================================================================================
                       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, 1999
                                       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 0-14508

                        ENSTAR INCOME PROGRAM II-1, L.P.
                        --------------------------------
             (Exact name of Registrant as specified in its charter)

                 Georgia                                       58-1628877
-----------------------------------------          -----------------------------
     (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

         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  29,936 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>

                                     PART I

Item 1.           BUSINESS

Introduction
------------

                  Enstar   Income   Program  II-1,   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 6.2 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.  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 all  final  liabilities  of the
partnership. We can give no assurance, however, that we will be able to generate
a sale of the partnership's cable assets.

                  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.

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

*    broadcast television signals of local network,  independent and educational
     stations
*    a limited  number of television  signals from  so-called  "super  stations"
     originating from distant cities, such as WGN
*    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
*    programming  originated  locally by the cable  television  system,  such as
     public, educational and government access programs, and
*    information  displays featuring news,  weather,  stock market and financial
     reports, and public service announcements.

                                      -2-

<PAGE>

                  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. Due to a general
lack of channel  capacity  available  for adding new  channels,  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 own and operate two cable  television  systems that provide
service to customers in the cities of  Taylorville,  Litchfield  and  Gillespie,
Illinois  and  portions of  unincorporated  Christian  County,  Illinois.  As of
December 31, 1999,  we served  approximately  7,100 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 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."

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.  We believe
that given a similar rate, technical, and channel capacity/utilization  profile,
our  cable  television   systems   generally  involve  less  risk  of  increased
competition than systems in large urban cities.  In our markets,  consumers have
access to only a limited number of over-the-air broadcast television signals. In
addition,   these  markets   typically  offer  fewer   competing   entertainment
alternatives than large cities. Nonetheless, we believe that all cable operators
will face  increased  competition  in the future from  alternative  providers of
multi-channel video programming services. See "Competition."

                  Adoption of rules implementing certain provisions of the Cable
Television  Consumer Protection and Competition Act of 1992 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  Telecommunications  Act of 1996 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."

                                      -3-

<PAGE>

                  Clustering

                  We have  sought to  acquire  cable  television  operations  in
communities that are proximate to other owned or affiliated  systems in order to
achieve  the  economies  of scale and  operating  efficiencies  associated  with
regional  "clusters." We believe  clustering can reduce  marketing and personnel
costs and can also reduce capital  expenditures in cases where cable service can
be delivered through a central headend reception facility.

                  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,
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."

                  The  Partnership has completed the rebuild of its cable system
in  Taylorville,  Illinois  and  neighboring  communities  at a  total  cost  of
approximately  $3.5  million  including  approximately  $144,000 in 1999.  Other
capital  expenditures for 1999 were  approximately  $223,300 for the improvement
and upgrade of other  assets,  including  approximately  $118,000  to  introduce
digital  services in the  community of  Gillespie,  Illinois  which was required
under a provision of its franchise agreement.  Capital expenditures budgeted for
2000 are  approximately  $1,590,700  including  an upgrade of our cable plant in
Litchfield,  Illinois at a total estimated cost  of approximately  $1.0 million.
The franchise agreement requires completion of the upgrade by January 2001. This
requirement  is expected to negatively  impact any offers we may receive for our
cable  television  systems.  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  employ  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

                                      -4-

<PAGE>

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.

Description of the Partnership's Systems
----------------------------------------

                  The table below sets forth certain  operating  statistics  for
our cable systems as of December 31, 1999.

<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>
Taylorville, IL        6,155       4,255            69.1%           836          19.6%              $34.74

Litchfield, IL         5,199       2,867            55.1%           531          18.5%              $34.65
                       -----       -----                            ---

Total                 11,354       7,122            62.7%         1,367          19.2%              $37.42
                      ======       =====                          =====
</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, 1999.

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

                                      -5-

<PAGE>

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,  1999,  our  monthly  rates for basic  cable
service for residential  customers,  including certain discounted rates,  ranged
from $22.05 to $25.51 and our premium service rate was $11.95, excluding special
promotions offered  periodically in conjunction with our marketing  programs.  A
one-time  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. As of February 19, 2000, we had one employee,  the cost
of which is charged directly to the  partnership.  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.   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 the 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.  Currently,  our cable  television  systems have an average  channel
capacity of 87, 77% of which is  presently  utilized.  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.  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.  Our current policy is to utilize fiber optic technology
where applicable in rebuild  projects which we undertake.  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.

                                      -6-

<PAGE>

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 15 partnerships  managed by the
corporate general partner as a group (approximately  81,100 basic subscribers at
December  31,  1999).   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
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 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 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.

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."

                                      -7-

<PAGE>

                  As of December  31,  1999,  we operated  cable  systems in six
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, 1999.

                               Number             Number of       Percentage of
             Year of             of                 Basic             Basic
     Franchise Expiration    Franchises          Subscribers       Subscribers
     --------------------    ----------          -----------       -----------

     Prior to 2001                 1                 1,903             26.7%
     2001 - 2005                   2                 3,855             54.1%
     2006 and after                3                 1,225             17.2%
                                   -                 -----             ----

     Total                         6                 6,983             98.0%
                                   =                 =====             ====

                  At  December  31,  1999,  one of the  Partnership's  franchise
agreements was expired, but was renewed subsequent to year end. 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  139  customers,
representing  approximately  2.0% 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."

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.

                                      -8-

<PAGE>

                  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  10  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.  America Online Inc., the nation's leading provider of Internet
services  has  recently  announced  a plan to  invest  $1.5  billion  in  Hughes
Electronics  Corp.,  DirecTV's  parent company,  and these  companies  intend to
jointly market  America  Online's  prospective  Internet  television  service to
DirecTV's DBS 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 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

                                      -9-

<PAGE>

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.

                  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.

                                      -10-

<PAGE>

                            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,  1999,  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,  1999,  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 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

                                      -11-

<PAGE>

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.  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

                                      -12-

<PAGE>

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.

                  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

                                      -13-

<PAGE>

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 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.

                                      -14-

<PAGE>


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

*      equal employment opportunity,

*      subscriber privacy,

*      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 nonduplication,

         (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,

*      registration of cable systems and facilities licensing,

*      maintenance of various records and public inspection files,

*      aeronautical frequency usage,

*      lockbox availability,

*      antenna structure notification,

*      tower marking and lighting,

*      consumer protection and customer service standards,

*      technical standards,

*      consumer electronics equipment compatibility, and

*      emergency alert systems.

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

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

                                      -15-

<PAGE>

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

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

                  Federal law contains  renewal  procedures  designed to protect
incumbent  franchisees against arbitrary denials of renewal. Even if a franchise
is  renewed,  the local  franchising  authority  may seek to impose new and more
onerous  requirements such as significant  upgrades in facilities and service or
increased  franchise  fees as a  condition  of  renewal.  Similarly,  if a local
franchising  authority's consent is required for the purchase or sale of a cable
system or franchise, 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

                                      -16-

<PAGE>

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. Except for the item noted below, management believes
that the outcome of all pending legal  proceedings  will not, in the  aggregate,
have a material adverse effect on our financial condition.

                  In the state of  Illinois,  customers  have  filed a  punitive
class action  lawsuit on behalf of all persons  residing in the state who are or
were customers of the partnership's cable television service,  and who have been
charged a fee for delinquent  payment of their cable bill. The action challenges
the legality of the processing fee and seeks  declaratory  judgment,  injunctive
relief and  unspecified  damages.  At present,  the  partnership  is not able to
project the outcome of the action.  All of the  partnership's  basic subscribers
reside in Illinois where the claim has been filed.

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

                  None.

                                      -17-

<PAGE>

                                     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 960 as of December
31, 1999. 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's
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 other liquidity requirements.

                  We  began  making  periodic  cash   distributions  to  limited
partners from  operations  during 1986, and distributed an aggregate of $374,200
($12.50 per unit) to limited  partners in each year during 1997,  1998 and 1999.
The  Partnership  will  continue to determine the  Partnership's  ability to pay
distributions on a quarter-by-quarter basis.

                  Our  ability  to  pay  distributions,   the  actual  level  of
distributions  and the continuance of  distributions  will depend on a number of
factors,  including: the amount of cash flow from operations,  projected capital
expenditures,  provision for contingent  liabilities,  regulatory or legislative
developments  governing the cable television industry,  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.

                                      -18-

<PAGE>

Item 6.           SELECTED FINANCIAL DATA

                  Set forth below is selected  financial data of the partnership
for the five  years  ended  December  31,  1999.  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,
                                                ------------------------------------------------------------------------------------
OPERATIONS STATEMENT DATA                           1995              1996             1997              1998             1999
                                                --------------    -------------    --------------    -------------    --------------

   <S>                                        <C>              <C>              <C>               <C>              <C>
   Revenues                                   $    2,603,700   $     2,797,500  $     2,994,500   $     3,158,400  $     3,200,400
   Costs and expenses                             (1,390,900)       (1,525,400)      (1,567,100)       (1,743,300)      (1,842,500)
   Depreciation and amortization                    (694,200)         (310,600)        (326,000)         (466,700)        (472,400)
                                                --------------    -------------    --------------    -------------    --------------
   Operating income                                  518,600           961,500        1,101,400           948,400          885,500
   Interest expense                                   (9,000)           (9,100)          (1,600)          (15,100)         (19,400)
   Interest income                                   109,000           118,000          128,800            81,900           93,900
   Gain on sale of cable assets                            -             2,700                -                 -             -
                                                --------------    -------------    --------------    -------------    --------------
   Net income                                 $      618,600   $     1,073,100  $     1,228,600   $     1,015,200  $       960,000
                                                ==============    =============    ==============    =============    ==============
   Distributions to partners                  $      378,000   $       378,000  $       378,000   $       378,000  $       378,000
                                                ==============    =============    ==============    =============    ==============

Per unit of limited
  partnership interest:
   Net income                                 $        20.46   $         35.49  $         40.63   $         33.57  $         31.75
                                                ==============    =============    ==============    =============    ==============
   Distributions                              $        12.50   $         12.50  $         12.50   $         12.50  $         12.50
                                                ==============    =============    ==============    =============    ==============

OTHER OPERATING DATA

   Net cash provided by operating
     activities                               $    1,173,000   $     1,446,400  $     1,505,100   $     1,397,200  $     1,339,700
   Net cash used in investing activities            (465,200)         (876,100)      (2,198,400)         (806,800)        (643,000)
   Net cash used in financing activities            (378,000)         (378,000)        (378,000)         (378,000)        (378,000)
   EBITDA (1)                                      1,212,800         1,272,100        1,427,400         1,415,100        1,357,900
   EBITDA to revenues                                 46.6%             45.5%            47.7%             44.8%            42.4%
   Capital expenditures                       $      408,200   $       869,300  $     2,182,700   $       794,100  $       627,900

                                                                                As of December 31,
                                                ------------------------------------------------------------------------------------
BALANCE SHEET DATA                                  1995              1996             1997              1998             1999
                                                --------------    -------------    --------------    -------------    --------------

   Total assets                               $    4,118,200   $     4,918,400  $     6,015,100   $     6,555,700  $     7,096,500
   General partners' deficit                         (35,700)          (28,800)         (20,300)          (13,900)          (8,100)
   Limited partners' capital                       3,855,300         4,543,500        5,385,600         6,016,400        6,592,600


----------
</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 not consider  EBITDA as an alternative to net
income as an indicator of 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.

                                      -19-

<PAGE>

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 flow. 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

                  1999 Compared to 1998

                  Our revenues  increased from  $3,158,400 to $3,200,400,  or by
1.3%,  for the year ended  December  31, 1999  compared to 1998.  Of the $42,000
increase, $71,200 was due to increases in regulated service rates we implemented
in 1999.  The  increase  was  partially  offset  by a  $15,500  decrease  due to
decreases  in the  number  of  subscriptions  for  basic  service  and a $13,700
decrease in other  revenue  producing  items.  As of December 31,  1999,  we had
approximately 7,100 basic subscribers and 1,400 premium service units.

                  Our service costs  increased from $902,700 to $987,100,  or by
9.3%,  for the year ended  December  31, 1999  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.  Programming
expense  increased  primarily  due to  increases  in rates  charged  by  program
suppliers  and due to  channel  additions  in our  Taylorville,  Illinois  cable
system.

                  Our  general  and   administrative   expenses  increased  from
$343,300 to $359,700,  or by 4.8%, for the year ended December 31, 1999 compared
to 1998,  primarily due to increases in insurance  premiums and customer billing
expenses.

                  Our  management  fees and reimbursed  expenses  decreased from
$497,300 to $495,700, or by less than 1.0%, for the year ended December 31, 1999
compared to 1998.  Management  fees  increased  in direct  relation to increased
revenues  as  described  above.  Reimbursed  expenses  decreased  due  to  lower
allocated personnel costs.

                  Our  depreciation  and  amortization  expense  increased  from
$466,700 to $472,400,  or by 1.2%, for the year ended December 31, 1999 compared
to 1998,  primarily  due to the rebuild of our plant in  Taylorville,  Illinois.
Depreciation  expense  increased  as portions of the system  rebuild were placed
into service.

                                      -20-

<PAGE>

                  Our operating income  decreased from $948,400 to $885,500,  or
by 6.6%, for the year ended December 31, 1999 compared to 1998, primarily due to
increases in programming fees and insurance premiums as described above.

                  Our interest income,  net of interest expense,  increased from
$66,800 to $74,500,  or by 11.5%,  for the year ended December 31, 1999 compared
to 1998, primarily due to higher average cash balances available for investment.

                  Due to the factors  described  above, our net income decreased
from  $1,015,200 to $960,000,  or by 5.4%,  for the year ended December 31, 1999
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 44.8% during 1998 to 42.4% in 1999.  The
decrease was primarily caused by higher  programming fees and insurance premiums
as described above. EBITDA decreased from $1,415,100 to $1,357,900,  or by 4.0%,
as a result.

                  1998 Compared to 1997

                  Our revenues  increased from  $2,994,500 to $3,158,400,  or by
5.5%,  for the year ended  December 31, 1998  compared to 1997.  Of the $163,900
increase,  $112,500  was due to increases  in  regulated  service  rates that we
implemented  in 1997,  $48,100 was due to increases in other  revenue  producing
items, including charges for franchise fees that the Partnership is permitted to
pass through to its customers,  and $3,300 was due to increases in the number of
subscriptions  for basic service.  As of December 31, 1998, we had approximately
7,100 basic subscribers and 1,400 premium service units.

                  Our service costs  increased from $846,300 to $902,700,  or by
6.7%,  for the year ended  December  31, 1998  compared to 1997.  Service  costs
represent costs directly  attributable to providing cable services to customers.
The increase was primarily  due to increases in  programming  fees.  Programming
expense  increased  primarily  due to  increases  in rates  charged  by  program
suppliers.

                  Our  general  and   administrative   expenses  increased  from
$248,000 to $343,300, or by 38.4%, for the year ended December 31, 1998 compared
to 1997,  primarily due to increases in marketing costs, audit fees and bad debt
expense.

                  Management  fees  and  reimbursed   expenses   increased  from
$472,800 to $497,300,  or by 5.2%, for the year ended December 31, 1998 compared
to 1997.  Management fees increased in direct relation to increased  revenues as
described above. Reimbursed expenses increased due to higher allocated personnel
costs resulting from staff additions.

                  Depreciation and amortization  expense increased from $326,000
to $466,700, or by 43.2%, for the year ended December 31, 1998 compared to 1997,
primarily due to the rebuild of our plant in Taylorville, Illinois. Depreciation
expense increased as portions of the system rebuild were placed into service.

                  Our operating income decreased from $1,101,400 to $948,400, or
by 13.9%, for the year ended December 31, 1998 compared to 1997, principally due
to increases in depreciation expense and programming fees as described above.

                  Our interest income,  net of interest expense,  decreased from
$127,200 to $66,800,  or by 47.5%, for the year ended December 31, 1998 compared
to 1997, primarily due to lower average cash balances available for investment.

                  Due to the factors  described  above, our net income decreased
from $1,228,600 to $1,015,200, or by 17.4%, for the year ended December 31, 1998
compared to 1997.

                                      -21-

<PAGE>

                  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 47.7% during 1997 to 44.8% in 1998.  The
decrease was primarily caused by higher  programming fees and marketing expenses
as described above.  EBITDA decreased from $1,427,400 to $1,415,100,  or by less
than 1.0%, as a result.

                  Distributions to Partners

                  Partnership   operations   generated   income   exclusive   of
depreciation and amortization of $1,554,600,  $1,481,900 and $1,453,200 in 1997,
1998  and  1999,  respectively.   As  provided  in  the  partnership  agreement,
distributions  to partners  are funded from such  amounts  after  providing  for
working  capital and other  liquidity  requirements,  including debt service and
capital  expenditures not otherwise funded by borrowings.  In each of 1997, 1998
and 1999, the partnership paid distributions of $378,000 to its partners.

LIQUIDITY AND CAPITAL RESOURCES

                  Our primary  objective,  having invested 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  and capital  requirements  relating to the  expansion,
improvement and upgrade of its cable systems.

                  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 all  final  liabilities  of the
partnership. We can give no assurance, however, that we will be able to generate
a sale of the partnership's cable assets.

                  At December 31, 1999, the partnership had no debt outstanding.
The  partnership  relies  upon  cash  flow  from  operations  to meet  operating
requirements and fund necessary capital  expenditures.  Although the partnership
currently has a significant  cash  balance,  there can be no assurance  that the
partnership's   cash  flow  will  be  adequate  to  meet  its  future  liquidity
requirements.  The  partnership  has completed  the rebuild of its  Taylorville,
Illinois  and  neighboring   communities   cable  system  at  a  total  cost  of
approximately $3.5 million under a provision of its franchise agreement. Rebuild
construction  costs  approximated  $144,000  during the year ended  December 31,
1999. Other capital expenditures in 1999 included approximately $223,300 for the
improvement  and upgrade of other  assets.  The  partnership  also  upgraded its
system  in the  community  of  Gillespie,  Illinois  under  a  provision  of its
franchise  agreement.  Expenditures  for the digital upgrade were  approximately
$118,000. Additionally, we will upgrade our cable system in Litchfield, Illinois
in 2000 at an estimated cost of approximately $1.0 million, which is required to
be completed  by January,  2001 under a provision  of the  franchise  agreement.
Other capital  expenditures  budgeted for 2000 total approximately  $552,100 for
the  improvement  and  upgrade  of other  assets.  As a result of these  planned
capital  expenditures,  the partnership  intends, if possible,  to maintain cash
reserves.

                  On September 30, 1997, Enstar Finance Company,  LLC ("EFC"), a
subsidiary of the corporate general partner, obtained a secured bank facility of
$35 million  from two agent banks in order to obtain funds that would in turn be
advanced to us and certain of the other  partnerships  managed by the  corporate
general partner. Our maximum loan commitment was approximately  $799,600 through
November 12, 1999.  After that date, we have no commitment  available  under the
EFC facility, which was reduced to $15 million.

                  We paid distributions  totaling $378,000 during the year ended
December 31,  1999,  and expect to continue to pay  distributions  at this level
during 2000. There can, however, be no assurances regarding the level, timing or
continuation of future distributions.

                                      -22-

<PAGE>

                  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.

                  All  of  our   subscribers   are   served  by  our  system  in
Taylorville,  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.

                  We  have  not   experienced   any  system  failures  or  other
disruptions  caused by Year 2000 problems since January 1, 2000 through the date
of this  report,  and do not  anticipate  that we will  encounter  any Year 2000
problems going forward. We spent approximately  $50,300 in the fourth quarter of
1999 to complete our preparation for the arrival of January 1, 2000 with respect
to the Year 2000 date change. Such costs will not be incurred in the future.

                  1999 vs. 1998

                  Our operating  activities  provided  $57,500 less cash in 1999
than in 1998.  Changes in  receivables,  prepaid  expenses and other assets used
$63,400  more  cash in 1999  due to  differences  in the  timing  of  receivable
collections and in the payment of prepaid expenses. We used $55,400 less cash to
pay  liabilities  owed to affiliates  and third party  creditors in 1999 than in
1998 due to differences in the timing of payments.

                  We used $163,400 less cash in investing activities during 1999
than in 1998, due to a $166,200  decrease in  expenditures  for tangible  assets
partially offset by a $2,800 increase in spending for intangible assets.

                  1998 vs. 1997

                  Our operating  activities  provided $107,900 less cash in 1998
than in 1997. We used $342,700 more cash to pay  liabilities  owed to affiliates
and third party  creditors in 1998 than in 1997 due to differences in the timing
of  payments.  Changes in  receivables,  prepaid  expenses and other assets used
$307,500  less  cash in 1998 due to  differences  in the  timing  of  receivable
collections and in the payment of prepaid expenses.

                  We used  $1,391,600 less cash in investing  activities  during
1998 than in 1997,  due to a $1,388,600  decrease in  expenditures  for tangible
assets and a $3,000 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."

                                      -23-

<PAGE>0

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

                  None.

                                      -24-

<PAGE>

                                    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 had been  previously  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 15 limited  partnerships  formed to own and  operate  cable
television  systems  and  through a  wholly-owned  operating  subsidiary.  As of
December 31, 1999,  the  corporate  general  partner  managed  cable  television
systems serving approximately 81,100 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 G. Barford            Senior Vice President of Operations - Western Division

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            Senior 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

</TABLE>

                  Except for Mr. Riddle,  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.

JERALD L. KENT, 43 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.

                                      -25-

<PAGE>

DAVID G. BARFORD,  41 Senior Vice  President of  Operations - Western  Division.
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, 44 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,  46 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, 50 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, 40 Senior 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,  43 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,  44 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, 50 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.

MICHAEL E. RIDDLE, 41 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,  47 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, 51 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.

                                      -26-

<PAGE>

STEVEN  E.  SILVA,  40  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.

                  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  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,  1999,  Enstar  Cable
charged us management fees of approximately  $160,000 and reimbursed expenses of
$335,700.  We  also  reimbursed  affiliates  approximately  $18,200  for  system
operating management services. In addition,  programming services were purchased
through  Falcon  Communications,  L.P.  and,  subsequent  to November  12, 1999,
through Charter. We paid Falcon  Communications,  L.P. and Charter approximately
$780,800 for these programming services for fiscal year 1999.

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
Registrant's Equity Securities and Related Security Holder Matters."

                                      -27-

<PAGE>

Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  As of March 3, 2000, 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>
Units  of  Limited  Partnership          Everest Cable Investors LLC                      1,545.5(1)                5.2%
   Interest                              199 South 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. As of March
30,  2000,  Charter   Communications   Holding  Company,  LLC  was  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  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

                                      -28-

<PAGE>

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 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.

                                      -29-

<PAGE>

                                     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.

                                      -30-

<PAGE>

                                   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, 2000.

                                   ENSTAR INCOME PROGRAM II-1, L.P.

                                   By:      Enstar Communications Corporation,
                                            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 2000.

<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                       Senior Vice President and Chief Financial Officer
--------------------                          (Principal Financial Officer and
Kent D. Kalkwarf                                 Principal Accounting Officer)

</TABLE>

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

                                      -31-

<PAGE>

                          INDEX TO FINANCIAL STATEMENTS





                                                                    PAGE
                                                                    ----

Report of Independent Auditors                                      F-2

Balance Sheets - December 31, 1998 and 1999                         F-3

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

    Statements of Operations                                        F-4

    Statements of Partnership Capital (Deficit)                     F-5

    Statements of Cash Flows                                        F-6

Notes to Financial Statements                                       F-7


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

                                       F-1

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS




Partners
Enstar Income Program II-1, L.P.  (A Georgia Limited Partnership)


We have audited the  accompanying  balance sheets of Enstar Income Program II-1,
L.P. (A Georgia  Limited  Partnership) as of December 31, 1998 and 1999, and the
related statements of operations,  partnership capital (deficit), and cash flows
for each of the  three  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-1,
L.P. at December 31, 1998 and 1999,  and the results of its  operations  and its
cash flows for each of the three 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-2

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                                 BALANCE SHEETS

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

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                    -------------------------------------
                                                                                          1998                1999
                                                                                    -----------------    ----------------
ASSETS:
   <S>                                                                            <C>                 <C>
   Cash and cash equivalents                                                      $        1,990,700  $        2,309,000

   Accounts receivable, less allowance of $5,100 and
       $2,000 for possible losses                                                             59,800              57,600

   Prepaid expenses and other assets                                                          24,100              77,800

   Property, plant and equipment, less accumulated
       depreciation and amortization                                                       4,414,300           4,585,500

   Franchise cost, less accumulated
       amortization of $37,000 and $47,900                                                    61,300              65,900

   Deferred charges, net                                                                       5,500                 700
                                                                                    -----------------    ----------------

                                                                                  $        6,555,700  $        7,096,500
                                                                                    =================    ================


                       LIABILITIES AND PARTNERSHIP CAPITAL
                       -----------------------------------

LIABILITIES:
   Accounts payable                                                               $         283,300   $          267,200
   Due to affiliates                                                                        269,900              244,800
                                                                                    -----------------    ----------------

          TOTAL LIABILITIES                                                                 553,200              512,000
                                                                                    -----------------    ----------------

COMMITMENTS AND CONTINGENCIES

PARTNERSHIP CAPITAL (DEFICIT):
   General partners                                                                         (13,900)              (8,100)
   Limited partners                                                                       6,016,400            6,592,600
                                                                                    -----------------    ----------------

          TOTAL PARTNERSHIP CAPITAL                                                       6,002,500            6,584,500
                                                                                    -----------------    ----------------

                                                                                  $       6,555,700   $        7,096,500
                                                                                    =================    ================
</TABLE>

                See accompanying notes to financial statements.

                                      F-3

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                            STATEMENTS OF OPERATIONS

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


<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                     -------------------------------------------------
                                                                         1997             1998              1999
                                                                     -------------    --------------    --------------

<S>                                                               <C>              <C>               <C>
REVENUES                                                          $      2,994,500 $      3,158,400  $      3,200,400
                                                                     -------------    --------------    --------------

OPERATING EXPENSES:
  Service costs                                                            846,300          902,700           987,100
  General and administrative expenses                                      248,000          343,300           359,700
  General Partner management fees
    and reimbursed expenses                                                472,800          497,300           495,700
  Depreciation and amortization                                            326,000          466,700           472,400
                                                                     -------------    --------------    --------------

                                                                         1,893,100        2,210,000         2,314,900
                                                                     -------------    --------------    --------------

           Operating income                                              1,101,400          948,400           885,500
                                                                     -------------    --------------    --------------

OTHER INCOME (EXPENSE):
  Interest expense                                                          (1,600)         (15,100)          (19,400)
  Interest income                                                          128,800           81,900            93,900
                                                                     -------------    --------------    --------------

                                                                           127,200           66,800            74,500
                                                                     -------------    --------------    --------------

NET INCOME                                                        $      1,228,600 $      1,015,200  $        960,000
                                                                     =============    ==============    ==============

Net income allocated to General Partners                          $         12,300 $         10,200  $          9,600
                                                                     =============    ==============    ==============

Net income allocated to Limited Partners                          $      1,216,300 $      1,005,000  $        950,400
                                                                     =============    ==============    ==============

NET INCOME PER UNIT OF LIMITED
  PARTNERSHIP INTEREST                                            $         40.63  $         33.57   $         31.75
                                                                     =============    ==============    ==============

WEIGHTED AVERAGE LIMITED
   PARTNERSHIP UNITS OUTSTANDING
    DURING THE YEAR                                                         29,936           29,936            29,936
                                                                     =============    ==============    ==============
</TABLE>

                See accompanying notes to financial statements.

                                      F-4

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                   STATEMENTS OF PARTNERSHIP CAPITAL (DEFICIT)

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


<TABLE>
<CAPTION>
                                                                          General          Limited
                                                                          Partners         Partners          Total
                                                                        -------------    -------------    -------------

PARTNERSHIP CAPITAL (DEFICIT),
  <S>                                                                <C>              <C>              <C>
  January 1, 1997                                                    $       (28,800) $     4,543,500  $     4,514,700

      Distributions to partners                                               (3,800)        (374,200)        (378,000)
      Net income for year                                                     12,300        1,216,300        1,228,600
                                                                        -------------    -------------    -------------

PARTNERSHIP CAPITAL (DEFICIT),
  December 31, 1997                                                          (20,300)       5,385,600        5,365,300

      Distributions to partners                                               (3,800)        (374,200)        (378,000)
      Net income for year                                                     10,200        1,005,000        1,015,200
                                                                        -------------    -------------    -------------

PARTNERSHIP CAPITAL (DEFICIT),
  December 31, 1998                                                          (13,900)       6,016,400        6,002,500

      Distributions to partners                                               (3,800)        (374,200)        (378,000)
      Net income for year                                                      9,600          950,400          960,000
                                                                        -------------    -------------    -------------

PARTNERSHIP CAPITAL (DEFICIT),
   December 31, 1999                                                 $        (8,100) $     6,592,600  $     6,584,500
                                                                        =============    =============    =============
</TABLE>

                See accompanying notes to financial statements.

                                      F-5

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                            STATEMENTS OF CASH FLOWS

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



<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                        ----------------------------------------------------
                                                                             1997              1998              1999
                                                                        ---------------    --------------    --------------
Cash flows from operating activities:
  <S>                                                                <C>                <C>               <C>
  Net income                                                         $      1,228,600   $      1,015,200  $        960,000
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                                           326,000            466,700           472,400
      Increase (decrease) from changes in:
        Accounts receivable, prepaid expenses
          and other assets                                                   (295,600)            11,900           (51,500)
        Accounts payable and due to affiliates                                246,100            (96,600)          (41,200)
                                                                        ---------------    --------------    --------------

         Net cash provided by operating activities                          1,505,100          1,397,200         1,339,700
                                                                        ---------------    --------------    --------------

Cash flows from investing activities:
  Capital expenditures                                                     (2,182,700)          (794,100)         (627,900)
  Increase in intangible assets                                               (15,700)           (12,700)          (15,500)
                                                                        ---------------    --------------    --------------

         Net cash used in investing activities                             (2,198,400)          (806,800)         (643,400)
                                                                        ---------------    --------------    --------------

Cash flows from financing activities:
  Distributions to partners                                                  (378,000)          (378,000)         (378,000)
                                                                        ---------------    --------------    --------------

Net increase (decrease) in cash and cash equivalents                       (1,071,300)           212,400           318,300

Cash and cash equivalents at beginning of year                              2,849,600          1,778,300         1,990,700
                                                                        ---------------    --------------    --------------

Cash and cash equivalents at end of year                             $      1,778,300   $      1,990,700  $      2,309,000
                                                                        ===============    ==============    ==============
</TABLE>

                See accompanying notes to financial statements.

                                      F-6

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                          NOTES TO FINANCIAL STATEMENTS

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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

FORM OF PRESENTATION

                  Enstar   Income   Program  II-1,   L.P.,  a  Georgia   limited
partnership (the  "Partnership"),  owns and operates cable television systems in
rural areas of Illinois.

                  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, EQUIPMENT AND DEPRECIATION AND AMORTIZATION

                  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:

                  Cable television systems                       5-15 years
                  Vehicles                                          3 years
                  Furniture and equipment                         5-7 years
                  Leasehold improvements                      Life of lease


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.

DEFERRED CHARGES

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

                                      F-7

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, 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  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-1,  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 $1,766,200.

                  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 $468,400 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.

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.

                                      F-8

<PAGE>

                        ENSTAR INCOME PROGRAM II-1, L.P.

                          NOTES TO FINANCIAL STATEMENTS

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


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)

RECLASSIFICATIONS

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

NOTE 2 - PARTNERSHIP MATTERS

                  The  Partnership  was  formed in 1984 to  acquire,  construct,
improve, develop and operate cable television systems. 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.  The
Partnership raised capital of $7,500,000 (the maximum) during 1985.

                  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   agreement   generally   provides  that  all
partnership  profits,  gains,  losses,  credits,  and cash distributions (all as
defined) from  operations or liquidation be allocated 1% to the general  partner
and 99% to the  limited  partners  until  the  limited  partners  have  received
distributions  of cash  flow  from  operations  and/or  cash  flow  from  sales,
refinancing, or liquidation of systems equal to their initial investment.  After
the limited partners have received cash flow equal to their initial  investment,
the general partner will only receive a one percent allocation of cash flow from
liquidating  a system until the limited  partners have received an annual simple
interest  return  of  at  least  18%  of  their  initial   investment  less  any
distributions from previous system liquidations. Thereafter, allocations will be
made 15% to the general partner and 85% to the limited partners. All allocations
to  individual  limited  partners  will be  based on  their  respective  capital
accounts.  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.

                  Upon the disposition of substantially all of the Partnership's
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

                                      F-9

<PAGE>


                        ENSTAR INCOME PROGRAM II-1, L.P.

                          NOTES TO FINANCIAL STATEMENTS

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


NOTE 3 - POTENTIAL SALE OF PARTNERSHIP ASSETS (Continued)

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 financial statements do not reflect
any  adjustments  that may  result  from the  outcome of this  uncertainty.  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

                  Property, plant and equipment consist of:

                                                        December 31,
                                             -----------------------------------
                                                  1998               1999
                                             ----------------   ----------------

Cable television systems                   $      6,999,500   $      7,454,500
Vehicles, furniture and equipment,
   and leasehold improvements                       338,900            474,900
                                             ----------------   ----------------

                                                  7,338,400          7,929,400

Less accumulated depreciation
   and amortization                              (2,924,100)        (3,343,900)
                                             ----------------   ----------------

                                           $      4,414,300   $      4,585,500
                                             ================   ================

NOTE 5 - COMMITMENTS AND CONTINGENCIES

                  Pole rentals amounted to $26,200,  $32,600 and $7,100 in 1997,
1998 and 1999,  respectively.  Rentals,  other  than pole  rentals,  charged  to
operations  amounted  to  $4,200,  $4,300  and  $7,100  in 1997,  1998 and 1999,
respectively.  The  Partnership is not  individually  committed  under any lease
agreement for building space. A wholly-owned subsidiary of the Corporate General
Partner (the "Manager")  provides management services to the Partnership and has
signed lease  agreements for regional  office space for which the Partnership is
charged its allocable portion.

                  Other  commitments  include   approximately  $1.0  million  at
December  31,  1999 to begin an upgrade of the  Partnership's  Litchfield  cable
system. The Partnership expects to complete the project by the required deadline
of January 1, 2001.

                  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.

                                      F-10

<PAGE>


                        ENSTAR INCOME PROGRAM II-1, L.P.

                          NOTES TO FINANCIAL STATEMENTS

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


NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)

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.

                  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  formerly  owned or managed by FCLP through  November  12, 1999,  and
currently managed by Charter.

                  All of the Partnership's  subscribers are served by its system
in Taylorville, 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 state of  Illinois,  customers  have  filed a  punitive
class action  lawsuit on behalf of all persons  residing in the state who are or
were customers of the Partnership's cable television service,  and who have been
charged a fee for delinquent  payment of their cable bill. The action challenges
the legality of the processing fee and seeks  declaratory  judgment,  injunctive
relief and  unspecified  damages.  At present,  the  Partnership  is not able to
project the outcome of the action.  All of the  Partnership's  basic subscribers
reside in Illinois where the claim has 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
$1,300  was made  during  1999.  There  were no  contributions  charged  against
operations for the Profit Sharing Plan in 1997 or 1998.

NOTE 7 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES

                  The  Partnership  has a management and service  agreement with
the Manager for a monthly  management fee of 5% of gross  receipts,  as defined,
from the  operations of the  Partnership.  Management  fee expense was $149,700,
$157,900 and $160,000 during 1997, 1998 and 1999, respectively.

                                      F-11

<PAGE>


                        ENSTAR INCOME PROGRAM II-1, L.P.

                          NOTES TO FINANCIAL STATEMENTS

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


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

                  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 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. The total amount charged to the Partnership for these
services  was  $323,100,  $339,400  and  $335,700  during  1997,  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  $29,400,
$15,700 and $18,200 in 1997, 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 cost.  The  Partnership
recorded  programming  fee expense of  $609,400,  $687,600 and $780,800 in 1997,
1998 and 1999,  respectively.  Programming fees are included in service costs in
the statements of operations.

                  The Partnership  provides cable television  signals to certain
cable systems in neighboring  communities which are owned by other  partnerships
managed by the Corporate  General  Partner.  Such services are provided  without
fee.

NOTE 8 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                  During the years ended December 31, 1997,  1998 and 1999, cash
paid for interest amounted to $1,600, $15,100 and $19,400, respectively.

                                      F-12

<PAGE>

                                  EXHIBIT INDEX
Exhibit
Number   Description
------   -----------

3        Second Amended and Restated Agreement of Limited  Partnership of Enstar
         Income Program II-1, L.P., dated as of August 1, 1988.(3)

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

10.2     Revolving  Credit  and Term Loan  Agreement  dated  February  28,  1986
         between  Enstar  Income  Program II-1 and Rhode Island  Hospital  Trust
         National Bank.(2)

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

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

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

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

10.7     Service agreement  between Enstar  Communications  Corporation,  Enstar
         Cable Corporation and Falcon Holding Group, Inc. dated as of October 1,
         1988.(4)

10.8     Amendment  No. 3 to  Revolving  Credit  and Term Loan  Agreement  dated
         February 28, 1986 between Enstar Income Program 1984-1 and Rhode Island
         Hospital Trust National Bank, dated October 15, 1990.(5)

10.9     A resolution of the City Council of Taylorville, Illinois extending the
         Cable  Television  Franchise of Enstar Income Program II-1.  Passed and
         adopted January 4, 1993.(6)

10.10    Ordinance  No.  92-9  of  the  City  Council  of  Gillespie,   Illinois
         authorizing an extension of the Cable Television  Franchise between the
         City of  Gillespie  and Enstar Cable  Corporation.  Passed and approved
         November 9, 1992.(6)

10.11    Ordinance No. 2497 of the City of Taylorville,  Illinois  extending the
         Cable  Television  Franchise of Enstar Income Program II-1.  Passed and
         adopted June 14, 1993.(7)

10.12    A  resolution  of the County Board of Christian  County  extending  the
         Cable  Television  Franchise of Enstar Income Program II-1.  Passed and
         adopted November 15, 1994.(8)

10.13    A resolution of the City Council of Litchfield,  Illinois extending the
         Cable  Television  Franchise of Enstar Income Program II-1.  Passed and
         adopted December 8, 1994.(8)

10.14    Ordinance  No.  94-16 of the City of  Gillespie,  Illinois  granting  a
         non-exclusive  community antenna  television system franchise to Enstar
         Income Program II-1. Passed and adopted December 12, 1994.(8)

10.15    Franchise  agreement  between Enstar Income Program II-1,  L.P. and the
         City of Taylorville, IL.(9)

10.16    Agreement with Respect to Franchise Fees and Reimbursable  Fees between
         Enstar Income Program II-1, L.P. and the City of Taylorville, IL. (9)

                                      E-1

<PAGE>
                                  EXHIBIT INDEX
Exhibit
Number          Description
------          -----------

10.17    Franchise   ordinance   granting  a  non-exclusive   community  antenna
         television franchise for the City of Taylorville, IL. (9)

10.18    Franchise  agreement  between  Enstar  Communications  Corporation  and
         County of Christian, Illinois. (10)

10.19    Franchise   ordinance   granting  a  non-exclusive   community  antenna
         television franchise for the City of Litchfield, IL.

21.1     Subsidiaries: None

27.1     Financial Data Schedule.

                               FOOTNOTE REFERENCES
                               -------------------

  (1)    Incorporated  by reference to the exhibits to the  Registrant's  Annual
         Report  on Form  10-K,  File No.  0-14508  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.  0-14508  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.  0-14508  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.  0-14508  for the  fiscal  year  ended
         December 31, 1989.

  (5)    Incorporated  by reference to the exhibits to the  Registrant's  Annual
         Report  on Form  10-K,  File No.  0-14508  for the  fiscal  year  ended
         December 31, 1990.

  (6)    Incorporated  by reference to the exhibits to the  Registrant's  Annual
         Report  on Form  10-K,  File No.  0-14508  for the  fiscal  year  ended
         December 31, 1991.

  (7)    Incorporated by reference to the exhibits to the Registrant's Quarterly
         Report on Form 10-Q,  File No. 0-14508 for the quarter ended  September
         30, 1993.

  (8)    Incorporated  by reference to the exhibits to the  Registrant's  Annual
         Report on Form 10-K, File No. 0-14508 dated December 31, 1994.

  (9)    Incorporated by reference to the exhibits to the Registrant's Quarterly
         Report on Form 10-Q,  File No. 0-14508 for the quarter ended  September
         30, 1995.

  (10)   Incorporated by reference to the exhibits to the Registrant's Quarterly
         Report on Form 10-Q,  File No. 0-14508 for the quarter ended  September
         30, 1997.

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