. Because of their resources, local
exchange carriers could be formidable competitors to traditional cable
operators. Various local exchange carriers already are providing video
programming services within their telephone service areas through a variety of
distribution methods, including both the deployment of broadband wire facilities
and the use of wireless transmission.

                  Under the 1996 Telecommunications Act, local exchange carriers
or any other cable competitor providing video programming to subscribers through
broadband wire should be regulated as a traditional cable operator, subject to
local franchising and federal regulatory requirements, unless the local exchange
carrier or other cable competitor elects to deploy its broadband plant as an
open video system. To qualify for favorable open video system status, the
competitor must reserve two-thirds of the system's activated channels for
unaffiliated entities. The Fifth Circuit Court of Appeals reversed certain of
the FCC's open video system rules, including its preemption of local
franchising. The FCC recently revised the applicable rules to eliminate this
general preemption, thereby leaving franchising discretion to state and local
authorities. It is unclear what effect this ruling will have on the entities
pursuing open video system operation.

                  Although local exchange carriers and cable operators can now
expand their offerings across traditional service boundaries, the general
prohibition remains on local exchange carrier buyouts of co-located cable
systems. Co-located cable systems are cable systems serving an overlapping
territory. Cable operator buyouts of co-located local exchange carrier systems,
and joint ventures between cable operators and local exchange carriers in the
same market are also prohibited. The 1996 Telecommunications Act provides a few
limited exceptions to this buyout prohibition, including a carefully
circumscribed "rural exemption." The 1996 Telecommunications Act also provides
the FCC with the limited authority to grant waivers of the buyout prohibition.

                  ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE
TELEVISION. The 1996 Telecommunications Act provides that registered utility
holding companies and subsidiaries may provide telecommunications services,
including cable television, despite restrictions in the Public Utility Holding
Company Act. Electric utilities must establish separate subsidiaries, known as
"exempt telecommunications companies" and must apply to the FCC for operating
authority. Like telephone companies, electric utilities have substantial
resources at their disposal, and could be formidable competitors to traditional
cable systems. Several such utilities have been granted broad authority by the
FCC to engage in activities which could include the provision of video
programming.


                                      -15-
<PAGE>   16


                  ADDITIONAL OWNERSHIP RESTRICTIONS. The 1996 Telecommunications
Act eliminates statutory restrictions on broadcast/cable cross-ownership,
including broadcast network/cable restrictions, but leaves in place existing FCC
regulations prohibiting local cross-ownership between co-located television
stations and cable systems.

                  Under the 1992 Cable Act, the FCC adopted rules precluding a
cable system from devoting more than 40% of its activated channel capacity to
the carriage of affiliated national video program services. Also under the 1992
Cable Act, the FCC has adopted rules that preclude any cable operator from
serving more than 30% of all U.S. domestic multichannel video subscribers,
including cable and direct broadcast satellite subscribers. However, this
provision has been stayed pending further judicial review.

                  MUST CARRY/RETRANSMISSION CONSENT. The 1992 Cable Act contains
broadcast signal carriage requirements. Broadcast signal carriage is the
transmission of broadcast television signals over a cable system to cable
customers. These requirements, among other things, allow local commercial
television broadcast stations to elect once every three years between "must
carry" status or "retransmission consent" status. Less popular stations
typically elect must carry, which is the broadcast signal carriage requirement
that allows local commercial television broadcast stations to require a cable
system to carry the station. More popular stations, such as those affiliated
with a national network, typically elect retransmission consent which is the
broadcast signal carriage requirement that allows local commercial television
broadcast stations to negotiate for payments for granting permission to the
cable operator to carry the stations. Must carry requests can dilute the appeal
of a cable system's programming offerings because a cable system with limited
channel capacity may be required to forego carriage of popular channels in favor
of less popular broadcast stations electing must carry. Retransmission consent
demands may require substantial payments or other concessions. Either option has
a potentially adverse effect on our business. The burden associated with must
carry may increase substantially if broadcasters proceed with planned conversion
to digital transmission and the FCC determines that cable systems must carry all
analog and digital broadcasts in their entirety. This burden would reduce
capacity available for more popular video programming and new internet and
telecommunication offerings. A rulemaking is now pending at the FCC regarding
the imposition of dual digital and analog must carry.

                  ACCESS CHANNELS. Local franchising authorities can include
franchise provisions requiring cable operators to set aside certain channels for
public, educational and governmental access programming. Federal law also
requires cable systems to designate a portion of their channel capacity, up to
15% in some cases, for commercial leased access by unaffiliated third parties.
The FCC has adopted rules regulating the terms, conditions and maximum rates a
cable operator may charge for commercial leased access use. We believe that
requests for commercial leased access carriages have been relatively limited. A
new request has been forwarded to the FCC, however, requesting that unaffiliated
Internet service providers be found eligible for commercial leased access.
Although we do not believe such use is in accord with the governing statute, a
contrary ruling could lead to substantial leased activity by Internet service
providers and disrupt our own plans for Internet service.

                  ACCESS TO PROGRAMMING. To spur the development of independent
cable programmers and competition to incumbent cable operators, the 1992 Cable
Act imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring their cable operators over new competitors and requires such
programmers to sell their programming to other multichannel video distributors.
This provision limits the ability of vertically integrated cable programmers to
offer exclusive programming arrangements to cable companies. There also has been
interest expressed in further restricting the marketing practices of cable
programmers, including subjecting programmers who are


                                      -16-
<PAGE>   17


not affiliated with cable operators to all of the existing program access
requirements, and subjecting terrestrially delivered programming to the program
access requirements. Terrestrially delivered programming is programming
delivered other than by satellite. These changes should not have a dramatic
impact on us, but would limit potential competitive advantages we now enjoy.

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

                  OTHER REGULATIONS OF THE FCC. In addition to the FCC
regulations noted above, there are other regulations of the FCC covering such
areas as:

o   equal employment opportunity,

o   subscriber privacy,

o   programming practices, including, among other things,

         (1)      syndicated program exclusivity, which is a FCC rule which
                  requires a cable system to delete particular programming
                  offered by a distant broadcast signal carried on the system
                  which duplicates the programming for which a local broadcast
                  station has secured exclusive distribution rights,

         (2)      network program non-duplication,

         (3)      local sports blackouts,

         (4)      indecent programming,

         (5)      lottery programming,

         (6)      political programming,

         (7)      sponsorship identification,

         (8)      children's programming advertisements, and

         (9)      closed captioning,

o   registration of cable systems and facilities licensing,

o   maintenance of various records and public inspection files,

o   aeronautical frequency usage,

o   lockbox availability,


                                      -17-
<PAGE>   18


o   antenna structure notification,

o   tower marking and lighting,

o   consumer protection and customer service standards,

o   technical standards,

o   consumer electronics equipment compatibility, and

o   emergency alert systems.

                  The FCC recently ruled that cable customers must be allowed to
purchase cable converters from third parties and established a multi-year
phase-in during which security functions, which would remain in the operator's
exclusive control, would be unbundled from basic converter functions, which
could then be satisfied by third party vendors.

                  The FCC has the authority to enforce its regulations through
the imposition of substantial fines, the issuance of cease and desist orders
and/or the imposition of other administrative sanctions, such as the revocation
of FCC licenses needed to operate certain transmission facilities used in
connection with cable operations.

                  COPYRIGHT. Cable television systems are subject to federal
copyright licensing covering carriage of television and radio broadcast signals.
In exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool, that varies depending on the size
of the system, the number of distant broadcast television signals carried, and
the location of the cable system, cable operators can obtain blanket permission
to retransmit copyrighted material included in broadcast signals. The possible
modification or elimination of this compulsory copyright license is the subject
of continuing legislative review and could adversely affect our ability to
obtain desired broadcast programming. We cannot predict the outcome of this
legislative activity. Copyright clearances for non-broadcast programming
services are arranged through private negotiations.

                  Cable operators distribute locally originated programming and
advertising that use music controlled by the two principal major music
performing rights organizations, the American Society of Composers, Authors and
Publishers and Broadcast Music, Inc. The cable industry has had a long series of
negotiations and adjudications with both organizations. A prior voluntarily
negotiated agreement with Broadcast Music has now expired, and is subject to
further proceedings. The governing rate court recently set retroactive and
prospective cable industry rates for American Society of Composers music based
on the previously negotiated Broadcast Music rate. Although we cannot predict
the ultimate outcome of these industry proceedings or the amount of any license
fees we may be required to pay for past and future use of association-controlled
music, we do not believe such license fees will be significant to our business
and operations.

                  STATE AND LOCAL REGULATION. Cable television systems generally
are operated pursuant to non-exclusive franchises granted by a municipality or
other state or local government entity in order to cross public rights-of-way.
Federal law now prohibits local franchising authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises. Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
failed to comply with material provisions.


                                      -18-
<PAGE>   19


                  The specific terms and conditions of franchises vary
materially between jurisdictions. Each franchise generally contains provisions
governing cable operations, service rates, franchising fees, system construction
and maintenance obligations, system channel capacity, design and technical
performance, customer service standards, and indemnification protections. A
number of states, including Connecticut, subject cable systems to the
jurisdiction of centralized state governmental agencies, some of which impose
regulation of a character similar to that of a public utility. Although local
franchising authorities have considerable discretion in establishing franchise
terms, there are certain federal limitations. For example, local franchising
authorities cannot insist on franchise fees exceeding 5% of the system's gross
cable-related revenues, cannot dictate the particular technology used by the
system, and cannot specify video programming other than identifying broad
categories of programming.

                  Federal law contains renewal procedures designed to protect
incumbent franchisees against arbitrary denials of renewal. Even if a franchise
is renewed, the local franchising authority may seek to impose new and more
onerous requirements such as significant upgrades in facilities and service or
increased franchise fees as a condition of renewal. Similarly, if a local
franchising authority's consent is required for the purchase or sale of a cable
system or franchise, such local franchising authority may attempt to impose more
burdensome or onerous franchise requirements in connection with a request for
consent. Historically, most franchises have been renewed for and consents
granted to cable operators that have provided satisfactory services and have
complied with the terms of their franchise.

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

ITEM 2. PROPERTIES

                  We own or lease parcels of real property for signal reception
sites (antenna towers and headends), microwave facilities and business offices,
and own or lease our service vehicles. We believe that our properties, both
owned and leased, are in good condition and are suitable and adequate for our
business operations.

                  We own substantially all of the assets related to our cable
television operations, including our program production equipment, headend
(towers, antennas, electronic equipment and satellite earth stations), cable
plant (distribution equipment, amplifiers, customer drops and hardware),
converters, test equipment and tools and maintenance equipment.

ITEM 3. LEGAL PROCEEDINGS

                  We are periodically a party to various legal proceedings.
These legal proceedings are ordinary and routine litigation proceedings that
are incidental to our business. Management believes that the outcome of pending
legal proceedings will not, in the aggregate, have a material adverse effect
on our financial condition.


                                      -19-
<PAGE>   20

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

        None.


                                      -20-
<PAGE>   21


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY SECURITIES AND RELATED SECURITY
        HOLDER MATTERS

LIQUIDITY

                  While our equity securities, which consist of units of limited
partnership interests, are publicly held, there is no established public trading
market for the units and we do not expect that a market will develop. The
approximate number of equity security holders of record was 661 as of December
31, 2000. In addition to restrictions on the transferability of units contained
in our partnership agreement, the transferability of units may be affected by
restrictions on resales imposed by federal or state law.

DISTRIBUTIONS

                  The amended partnership agreement generally provides that all
cash distributions (as defined) be allocated 1% to the general partners and 99%
to the limited partners until the limited partners have received aggregate cash
distributions equal to their original capital contributions ("Capital Payback").
The partnership agreement also provides that all partnership profits, gains,
operational losses, and credits (all as defined) be allocated 1% to the general
partners and 99% to the limited partners until the limited partners have been
allocated net profits equal to the amount of cash flow required for Capital
Payback. After the limited partners have received cash flow equal to their
initial investments, the general partners will receive a 1% allocation of cash
flow from sale or liquidation of a system until the limited partners have
received an annual simple interest return of at least 18% of their initial
investments less any distributions from previous system sales and cash
distributions from operations after Capital Payback. Thereafter, the respective
allocations will be made 15% to the general partners and 85% to the limited
partners. Any losses from system sales or exchanges shall be allocated first to
all partners having positive capital account balances (based on their respective
capital accounts) until all such accounts are reduced to zero and thereafter to
the Corporate General Partner. All allocations to individual limited partners
will be based on their respective limited partnership ownership interests.

                  Upon the disposition of substantially all of the Partnership
assets, gains shall be allocated first to the limited partners having negative
capital account balances until their capital accounts are increased to zero,
next equally among the general partners until their capital accounts are
increased to zero, and thereafter as outlined in the preceding paragraph. Upon
dissolution of the Partnership, any negative capital account balances remaining
after all allocations and distributions are made must be funded by the
respective partners.

                  The policy of the Corporate General Partner (although there is
no contractual obligation to do so) is to cause the Partnership to make cash
distributions on a quarterly basis throughout the operational life of the
Partnership, assuming the availability of sufficient cash flow from partnership
operations. The amount of such distributions, if any, will vary from quarter to
quarter depending upon our results of operations and the Corporate General
Partner's determination of whether otherwise available funds are needed for the
Partnership's ongoing working capital and liquidity requirements.

                  We began making periodic cash distributions to limited
partners from operations during 1986. No distributions were made during 1998,
1999 or 2000. As a result of its liquidity requirements, management has
concluded that it is not prudent for the Partnership to resume paying
distributions at this time.

                  Our ability to pay distributions, the actual level of
distributions and the continuance of distributions, if any, will depend on a
number of factors, including: the amount of cash flow from operations, projected
capital expenditures, provision for contingent liabilities, availability of bank
refinancing, regulatory


                                      -21-
<PAGE>   22


or legislative developments governing the cable television industry, the sale
of cable system assets and growth in customers. Some of these factors are
beyond our control, and consequently, we cannot make assurances regarding the
level or timing of future distributions.

ITEM 6. SELECTED FINANCIAL DATA

                  Set forth below is selected financial data of the Partnership
for the five years ended December 31, 2000. This data should be read in
conjunction with the Partnership's financial statements included in Item 8
hereof and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 7.

<TABLE>
<CAPTION>
                                                                         Year Ended December 31
                                            --------------------------------------------------------------------------------
                                                1996             1997             1998             1999             2000
                                            ------------     ------------     ------------     ------------     ------------
<S>                                         <C>              <C>              <C>              <C>              <C>
OPERATIONS STATEMENT DATA

  Revenues                                  $  3,510,300     $  3,836,000     $  3,968,300     $  3,928,800     $  3,916,300
  Costs and expenses                          (1,943,600)      (2,094,100)      (2,219,000)      (2,308,000)      (2,215,800)
  Depreciation and amortization                 (927,400)        (706,300)        (671,100)        (625,600)        (503,400)
                                            ------------     ------------     ------------     ------------     ------------
  Operating income                               639,300        1,035,600        1,078,200          995,200        1,197,100
  Interest expense                               (58,400)         (22,300)         (15,300)         (18,400)              --
  Interest income                                 84,800          129,000          175,100          225,200          375,500
  Loss on disposal of cable assets                (3,200)              --           (1,500)              --               --
  Other                                               --               --               --               --          (26,700)
                                            ------------     ------------     ------------     ------------     ------------
  Net income                                $    662,500     $  1,142,300     $  1,236,500     $  1,202,000     $  1,545,900
                                            ============     ============     ============     ============     ============
PER UNIT OF LIMITED PARTNERSHIP INTEREST:

  Net income                                $      21.95     $      37.85     $      40.97     $      39.83     $      51.22
                                            ============     ============     ============     ============     ============
OTHER OPERATING DATA

  Net cash from operating activities        $  1,698,800     $  2,062,900     $  1,671,300     $  1,658,800     $  1,745,600
  Net cash from investing activities          (1,110,800)        (952,200)        (281,800)        (374,400)        (311,700)
  Net cash from financing activities            (483,700)              --               --               --               --
  EBITDA(1)                                    1,566,700        1,741,900        1,749,300        1,620,800        1,700,500
  EBITDA to revenues                                44.6%            45.4%            44.1%            41.3%            43.4%
  Capital expenditures                      $  1,084,000     $    930,600     $    273,000     $    367,300     $    309,700
</TABLE>

<TABLE>
<CAPTION>
                                                                     As of December 31
                                        ---------------------------------------------------------------------------
                                            1996            1997            1998            1999           2000
                                        ------------    ------------    ------------    ------------   ------------
<S>                                     <C>             <C>             <C>             <C>            <C>
BALANCE SHEET DATA

  Total assets                          $  5,340,100    $  6,649,400    $  7,797,300    $  8,890,700   $ 10,241,300

  General partners' capital (deficit)        (25,600)        (14,200)         (1,800)         10,200         25,700

  Limited partners' capital                4,838,700       5,969,600       7,193,700       8,383,700      9,914,100
</TABLE>

----------
     (1) EBITDA is calculated as operating income before depreciation and
amortization. Based on our experience in the cable television industry, we
believe that EBITDA and related measures of cash flow serve as important
financial analysis tools for measuring and comparing cable television companies
in several areas, such as liquidity, operating performance and leverage. EBITDA
is not a measurement determined under generally accepted accounting principles
("GAAP") and does not represent cash generated from operating activities in
accordance with GAAP. You should consider EBITDA as an alternative to net income
as an indicator of our financial performance or as an alternative to cash flows
as a measure of liquidity. In addition, our definition of EBITDA may not be
identical to similarly titled measures used by other companies.


                                      -22-
<PAGE>   23


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

                  The 1992 Cable Act required the Federal Communications
Commission to, among other things, implement extensive regulation of the rates
charged by cable television systems for basic and programming service tiers,
installation, and customer premises equipment leasing. Compliance with those
rate regulations has had a negative impact on our revenues and cash flows. The
1996 Telecommunications Act substantially changed the competitive and regulatory
environment for cable television and telecommunications service providers. Among
other changes, the 1996 Telecommunications Act ended the regulation of cable
programming service tier rates on March 31, 1999. There can be no assurance as
to what, if any, further action may be taken by the FCC, Congress or any other
regulatory authority or court, or their effect on our business. Accordingly, our
historical financial results as described below are not necessarily indicative
of future performance.

                  This annual report includes certain forward-looking statements
regarding, among other things, our future results of operations, regulatory
requirements, competition, capital needs and general business conditions
applicable to the Partnership. Such forward-looking statements involve risks and
uncertainties including, without limitation, the uncertainty of legislative and
regulatory changes and the rapid developments in the competitive environment
facing cable television operators such as the Partnership, as discussed more
fully elsewhere in this Report.

RESULTS OF OPERATIONS

                  2000 COMPARED TO 1999

                  Our revenues decreased from $3,928,800 to $3,916,300, or by
less than 1.0%, for the year ended December 31, 2000, as compared to 1999. Of
the $12,500 decrease, $60,900 was due to decreases in the number of
subscriptions for basic, premium, tier and equipment rental services and
$102,700 was due to decreases in other revenue producing items. The decrease was
partially offset by a $151,100 increase in regulated service rates that we
implemented in 2000. As of December 31, 2000, we had approximately 8,427 basic
subscribers and 2,136 premium service units.

                  Effective with the acquisition of Falcon Communications, L.P.
(Falcon) by Charter Communications Holdings Company, LLC (Charter) on November
12, 1999, certain activities previously incurred at the Partnership and expensed
through service cost and general and administrative expense have been either
eliminated by Charter, or have been reimbursed by the Partnership based on
Charter's costs incurred. These reimbursed costs are included in general partner
management fees and reimbursed expenses on the Partnership's statements of
operations. The total of service costs, general and administrative expenses and
general partner management fees and reimbursed expenses decreased from
$2,308,000 to $2,215,800, or by 4.0%, for the year ended December 31, 2000, as
compared to 1999.

                  Our service costs decreased from $1,302,800 to $1,182,900, or
by 9.2%, for the year ended December 31, 2000, as compared to 1999. Service
costs represent costs directly attributable to providing cable services to
customers. The decrease is primarily due to decreases in programming fees,
personnel costs and certain costs incurred by the Partnership prior to the
Charter acquisition that are now incurred by Charter and reimbursed by the
Partnership, as discussed above. Programming fees decreased as a result of lower
rates that Charter has extended to us and a decrease in subscribers.


                                      -23-
<PAGE>   24


                  Our general and administrative expenses decreased from
$478,500 to $394,400, or by 17.6%, for the year ended December 31, 2000, as
compared to 1999. As discussed above, Charter now performs certain management
and operational functions formerly performed by the Partnership. This has
resulted in us having more reimbursable costs and lower service costs and
general and administrative expenses.

                  Our management fees and reimbursed expenses increased from
$526,700 to $638,500, or by 21.2%, for the year ended December 31, 2000, as
compared to 1999. Management fees decreased in direct relation to decreased
revenues as described above. As discussed above, Charter now performs certain
management and operational functions formerly performed by the Partnership. This
has resulted in us having more reimbursable costs and lower service costs and
general and administrative expenses.

                  Our depreciation and amortization expense decreased from
$625,600 to $503,400, or by 19.5%, for the year ended December 31, 2000, as
compared to 1999 due to certain plant assets becoming fully depreciated.

                  Due to the factors described above, our operating income
increased from $995,200 to $1,197,100, or by 20.3%, for the year ended December
31, 2000, as compared to 1999.

                  Our interest income, net of interest expense, increased from
$206,800 to $375,500, or by 81.6%, for the year ended December 31, 2000, as
compared to 1999, primarily due to higher average cash balances available for
investment during 2000, and to the reclassification of certain bank charges from
interest expense to general and administrative expense.

                  Our other expenses of $26,700 for the year ended December 31,
2000, consisted of legal and proxy costs associated with the sale of our
partnership assets.

                  Due to the factors described above, our net income increased
from $1,202,000 to $1,545,900, or by 28.6%, for the year ended December 31,
2000, as compared to 1999.

                  EBITDA is calculated as operating income before depreciation
and amortization. See footnote 1 to "Selected Financial Data." EBITDA as a
percentage of revenues increased from 41.3% during 1999 to 43.4% in 2000. Due to
the factors described above, EBITDA increased from $1,620,800 to $1,700,500, or
by 4.9%, as a result.

                  1999 COMPARED TO 1998

                  Our revenues decreased from $3,968,300 to $3,928,800, or by
1.0%, for the year ended December 31, 1999, as compared to 1998. Of the $39,500
decrease, $108,500 was due to decreases in the number of subscriptions for
basic, premium, tier and equipment rental services and $4,200 was due to
decreases in other revenue producing items. The decrease was partially offset by
a $73,200 increase in regulated service rates that we implemented in 1999. As of
December 31, 1999, we had approximately 8,700 basic subscribers and 1,500
premium service units.

                  Our service costs increased from $1,252,000 to $1,302,800, or
by 4.1%, for the year ended December 31, 1999 as compared to 1998. Service costs
represent costs directly attributable to providing cable services to customers.
The increase was primarily due to increases in programming fees.

                  Our general and administrative expenses increased from
$405,500 to $478,500, or by 18.0%, for the year ended December 31, 1999, as
compared to 1998, primarily due to higher insurance premiums and customer
billing costs.


                                      -24-
<PAGE>   25


                  Management fees and reimbursed expenses decreased from
$561,500 to $526,700, or by 6.2%, for the year ended December 31, 1999, as
compared to 1998. Management fees decreased in direct relation to decreased
revenues as described above. Reimbursed expenses decreased primarily due to
lower allocated personnel costs.

                  Our depreciation and amortization expense decreased from
$671,100 to $625,600, or by 6.8%, for the year ended December 31, 1999, as
compared to 1998 due to certain plant assets becoming fully depreciated.

                  Our operating income decreased from $1,078,200 to $995,200, or
by 7.7%, for the year ended December 31, 1999, as compared to 1998, due
primarily to increased programming fees and insurance premiums as described
above.

                  Our interest income, net of interest expense, increased from
$159,800 to $206,800, or by 29.4%, for the year ended December 31, 1999, as
compared to 1998, primarily due to higher average cash balances available for
investment during 1999.

                  Due to the factors described above, our net income decreased
from $1,236,500 to $1,202,000 for the year ended December 31, 1999, as compared
to 1998.

                  EBITDA is calculated as operating income before depreciation
and amortization. See footnote 1 to "Selected Financial Data." EBITDA as a
percentage of revenues decreased from 44.1% during 1998 to 41.3% in 1999. The
decrease was primarily due to increases in programming fees and insurance
premiums as described above. EBITDA decreased from $1,749,300 to $1,620,800, or
by 7.3%, as a result.

LIQUIDITY AND CAPITAL RESOURCES

                  Our primary objective, having invested our net offering
proceeds in cable television systems, is to distribute to our partners all
available cash flow from operations and proceeds from the sale of cable systems,
if any, after providing for expenses, debt service and capital requirements
relating to the expansion, improvement and upgrade of our cable systems.

                  In accordance with the partnership agreement, the Corporate
General Partner has implemented a plan for liquidating the Partnership. On
August 8, 2000 (as amended on September 29, 2000), the Partnership, together
with certain affiliates (collectively, the "Sellers") entered into a purchase
and sales agreement (the "Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership (the "Purchaser"). The Agreement
provides for the Purchaser to acquire the assets comprising the Partnership's
cable systems serving Hillsboro, Illinois, and Malden, Missouri, as well as
certain assets of other affiliates.

                  The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $95,574,600 in cash (subject to normal closing adjustments).
Of that amount, $15,770,600 (subject to normal closing adjustments) is payable
to the Partnership. The allocation of the purchase price among each of the
Sellers was assigned by the Purchaser for each of the systems.

                  The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all the Sellers; (b) receipt of
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the limited partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the limited partners of
the Partnership and the other selling affiliates voting to approve the sale.
Furthermore, the Partnership is currently negotiating additional amendments to
the purchase and sale agreement with the Purchaser. Accordiingly, there can be
no assurance that the sale will close.


                                      -25-
<PAGE>   26


                  At December 31, 2000, the Partnership had no debt outstanding.
The Partnership upon the availability of cash generated from operations to fund
our ongoing expenses and capital requirements. We completed the rebuild of our
Jerseyville, Illinois, and surrounding cable systems in 1998, at a total cost of
approximately $2.1 million. We spent approximately $310,000 during 2000 for
replacement and upgrade of other assets. We are budgeted to spend approximately
$318,000 in 2001 for replacement and upgrade of additional assets.

                  The Corporate General Partner believes that cash flows from
operations will be adequate to meet our current liquidity requirements,
including the funding for capital expenditures discussed above. However, as a
result of such liquidity requirements, the Corporate General Partner has
concluded that it is not prudent for us to resume paying distributions at this
time.

                  Beginning in August 1997, the Corporate General Partner
elected to self-insure our cable distribution plant and subscriber connections
against property damage as well as possible business interruptions caused by
such damage. The decision to self-insure was made due to significant increases
in the cost of insurance coverage and decreases in the amount of insurance
coverage available.

                  In October 1998, Falcon Communications, L.P. reinstated third
party insurance coverage for all of the cable television properties owned or
managed by it to cover damage to cable distribution plant and subscriber
connections and against business interruptions resulting from such damage. This
coverage is subject to a significant annual deductible which applies to all of
the cable television properties owned or formerly managed by FCLP through
November 12, 1999, and currently managed by Charter, including those of the
Partnership.

                  Approximately 72.7% of our subscribers are served by our
system in Hillsboro, Illinois, and neighboring communities. Significant damage
to the system due to seasonal weather conditions or other events could have a
material adverse effect on our liquidity and cash flows. We continue to purchase
insurance coverage in amounts our management views as appropriate for all other
property, liability, automobile, workers' compensation and other types of
insurable risks.

                  2000 VS. 1999

                  Our operating activities provided $86,800 more cash in the
year ended December 31, 2000, than in 1999. We used $77,700 more cash to pay
liabilities owed to affiliates and third-party creditors in 2000 due to
differences in the timing of payments. Changes in accounts receivable, prepaid
expenses and other assets used $48,200 more cash in 2000 than in 1999 due to
differences in the timing of receivable collections and in the payment of
prepaid expenses.

                  We used $62,700 less cash in investing activities in 2000 than
in 1999 due to a $57,600 decrease in expenditures for tangible assets and a
$5,100 decrease in spending for intangible assets.

                  1999 VS. 1998

                  Our operating activities provided $12,500 less cash in the
year ended December 31, 1999 than in 1998. We used $20,000 more cash to pay
liabilities owed to affiliates and third-party creditors in 1999 due to
differences in the timing of payments. Changes in accounts receivable, prepaid
expenses and other assets used $89,000 less cash in 1999 than in 1998 due to
differences in the timing of receivable collections and in the payment of
prepaid expenses.


                                      -26-
<PAGE>   27



                  We used $92,600 more cash in investing activities in 1999 than
in 1998 due to a $94,300 increase in expenditures for tangible assets and a
$1,700 decrease in spending for intangible assets.

INFLATION

                  Certain of our expenses, such as those for wages and benefits,
equipment repair and replacement, and billing and marketing generally increase
with inflation. However, we do not believe that our financial results have been,
or will be, adversely affected by inflation in a material way, provided that we
are able to increase our service rates periodically, of which there can be no
assurance. See "Legislation and Regulation."

ITEM 7(A).        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  We are not exposed to material market risks associated with
financial instruments.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  The financial statements and related financial information
required to be filed hereunder are indexed on Page F-1.

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

                  Previously reported in Current Report on Form 8-K, dated July
18, 2000.


                                      -27-
<PAGE>   28


                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The general partners of the Partnership may be considered, for
certain purposes, the functional equivalents of directors and executive
officers. The Corporate General Partner is Enstar Communications Corporation,
and Robert T. Graff, Jr. is the Individual General Partner. As part of Falcon
Cablevision's September 30, 1988, acquisition of the Corporate General Partner,
Falcon Cablevision received an option to acquire Mr. Graff's interest as
Individual General Partner of the Partnership and other affiliated cable limited
partnerships that he previously co-sponsored with the Corporate General Partner,
and Mr. Graff received the right to cause Falcon Cablevision to acquire such
interests. These arrangements were modified and extended in an amendment dated
September 10, 1993, pursuant to which, among other things, the Corporate General
Partner obtained the option to acquire Mr. Graff's interest in lieu of the
purchase right described above which was originally granted to Falcon
Cablevision. Since its incorporation in Georgia in 1982, the Corporate General
Partner has been engaged in the cable/telecommunications business, both as a
general partner of 14 limited partnerships formed to own and operate cable
television systems and through a wholly-owned operating subsidiary. As of
December 31, 2000, the Corporate General Partner managed cable television
systems with approximately 76,046 basic subscribers.

                  Following the acquisition of the Corporate General Partner in
November 1999 by a Charter Communications-controlled entity, the directors and
executive officers of the Corporate General Partner have been changed to the
persons named below all of whom have their principal employment in a comparable
position with Charter Communications, Inc.:


<TABLE>
<CAPTION>
NAME                              POSITION
----                              --------
<S>                               <C>
Jerald L. Kent                    Director, President and Chief Executive Officer

David C. Andersen                 Senior Vice President - Communications

David G. Barford                  Executive Vice President and Chief Operating Officer

Mary Pat Blake                    Senior Vice President - Marketing and Programming

Eric A. Freesmeier                Senior Vice President - Administration

Thomas R. Jokerst                 Senior Vice President - Advanced Technology Development

Kent D. Kalkwarf                  Executive Vice President and Chief Financial Officer

Ralph G. Kelly                    Senior Vice President - Treasurer

David L. McCall                   Senior Vice President of Operations - Eastern Division

John C. Pietri                    Senior Vice President - Engineering

Michael E. Riddle                 Senior Vice President and Chief Information Officer

Steven A. Schumm                  Executive Vice President, Assistant to the President

Curtis S. Shaw                    Senior Vice President, General Counsel and Secretary

Steven E. Silva                   Senior Vice President - Corporate Development and Technology

James (Trey) H. Smith, III        Senior Vice President of Operations - Western Division
</TABLE>

                  Except for Mr. Andersen, Mr. Riddle and Mr. Smith, our
executive officers were appointed to their position following our formation in
July 1999, and became employees of Charter Communications, Inc., upon completion
of our initial public offering. Prior to that time, they were employees of
Charter Investment, Inc. All of our executive officers simultaneously serve in
the same capacity with Charter Investment, Inc.


                                      -28-
<PAGE>   29


JERALD L. KENT, 44 Director, President and Chief Executive Officer. Mr. Kent
co-founded Charter Communications Investment, Inc. in 1993. Mr. Kent was
executive vice president and chief financial officer of Cencom Cable Associates,
Inc. Mr. Kent, a certified public accountant, attained the position of tax
manager with Arthur Andersen LLP. Mr. Kent received a bachelor's degree and
M.B.A. from Washington University.

DAVID C. ANDERSEN, 51 Senior Vice President - Communications. Prior to joining
Charter Communications, Inc. in May 2000, Mr. Andersen served as Vice President
of Communications for CNBC, the worldwide cable and satellite business news
network subsidiary of NBC. Before that, starting in 1982 when he established
their public relations department, Mr. Andersen served in various management
positions at Cox Communications, Inc., most recently as Vice President of Public
Affairs. Mr. Andersen serves on the Board of KIDSNET, and is a former Chairman
of the National Captioning Institute's Cable Advisory Board. He received a B.S.
degree in Journalism from the University of Kansas.

DAVID G. BARFORD, 42 Executive Vice President and Chief Operating Officer. Prior
to joining Charter Communications Investment, Inc. in 1995, Mr. Barford held
various senior marketing and operating roles during nine years at Comcast Cable
Communications, Inc. He received a B.A. from California State University,
Fullerton, and an M.B.A. from National University.

MARY PAT BLAKE, 45 Senior Vice President - Marketing and Programming. Prior to
joining Charter Communications Investment, Inc. in 1995, Ms. Blake was active in
the emerging business sector and formed Blake Investments, Inc. in 1993. She has
18 years of experience with senior management responsibilities in marketing,
sales, finance, systems, and general management. Ms. Blake received a B.S. from
the University of Minnesota and an M.B.A. from the Harvard Business School.

ERIC A. FREESMEIER, 47 Senior Vice President - Administration. From 1986 until
joining Charter Investment, Inc. in 1998, Mr. Freesmeier served in various
executive management positions at Edison Brothers Stores, Inc. Earlier he held
management and executive positions at Montgomery Ward. Mr. Freesmeier holds
bachelor's degrees from the University of Iowa and a master's degree from
Northwestern University's Kellogg Graduate School of Management.

THOMAS R. JOKERST, 51 Senior Vice President - Advanced Technology Development.
Mr. Jokerst joined Charter Investment, Inc. in 1994. Previously he served as a
vice president of Cable Television Laboratories and as a regional director of
engineering for Continental Cablevision. He is a graduate of Ranken Technical
Institute and of Southern Illinois University.

KENT D. KALKWARF, 41 Executive Vice President and Chief Financial Officer. Prior
to joining Charter Investment, Inc. in 1995, Mr. Kalkwarf was employed for 13
years by Arthur Andersen LLP where he attained the position of senior tax
manager. He has extensive experience in cable, real estate, and international
tax issues. Mr. Kalkwarf has a B.S. from Illinois Wesleyan University and is a
certified public accountant.

RALPH G. KELLY, 44 Senior Vice President - Treasurer. Prior to joining Charter
Investment, Inc. in 1993, Mr. Kelly was controller and then treasurer of Cencom
Cable Associates. He left Charter in 1994, to become chief financial officer of
CableMaxx, Inc., and returned in 1996. Mr. Kelly received his bachelor's degree
in accounting from the University of Missouri - Columbia and his M.B.A. from
Saint Louis University.

DAVID L. MCCALL, 45 Senior Vice President of Operations - Eastern Division.
Prior to joining Charter Investment, Inc. in 1995, Mr. McCall was associated
with Crown Cable and its predecessor company, Cencom Cable Associates, Inc. from
1983 to 1994. Earlier he was system manager of Coaxial Cable Developers. Mr.
McCall has served as a director of the South Carolina Cable Television
Association for the past 10 years.

JOHN C. PIETRI, 51 Senior Vice President - Engineering. Prior to joining Charter
Investment, Inc. in 1998, Mr. Pietri was with Marcus Cable for eight years, most
recently serving as senior vice president and chief technical officer. Earlier
he was in operations with West Marc Communications and Minnesota Utility
Contracting. Mr. Pietri attended the University of Wisconsin-Oshkosh.


                                      -29-
<PAGE>   30


MICHAEL E. RIDDLE, 42 Senior Vice President and Chief Information Officer. Prior
to joining Charter Investment, Inc. in 1999, Mr. Riddle was director, applied
technologies of Cox Communications for four years. Prior to that, he held
technical and management positions during four years at Southwestern Bell and
its subsidiaries. Mr. Riddle attended Fort Hays State University.

STEVEN A. SCHUMM, 48 Executive Vice President and Assistant to the President.
Prior to joining Charter Investment, Inc. in 1998, Mr. Schumm was managing
partner of the St. Louis office of Ernst & Young LLP, where he was a partner for
14 of 24 years. He served as one of 10 members of the firm's National Tax
Committee. Mr. Schumm earned a B.S. degree from Saint Louis University.

CURTIS S. SHAW, 52 Senior Vice President, General Counsel and Secretary. Prior
to joining Charter Investment, Inc. in 1997, Mr. Shaw served as corporate
counsel to NYNEX since 1988. He has over 25 years of experience as a corporate
lawyer, specializing in mergers and acquisitions, joint ventures, public
offerings, financings, and federal securities and antitrust law. Mr. Shaw
received a B.A. from Trinity College and a J.D. from Columbia University School
of Law.

STEVEN E. SILVA, 41 Senior Vice President - Corporate Development and
Technology. From 1983 until joining Charter Investment, Inc. in 1995, Mr. Silva
served in various management positions at U.S. Computer Services, Inc. He is a
member of the board of directors of High Speed Access Corp.

JAMES (TREY) H. SMITH, III, 52 Senior Vice President of Operations - Western
Division. Mr. Smith was appointed to his current position in September 2000,
previously serving as a Division President of AT&T Broadband. Before that, he
was President and CEO of Rogers Cablesystems Ltd., Senior Vice President of the
Western Region for MediaOne/Continental Cable and Executive Vice President of
Operations for Times Mirror Cable TV, Inc. He received B.B.A. and M.B.A. degrees
from Georgia State University and is a certified public accountant.

                  The sole director of the Corporate General Partner is elected
to a one-year term at the annual shareholder meeting to serve until the next
annual shareholder meeting and thereafter until his respective successor is
elected and qualified. Officers are appointed by and serve at the discretion of
the directors of the Corporate General Partner.

ITEM 11.          EXECUTIVE COMPENSATION

MANAGEMENT FEE

                  The Partnership has a management agreement with Enstar Cable
Corporation, a wholly owned subsidiary of the Corporate General Partner,
pursuant to which Enstar Cable manages our systems and provides all operational
support for our activities. For these services, Enstar Cable receives a
management fee of 5% of our gross revenues, excluding revenues from the sale of
cable television systems or franchises, calculated and paid monthly. In
addition, we reimburse Enstar Cable for operating expenses incurred by Enstar
Cable in the day-to-day operation of our cable systems. The management agreement
also requires us to indemnify Enstar Cable (including its officers, employees,
agents and shareholders) against loss or expense, absent negligence or
deliberate breach by Enstar Cable of the management agreement. The management
agreement is terminable by the Partnership upon 60 days written notice to Enstar
Cable. Enstar Cable had, prior to November 12, 1999, engaged Falcon
Communications, L.P. to provide management services for us and paid Falcon
Communications, L.P. a portion of the management fees it received in
consideration of such services and reimbursed Falcon Communications, L.P. for
expenses incurred by Falcon Communications, L.P. on its behalf. Subsequent to
November 12, 1999, Charter, as successor-by-merger to Falcon Communications,
L.P., has provided such services and received such payments. Additionally, we
receive system operating


                                      -30-
<PAGE>   31


management services from affiliates of Enstar Cable in lieu of directly
employing personnel to perform those services. We reimburse the affiliates for
our allocable share of their operating costs. The Corporate General Partner also
performs supervisory and administrative services for the Partnership, for which
it is reimbursed.

                  For the fiscal year ended December 31, 2000, Enstar Cable
charged us management fees of approximately $195,800. We also reimbursed Enstar
Cable, Charter and its affiliates approximately $442,700 for system operating
management services. In addition, programming services were purchased through
Charter. We paid Charter approximately $761,100 for these programming services
for fiscal year 2000.

PARTICIPATION IN DISTRIBUTIONS

                  The general partners are entitled to share in distributions
from, and profit and losses in, the Partnership. See Item 5., "Market for the
Registrant's Equity Securities and Related Security Holder Matters."

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  As of February 28, 2001, the only persons known by the
Partnership to own beneficially or that may be deemed to own beneficially more
than 5% of the units were:

<TABLE>
<CAPTION>
                                                   Name and Address                  Amount and Nature of         Percent
           Title of Class                        of Beneficial Owner                 Beneficial Ownership        of Class
-------------------------------------    -------------------------------------    ---------------------------   ------------
<S>                                      <C>                                      <C>                           <C>
Units of Limited Partnership             Everest Cable Investors LLC                       2,086(1)                7.0%
   Interest                              199 So. Los Robles Ave., Suite 440
                                         Pasadena, CA 91101
</TABLE>

(1)      As reported to us by our transfer agent, Gemisys Corporation.

                  The Corporate General Partner is a wholly owned subsidiary of
Charter Communications Holding Company, LLC. Charter Communications Holding
Company, LLC, through a subsidiary, owns a 100% interest in CC VII. Charter
Communications Holding Company, LLC is beneficially controlled by Paul G. Allen
through his ownership and control of Charter Communications, Inc., Charter
Investment, Inc. and Vulcan Cable III, Inc.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONFLICTS OF INTEREST

                  On November 12, 1999, Charter acquired ownership of Enstar
Communications Corporation from Falcon Holding Group, L.P. and assumed the
management services operations of Falcon Communications, L.P. Charter now
manages the operations of the partnerships of which Enstar Communications
Corporation is the Corporate General Partner, including the Partnership.
Commencing November 13, 1999, Charter began receiving management fees and
reimbursed expenses which had previously been paid by the Corporate General
Partner to Falcon Communications, L.P.

                  The Partnership relies upon the Corporate General Partner and
certain of its affiliates to provide general management services, system
operating services, supervisory and administrative services and programming. See
Item 11., "Executive Compensation" and Item 7., "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The executive
officers of the Corporate General


                                      -31-
<PAGE>   32


Partner have their personal employment with Charter Communications, Inc., and,
as a result, are involved in the management of other cable ventures. Charter
expects to continue to enter into other cable ventures. These affiliations
subject Charter and the Corporate General Partner and their management to
conflicts of interest. These conflicts of interest relate to the time and
services that management will devote to the Partnership's affairs.

FIDUCIARY RESPONSIBILITY AND INDEMNIFICATION OF THE GENERAL PARTNERS

                  A general partner is accountable to a limited partnership as a
fiduciary and consequently must exercise good faith and integrity in handling
partnership affairs. Where the question has arisen, some courts have held that a
limited partner may institute legal action on his own behalf and on behalf of
all other similarly situated limited partners (a class action) to recover
damages for a breach of fiduciary duty by a general partner, or on behalf of the
Partnership (a partnership derivative action) to recover damages from third
parties. Section 14-9-1001 of the Georgia Revised Uniform Limited Partnership
Act also allows a partner to maintain a partnership derivative action if general
partners with authority to do so have refused to bring the action or if an
effort to cause those general partners to bring the action is not likely to
succeed. Some cases decided by federal courts have recognized the right of a
limited partner to bring such actions under the Securities and Exchange
Commission's Rule 10b-5 for recovery of damages resulting from a breach of
fiduciary duty by a general partner involving fraud, deception or manipulation
in connection with the limited partner's purchase or sale of partnership units.

                  The partnership agreement provides that the general partners
will be indemnified by the Partnership for acts performed within the scope of
their authority under the partnership agreement if the general partners (i)
acted in good faith and in a manner that it reasonably believed to be in, or not
opposed to, the best interests of the Partnership and the partners, and (ii) had
no reasonable grounds to believe that their conduct was negligent. In addition,
the partnership agreement provides that the General Partners will not be liable
to the Partnership or its limited partners for errors in judgment or other acts
or omissions not amounting to negligence or misconduct. Therefore, limited
partners will have a more limited right of action than they would have absent
such provisions. In addition, we maintain, at our expense and in such reasonable
amounts as the Corporate General Partner determines, a liability insurance
policy which insures the Corporate General Partner, Charter and its affiliates
(which include CC VII), officers and directors and persons determined by the
Corporate General Partner against liabilities which they may incur with respect
to claims made against them for certain wrongful or allegedly wrongful acts,
including certain errors, misstatements, misleading statements, omissions,
neglect or breaches of duty. To the extent that the exculpatory provisions
purport to include indemnification for liabilities arising under the Securities
Act of 1933, it is the opinion of the Securities and Exchange Commission that
such indemnification is contrary to public policy and therefore unenforceable.


                                      -32-
<PAGE>   33


                                     PART IV


ITEM 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



(a)             1.    Financial Statements

                      Reference is made to the Index to Financial Statements on
                      page F-1.



(a)             2.    Financial Statement Schedules

                      Reference is made to the Index to Financial Statements on
                      page F-1.



(a)             3.    Exhibits

                      Reference is made to the Index to Exhibits on Page E-1.



(b)                   Reports on Form 8-K

                      None.


                                      -33-
<PAGE>   34


                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on March
30, 2001.

                                      ENSTAR INCOME PROGRAM II-2, L.P.
                                      By:   Enstar Communications Corporation,
                                            Corporate General Partner


                                                 By: /s/ Jerald L. Kent
                                                     Jerald L. Kent
                                                     Director, President and
                                                       Chief Executive Officer



                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on the 30th day of March 2001.

<TABLE>
<CAPTION>
                 Signatures                                            Title(*)
        ----------------------------            ------------------------------------------------------
<S>                                             <C>
        /s/ Jerald L. Kent                      Director, President and Chief Executive Officer
        ------------------                        (Principal Executive Officer)
        Jerald L. Kent



        /s/ Kent D. Kalkwarf                    Executive Vice President and Chief Financial Officer
        --------------------
        Kent D. Kalkwarf                        (Principal Financial Officer and
                                                Principal Accounting Officer)
</TABLE>




(*) Indicates position(s) held with Enstar Communications Corporation, the
Corporate General Partner of the Registrant.


                                      -34-
<PAGE>   35


                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                                                  PAGE
                                                                                                                  ----
<S>                                                                                                               <C>
Report of Independent Public Accountants                                                                          F-2

Balance Sheet as of December 31, 2000                                                                             F-3

Financial Statements for the year ended December 31, 2000:

   Statement of Operations                                                                                        F-4

   Statement of Partnership Capital                                                                               F-5

   Statement of Cash Flows                                                                                        F-6

Notes to Financial Statements                                                                                     F-7


Report of Independent Auditors                                                                                   F-15

Balance Sheet - December 31, 1999                                                                                F-16

Financial Statements for each of the two years in the period ended December 31,
1999:

   Statements of Operations                                                                                      F-17

   Statements of Partnership Capital (Deficit)                                                                   F-18

   Statements of Cash Flows                                                                                      F-19

Notes to Financial Statements                                                                                    F-20
</TABLE>

All schedules have been omitted because they are either not required, not
applicable or the information has otherwise been supplied.


                                      F-1
<PAGE>   36


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of
Enstar Income Program II-2, L.P.:

We have audited the accompanying balance sheet of Enstar Income Program II-2,
L.P. (a Georgia Limited Partnership) as of December 31, 2000, and the related
statements of operations, partnership capital and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Enstar Income Program II-2,
L.P. as of December 31, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.



/s/ ARTHUR ANDERSEN LLP



St. Louis, Missouri,
   March 23, 2001


                                      F-2
<PAGE>   37


                        ENSTAR INCOME PROGRAM II-2, L.P.


                      BALANCE SHEET AS OF DECEMBER 31, 2000


<TABLE>
<S>                                                                      <C>
                                     ASSETS

ASSETS:
   Cash and cash equivalents                                             $ 7,186,600
   Accounts receivable                                                       239,000
   Prepaid expenses and other assets                                          51,200
   Property, plant and equipment, net                                      2,748,800
   Franchise cost, net of accumulated amortization of $1,388,200              15,700
                                                                         -----------
                                                                         $10,241,300
                                                                         ===========

                       LIABILITIES AND PARTNERSHIP CAPITAL

LIABILITIES:
   Accounts payable                                                      $    68,500
   Accrued liabilities                                                       170,400
   Due to affiliates                                                          62,600
                                                                         -----------
           Total liabilities                                                 301,500
                                                                         -----------
PARTNERSHIP CAPITAL:
   General partners                                                           25,700
   Limited partners                                                        9,914,100
                                                                         -----------
           Total partnership capital                                       9,939,800
                                                                         -----------
                                                                         $10,241,300
                                                                         ===========
</TABLE>

         The accompanying notes are an integral part of this statement.


                                      F-3
<PAGE>   38


                        ENSTAR INCOME PROGRAM II-2, L.P.


                             STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 2000


<TABLE>
<S>                                                                      <C>
REVENUES                                                                 $ 3,916,300
                                                                         -----------
OPERATING EXPENSES:
   Service costs                                                           1,182,900
   General and administrative expenses                                       394,400
   General partner management fees and reimbursed expenses                   638,500
   Depreciation and amortization                                             503,400
                                                                         -----------
                                                                           2,719,200
                                                                         -----------
           Operating income                                                1,197,100
                                                                         -----------
OTHER INCOME (EXPENSE):
   Interest income                                                           375,500
   Other                                                                     (26,700)
                                                                         -----------
                                                                             348,800
                                                                         -----------
           Net income                                                    $ 1,545,900
                                                                         ===========

NET INCOME ALLOCATED TO GENERAL PARTNERS                                 $    15,500
                                                                         ===========

NET INCOME ALLOCATED TO LIMITED PARTNERS                                 $ 1,530,400
                                                                         ===========

NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST                      $     51.22
                                                                         ===========

WEIGHTED AVERAGE LIMITED PARTNERSHIP UNITS OUTSTANDING DURING THE
 YEAR                                                                         29,880
                                                                         ===========
</TABLE>

         The accompanying notes are an integral part of this statement.


                                      F-4
<PAGE>   39


                        ENSTAR INCOME PROGRAM II-2, L.P.


                        STATEMENT OF PARTNERSHIP CAPITAL



<TABLE>
<CAPTION>
                                               General      Limited
                                               Partners     Partners       Total
                                              ----------   ----------   ----------
<S>                                           <C>          <C>          <C>
PARTNERSHIP CAPITAL, January 1, 2000          $   10,200   $8,383,700   $8,393,900

   Net income                                     15,500    1,530,400    1,545,900
                                              ----------   ----------   ----------
PARTNERSHIP CAPITAL, December 31, 2000        $   25,700   $9,914,100   $9,939,800
                                              ==========   ==========   ==========
</TABLE>


         The accompanying notes are an integral part of this statement.


                                      F-5
<PAGE>   40


                        ENSTAR INCOME PROGRAM II-2, L.P.


                             STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 2000



<TABLE>
<S>                                                                                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                        $ 1,545,900
   Adjustments to reconcile net income to net cash from operating activities-
     Depreciation and amortization                                                       503,400
     Changes in-
       Accounts receivable, prepaid expenses and other assets                           (108,400)
       Accounts payable, accrued liabilities and due to/from affiliates                 (186,300)
                                                                                     -----------
           Net cash from operating activities                                          1,745,600
                                                                                     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                                 (309,700)
   Change in intangible assets                                                            (2,000)
                                                                                     -----------
           Net cash from investing activities                                           (311,700)
                                                                                     -----------
           Net increase in cash and cash equivalents                                   1,433,900

CASH AND CASH EQUIVALENTS, beginning of year                                           5,752,700
                                                                                     -----------
CASH AND CASH EQUIVALENTS, end of year                                               $ 7,186,600
                                                                                     ===========


CASH PAID FOR INTEREST                                                               $        --
                                                                                     ===========
</TABLE>

         The accompanying notes are an integral part of this statement.


                                      F-6
<PAGE>   41


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

                  Enstar Income Program II-2, L.P., a Georgia limited
partnership (the "Partnership"), owns and operates cable television systems in
rural areas of Illinois and Missouri.

                  The financial statements do not give effect to any assets that
the partners may have outside of their interest in the Partnership, nor to any
obligations, including income taxes of the partners.

CASH AND CASH EQUIVALENTS

                  The Partnership considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. These
investments are carried at cost, which approximates fair market value. The
Partnership has no cash equivalents at December 31, 2000.

PROPERTY, PLANT AND EQUIPMENT

                  Property, plant and equipment are stated at cost. Direct costs
associated with installations in homes not previously served by cable are
capitalized as part of the cable distribution system, and reconnects are
expensed as incurred. For financial reporting, depreciation is computed using
the straight-line method over the following estimated useful lives:

<TABLE>
<S>                                                    <C>
                  Cable distribution systems              5-15 years
                  Vehicles                                   3 years
                  Furniture and equipment                  5-7 years
                  Leasehold improvements               Life of lease
</TABLE>

FRANCHISE COST

                  Costs incurred in obtaining and renewing cable franchises are
deferred and amortized over the lives of the franchises. Costs relating to
unsuccessful franchise applications are charged to expense when it is determined
that the efforts to obtain the franchise will not be successful. Franchise
rights acquired through the purchase of cable television systems represent
management's estimate of fair value and are generally amortized using the
straight-line method over a period of up to 15 years. The period of up to 15
years is management's best estimate of the useful lives of the franchises and
assumes substantially all of those franchises that expire during the period will
be renewed by the Partnership.

                  As of December 31, 2000, the franchise agreements have
expired in six of the Partnership's franchise areas where it serves 5,498 basic
subscribers. The Partnership continues to serve these customers while it is in
negotiations to extend the franchise agreements and continues to pay franchise
fees to the franchise authorities.


                                      F-7
<PAGE>   42


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF ASSETS

                  If facts and circumstances suggest that a long-lived asset may
be impaired, the carrying value is reviewed. If a review indicates that the
carrying value of such asset is not recoverable based on projected undiscounted
net cash flows related to the asset over its remaining life, the carrying value
of such asset is reduced to its estimated fair value.

REVENUES

                  Cable television revenues from basic and premium services are
recognized when the related services are provided.

                  Installation revenues are recognized to the extent of direct
selling costs incurred. The remainder, if any, is deferred and amortized to
income over the estimated average period that customers are expected to remain
connected to the cable system. As of December 31, 2000, no installation revenue
has been deferred, as direct selling costs have exceeded installation revenue.

                  Local governmental authorities impose franchise fees on the
Partnership ranging up to a federally mandated maximum of 5.0% of gross
revenues. Such fees are collected on a monthly basis from the Partnership's
customers and are periodically remitted to local franchise authorities.
Franchise fees collected and paid are reported as revenues and expenses.

ADVERTISING COSTS

                  The Partnership expenses all advertising costs as incurred.

INCOME TAXES

                  As a partnership, Enstar Income Program II-2, L.P. pays no
income taxes. All of the income, gains, losses, deductions and credits of the
Partnership are passed through to its partners. The basis in the Partnership's
assets and liabilities differs for financial and tax reporting purposes. As of
December 31, 2000, the book basis of the Partnership's net assets exceeded its
tax basis by approximately $1,260,300.

                  The accompanying financial statements, which are prepared in
accordance with accounting principles generally accepted in the United States,
differ from the financial statements prepared for tax purposes due to the
different treatment of various items as specified in the Internal Revenue Code.
The net effect of these accounting differences is that net income for the year
ended December 31, 2000, in the financial statements is approximately $59,900
more than tax income of the Partnership for the same period, caused principally
by timing differences in depreciation expense.


                                      F-8
<PAGE>   43


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST

                  Net income per unit of limited partnership interest is based
on the average number of units outstanding during the period presented. For this
purpose, net income has been allocated 99% to the limited partners and 1% to the
general partners. The general partners do not own units of partnership interest
in the Partnership, but rather holds a participation interest in the income,
losses and distributions of the Partnership.

SEGMENTS

                  The Partnership has one segment, cable services.

USE OF ESTIMATES

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

NOTE 2 - PARTNERSHIP MATTERS

                  The Partnership was formed on July 3, 1984, to acquire,
construct, improve, develop and operate cable television systems in various
locations in the United States. The partnership agreement provides for Enstar
Communications Corporation (the "Corporate General Partner") and Robert T.
Graff, Jr. to be the general partners and for the admission of limited partners
through the sale of interests in the Partnership.

                  On September 30, 1988, Falcon Cablevision, a California
limited partnership, purchased all of the outstanding capital stock of the
Corporate General Partner. On September 30, 1998, Falcon Holding Group, L.P.
("FHGLP") acquired ownership of the Corporate General Partner from Falcon
Cablevision. Simultaneously with the closing of that transaction, FHGLP
contributed all of its existing cable television system operations to Falcon
Communications, L.P. ("FCLP"), a California limited partnership and successor to
FHGLP. FHGLP served as the managing partner of FCLP, and the general partner of
FHGLP was Falcon Holding Group, Inc., a California corporation ("FHGI"). On
November 12, 1999, Charter Communications Holding Company, LLC, ("Charter"),
acquired the ownership of FCLP and the Corporate General Partner. The Corporate
General Partner, Charter and affiliated companies are responsible for the
day-to-day management of the Partnership and its operations.

                  The Partnership was formed with an initial capital
contribution of $1,100 comprising $1,000 from the Corporate General Partner and
$100 from the initial limited partner. Sale of interests in the Partnership
began in January 1985, and the initial closing took place in October 1985. The
Partnership continued to raise capital until $7,500,000 (the maximum) was sold
by January 1986.


                                      F-9
<PAGE>   44


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - PARTNERSHIP MATTERS (CONTINUED)

                  The amended partnership agreement generally provides that all
cash distributions (as defined) be allocated 1% to the general partners and 99%
to the limited partners until the limited partners have received aggregate cash
distributions equal to their original capital contributions ("Capital Payback").
The partnership agreement also provides that all partnership profits, gains,
operational losses, and credits (all as defined) be allocated 1% to the general
partners and 99% to the limited partners until the limited partners have been
allocated net profits equal to the amount of cash flow required for Capital
Payback. After the limited partners have received cash flow equal to their
initial investments, the general partners will receive a 1% allocation of cash
flow from sale or liquidation of a system until the limited partners have
received an annual simple interest return of at least 18% of their initial
investments less any distributions from previous system sales and cash
distributions from operations. Thereafter, the respective allocations will be
made 15% to the general partners and 85% to the limited partners. Any losses
from system sales or exchanges shall be allocated first to all partners having
positive capital account balances (based on their respective capital accounts)
until all such accounts are reduced to zero and thereafter to the Corporate
General Partner. All allocations to individual limited partners will be based on
their respective limited partnership ownership interests.

                  Upon the disposition of substantially all of the Partnership
assets, gains shall be allocated first to the limited partners having negative
capital account balances until their capital accounts are increased to zero,
next equally among the general partners until their capital accounts are
increased to zero, and thereafter as outlined in the preceding paragraph. Upon
dissolution of the Partnership, any negative capital account balances remaining
after all allocations and distributions are made must be funded by the
respective partners. The partnership agreement limits the amount of debt the
Partnership may incur.

NOTE 3 - SALE OF PARTNERSHIP ASSETS

                  In accordance with the partnership agreement, the Corporate
General Partner has implemented a plan for liquidating the Partnership. On
August 8, 2000 (as amended on September 29, 2000), the Partnership, together
with certain affiliates (collectively, the "Sellers") entered into a purchase
and sale agreement (the "Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership (the "Purchaser"). The Agreement
provides for the Purchaser to acquire the assets comprising the Partnership's
cable systems serving Hillsboro, Illinois, and Malden, Missouri, as well as
certain assets of other affiliates.

                  The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $95,574,600 in cash (subject to normal closing adjustments).
Of that amount, $15,770,600 (subject to normal closing adjustments) is payable
to the Partnership. The allocation of the purchase price among each of the
Sellers was assigned by the Purchaser for each of the systems.


                                      F-10
<PAGE>   45


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 3 - SALE OF PARTNERSHIP ASSETS (CONTINUED)

                  The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all the Sellers; (b) receipt of
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the limited partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the limited partners of
the Partnership and the other selling affiliates voting to approve the sale.
Furthermore, the Partnership is currently negotiating additional amendments to
the purchase and sale agreement with the Purchaser. Accordiingly, there can be
no assurance that the sale will close.


NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

                  Property, plant and equipment consists of the following as of
December 31, 2000:

<TABLE>
<S>                                                             <C>
          Cable distribution systems                            $  10,699,000
          Land and improvements                                        17,000
          Vehicles, furniture and equipment                           412,000
                                                                -------------
                                                                   11,128,000

          Less accumulated depreciation                            (8,379,200)
                                                                -------------
                                                                $   2,748,800
                                                                =============
</TABLE>

                  Depreciation expense for the year ended December 31, 2000, was
$443,900.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

LITIGATION

                  The Partnership is a party to lawsuits and claims that arose
in the ordinary course of conducting its business. In the opinion of management,
after consulting with legal counsel, the outcome of these lawsuits and claims
will not have a material adverse effect on the Partnership's financial position
or results of operations.



                                      F-11
<PAGE>   46


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

REGULATION IN THE CABLE TELEVISION INDUSTRY

                  The cable television industry is subject to extensive
regulation at the federal, local and, in some instances, state levels. The Cable
Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and
together with the 1984 Cable Act, the "Cable Acts,"), and the Telecommunications
Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the
development and regulation of cable television systems. The Federal
Communications Commission (FCC) has principal responsibility for implementing
the policies of the Cable Acts. Many aspects of such regulation are currently
the subject of judicial proceedings and administrative or legislative proposals.
Legislation and regulations continue to change, and the Partnership cannot
predict the impact of future developments on the cable television industry.

                  The 1992 Cable Act and the FCC's rules implementing that act
generally have increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local or state franchise authorities. The Cable Acts and the
corresponding FCC regulations have established rate regulations.

                  The 1992 Cable Act permits certified local franchising
authorities to order refunds of basic service tier rates paid in the previous
12-month period determined to be in excess of the maximum permitted rates.
During 2000, the amounts refunded by the Partnership have been insignificant.
The Partnership may be required to refund additional amounts in the future.

                  The Partnership believes that it has complied in all material
respects with the provisions of the 1992 Cable Act, including the rate setting
provisions promulgated by the FCC. However, in jurisdictions that have chosen
not to certify, refunds covering the previous 12-month period may be ordered
upon certification if the Partnership is unable to justify its basic rates. The
Partnership is unable to estimate at this time the amount of refunds, if any,
that may be payable by the Partnership in the event certain of its rates are
successfully challenged by franchising authorities or found to be unreasonable
by the FCC. The Partnership does not believe that the amount of any such refunds
would have a material adverse effect on the financial position or result of
operations of the Partnership.

                  The 1996 Telecom Act, among other things, immediately
deregulated the rates for certain small cable operators and in certain limited
circumstances rates on the basic service tier, and as of March 31, 1999,
deregulated rates on the cable programming service tier (CPST). The FCC has
taken the position that it will still adjudicate pending CPST complaints but
will strictly limit its review, and possible refund orders, to the time period
predating the sunset date, March 31, 1999. The Partnership does not believe any
adjudication regarding their pre-sunset complaints will have a material adverse
effect on the Partnership's financial position or result of operations.


                                      F-12
<PAGE>   47


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

                  A number of states subject cable television systems to the
jurisdiction of centralized state governmental agencies, some of which impose
regulation of a character similar to that of a public utility. State
governmental agencies are required to follow FCC rules when prescribing rate
regulation, and thus, state regulation of cable television rates is not allowed
to be more restrictive than the federal or local regulation.

INSURANCE

                  The Partnership has third party insurance coverage to cover
damage to cable distribution plant and subscriber connections and against
business interruptions resulting from such damage. This coverage is subject to a
significant annual deductible which applies to all of the cable television
properties including the Partnership.

                  Approximately 72.7% of the Partnership's subscribers are
served by its system in Hillsboro, Illinois, and neighboring communities.
Significant damage to the system due to seasonal weather conditions or other
events could have a material adverse effect on the Partnership's liquidity and
cash flows. The Partnership continues to purchase insurance coverage in amounts
its management views as appropriate for all other property, liability,
automobile, workers' compensation and other types of insurable risks.

NOTE 6 - EMPLOYEE BENEFIT PLAN

                  The Partnership participates in a cash or deferred profit
sharing plan (the "Profit Sharing Plan") sponsored by a subsidiary of the
Corporate General Partner, which covers substantially all of its employees. The
Profit Sharing Plan provides that each participant may elect to make a
contribution in an amount up to 15% of the participant's annual compensation
which otherwise would have been payable to the participant as salary. Effective
January 1, 1999, the Profit Sharing Plan was amended, whereby the Partnership
would make an employer contribution equal to 100% of the first 3% and 50% of the
next 2% of the participants' contributions. No contribution was made during
2000.

NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

                  The Partnership has a management and service agreement (the
"Management Agreement") with Enstar Cable Corporation (the "Manager"), a wholly
owned subsidiary of the Corporate General Partner, pursuant to which the
Partnership pays a monthly management fee of 5% of gross revenues to the
Manager. Management fee expense for the year ended December 31, 2000,
approximated $195,800. No management fee is payable to the Manager by the
Partnership and management fees are non-interest bearing.

                  The Management Agreement also provides that the Partnership
reimburse the Manager for direct expenses incurred on behalf of the Partnership
and the Partnership's allocable share of the Manager's operational costs.
Additionally, Charter and its affiliates provide other management and
operational services for the Partnership. These expenses are charged to the
properties served based primarily on the Partnership's allocable share of
operational costs associated with the services provided. The total amount
charged to the Partnership for these costs for the year ended December 31, 2000,
approximated $442,700. There is no duplication of reimbursed expenses to the
Manager.


                                      F-13
<PAGE>   48


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)

                  Substantially all programming services had been purchased
through Charter. Charter charges the Partnership for these costs based on its
costs. The Partnership recorded programming fee expense of $761,100 for the year
ended December 31, 2000. Programming fees are included in service costs in the
statement of operations.

                  The cable system in one of the Partnership's franchise areas
does not have head-end equipment to receive and retransmit its cable television
signal. The system relies on another partnership managed by the Corporate
General Partner with systems located in neighboring communities to provide its
cable television signal. The Partnership is not charged a fee for this service.

NOTE 8 - RECENTLY ISSUED ACCOUNTING STANDARDS

                  Statement of Financial Accounting Standards Board (SFAS) No.
133, Accounting for Derivative Instruments and Hedging Activities, as amended by
SFAS 137, Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133, and SFAS 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities, is
effective for the Partnership as of January 1, 2001. SFAS 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value and
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. The Partnership has no derivative instruments.
Adoption of these new accounting standards did not impact the financial
statements of the Partnership.


                                      F-14
<PAGE>   49


                         REPORT OF INDEPENDENT AUDITORS



Partners
Enstar Income Program  II-2, L.P. (A Georgia Limited Partnership):

We have audited the accompanying balance sheet of Enstar Income Program II-2,
L.P. (a Georgia Limited Partnership) as of December 31, 1999, and the related
statements of operations, partnership capital (deficit), and cash flows for each
of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Enstar Income Program II-2,
L.P. at December 31, 1999, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.



                                                 /s/   ERNST & YOUNG LLP



Los Angeles, California,
   March 24, 2000


                                      F-15
<PAGE>   50


                        ENSTAR INCOME PROGRAM II-2, L.P.


                     BALANCE SHEET - AS OF DECEMBER 31, 1999


<TABLE>
<S>                                                                                     <C>
ASSETS:
   Cash and cash equivalents                                                            $5,752,700
   Accounts receivable, less allowance of $2,200 for possible losses                        74,600
   Prepaid expenses and other assets                                                       107,200
   Property, plant and equipment, less accumulated depreciation and amortization         2,883,000
   Franchise cost, net of accumulated amortization of $1,329,300                            72,500
   Deferred charges, net                                                                       700
                                                                                        ----------
                                                                                        $8,890,700
                                                                                        ==========

                                         LIABILITIES AND PARTNERSHIP CAPITAL

LIABILITIES:
   Accounts payable                                                                     $  239,600
   Due to affiliates                                                                       257,200
                                                                                        ----------
           Total liabilities                                                               496,800
                                                                                        ----------

COMMITMENTS AND CONTINGENCIES

PARTNERSHIP CAPITAL (DEFICIT):
   General partners                                                                         10,200
   Limited partners                                                                      8,383,700
                                                                                        ----------
           Total partnership capital                                                     8,393,900
                                                                                        ----------
                                                                                        $8,890,700
                                                                                        ==========
</TABLE>


                 See accompanying notes to financial statements.


                                      F-16
<PAGE>   51


                        ENSTAR INCOME PROGRAM II-2, L.P.


                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                 Year Ended December 31
                                                                              ----------------------------
                                                                                  1998            1999
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
REVENUES                                                                      $  3,968,300    $  3,928,800
                                                                              ------------    ------------
OPERATING EXPENSES:
   Service costs                                                                 1,252,000       1,302,800
   General and administrative expenses                                             405,500         478,500
   General Partner management fees and reimbursed expenses                         561,500         526,700
   Depreciation and amortization                                                   671,100         625,600
                                                                              ------------    ------------
                                                                                 2,890,100       2,933,600
                                                                              ------------    ------------
           Operating income                                                      1,078,200         995,200
                                                                              ------------    ------------
OTHER INCOME (EXPENSE):
   Interest expense                                                                (15,300)        (18,400)
   Interest income                                                                 175,100         225,200
   Loss on sale of cable assets                                                     (1,500)             --
                                                                              ------------    ------------
                                                                                   158,300         206,800
                                                                              ------------    ------------
           Net income                                                         $  1,236,500    $  1,202,000
                                                                              ============    ============

NET INCOME ALLOCATED TO GENERAL PARTNERS                                      $     12,400    $     12,000
                                                                              ============    ============

NET INCOME ALLOCATED TO LIMITED PARTNERS                                      $  1,224,100    $  1,190,000
                                                                              ============    ============

NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST                           $      40.97    $      39.83
                                                                              ============    ============

WEIGHTED AVERAGE LIMITED PARTNERSHIP UNITS OUTSTANDING DURING THE YEAR              29,880          29,880
                                                                              ============    ============
</TABLE>


                 See accompanying notes to financial statements.


                                      F-17
<PAGE>   52


                        ENSTAR INCOME PROGRAM II-2, L.P.


                   STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)



<TABLE>
<CAPTION>
                                                         General         Limited
                                                         Partners        Partners        Total
                                                       ------------    ------------   ------------
<S>                                                    <C>             <C>            <C>
PARTNERSHIP CAPITAL (DEFICIT), January 1, 1998         $    (14,200)   $  5,969,600   $  5,955,400

  Net income for year                                        12,400       1,224,100      1,236,500
                                                       ------------    ------------   ------------
PARTNERSHIP CAPITAL (DEFICIT), December 31, 1998             (1,800)      7,193,700      7,191,900

   Net income for year                                       12,000       1,190,000      1,202,000
                                                       ------------    ------------   ------------
PARTNERSHIP CAPITAL (DEFICIT), December 31, 1999       $     10,200    $  8,383,700   $  8,393,900
                                                       ============    ============   ============
</TABLE>


                 See accompanying notes to financial statements.



                                      F-18
<PAGE>   53



                        ENSTAR INCOME PROGRAM II-2, L.P.


                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                   Year Ended December 31
                                                                                ----------------------------
                                                                                    1998            1999
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                   $  1,236,500    $  1,202,000
   Adjustments to reconcile net income to net cash provided by operating
    activities-
       Depreciation and amortization                                                 671,100         625,600
       Loss on sale of cable assets                                                    1,500              --
       Decrease from changes in-
         Accounts receivable, prepaid expenses and other assets                     (149,200)        (60,200)
         Accounts payable and due to affiliates                                      (88,600)       (108,600)
                                                                                ------------    ------------
           Net cash provided by operating activities                               1,671,300       1,658,800
                                                                                ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                             (273,000)       (367,300)
   Increase in intangible assets                                                      (8,800)         (7,100)
                                                                                ------------    ------------
           Net cash used in investing activities                                    (281,800)       (374,400)
                                                                                ------------    ------------
           Net increase in cash and cash equivalents                               1,389,500       1,284,400

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     3,078,800       4,468,300
                                                                                ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                        $  4,468,300    $  5,752,700
                                                                                ============    ============
</TABLE>

                 See accompanying notes to financial statements.


                                      F-19
<PAGE>   54


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

FORM OF PRESENTATION

                  Enstar Income Program II-2, L.P., a Georgia limited
partnership (the "Partnership"), owns and operates cable television systems in
rural areas of Illinois and Missouri.

                  The financial statements do not give effect to any assets that
the partners may have outside of their interest in the Partnership, nor to any
obligations, including income taxes of the partners.

CASH EQUIVALENTS

                  For purposes of the statements of cash flows, the Partnership
considers all highly liquid debt instruments purchased with an initial maturity
of three months or less to be cash equivalents. The carrying value of cash and
cash equivalents approximates fair value due to the short maturity of these
instruments.

                  The Partnership has no cash equivalents at December 31, 1999.

PROPERTY, PLANT AND EQUIPMENT

                  Property, plant and equipment are stated at cost. Direct costs
associated with installations in homes not previously served by cable are
capitalized as part of the distribution system, and reconnects are expensed as
incurred. For financial reporting, depreciation and amortization is computed
using the straight-line method over the following estimated useful lives:

<TABLE>
<S>                                                    <C>
                  Cable television systems                5-15 years
                  Vehicles                                   3 years
                  Furniture and equipment                  5-7 years
                  Leasehold improvements               Life of lease
</TABLE>

FRANCHISE COST

                  The excess of cost over the fair values of tangible assets and
customer lists of cable television systems acquired represents the cost of
franchises. In addition, franchise cost includes capitalized costs incurred in
obtaining new franchises and the renewal of existing franchises. These costs are
amortized using the straight-line method over the lives of the franchises,
ranging up to 15 years. The Partnership periodically evaluates the amortization
periods of these intangible assets to determine whether events or circumstances
warrant revised estimates of useful lives. Costs relating to unsuccessful
franchise applications are charged to expense when it is determined that the
efforts to obtain the franchise will not be successful. The Partnership is in
the process of negotiating the renewal of expired franchise agreements for three
of the Partnership's 11 franchises, which include approximately 32% of the
Partnership's basic subscribers at December 31, 1999.

DEFERRED CHARGES

                  Deferred charges are amortized using the straight-line method
over two years.


                                      F-20
<PAGE>   55


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

RECOVERABILITY OF ASSETS

                  The Partnership assesses on an ongoing basis the
recoverability of intangible and capitalized plant assets based on estimates of
future undiscounted cash flows compared to net book value. If the future
undiscounted cash flow estimate were less than net book value, net book value
would then be reduced to estimated fair value, which would generally approximate
discounted cash flows. The Partnership also evaluates the amortization periods
of assets, including franchise costs and other intangible assets, to determine
whether events or circumstances warrant revised estimates of useful lives.

REVENUE RECOGNITION

                  Revenues from customer fees, equipment rental and advertising
are recognized in the period that services are delivered. Installation revenue
is recognized in the period the installation services are provided to the extent
of direct selling costs. Any remaining amount is deferred and recognized over
the estimated average period that customers are expected to remain connected to
the cable television system.

INCOME TAXES

                  As a partnership, Enstar Income Program II-2, L.P. pays no
income taxes. All of the income, gains, losses, deductions and credits of the
Partnership are passed through to its partners. The basis in the Partnership's
assets and liabilities differs for financial and tax reporting purposes. At
December 31, 1999, the book basis of the Partnership's net assets exceeded its
tax basis by $1,164,100.

                  The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, differ from the
financial statements prepared for tax purposes due to the different treatment of
various items as specified in the Internal Revenue Code. The net effect of these
accounting differences is that net income for 1999 in the financial statements
is $131,300 more than tax income of the Partnership for the same period, caused
principally by timing differences in depreciation expense.

ADVERTISING COSTS

                  All advertising costs are expensed as incurred.

EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST

                  Earnings and losses have been allocated 99% to the limited
partners and 1% to the general partners. Earnings and losses per unit of limited
partnership interest is based on the weighted average number of units
outstanding during the year. The General Partners do not own units of
Partnership interest in the Partnership, but rather hold a participation
interest in the income, losses and distributions of the Partnership.


                                      F-21
<PAGE>   56


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

                  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.


RECLASSIFICATIONS

                  Certain prior year amounts have been reclassified to conform
to the 1999 presentation.

NOTE 2 - PARTNERSHIP MATTERS

                  The Partnership was formed on July 3, 1984, to acquire,
construct, improve, develop and operate cable television systems in various
locations in the United States. The partnership agreement provides for Enstar
Communications Corporation (the "Corporate General Partner") and Robert T.
Graff, Jr. to be the general partners and for the admission of limited partners
through the sale of interests in the Partnership.

                  On September 30, 1998, Falcon Holding Group, L.P. ("FHGLP")
acquired ownership of the Corporate General Partner from Falcon Cablevision.
Simultaneously with the closing of that transaction, FHGLP contributed all of
its existing cable television system operations to Falcon Communications, L.P.
("FCLP"), a California limited partnership and successor to FHGLP. FHGLP served
as the managing partner of FCLP, and the general partner of FHGLP was Falcon
Holding Group, Inc., a California corporation ("FHGI"). On November 12, 1999,
Charter Communications Holding Company, LLC, ("Charter"), acquired the ownership
of FCLP and the Corporate General Partner. The Corporate General Partner,
Charter and affiliated companies are responsible for the day-to-day management
of the Partnership and its operations.

                  The Partnership was formed with an initial capital
contribution of $1,100 comprising $1,000 from the Corporate General Partner and
$100 from the initial limited partner. Sale of interests in the Partnership
began in January 1985, and the initial closing took place in October 1985. The
Partnership continued to raise capital until $7,500,000 (the maximum) was sold
by January 1986.

                  The amended partnership agreement generally provides that all
cash distributions (as defined) be allocated 1% to the general partners and 99%
to the limited partners until the limited partners have received aggregate cash
distributions equal to their original capital contributions ("Capital Payback").
The partnership agreement also provides that all partnership profits, gains,
operational losses, and credits (all as defined) be allocated 1% to the general
partners and 99% to the limited partners until the limited partners have been
allocated net profits equal to the amount of cash flow required for Capital
Payback. After the limited partners have received cash flow equal to their
initial investments, the general partners will receive a 1% allocation of cash
flow from sale or liquidation of a system until the limited partners have
received an annual simple interest return of at least 18% of their initial
investments less any distributions from previous system sales and cash
distributions from operations. Thereafter, the respective allocations will be
made 15%


                                      F-22
<PAGE>   57


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - PARTNERSHIP MATTERS (CONTINUED)

to the general partners and 85% to the limited partners. Any losses from system
sales or exchanges shall be allocated first to all partners having positive
capital account balances (based on their respective capital accounts) until all
such accounts are reduced to zero and thereafter to the Corporate General
Partner. All allocations to individual limited partners will be based on their
respective limited partnership ownership interests.

                  Upon the disposition of substantially all of the Partnership
assets, gains shall be allocated first to the limited partners having negative
capital account balances until their capital accounts are increased to zero,
next equally among the general partners until their capital accounts are
increased to zero, and thereafter as outlined in the preceding paragraph. Upon
dissolution of the Partnership, any negative capital account balances remaining
after all allocations and distributions are made must be funded by the
respective partners. The partnership agreement limits the amount of debt the
Partnership may incur.

NOTE 3 - POTENTIAL SALE OF PARTNERSHIP ASSETS

                  In accordance with the partnership agreement, the Corporate
General Partner has implemented a plan for liquidating the Partnership. In
connection with that strategy, the Corporate General Partner has entered into an
agreement with a cable broker to market the Partnership's cable systems to third
parties. Should the Partnership receive offers from third parties for such
assets, the Corporate General Partner will prepare a proxy for submission to the
limited partners for the purpose of approving or disapproving such sale. Should
such a sale be approved, the Corporate General Partner will proceed to liquidate
the Partnership following the settlement of its final liabilities. The Corporate
General Partner can give no assurance, however, that it will be able to generate
a sale of the Partnership's cable assets. The financial statements do not
reflect any adjustments that may result from the outcome of this uncertainty.

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

                  As of December 31, 1999, property, plant and equipment consist
of:

<TABLE>
<S>                                                                         <C>
      Cable television systems                                              $ 10,262,300
      Vehicles, furniture and equipment, and leasehold improvements              563,700
                                                                            ------------
                                                                              10,826,000

      Less accumulated depreciation and amortization                          (7,943,000)
                                                                            ------------
                                                                            $  2,883,000
                                                                            ============
</TABLE>


                                      F-23
<PAGE>   58


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 5 - COMMITMENTS AND CONTINGENCIES

                  The Partnership leases buildings and tower sites associated
with the systems under operating leases expiring in various years through 2012.

                  Future minimum rental payments under non-cancelable operating
leases that have terms in excess of one year as of December 31, 1999, are as
follows:


<TABLE>
<CAPTION>
                        Year                                Amount
                  ---------------                          ---------
<S>                                                        <C>
                  2000                                     $   5,300
                  2001                                         5,300
                  2002                                         5,300
                  2003                                         5,300
                  2004                                         2,900
                  Thereafter                                   9,200
                                                           ---------
                                                           $  33,300
                                                           =========
</TABLE>

                  Rentals, other than pole rentals, charged to operations
amounted to $7,900 and $7,800 in 1998 and 1999, respectively. Pole rentals were
$42,900 and $43,600 in 1998 and 1999, respectively.

                  The Partnership is subject to regulation by various federal,
state and local government entities. The Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Cable Act") provides for, among other
things, federal and local regulation of rates charged for basic cable service,
cable programming service tiers ("CPSTs") and equipment and installation
services. Regulations issued in 1993 and significantly amended in 1994 by the
Federal Communications Commission (the "FCC") have resulted in changes in the
rates charged for the Partnership's cable services. The Partnership believes
that compliance with the 1992 Cable Act has had a significant negative impact on
its operations and cash flow. It also believes that any potential future
liabilities for refund claims or other related actions would not be material.
The Telecommunications Act of 1996 (the "1996 Telecom Act") was signed into law
on February 8, 1996. As it pertains to cable television, the 1996 Telecom Act,
among other things, (i) ends the regulation of certain CPSTs in 1999; (ii)
expands the definition of effective competition, the existence of which
displaces rate regulation; (iii) eliminates the restriction against the
ownership and operation of cable systems by telephone companies within their
local exchange service areas; and (iv) liberalizes certain of the FCC's
cross-ownership restrictions.

                  Beginning in August 1997, the Corporate General Partner
elected to self-insure the Partnership's cable distribution plant and subscriber
connections against property damage as well as possible business interruptions
caused by such damage. The decision to self-insure was made due to significant
increases in the cost of insurance coverage and decreases in the amount of
insurance coverage available.


                                      F-24
<PAGE>   59


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

                  In October 1998, FCLP reinstated third party insurance
coverage for all of the cable television properties owned or managed by FCLP to
cover damage to cable distribution plant and subscriber connections and against
business interruptions resulting from such damage. This coverage is subject to a
significant annual deductible which applies to all of the cable television
properties owned or formerly managed by FCLP through November 12, 1999, and
currently managed by Charter, including the Partnership.

                  Approximately 73% of the Partnership's subscribers are served
by its system in Hillsboro, Illinois, and neighboring communities. Significant
damage to the system due to seasonal weather conditions or other events could
have a material adverse effect on the Partnership's liquidity and cash flows.
The Partnership continues to purchase insurance coverage in amounts its
management views as appropriate for all other property, liability, automobile,
workers' compensation and other types of insurable risks.

                  In the states of Missouri and Illinois, customers have filed
punitive class action lawsuits on behalf of all persons residing in the states
who are or were customers of the Partnerships' cable television service, and who
have been charged a fee for delinquent payment of their cable bill. The actions
challenge the legality of the processing fee and seek declaratory judgment,
injunctive relief and unspecified damages. At present, the Partnership is not
able to project the outcome of the actions. All of the Partnership's basic
subscribers reside in Missouri and Illinois where the claims have been filed.

NOTE 6 - EMPLOYEE BENEFIT PLAN

                  The Partnership participates in a cash or deferred profit
sharing plan (the "Profit Sharing Plan") sponsored by a subsidiary of the
Corporate General Partner, which covers substantially all of its employees. The
Profit Sharing Plan provides that each participant may elect to make a
contribution in an amount up to 15% of the participant's annual compensation
which otherwise would have been payable to the participant as salary. Prior to
1999, the Partnership's contribution to the Profit Sharing Plan, as determined
by management, was discretionary but could not exceed 15% of the annual
aggregate compensation (as defined) paid to all participating employees.
Effective January 1, 1999, the Profit Sharing Plan was amended, whereby the
Partnership would make an employer contribution equal to 100% of the first 3%
and 50% of the next 2% of the participants' contributions. A contribution of
$1,200 was made during 1999. There were no contributions charged against
operations of the Partnership for the Profit Sharing Plan in 1998.

NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

                  The Partnership has a management and service agreement with a
wholly owned subsidiary of the Corporate General Partner (the "Manager") for a
monthly management fee of 5% of gross receipts, as defined, from the operation
of the Partnership. Management fee expense was $198,400 and $196,400 in 1998,
1999, respectively.

                  In addition to the monthly management fee, the Partnership
reimburses the Manager for direct expenses incurred on behalf of the Partnership
and for the Partnership's allocable share of operational costs associated with
services provided by the Manager. All cable television properties managed by the
Corporate General Partner and its subsidiaries are charged a proportionate share
of these expenses. Charter and its affiliates provide management services for
the Partnership. Such services were provided by FCLP and its affiliates prior to
November 12, 1999. Corporate office allocations and district office expenses are
charged to


                                      F-25
<PAGE>   60


                        ENSTAR INCOME PROGRAM II-2, L.P.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)

the properties served based primarily on the respective percentage of basic
customers or homes passed (dwelling units within a system) within the designated
service areas. Reimbursed expenses were $363,100 and $330,300 in 1998 and 1999,
respectively.

                  The Partnership also receives certain system operating
management services from an affiliate of the Corporate General Partner in
addition to the Manager, due to the fact that there are no such employees
directly employed by the Partnership's cable systems. The Partnership reimburses
the affiliate for its allocable share of the affiliate's operational costs. The
total amount charged to the Partnership for these costs approximated $68,000 and
$62,700 in 1998 and 1999, respectively. No management fee is payable to the
affiliate by the Partnership and there is no duplication of reimbursed expenses
and costs paid to the Manager.

                  Substantially all programming services have been purchased
through FCLP, and since November 12, 1999, have been purchased through Charter.
FCLP charged the Partnership for these costs based on an estimate of what the
Corporate General Partner could negotiate for such programming services for the
15 partnerships managed by the Corporate General Partner as a group. Charter
charges the Partnership for these costs based on its costs. Programming fee
expense was $879,500 and $935,200 in 1998 and 1999, respectively. Programming
fees are included in service costs in the statements of operations.

                  The cable system in one of the Partnership's franchise areas
does not have head-end equipment to receive and retransmit its cable television
signal. The system relies on another partnership managed by the Corporate
General Partner with systems located in neighboring communities to provide its
cable television signal. The Partnership is not charged a fee for this service.

NOTE 8 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                  During the years ended December 31, 1998 and 1999, cash paid
for interest amounted to $15,300 and $18,400, respectively.


                                      F-26
<PAGE>   61


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER   DESCRIPTION
-------  ------------
<S>      <C>
3        Second Amended and Restated Agreement of Limited Partnership of Enstar
         Income Program II-2, L.P., dated as of August 1, 1988.(3)

3.1      Amendment to Section 5.3.1 dated December 17, 1992. Incorporated by
         reference to the exhibits to the Registrant's Current Report on Form
         8-K dated December 17, 1992.

10.1     Management Agreement between Enstar Income Program II-2 and Enstar
         Cable Corporation.(1)

10.2     Credit Facility dated January 9, 1987 between Enstar Income Program
         II-2 and The Indiana National Bank.(2)

10.3     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Hillsboro, IL.(2)

10.4     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Jerseyville, IL.(2)

10.5     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Nokomis, IL.(2)

10.6     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Witt, IL.(2)

10.7     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Malden, MO.(2)

10.8     Franchise Ordinance and related documents thereto granting a
         non-exclusive community antenna television franchise for the City of
         Campbell, MO.(2)

10.9     Service Agreement between Enstar Communications Corporation, Enstar
         Cable Corporation, and Falcon Holding Group, Inc. dated as of October
         1, 1988.(3)

10.10    Ordinance No. 1162 of the City of Pana, Illinois, authorizing an
         extension of a cable television franchise and authorizing and renewing
         an agreement between the City of Pana, Illinois, and Enstar Cable.
         Passed and approved February 8, 1993.(4)

10.11    Franchise Agreement between the City of Pana, Illinois, and Enstar
         Communications Corporation and Enstar Income Program II-2.(5)

10.12    A resolution of the City Council of Malden, Missouri extending the
         Cable Television Franchise of Enstar Income Program II-2. Passed and
         approved September 2, 1993.(6)

10.13    A resolution of the City Council of Witt, Illinois, extending the Cable
         Television Franchise of Enstar Income Program II-2. Passed and adopted
         September 10, 1993.(6)

10.14    Loan Agreement between Enstar Income Program II-2 and
         Kansallis-Osake-Pankki dated December 9, 1993.(7)

10.15    Franchise Agreement and related documents thereto granting a
         non-exclusive community antenna television system franchise for the
         City of Jerseyville.(8)

10.16    Franchise Ordinance granting a non-exclusive community antenna
         television system franchise for the City of Campbell, Missouri.(9)

10.17    Franchise Ordinance granting a non-exclusive community antenna
         television system franchise for the City of Malden, Missouri.(10)
</TABLE>


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<PAGE>   62



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER   DESCRIPTION
-------  ------------
<S>      <C>
10.18    Asset Purchase Agreement, dated August 8, 2000, by and among Multimedia
         Acquisition Corp., as Buyer, and Enstar Income Program II-1, L.P.,
         Enstar Income Program II-2, L.P., Enstar Income Program IV-3, L.P.,
         Enstar Income/Growth Program Six-A, L.P., Enstar IX, Ltd., Enstar XI,
         Ltd., Enstar IV/PBD Systems Venture, Enstar Cable of Cumberland Valley
         and Enstar Cable of Macoupin County, as Sellers.(11)

10.19    Amendment dated September 29, 2000, of the Asset Purchase Agreement
         dated August 8, 2000, by and among Multimedia Acquisition Corp., as
         Buyer, and Enstar Income Program II-1, L.P., Enstar Income Program
         II-2, L.P., Enstar Income Program IV-3, L.P., Enstar Income/Growth
         Program Six-A, L.P., Enstar IX, Ltd., Enstar XI, Ltd., Enstar IV/PBD
         Systems Venture, Enstar Cable of Cumberland Valley and Enstar Cable of
         Macoupin County, as Sellers.(12)

21.1     Subsidiaries: None

</TABLE>


                               FOOTNOTE REFERENCES


(1)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1986.

(2)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1987.

(3)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1988.

(4)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1992.

(5)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-14505 for the quarter ended June 30,
        1993.

(6)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-14505 for the quarter ended September
        30, 1993.

(7)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1993.

(8)     Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-14505 for the quarter ended June 30,
        1994.

(9)     Incorporated by reference to the exhibits to the Registrant's Annual
        Report on Form 10-K, File No. 0-14505 for the fiscal year ended December
        31, 1999.

(10)    Incorporated by reference to the exhibits to the Registrant's Quarterly
        Report on Form 10-Q, File No. 0-14505 for the quarter ended March 31,
        2000.

(11)    Incorporated by reference to the exhibits to the Current Report on Form
        10-Q of Enstar Income Program II-1, L.P., File No. 0-14508 for the
        quarter ended June 30, 2000.

(12)    Incorporated by reference to the exhibits to the Current Report on Form
        10-Q of Enstar Income Program IV-1, L.P., File No. 0-15705 for the
        quarter ended September 30, 2000.


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