<PAGE>   1


                       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, 1996 OR

           [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM _________ TO _________

                        Commission file number 333-3774

                         ------------------------------
                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.
         CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS CAPITAL CORPORATION
             (Exact Name of Registrant as Specified in its Charter)


          Delaware                                43-1728405
                                                  43-1740264
(State or Other Jurisdiction of                   (I.R.S. Employer
Incorporation or Organization)                    Identification No.)

12444 Powerscourt Drive, Suite 400
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:
                                      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 the Form 10-K or any
amendment to this Form 10-K.  [X]

                      DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated into this Report by reference:  _____

                                                              Total Pages: _____
                                                        Exhibit Index:  Page ___






<PAGE>   2


                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.
         CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS CAPITAL CORPORATION
                          1996 FORM 10-K ANNUAL REPORT

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
<S>                                                                                                        <C>
                                                   PART I

Item 1. Business .........................................................................................   3

Item 2. Properties .......................................................................................  17

Item 3. Legal Proceedings ................................................................................  18

Item 4. Submission of Matters to a Vote of Security Holders ..............................................  18


                                                  Part II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters ............................  19
Item 6. Selected Financial Data  .........................................................................  19
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ............  20
Item 8. Financial Statements and Supplementary Data ......................................................  27
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .............  27

                                                 Part III

Item 10. Directors and Executive Officers of the Registrant ..............................................  28
Item 11. Executive Compensation ..........................................................................  28
Item 12. Security Ownership of Certain Beneficial Owners and Management ..................................  29
Item 13. Certain Relationships and Related Transactions ..................................................  30

                                                  Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K  ................................  33

</TABLE>



                                       2



<PAGE>   3



                                     PART I


ITEM 1. BUSINESS

GENERAL

Charter Communications Southeast Holdings, L.P. ("Charter Holdings") was formed
as a Delaware limited partnership in 1995 and is a holding company for other
limited partnerships and corporations that own and operate cable television
systems in the southeastern region of the United States (collectively referred
to as the "Partnership").

Charter Communications Southeast Holdings Capital Corporation ("Holdings
Capital") was formed in 1996 as a Delaware corporation to be a wholly-owned
subsidiary of Charter Holdings and for the exclusive purpose of serving as a
co-issuer with Charter Holdings for the Senior Secured Discount Debentures due
2007 that were issued in March 1996 (see "--Major Transactions in 1996").
Charter Holdings and Holdings Capital, referred to together herein as the
"Registrants", maintain their principal executive offices at 12444 Powerscourt
Drive, Suite 400, St. Louis, Missouri 63131 and their telephone number is (314)
965-0555.

The Partnership receives management services and administrative support for its
operations from Charter Communications, Inc. ("Charter") pursuant to the terms
of a Management Agreement.  See "Item 13.  Certain Relationships and Related
Transactions.".  Charter is a privately-held multi-system operator and manager
of cable television systems serving in excess of one million subscribers.
Charter has an indirect equity interest in Charter Holdings.  See "Item 12.
Security Ownership of Certain Beneficial Owners and Management".

The Partnership acquired its cable televisions systems (the "Systems") in a
series of transactions commencing in April 1994.  At December 31, 1996, the
Systems served an aggregate of approximately 331,000 basic subscribers, of
which 85%  were located within five clusters:  the
Greenville-Spartanburg/Asheville Cluster in western North Carolina and South
Carolina; the Atlanta cluster in the suburban corridor south of Atlanta,
Georgia; the northern Alabama Cluster near Huntsville and Birmingham; the New
Orleans Cluster in the suburban areas north of New Orleans, Louisiana; and the
Nashville Cluster in the suburban areas northwest of Nashville, Tennessee.  The
remaining 15% of the Partnership's basic subscribers do not reside within the
aforementioned clusters.


ORGANIZATIONAL STRUCTURE

The general partner of Charter Holdings is Charter Communications Holdings
Properties, Inc. ("Holdings Properties").  Charter Holdings has direct and
indirect ownership of 100% of the outstanding equity interests in Charter
Communications Southeast, L.P. ("Charter Southeast"), which, in turn, serves as
a holding company for certain subsidiary entities that own cable television
systems.  The operating subsidiary entities are Charter Communications, L.P.
("CC-I") and Charter Communications II, L.P. ("CC-II," which for purposes of
this report, shall be deemed to include its subsidiaries, Charter
Communications III, L.P. and Peachtree Cable TV, Inc.).  Charter Holdings and
its general partner, in turn, are directly and/or indirectly owned by another
holding company, CharterComm Holdings, L.P. (See "Item 12.  Security Ownership
of Certain Beneficial Owners and Management").

                                       3



<PAGE>   4



A summary of the organizational structure of  the Registrants is set forth
below.


                         ORGANIZATIONAL STRUCTURE OF
                    CHARTER HOLDINGS AND HOLDINGS CAPITAL



                              [STRUCTURE CHART]




MAJOR TRANSACTIONS IN 1996

In March 1996, Charter Holdings and Holdings Capital co-issued $146,820,000
principal amount at maturity of Senior Discount Debentures due 2007
(representing a yield from the date of issuance to maturity of 14%)  (the
"Debentures").  Concurrent with the issuance of the Debentures, Charter
Southeast, a subsidiary of Charter Holdings, and Charter Communications
Southeast Capital Corporation, a wholly-owned subsidiary of Charter Southeast,
co-issued $125.0 million principal amount of 11-1/4% Senior Notes due 2006 (the
"Senior Notes").  These two concurrent offerings of Debentures and Senior Notes
are referred to as the "Offerings."  Net proceeds of  approximately $72.4
million from the Debentures offering, combined with net proceeds of
approximately $121.3 million from the Senior Notes offering, were applied as
follows:  (a) $15.0 million to repay bridge notes to Charterhouse Equity
Partners II, L.P.; (b) $1.1 million to repay a short-term intercompany note to
CC-I; (c) $61.5 million as a capital contribution to CC-I, which used the funds
to repay outstanding borrowings of $18.1, redeem $43.2 million of outstanding
special limited partnership interests and pay $.2 million of transaction costs;
(d) $114.9 million as a capital contribution to CC-II, which used the funds to
consummate the acquisition of systems from Cencom Cable Income Partners, L.P.
("CCIP") and pay related transaction costs; and (e) pay $1.2 million of
transaction costs.  See "Item 13.  Certain Relationships and Related
Transactions."

In connection with the issuance of the Debentures and the Senior Notes, the
Partnership's operating subsidiaries amended and restated their credit
facilities (see "Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations") and Charter Holdings entered into a
Management Agreement with Charter that effectively provides services for all of
the Partnership's operations and replaced various management agreements then in
effect between certain subsidiaries and Charter.  See "Item 13. Certain
Relationships and Related Transactions."

                                       4


<PAGE>   5



In January 1996, CC-II acquired a cable television system serving certain
communities in South Carolina with an aggregate of approximately 4,500 basic
subscribers for an aggregate purchase price of $8.7 million, after closing
adjustments.

On March 29, 1996, CC-II acquired cable television systems serving
approximately 53,900 subscribers located in and around Fort Gordon, Georgia,
Camp Lejeune, North Carolina, Clarksville, Tennessee, Hopkinsville, Kentucky
and Tryon, North Carolina.  These systems were acquired from CCIP, the general
partner of which is an affiliate of Charter, for an aggregate purchase price of
$112.1 million, after closing adjustments (the "CCIP Acquisition").  See "Item
3.  Legal Proceedings" and "Item 13.  Certain Relationships and Related
Transactions."

On November 29, 1996, CC-I acquired cable television systems serving certain
communities in Alabama and Tennessee with an aggregate of approximately 13,600
subscribers on that date, for an aggregate purchase price of $21.9 million,
after closing adjustments.


PROPOSED ACQUISITIONS

On May 30, 1996, CC-II entered into an Asset Purchase Agreement with Cencom
Cable Income Partners II, L.P. ("CCIP-II") to acquire the cable televisions
systems located in Anderson County, South Carolina, for a purchase price of
$36.7 million.  The Anderson County systems served approximately 20,800
subscribers at December 31, 1996.

On April 26, 1996 (and amended and restated on January 16, 1997),  CC-II
entered into an Asset Purchase Agreement with Cencom Partners, L.P. ("CPLP") to
acquire the assets of a cable television system located in Abbeville, South
Carolina for purchase prices of $4.2 million.  The  Abbeville system served
approximately 2,500 subscribers at December 31, 1996.

On May 30, 1996 (and amended and restated on January 16, 1997),  CC-II entered
into an Asset Purchase Agreement with Cencom Partners, L.P. ("CPLP") to acquire
the assets of a cable television system located in Lincolnton, North Carolina
for purchase prices of $27.5 million.  The Lincolnton system served
approximately 14,800 subscribers at December 31, 1996.

On May 30, 1996 (and amended and restated on January 16, 1997),  CC-I entered
into an Asset Purchase Agreement with  CPLP to acquire the assets of a cable
television system located in Sanford, North Carolina serving 12,600 subscribers
at December 31, 1996, for a purchase price of $20.8 million.

The general partner of each of CPLP and CCIP-II is an affiliate of Charter.
Furthermore, each of CPLP and CCIP-II is currently in the process of
dissolution.  Each of the above acquisitions (collectively referred to as the
"CCIP-II/CPLP Acquisition") is subject to the prior approval of the holders of
a majority of the outstanding limited partnership interests of CCIP-II, which
approval is currently being sought by written consent.  Subject to the
satisfaction of certain terms and conditions, including the favorable votes of
the limited partners of CCIP-II, it is currently expected that these
acquisitions will be consummated in the second quarter of 1997, although there
can be no assurance that these acquisitions will be consummated.  See "Item 13.
Certain Relationships and Related Transactions."


RECENT DEVELOPMENTS

On February 7, 1997, CC-II acquired a cable television system serving Hickory,
North Carolina serving approximately 35,400 subscribers, for a purchase price
of approximately $68.1 million, after closing adjustments.

On February 28, 1997, Charter Holdings received  $30 million of additional
limited partnership contributions as well as the contribution of the assets and
related liabilities of a certain cable television system serving areas in and
around Stockbridge, Georgia.  The Stockbridge system, which had an appraised
value of approximately $3.67 million, was contributed to Charter Southeast
which, in turn, contributed such system to CC-II.  The additional capital was
contributed to Charter Southeast which, in turn, contributed $5.0 million of
such capital to CC-I and $25.0 million of such capital to CC-II, to be

                                       5


<PAGE>   6

ultimately used toward the proposed CCIP-II/CPLP Acquisition.  Pending
consummation of the CCIP-II/CPLP Acquisition, the equity contribution was used
to pay down outstanding indebtedness under the credit facilities of CC-I and
CC-II.  See "Item 13. Certain Relationships and Related Transactions."


THE CABLE TELEVISION INDUSTRY

Most cable television systems offer a variety of channels and programming and,
in recent years, more sophisticated systems with greater channel capacity have
increased the potential number of programming offerings available to
subscribers and, consequently, the potential revenue available per subscriber.
Present day state-of-the-art cable television systems are capable of providing
36 to 108 channels of programming.  See "--Marketing, Programming and Rates."

A cable television system consists of two principal operating components:  one
or more signal origination points called "headends" and a signal distribution
system.  It may also include program origination facilities.  Each headend
includes a tower, antennae or other receiving equipment at a location favorable
for receiving broadcast signals and one or more earth stations that receive
signals transmitted by satellite.  The headend facility also houses the
electronic equipment which amplifies, modifies and modulates the signals,
preparing them for passage over the system's network of cables.

The signal distribution system consists of amplifiers and trunk lines which
originate at the headend and carry the signal to various parts of the system,
smaller distribution cable and distribution amplifiers which carry the signal
to the immediate vicinity of the subscriber and drop lines which carry the
signal into the subscriber's home.  In the past several years, many cable
operators have utilized fiber optic technology (in place of, or in combination
with, coaxial cable) to transmit signals through the primary trunk lines.


SUBSCRIBER DATA OF THE PARTNERSHIP SYSTEMS

The following table sets forth a summary of subscriber data (rounded to the
nearest hundred) of the Systems as of the dates indicated:


<TABLE>
<CAPTION>
                                                        As of December 31,
                                                ---------------------------------
                                                1996           1995          1994
                                                ----           ----          ----
<S>                                            <C>            <C>          <C>
Basic Subscribers:
      Greenville-Spartanburg/Asheville Cluster  78,100          71,100           0
      Atlanta Cluster                           62,400          57,700      33,700
      Northern Alabama Cluster                  62,400          47,800      17,600
      New Orleans Cluster                       35,600          35,400      34,400
      Nashville Cluster                         42,400               0           0
      Non-Cluster Systems                       49,700          37,100      13,300
                                               -------         -------      ------
                                               330,600         249,100      99,000
                                               =======         =======      ======

Premium Subscriptions:
      Greenville-Spartanburg/Asheville Cluster  30,400          26,400           0
      Atlanta Cluster                           23,700          22,400      12,500
      Northern Alabama Cluster                  27,000          50,400       9,000
      New Orleans Cluster                       16,800          19,100      19,800
      Nashville Cluster                         22,800               0           0
      Non-Cluster Systems                       30,500          23,900       7,900
                                               -------         -------      ------
                                               151,200         142,200      49,200
                                               =======         =======      ======
</TABLE>


See "Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of subscriber data.



                                       6



<PAGE>   7


MARKETING, PROGRAMMING AND RATES

The Systems' marketing program is based upon offering various packages of cable
services designed to appeal to different market segments.  Charter, in its
capacity as manager of the Systems, performs and utilizes market research on
selected Systems, compares the data to national research and tailors a
marketing program for each individual market.  The Partnership utilizes a
coordinated array of marketing techniques to attract and retain subscribers,
including door-to-door solicitation, telemarketing, media advertising and
direct mail solicitations, gain new subscribers and increase basic and premium
penetration in the communities served by the Systems.

Although services vary from system to system because of differences in channel
capacity, viewer interests and community demographics, each of the individual
Systems offers a "basic service tier," consisting of local television channels
(network and independent stations) available over-the-air, local public
channels and governmental and leased access channels.  The individual Systems
also offer an expanded basic tier of television stations relayed from distant
cities, specialized programming delivered via satellite and various
alpha-numeric channels providing information on news, time, weather and the
stock market.  In addition to these services, the Systems typically provide one
or more premium services purchased from independent suppliers and combined in
different formats to appeal to the various segments of the viewing audience,
such as Home Box Office, Cinemax, Showtime, The Movie Channel and the Disney
Channel.  A "premium service unit" is a single premium service for which a
subscriber must pay an additional monthly fee in order to receive the service.
Subscribers may subscribe for one or more premium service units.  The Systems
also receive revenues from the sale or monthly use of certain equipment (e.g.,
converters, wireless remote control devices, etc.) and from cable programming
guides, with some Systems offering enhanced audio services.  Certain of the
Systems also generate revenues from the sale of advertising spots on one or
more channels, from the distribution and sale of pay-per-view movies and
events, and from commissions resulting from subscribers participating in home
shopping.

Rates to subscribers vary from market to market and in accordance with the type
of service selected and the rates currently charged by the Systems reflect
reductions effected in response to the implementation of  the 1992 Cable Act
(as hereafter defined).  A one-time installation fee, which may be partially
waived during a promotional period, is charged to new subscribers.  The
practices of the Partnership regarding rates are consistent with the current
practices in the industry.  See Item 1 - "Regulation of the Cable Television
Industry" for a discussion of rate setting.


FRANCHISES

The Systems operate pursuant to an aggregate of 237 non-exclusive franchises,
permits or similar authorizations issued by governmental authorities.
Franchises or permits are awarded by a governmental authority and generally are
not transferable absent the consent of the authority.  Most of the franchises
pursuant to which the Systems operate may be terminated prior to their stated
expiration by the granting authority, after due process, following a breach of
a material provision.  Currently, 29 of the Partnership's 237 franchises,
serving approximately 16% of the Partnership's subscribers in the aggregate,
were within a three-year window period for renewal.  Under the terms of most of
the franchises, a franchise fee of up to five percent (5%) of the gross
revenues derived by a cable system from the provision of cable television
services (the maximum amount that may be charged by a franchising authority
under the 1992 Cable Act) is payable to the franchising authority.

The Cable Acts, as herein defined, provide for an orderly franchise renewal
process in which franchise renewal may not be unreasonably withheld.  If a
renewal is withheld and the franchising authority acquires ownership of the
cable system or effects a transfer of ownership to another party, the franchise
authority must pay the cable operator the "fair market value" for the system
covered by such franchise.  The Cable Acts also establish comprehensive renewal
procedures requiring that an incumbent franchisee's renewal application be
assessed on its own merit and not as part of a comparative process with
competing applications.  In connection with the franchise renewal process, many
governmental authorities require the cable operator to commit to making certain
technological upgrades to the system, which may require substantial capital
expenditures.




                                       7



<PAGE>   8

CERTAIN REGULATORY AND LEGISLATIVE DEVELOPMENTS

The cable television industry is subject to extensive regulation by federal,
local and, in some instances, state government agencies.  The Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act")
significantly expanded the scope of cable television regulation on an
industry-wide basis by imposing rate regulation, requirements related to the
carriage of local broadcast station, customer service obligations and other
requirements.  Under the FCC's initial rate regulations pursuant to the 1992
Cable Act, regulated cable systems (i.e., those systems not subject to
effective competition)  were required to apply a benchmark formula to determine
their maximum permitted rates.  Those systems whose rates were above the
benchmark on September 30, 1992, were required to reduce their rates to the
benchmark or by 10%, whichever was less.  Under revised rate regulations
adopted in February 1994, regulated cable systems were required to set their
rates so that regulated revenues per subscriber did not exceed September 30,
1992 levels, reduced by 17% (taking into account the previous 10% reduction).

On June 15, 1995, the FCC released new rules to reduce the substantive and
procedural burdens of rate regulation applicable to small cable systems (i.e.,
cable systems servicing 15,000 or fewer subscribers that are owned by a cable
company which served, in the aggregate, 400,000 or fewer subscribers at the
time such rules went into effect).  Cable companies falling outside of this
definition may petition the FCC for small company treatment if they can
demonstrate similar circumstances.  The FCC's new small cable systems rules
amended the FCC's previous definitions of small cable entities to encompass a
broader range of cable systems that are eligible for special rate and
administrative treatment.  Specifically, the new rules create a new
cost-of-service approach for the purpose of determining the rate applicable to
a small cable system using a five-element calculation based on a system's
costs.  See "--Regulation and Legislation - Small Cable Systems."

On February 1, 1996, Congress passed the Telecommunications Act of 1996 ( the
"Telecommunications Act" and, together with the 1992 Cable Act, the "Cable
Acts").  The Telecommunications Act was signed into law by the President on
February 8, 1996, and substantially amends the Communications Act of 1934 (the
"Communications Act") (including the re-regulation of subscriber rates under
the 1992 Cable Act).  The Telecommunications Act alters federal, state and
local laws and regulations pertaining to cable television, telecommunications
and other services.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership.  Although the new legislation is expected to
substantially lessen regulatory burdens, the cable television industry may be
subject to additional competition as a result thereof.  There are numerous
rulemakings which have been, and which will be undertaken by the FCC which will
interpret and implement the Telecommunications Act's provisions.  In addition,
certain provisions of the Telecommunications Act (such as the deregulation of
cable programming rates)  are not immediately effective.  Furthermore, the
legality of certain of the Telecommunications Act's provisions have been and
are likely to continue to be, judicially challenged, and the FCC's regulations
implementing the Telecommunications Act may be appealed for reconsideration by
the FCC.  The Partnership is unable at this time to predict the outcome of such
rulemaking or litigation or the substantive effect (financial or otherwise) of
the new legislation and the rulemakings on the Partnership.

REGULATION AND LEGISLATION

The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels.  In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.  The Cable
Acts, both of which amended the Communications Act, establish a national policy
to guide the development and regulation of cable television systems.  The
Communications Act was recently substantially amended by the Telecommunications
Act, which alters federal, state and local laws pertaining to cable television,
telecommunications and other services.  Principal responsibility for
implementing the policies of the Cable Acts is allocated between the FCC and
state or local franchising authorities.

                                       8


<PAGE>   9



Cable Acts and FCC Regulation

The Cable Acts and the FCC's implementing rules establish, among other things,
(i) rate regulations, (ii) "anti-buy through" provisions, (iii) "must carry"
and "retransmission consent" requirements, (iv) rules for franchise renewals
and transfer, and (v) other regulations covering a variety of operational
areas.

The 1992 Cable Act and the FCC's rules implementing the 1992 Cable Act
generally have increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.  The Partnership is not able to predict
the ultimate effect of the 1992 Cable Act or the ultimate outcome of various
FCC rulemaking proceedings or the litigation challenging various aspects of the
1992 Cable Act and the FCC regulations implementing the 1992 Cable Act.

Rate Regulation.  The Cable Acts and FCC regulations have imposed rate
requirements for basic services and equipment.  Under the 1992 Cable Act, a
local franchising authority in a community not subject to "effective
competition" (as defined in the 1992 Cable Act) generally is authorized to
regulate basic cable service rates after certifying to the FCC that, among
other things, it will adopt and administer rate regulations consistent with FCC
rules, and in a manner that will provide a reasonable opportunity to consider
the views of interested parties.  The Telecommunications Act expands the
definition of "effective competition" to include any franchise area where a
local exchange carrier (or its affiliate) (or any multichannel video
programming distributor using the facilities of such carrier or its affiliate)
provides video programming services to subscribers by any means, other than
through DBS.  The local exchange carrier must provide "comparable" programming
services in the franchise area.  In regulating the basic service rates,
certified local franchise authorities have the authority to order a rate refund
of previously paid rates determined to be in excess of the maximum permitted
reasonable rates.

For a defined class of  "small cable operators," the Telecommunications Act
immediately eliminates regulation of cable programming rates.  To qualify as a
"small cable operator," the operator must serve in the aggregate fewer than one
percent of all U.S. subscribers and have affiliate gross revenues not exceeding
$250,000,000 and serve 50,000 or fewer subscribers in any franchise area.  Rate
regulation of the basic service tier remains subject to regulation by local
franchising authorities under the Telecommunications Act, except under specific
circumstances for certain small cable operators.  Rates for the basic service
tier of small cable operators are deregulated if the system offered only a
single tier of services as of December 31, 1994.  See "--Small Cable Systems,"
below.

Under the 1992 Cable Act, rates for cable programming services not carried on
the basic service tier ("non-basic services") could be regulated by the FCC
upon the filing of a complaint by franchise authorities or subscribers that
indicates the cable operator's rates for these services are unreasonable.
Three rate complaints have been filed with the FCC with respect to certain of
the Partnership's cable programming service tiers, one of which has been filed
with respect to the Anderson County System.  The General Partner does not
believe that these rate complaints, even if decided against the Partnership,
will have a material adverse effect on the Partnership.  The Telecommunications
Act eliminates regulation of the cable programming service tier (non-basic
programming) as of March 31, 1999.  In the interim, rate regulation of the
cable programming tier can only be triggered by a franchising authority
complaint to the FCC.  A franchising authority complaint must be based on more
than one subscriber complaint, which must be filed within 90 days after a rate
increase.  If the FCC determines that the Partnership's cable programming
service tier rates are unreasonable, the FCC has the authority to order the
Partnership to reduce cable programming service tier rates and to refund to
customers any overcharges occurring from the filing date of the rate complaint
at the FCC.  While management believes that the Partnership has complied in all
material respects with the rate provisions of the 1992 Cable Act, in
jurisdictions that have not yet chosen to certify, refunds covering a one-year
period on basic service may be ordered upon future certification if the
Partnership is unable to justify its rates through a benchmark or
cost-of-service filing or small system cost-of-service filing pursuant to FCC
rules.  The General Partner is unable to estimate at this time the amount of
refunds that may be payable by the Partnership in the event any of the
Partnership System's rates are successfully challenged by franchising
authorities or found to be unreasonable by the FCC, although it does not
believe that the amount of any such refunds would have a material adverse
effect on the Partnership.  Notwithstanding mandated rate reductions, cable
operators currently may adjust their regulated rates to reflect inflation and
what the FCC has deemed to be external costs (such as increased in franchise
fees).


                                       9



<PAGE>   10

In November 1994, the FCC adopted the so-called "going-forward rules" which,
among other things, allow cable operators to raise rates over the next three
years by adding channels to the expanded basic service tier.  Under the revised
rules, cable operators were allowed to take a per channel markup of up to 20
cents for each channel added to the expanded basic service tier, with an
aggregate cap of $1.20 per subscriber per month.  Accordingly, the Partnership
was permitted to adjust rates on January 1, 1995 for channel additions occurring
after May 14, 1994.  In addition to rate adjustments permitted for additional
channels, the "going-forward rules" allowed cable operators to recover an
additional amount of  30 cents in the aggregate per subscriber per month for
license fees associated with adding new channels through 1996.  The license fee
cap applied through December 31, 1996.  (During the third year, license fees are
subject to the general rate rules.)  Thus, through 1996 the allowable rate
increases for channel adjustments and license fees could have totaled up to
$1.50 per subscriber per month.  Under the "going-forward rules," in 1997, cable
operators may make an additional flat fee increase of 20 cents per channel per
month for channels added during that year, provided that the rate increases made
by cable operators over the three year period (exclusive of license fees) do not
exceed $1.40 in the aggregate.  For channels added after May 14, 1994, operators
electing to take advantage of the 20 cents per channel adjustment may not take a
7.5% markup on programming cost increases that are otherwise currently
permissible under the rate rules.  The "going-forward rules" are scheduled to
expire on December 31, 1997.

The "going-forward rules" also allow cable operators to place channels that
were not offered on the cable system prior to October 1, 1994 on a new separate
unregulated service tier as long as the regulated basic and expanded basic
service tiers remain intact.  Cable operators may offer the same new channels
simultaneously on both an expanded basic tier and a new unregulated service
tier, and may at any time move them to the new tier.  Thus, operators may build
up a following for new channels by putting them in the expanded basic service
tier before moving them to the new unregulated service tier.  Channels that
were in the basic service tier or the expanded service tier prior to September
30, 1994, may not be moved to the new tier, nor may such channels be dropped
from the basic or expanded basic service tiers and then added to a new tier
within the two-year period after the date upon which any such channel is
dropped.

In September 1995, the FCC developed an abbreviated cost-of-service form that
permits cable operators to recover the costs of significant upgrades that
provide benefits to subscribers of regulated cable services.  Cable operators
seeking to raise rates to cover the cost of an upgrade would submit only the
costs of the upgrade instead of all current costs.

In another action in September 1995, the FCC established a new optional rate
adjustment methodology that encourages operators to limit their rate increases
to once per year to reflect inflation and changes in external costs and in the
number of channels.  The rules permit cable operators to "project reasonable"
changes in their costs for the 12 months following the rate change (in an
effort to eliminate delays in recovering costs).  The order also allows
operators to recover increases in additional types of franchise requirement
costs.  Permitted pass-through increases include increases in the costs of
providing institutional networks, video services, data services to or from
governmental and educational institutions, and certain other cost increases.
The Partnership is unable to predict the effect of these new rate rules on its
business.

In November 1995, the FCC proposed to provide cable operators with the option
of establishing uniform rates for similar service packages offered in multiple
franchise areas located in the same region.  Under the FCC's current rules,
cable operators subject to rate regulation must establish rates on a
franchise-specific basis.  The FCC recently adopted an order that will permit a
cable television system operator to submit a proposal to establish uniform
rules across multiple franchise areas.  The new rules could lower cable
operators' marketing costs and may also allow operators to better respond to
competition from alternative providers.  The Partnership is unable to predict
whether these rules will be of any benefit to the Systems.

In April 1996, the FCC revised its cost-of-service rules.   Since the adoption
of these new rules, the partnership has made cost-of-service filings for
several of its systems to provide justification for increased rates. Through
March 15, 1997, filings made were found to justify rates in two of the
partnership's Systems.  There can be no assurance that other filings that have
been made or will be made will be found to justify an increased rate.

In July 1996, the FCC proposed to give operators more flexibility with respect
to the relative pricing of different tiers of service.  Under this proposal,
once an operator has set rates in accordance with existing regulations, the
operator could decrease its basic service tier  ("BST") rate and then take a
corresponding increase in its cable programming service tier


                                       10



<PAGE>   11

("CPST") rate to offset the lost revenue on the BST.  In this proceeding, the
FCC has also asked parties to comment on whether it should place a limit on
the amount of any CPST rate increase or otherwise limit the amount by which the
BST and CPST rate may be adjusted.

The FCC expects that this proposal would give operators rate the structure
flexibility enjoyed by alternative providers of video service who are, or soon
will be, attempting to compete with cable operators but who are not subject to
the rate regulation imposed by statute on cable operators.  The Partnership is
unable to predict whether these proposed rules will ultimately be promulgated
by the FCC, and if they are promulgated, what their effect on the Partnership
will be.

The uniform rate requirements in the 1992 Cable Act which require that cable
operators charge uniform rates through their franchise area are relaxed by the
Telecommunications Act.  Specifically, the Telecommunications Act clarifies
that the uniform rate provision does not apply where a cable operator faces
"effective competition."  In addition, bulk discounts to multiple dwelling
units are exempted from the uniform rate requirements.  However, complaints
concerning "predatory" pricing (including with respect to bulk discounts to
multiple dwelling units) may be made to the FCC.  The Telecommunications Act
also permits cable operators to aggregate, on a franchise system, regional or
company level, its equipment costs in broad categories.  The Telecommunications
Act should facilitate the rationalization of equipment rates across
jurisdictional boundaries.  However, these cost-aggregation rules do not apply
to the limited equipment used by subscribers who only receive basic
programming.

"Anti-Buy Through" Provisions.  The 1992 Cable Act and corresponding FCC
regulations have established requirements for customers to be able to purchase
video programming on a per channel or per program basis without having to
subscribe to any tier of service (other than the basic service tier), subject
to available technology.  The available technology exception sunsets on October
5, 2002.  Although most of  the Partnership's subscribers are served by systems
that offer addressable technology, most of the  Partnership's subscribers do
not currently have the requisite equipment in their home to utilize such
technology.  As a result, most of the Partnership Systems are currently exempt
from complying with the  requirements of the 1992 Cable Act.  The Partnership
cannot predict the extent to which this provision of the 1992 Cable Act and the
corresponding FCC rules may cause customers to discontinue optional nonbasic
service tiers in favor of the less expensive basic cable service.

"Must Carry" Requirements/Retransmission Consents."   Under the 1992  Cable
Act, cable television operators are subject to mandatory broadcast signal
carriage requirements that allow local commercial and non-commercial
educational television broadcast stations to elect to require a cable system to
carry the station, subject to certain exceptions, or, in the case of commercial
stations, to negotiate for "retransmission consent" to carry the station.  In
addition, there are requirements for cable systems to obtain retransmission
consent for all "distant" commercial television stations (except for
commercial/satellite-delivered independent "superstations" such as WTBS),
commercial radio stations and certain low power television stations carried by
such systems after October 6, 1993.  The validity of mandatory signal carriage
requirements is being litigated in the United States Supreme Court, which heard
arguments on the must carry rule in October 1996; however, the carriage
requirements will remain in effect pending the outcome of such proceedings.  As
a result of the mandatory carriage rules, the Partnership's Systems have been
required to carry television broadcast stations that otherwise would not have
been carried, thereby causing displacement of possible more attractive
programming.  The retransmission consent rules have resulted in the deletion of
certain local and distant television broadcast stations which the Partnership's
Systems were carrying.  To the extent retransmission consent fees were paid for
the continued carriage of certain television stations, such  costs were not
recoverable.  Any future amounts paid in exchange for retransmission consent,
however, may be passed along to subscribers as additional programming costs.

Franchise Matters.  The 1984  Cable Act contains franchise renewal procedures
designed to protect against arbitrary denials of renewal.  The 1992 Cable Act
made several changes to the renewal process that could make it easier for a
franchising authority to deny renewal.  Moreover, even if a franchise is
renewed, a franchising authority may seek to impose new and more onerous
requirements, including requiring significant upgrades in facilities and
services or increased franchise fees.  If a franchising authority's consent is
required for the purchase or sale of a cable television system, the franchising
authority may also seek to impose new and more onerous requirements as a
condition to the transfer.  The acceptance of these new requirements, however,
may not be made a condition of the transfer.  Historically, franchises have
been renewed for cable operators that have provided satisfactory services and
have complied with the terms of their




                                       11


<PAGE>   12

franchises.  Although the General Partner believes that the Partnership has
generally met the terms of its franchise agreements and has provided quality
levels of service, and anticipates that the Partnership's future franchise
renewal prospects generally will be favorable, there can be no assurance that
any such franchises will be renewed or, if renewed, that the franchising
authority will not impose more onerous requirements on the Partnership than
previously existed.

Other FCC Regulations.  The Partnership is subject to a variety of other FCC
rules.  covering such diverse areas as equal employment opportunity,
programming, maintenance of records and public inspection of files, technical
standards, leased access and customer service.  The FCC has 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 often used in connection with cable
operations. The General Partner believes the Partnership is in compliance in
all material respects with all applicable FCC requirements.

Small Cable Systems.  The FCC has implemented rules to reduce the substantive
and procedural burdens of rate regulation applicable to small cable systems
(i.e., cable systems serving 15,000 or fewer subscribers that are owned by or
affiliated with a cable company which served, in the aggregate, 400,000 or
fewer subscribers at the time such rules went into effect).  Cable companies
falling outside of this definition may petition the FCC for small company
treatment if they can demonstrate similar circumstances.  The FCC's small cable
systems rules amended the FCC's  previous definitions of small cable entities
to encompass a broader range of cable systems that are eligible for special
rate and administrative treatment.  In addition, these new rules made available
to this expanded category a new regulatory scheme which the FCC expects to
provide both rate relief and reduced administrative burdens.  Specifically, the
new rules created a new cost-of-service approach involving a five-element
calculation based on a system's costs.  The calculation will produce a per
channel rate for regulated services that will be presumed reasonable if it is
no higher than $1.24 per channel.  If the formula generates a higher rate, the
operator may still charge that rate if not challenged by the franchise
authority, or if, upon being challenged, it meets its burden of proving that
the rate is reasonable.  Under these new rules, the regulatory benefits
accruing to such small cable systems remain effective even if such small cable
systems are later acquired by cable companies which serve in excess of 400,000
subscribers. The Partnership applied to regulatory authorities for small cable
system rate relief with regard to most of its systems, and as to all such
applications on file, the time period in which to file a challenge has passed.
As to certain of such systems for which an application was filed, the status as
a small cable system has been challenged by other parties.  However, none of
these challenges has been resolved by the FCC, and accordingly, in no instance
has the FCC yet denied status as a small cable system to any of the
Partnership's Systems.


1996 Telecommunications Act

On February 1, 1996, Congress passed the Telecommunications Act.  The
Telecommunications Act was signed into law by President Clinton on February 8,
1996, and substantially amends the Communications Act (including the
re-regulation of subscriber rates under the 1992 Cable Act).  The
Telecommunications Act alters federal, state and local laws and regulations
pertaining to cable television, telecommunications, and other services.  In
addition to the amendments previously discussed in this section, the
legislation also allows additional competition in video programming by
telephone companies, and makes other revisions to the Communications Act and
the 1984 and 1992 Cable Acts.

Telephone Company Provision of Video Programming.  Under the Telecommunications
Act, telephone companies can compete directly with cable operators in the
provision of video programming.  The Telecommunications Act recognizes several
multiple entry options for telephone companies to provide competitive video
programming, including over their telephone facilities, through either common
carrier transport or an "open video system," by radio communication, or as a
regular cable system.  LECs, including RBOCs, will be allowed to compete with
cable operators both inside and outside the LECs' telephone service areas.  The
Telecommunications Act repeals the statutory ban on telephone company provision
of video programming services in the telephone company's service areas.  The
FCC's video dialtone regulations have also been repealed.  Pursuant to the
authority granted to the FCC in the Telecommunications Act, the FCC required
all video dialtone operators in order to continue to offer services, to elect
one of the four permissible options for telephone companies by November 6, 1996
(as discussed more fully below).  Video dialtone operators were permitted to
apply for extensions based upon "good cause."


                                       12



<PAGE>   13

In particular, if a telephone company provides video via radio communications,
it will be regulated under Title II of the Communications Act (the general
sections governing use of the airwaves), rather than cable regulation under
Title VI.  If a telephone company provides common carriage transport of video
programming, it will be subject to the requirements of  Title II of the
Communications Act (the general common carrier provisions), rather than Title
VI cable regulation.  Telephone companies providing video programming through
any other means (other than as an "open video system," as described below) will
be regulated under Title VI cable regulation.

The Telecommunications Act replaces the FCC's video dialtone rules with an
"open video system" plan by which telephone companies can provide video
programming service in their telephone service area.  Telephone companies that
comply with the FCC's open video system regulations (which must be prescribed
within six months from enactment) will be subject to a relaxed regulatory
scheme.  The open video system requirements are in lieu of Title II common
carrier regulation.

The FCC was directed and has prescribed rules that prohibit open video systems
from discriminating among video programming providers with regard to carriage,
and that ensure that open video system rates, terms and conditions for service
are reasonable and non-discriminatory.  Pursuant to the Telecommunications Act,
the FCC has also adopted regulations prohibiting an open video system operator
and its affiliates from occupying more than one-third of the system's activated
channels when demand for channels exceeds supply.  The Telecommunications Act
also mandates other open video system regulations, including channel sharing
and sports exclusivity.  Open video systems will be subject to the authority of
local governments to manage public rights-of-way.  Local franchising
authorities may require open video system operators to pay franchise-type fees,
which may not exceed the rate at which franchise fees are imposed on any cable
operator in the corresponding franchise area.

Buyouts.  The Telecommunications Act generally prohibits buyouts of cable
systems (which includes any ownership interest exceeding 10%) by LECs within
the LECs' telephone service area, cable operator buyouts of LEC systems within
the cable operator's franchise area, and joint ventures between cable operators
and LECs in the same markets.  There are certain statutory exceptions,
including a rural exemption which permits buyouts where the purchased system
serves an area with fewer than 35,000 inhabitants outside an urban area.  Also,
the FCC may grant waivers of the buyout provisions in cases where (1) the cable
operator or LEC would be subject to undue economic distress; (2) the cable
television system or facility would not be economically viable; or (3) the
anti-competitive effects of the proposed transaction are clearly outweighed by
the effect of the transaction in meeting community needs.  The relevant local
franchising authority must approve any such waiver.

Public Utility Competition.  The Telecommunications Act also authorizes
registered utility holding companies and their subsidiaries to provide video
programming services, notwithstanding the Public Utility Holding Company Act.
Utilities must establish separate subsidiaries for this purpose and must apply
to the FCC for operating authority.  Several such utilities have been granted
broad authority by the FCC to engage in activities which could include video
programming.

Cross-Ownership; Reduced Regulations.  The Telecommunications Act makes several
other changes to relax ownership restrictions and regulation of cable systems.
It repeals the 1992 Cable Act's three-year holding requirement pertaining to
sales of cable systems.  The broadcast/cable cross-ownership restrictions are
eliminated, although the FCC's regulations prohibiting broadcast/cable common
ownership currently remain.  The SMATV cable cross-ownership and the MMDS cable
cross-ownership restrictions have been eliminated for cable operators subject
to effective competition.

The Telecommunications Act amends the definition of "cable system" so that a
broader class of entities (including some which may compete with the
Partnership) providing video programming will be exempt from regulation as
cable systems under the Communications Act.

Pole Attachments.  The Telecommunications Act also alters the scheme pertaining
to pole attachment rates (rates charged by telephone and utility companies for
delivery of cable services).  The current method for determining rates will
continue for five years.  The FCC recently adopted an Order to implement the
Telecommunications Act's pole attachment provisions, and is engaged in a
further proceeding regarding pole attachment rates.  Any increases pursuant to
this new




                                       13

<PAGE>   14

formula may not begin for five years, and will be phased in over five
through ten in equal increments.  However, this new FCC formula does not apply
in states which certify that they regulate pole rates.

Miscellaneous Requirements and Provisions.  The Telecommunications Act also
imposes other miscellaneous requirements on cable operators, including an
obligation to fully scramble or block at no charge the audio and video portion
of any channel not specifically subscribed to by a household.  In addition,
sexually explicit programming must be scrambled or blocked.  If the cable
operator is unable to scramble or block its signal completely, it must restrict
transmission to those hours of the day when children are unlikely to view the
programming, as determined by the FCC.  On March 24, 1997, the U.S. Supreme
Court let stand a lower court ruling that allows enforcement of this provision
pending consideration of a constitutional challenge.  Enforcement of the
scrambling requirement could increase operating expenses for operators of cable
television systems, including the Partnership, and provide a competitive
advantage to less regulated providers of video programming services.  The
Telecommunications Act also directs the FCC to adopt regulations to ensure, with
certain exceptions, that video programming is fully accessible through closed
captioning.  The FCC recently released a report to Congress on the level at
which video programming is closed captioned.  The FCC has also initiated another
proceeding to establish regulations to implement closed captioning requirements.

Although the Telecommunications Act may substantially lessen regulatory
burdens, the cable television industry may be subject to additional competition
as a result thereof.  There are numerous rulemakings which have been, and which
will be undertaken by the FCC which will interpret and implement the provisions
of the Telecommunications Act.  In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective.  Further, certain provisions of the
Telecommunications Act have been, and are likely to continue to be subject to
legal challenges. The Partnership is unable at this time to predict the outcome
of such rulemakings or litigation or the substantive effect (financial or
otherwise) of the Telecommunications Act and related rulemakings on the
Partnership.

FCC Implementation.  The FCC is presently, and will be, engaged in numerous
proceedings to implement various provisions of the Telecommunications Act.
Recently, the FCC adopted cable television equipment cost aggregation rules and
adopted open video system rules.  In addition to the proceedings previously
discussed herein, the FCC has initiated a proceeding to implement most of the
Cable Act reform provisions of the Telecommunications Act.

In this proceeding, the FCC has set forth certain interim rules to govern while
the FCC completes its implementation of the Telecommunications Act.  Among
other things, the FCC is requiring on an interim basis that for a LEC to be
deemed to be offering "comparable" programming, such programming must include
the signals of local broadcasters.  Cable systems that meet all of the relevant
criteria in the new effective competition test are exempt from rate regulation
as of  February 8, 1996 (the date the Telecommunications Act was signed into law
by President Clinton).  Cable systems may file a petition with the FCC at any
time for a determination of effective competition.

The FCC has also established interim rules governing the filing of rate
complaints by local franchising authorities.  Local franchising authorities may
file rate complaints with the FCC when the local franchising authorities
receive more than one subscriber complaint concerning an operator's rate
increase.  If the local franchising authority receives more than one subscriber
complaint within the 90-day period and decides to file its own complaint with
the FCC, it must do so within 180 days after the rate increase became
effective.  Before filing a complaint with the FCC, the local franchising
authority must first provide the cable operator written notice of its intent to
do so and must give the operator a minimum of 30 days to file with the local
franchising authority the relevant FCC forms used to justify a rate increase.
The local franchising authority must then forward its complaint and the
operator's response to the FCC within the 180 day deadline.  The FCC must issue
a final order within 90 days after it receives a local franchising authority
complaint.

For interim purposes, the FCC has established that an operator serving fewer
than 617,000 subscribers is a "small cable operator" if its annual revenues,
when combined with the total annual revenues of all of its affiliates, do not
exceed $250 million in the aggregate.  For interim purposes, "affiliate" will
be defined as a 20% or greater equity interest.

In addition to the interim rules discussed above and other miscellaneous
interim rules, the FCC is also engaged in a rule-making proceeding to create
and implement final rules relating to the cable reform provisions of the
Telecommunications

                                       14

<PAGE>   15


Act.  Among other issues, the FCC is considering whether to
establish a LEC market share that must be satisfied before a LEC will be deemed
to constitute "effective competition" to an incumbent cable operator (which
would free the cable operator from rate regulation).  The Partnership cannot
predict the outcome of this FCC proceeding or what its ultimate effect will be.


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, cable operators can obtain blanket permission to
retransmit broadcast signals.  The nature and amount of future copyright
payments for broadcast signal carriage cannot be predicted.  The possible
simplification, modification or elimination of the compulsory copyright license
is the subject of continuing legislative review.  The elimination or substantial
modification of the cable compulsory license could adversely affect the ability
of the Partnership to obtain suitable programming and could substantially
increase the cost of programming that remained available for distribution to the
customers of the Partnership.  The General Partner cannot predict the result of
such legislative activity or the effect of such activity on the Partnership's
condition (financial or otherwise).  See "--Regulation and Legislation."


State and Local Regulation

Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity.  Franchises generally are granted for fixed terms and
in many cases are terminable if the franchisee fails to comply with material
provisions of its franchise agreement.  The terms and conditions of franchises
vary materially from jurisdiction to jurisdiction.  A number of states subject
cable television systems to the jurisdiction  of centralized state governmental
agencies, some of which impose regulation of a character  similar to that
imposed on a public utility.  Attempts in other states to regulate cable
television systems are continuing and can be expected to increase.  The
Partnership cannot predict whether any of the states in which the Partnership
currently operates will engage in such regulation in the future.  State and
local franchising jurisdiction is not unlimited, however, and must be exercised
consistently with Federal law.  The 1992 Cable Act immunizes franchising
authorities from monetary damage awards arising from regulation of cable
television systems or decisions made on franchise grants, renewals, transfers
and amendments.


COMPETITION IN THE CABLE TELEVISION BUSINESS

Cable television companies generally operate under non-exclusive franchises
granted by local authorities that are subject to renewal and renegotiation from
time to time.  The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable television franchises and from unreasonably refusing
to award additional competitive franchises.  Cable system operators may
therefore experience competition from other operators building a system in an
existing franchise area (i.e., an "overbuild").  The 1992 Cable Act also
permits municipal authorities to operate cable television systems in their
communities without franchises. Heretofore, there have been virtually no
overbuilds in the areas in which the Partnership's Systems are located.
However, in October, 1996, in Newnan, Georgia, the Newnan Water Sewage and
Light Commission announced its intention to construct a fiber optic system and
has already begun to market cable television service to the Partnership's
customers within the city area.  The Partnership has approximately 6,000 homes
passed and 3,500 basic subscribers within the City of Newnan.  The Newnan Water
Sewage and Light Commission has recently received a franchise for the
unincorporated county area surrounding the city.  Given the recent nature of
this competitive development, the Partnership cannot estimate its impact.

Other cable operators operate systems in the vicinity of the Partnership's
Systems and also compete for the right to construct systems in new housing
developments adjoining or otherwise located in proximity to such operator's
existing systems.  The Partnership believes that the selection of a cable
operator to construct a system in a new housing development (which may be
located near the cable systems of several different operators) is typically
based upon an

                                       15


<PAGE>   16

evaluation by the real estate developer of the programming and pricing offered
by the different cable operators conducting business in proximity to such
housing development.

Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment.  Within the home video programming market, the Partnership
competes primarily with other cable franchise holders and with home satellite
and wireless cable providers, and when existing franchises become available for
renewal (or new franchises become available in the southeastern region of the
United States), with other cable franchise holders.  The Partnership believes
that direct broadcast satellite ("DBS"), a service by which packages of
television programming are transmitted to individual homes that are serviced by
a single satellite dish, is currently the most significant competitive threat to
the Partnership's Systems.  There are certain disadvantages associated with DBS
technology (e.g., high upfront capital costs, lack of local programming and
topographical limitations which limit reception in hilly areas) that have
limited its competitive impact to date. However, the prices that consumers pay
to obtain a DBS satellite dish have been reduced substantially and recent
published reports indicate that there are now approximately 4.5 million
subscribers to DBS services, which reflects a substantial increase in the number
of such subscribers from those reported in previous years.  In addition, many
observers are projecting continued growth for the DBS industry through the end
of the decade.  Thus, although it is difficult to assess the ultimate magnitude
of the impact that DBS will have on the cable industry or upon the Partnership's
operations and revenues, DBS services now pose a significant competitive threat
to cable television systems. Furthermore, recently announced plans by
Newscorp/EchoStar to seek approval to offer local broadcast channels on DBS
commencing in the latter part of 1998, if implemented with effective technology
and providing channels local to the markets served by the Partnership's Systems,
could accelerate the timing and increase the impact of the competition.  (This
proposed plan calls for local stations on the DBS system in at least 75% of the
country by the end of 1998, via the use of "spot beam" technology, which aims
local signals down to small geographic areas.)

Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution services ("MMDS"), which
uses low power microwave frequencies to transmit video programming over-the-air
to customers.  The FCC has amended its regulations to enable MMDS systems to
compete more effectively with cable systems by making available additional
channels  to the MMDS industry and by refining the procedures by which MMDS
licenses are granted.  The FCC also recently ruled that wireless cable
operators may increase their channel capacity and service offerings through
digital compression techniques.  Such increased capacity and offerings may make
wireless cable a more significant competitor in the video programming industry.
The 1992 Cable Act generally prohibits a cable operator from holding an FCC
MMDS license in its franchised cable service area.  However, the
Telecommunications Act allows such common ownership if the cable operator is
subject to "effective competition".  Although the Partnership faces some actual
or potential competition from MMDS operators, such competition is not yet
significant.  Additionally, the FCC recently allocated frequencies in the 28
GHz band for a new multichannel wireless video service similar to MMDS.  The
Partnership is unable to predict the economic viability of wireless video
services, such as MMDS, or whether such services will present a competitive
threat to the Partnership.

Additional forms of competition for cable systems are master antenna television
("MATV") and satellite master antenna television system ("SMATV").  These
systems are essentially small, closed cable systems which operate within
specific hotels, apartment- or condominium-complexes and individual residences.
Due to the widespread availability of earth stations, such private cable
television systems can offer both improved reception of local television
stations and many of the same satellite-delivered program services which are
offered by franchised cable television systems.  MATV and SMATV systems
currently benefit from operating advantages not available to franchised cable
television systems, including fewer regulatory burdens and no requirement to
service low density or economically depressed communities.  The
Telecommunications Act, which to some extent deregulates or lessens the
regulatory burden on the cable industry, may reduce some of the advantages of
MATV and SMATV systems.  However, since MATV and SMATV systems generally do not
fall within the Cable Act's definition of a "cable system", notwithstanding the
enactment of such legislation, they could still be exempt from other
requirements of the Cable Acts which were not amended.  Furthermore, the
Telecommunications Act broadens an exemption from regulation as a "cable
system", which may exempt additional MATV and SMATV systems from regulation
under the Cable Acts.

A federal statutory cross-ownership restriction had historically limited entry
into the cable television business by local telephone companies, which are
potentially strong competitors to cable operators.  The Telecommunications Act
repealed



                                      16

<PAGE>   17

the cross-ownership restriction and authorizes LECs to provide a wide variety
of video services competitive with services provided by cable systems and to
provide cable services directly to customers in the telephone companies' service
areas, with some regulatory safeguards.  See "--Regulation and Legislation."
Some video programming services provided by telephone companies (e.g., "open
video systems") do not require local franchises.  Further, certain of the RBOCs
have already entered the cable television business outside their service areas.
For example, US West has purchased cable televisions systems serving subscribers
in and around Atlanta, Georgia (an area in which the Partnership has cable
operations).  The Partnership believes that telephone companies will generally
focus their efforts on cable acquisitions in larger metropolitan areas, although
there can be no assurance that this will be the case.

The Telecommunications Act also authorizes registered utility holding companies
and their subsidiaries to provide video programming services, notwithstanding
the applicability of the Public Utility Holding Company Act.  See "--Regulation
and Legislation."

Other new technologies may become competitive with non-entertainment services
that cable television systems can offer.  Advances in communications technology
as well as changes in the marketplace and the regulatory and legislative
environment are constantly occurring.  The Partnership cannot predict the
effect that ongoing or future developments might have on the cable television
industry generally or the Partnership specifically.

EMPLOYEES

Neither Charter Holdings nor Holdings Capital has any employees.  As of
December 31, 1996, Charter Holdings' operating subsidiaries employed a total of
approximately 520 full-time equivalent persons in the operation of their cable
television systems.  None of these employees are represented by a union and
these employers have never experienced a work stoppage.  The Partnership
considers its relationships with its employees to be good.

Charter acts as the management company  for the Partnership pursuant to a
Management Agreement, and is the employer of record of the persons who serve as
executive officers of  Charter Holdings and Holdings Capital.  See "Item 13.
Certain Relationships and Related Transactions."


OTHER MATTERS

The Partnership owns and operates cable television systems and does not engage
in any other identifiable industry segments.  The Partnership does not believe
that changes of a seasonal nature are material to the cable television
business.  The Partnership has not expended material amounts during the last
two years on research and development activities.  As the Partnership is a
service-related organization, little or no raw materials are utilized by the
Partnership.  The necessary hardware, coaxial cable and electronics required
for construction of new cable plant are available from a variety of vendors and
are generally available in ample supply.  There is no one customer or
affiliated group of customers to whom sales are made in amounts which exceed
ten percent (10%) of the Partnership's revenues.  The Partnership believes it
is not affected by inflation except to the extent that the economy in general
is affected thereby.


ITEM 2. PROPERTIES

The Partnership's principal physical assets consist of the components of each
of the Systems, which include a headend, distribution cables and local business
offices.  The receiving apparatus is comprised of a tower and antennas for
reception of over-the-air broadcast television signals and one or more earth
stations for reception of satellite signals.  Located near these receiving
devices is a building that houses associated electronic gear and processing
equipment.  The Partnership owns the receiving and distribution equipment of
each System and owns or leases small parcels of real property for the receiving
sites.




                                      17

<PAGE>   18

Cable is either buried in trenches or is attached to utility poles pursuant to
license agreements with the owners of the poles.  As is typical in the cable
television industry, the Partnership maintains insurance on its above-ground
plant, but not for its underground plant.  The Registrant owns or leases the
local business office of each system from which it dispatches service
employees, monitors the technical quality of the system, handles customer
service and billing inquiries and administers marketing programs.  The office
facilities of some systems include certain equipment for program production, as
required under certain of the Partnership's franchises.

The Partnership believes that its properties are generally in good condition,
although the physical components of the cable systems do require maintenance
and periodic upgrades to keep pace with technological advances and to comply
with the requirements of certain franchising authorities.  The Systems
currently operate at between 270 and 750 megahertz, whereas the General Partner
believes the standard in the cable television industry to be 450 megahertz.
For a discussion of historical and planned capital expenditures, see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."  Partnership plant is summarized at December 31, 1996 as follows:


<TABLE>
<CAPTION>
                                        42 or Fewer   43 to 54  55 to 62  63 or Greater
                                         Channels     Channels  Channels    Channels       Total
                                         --------     --------  --------    --------       -----
         <S>                             <C>          <C>        <C>         <C>          <C>
         Number of Systems .............    49           10        12          3              74
         Miles of Plant ................   5,661        4,037     4,332        696          14,726
         Basic Subscribers .............  108,300      96,300    106,200     19,800        330,600
         % of Total Basic Subscribers ..   32.8%        29.1%     32.1%       6.0%           100%
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS


The Partnership is involved from time to time in routine legal matters
incidental to its business.  Management, after consultation with its legal
counsel, believes that the resolution of such matters will not have a material
adverse effect on the Partnership's financial position or results of
operations.

A purported class action lawsuit on behalf of the limited partners of Cencom
Cable Income Partners, L.P. was filed in 1995 (the "Action"), which sought,
among other things, to enjoin permanently the CCIP Acquisition.  On February
15, 1996, the Court of Chancery of the State of Delaware in and for new Castle
County dismissed all of the plaintiff's claims for injunctive relief (including
that which sought to prevent the consummation of the CCIP Acquisition); the
plaintiff's claims for money damages which might result from the proposed sale
by CCIP of its assets (including the CCIP Acquisition) remain pending.  Each of
the defendants in the Action, including Charter and CC-II, believes the Action
to be without merit and is contesting it vigorously.  On October 19, 1996, the
plaintiff filed a Consolidated Amended Class Action Complaint (the "Amended
Complaint").  In connection with the filing of the Amended Complaint, the
defendants informed the court that portions of the Amended Complaint were
legally inadequate.  The defendants filed an Answer to the Amended Complaint on
December 6, 1996.  In January 1997, the defendants filed a Motion for Summary
Judgment to dismiss all remaining claims as to all parties in the Action.  The
general partner of CCIP believes that portions of the Amended Complaint are
legally inadequate and intends to file a dispositive motion as to all remaining
claims in the Action.  There can be no assurance, however, that the plaintiff
will not be awarded damages, some or all of which may be payable by CC-II, in
connection with the Action.


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


No matters were submitted to a vote of security holders during the fourth
quarter of 1996.


                                       18


<PAGE>   19


                                    PART II



ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Not applicable.


ITEM 6.   SELECTED FINANCIAL DATA


The following selected financial data has been derived from the audited
financial statements of the Partnership and should be read in conjunction with
the financial statements and notes thereto included pursuant to Item 8 of this
Form 10-K.


<TABLE>
<CAPTION>
                                                            AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                                        -------------------------------------------------
                                                            1996             1995                1994
                                                        ------------      ------------        -----------
           <S>                                          <C>              <C>                <C>
           STATEMENT OF OPERATIONS DATA:
           Service Revenues....................         $120,279,555      $ 72,830,913        $21,561,116
           Income (loss) from Operations                     835,380        (8,206,746)        (4,989,077)
           Net loss............................          (40,419,949)      (27,585,703)        (9,609,052)

           BALANCE SHEET DATA:
           Total assets........................          577,015,932       425,561,725            --
           Long-term obligations, including
             current maturities..................        493,571,442       259,125,000            --
           Partners' (deficit) capital.........           46,015,242        31,598,457            --

           MISCELLANEOUS DATA:
           Ratio of earnings to fixed charges1/             --                 --                 --
---------------------------------------
</TABLE>

1/ Ratio of earnings to fixed charges is calculated using income from
continuing operations adding back fixed charges; fixed charges include interest
expense and amortization expense for debt issuance costs.  Earnings for the
years ended December 31, 1996, 1995 and 1994 were insufficient to cover the
fixed charges by $40,419,949, $27,585,703, and $9,609,052, respectively.  As a
result of such insufficiencies, these ratios are not presented above.


                                       19


<PAGE>   20



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

SIGNIFICANT ASSET ACQUISITIONS

The Partnership has operated cable television systems for a limited period of
time and had no operations prior to April 30, 1994.  The Partnership completed
nine acquisitions during the period of April 30, 1994 through December 31,
1996, summarized as follows:

<TABLE>
<CAPTION>
                          Approximate
     Acquisition Date   Purchase Price        Location of Systems
     -----------------  --------------        -------------------
     <S>                <C>             <C>
     April 30, 1994     $174.7 million  Georgia, Alabama, Louisiana
     January 1, 1995    $108.0 million  Kentucky, N. Carolina, S. Carolina
     May 1, 1995        $ 22.0 million              Georgia
     May 31, 1995       $ 48.0 million              Alabama
     July 31, 1995        34.7 million              Georgia
     November 30, 1995  $ 35.0 million            S. Carolina
     January 1, 1996    $  8.4 million            S. Carolina
     March 29, 1996     $112.0 million  Georgia, N. Carolina, Tenn., Ky.
     November 29, 1996  $ 22.0 million          Alabama, Tennessee
</TABLE>


As of December 31, 1996, the Partnership had two pending acquisitions for the
purchase of cable television systems serving approximately 86,100 basic
subscribers for a total purchase price of approximately $157.2 million.  On
February 7, 1997, the Partnership completed the acquisition of the cable
television system in Hickory, N.C., which serves approximately 35,400 basic
subscribers, for a purchase price of approximately $68.1 million, after
adjustments.

The remaining pending acquisition, the CCIP-II/CPLP Acquisition, is subject to
the satisfaction of certain terms and conditions, including the favorable votes
of the holders of the limited partnership interests of CCIP-II.  It is
anticipated that these acquisitions will be consummated during the second
quarter of 1997, although there can be no assurance that these acquisitions
will be consummated.  See "Part I.  Business - Proposed Acquisitions".


                                       20


<PAGE>   21



RESULTS OF OPERATIONS

The following table summarizes the amounts and the percentage of total revenues
for certain items for the periods indicated:



<TABLE>
<CAPTION>
                                                FOR THE YEAR ENDED DECEMBER 31,
                             ---------------------------------------------------------------------
                                     1996                      1995                     1994
                             -------------------        ------------------        ----------------
                                Amt.         %             Amt.        %            Amt.       %
                             ------------   ----        -----------   ----        ---------   ----
<S>                          <C>           <C>          <C>         <C>         <C>          <C>
Service Revenues:
 Basic Service               $ 87,056,898   72.4        $53,237,594   73.1      $16,314,348   75.7
 Premium Service               14,648,591   12.2          9,635,049   13.2        2,786,478   12.9
 Other Services                18,574,066   15.4          9,958,270   13.7        2,460,290   11.4
                             ------------   ----        -----------   ----        ---------   ----
                              120,279,555  100.0         72,830,913  100.0       21,561,116  100.0
                             ------------   ----        -----------   ----        ---------   ----
Operating Expenses:
 Total Operating and
   General & Administrative    60,297,537   50.1         37,247,983   51.2       11,152,604   51.7
 Management Fees                6,013,899    5.0          3,642,012    5.0        1,078,000    5.0
 Depreciation & Amortization   53,132,739   44.2         40,147,664   55.1       14,319,589   66.4
                             ------------   ----        -----------   ----        ---------   ----
 Total Operating Expense      119,444,175   99.3         81,037,659  111.3       26,550,193  123.1
                             ------------   ----        -----------   ----        ---------   ----
Income (Loss) from
 Operations                       835,380    0.7         (8,206,746) (11.3)      (4,989,077) (23.1)
                             ------------   ----        -----------   ----        ---------   ----
Other Income (Expenses):
 Interest Income                  233,479    0.2            198,400    0.3           34,564    0.2
 Interest Expense             (41,020,677) (34.1)       (18,721,628) (25.7)      (4,654,539) (21.6)
 Loss from Hurricane             (367,000)  (0.3)          (744,800)  (1.0)               0    0.0
 Other                           (101,131)  (0.1)           (40,183)  (0.1)               0    0.0
                             ------------   ----        -----------   ----        ---------   ----
 Other Income (Expense)       (41,255,329) (34.3)       (19,308,211) (26.5)      (4,619,975) (21.4)
                             ------------   ----        -----------   ----        ---------   ----
Net Loss Before Income Tax
 Benefit and
 Extraordinary Item           (40,419,949) (33.6)       (27,514,957) (37.8)      (9,609,052) (44.5)

Income Tax Benefit                      0    0.0          1,888,692    2.6                0    0.0
                             ------------   ----        -----------   ----        ---------   ----
Net Loss Before Extraordinary
 Item                         (40,419,949) (33.6)       (25,626,265) (35.2)      (9,609,052) (44.5)

Extraordinary Item - Loss on
 Early Retirement of Debt               0    0.0         (1,959,438)  (2.7)               0    0.0

Net Loss                     ($40,419,949) (33.6)      ($27,585,703) (37.9)     ($9,609,052) (44.5)
                             ============   ====        ===========   ====       ==========   ====
</TABLE>


                                       21


<PAGE>   22


COMPARISON OF YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

Service Revenues

The Partnership earns substantially all of its revenues from monthly
subscription fees for basic tier, expanded tier, premium channels, equipment
rental and ancillary services provided by its cable television Systems.
Service revenues increased by 237.8% from $21.6 million in 1994 to $72.8
million in 1995, and increased 65.1% to $120.3 million in 1996.  These
increases are primarily due to the increase in the number of subscribers to the
cable services offered by the Partnership as a result of the acquisitions of
cable television systems during 1995 and 1996.  The Partnership has been able
to increase revenues through the implementation of basic and expanded tier
retail rate increases in certain systems, in accordance with federal law.  In
addition to the subscriber increases as a result of acquisitions, the
Partnership has grown its subscriber base internally as a result of
management's marketing efforts to add new subscribers, increased efforts to
retain existing customers, and a limited amount of new-build construction to
increase the coverage area of its systems.  See "Item I - Description of the
Partnership Systems" for a summary of the year end subscriber data by operating
cluster.

Premium service subscriptions increased from 49,200 at December 31, 1994 to
142,200 at December 31, 1995, to 151,200 at December 31, 1996.  The increases
in total premium units is due primarily to the increase in the number of basic
subscribers as a result of the acquisitions during 1995 and 1996.  Also, the
number of premium service subscriptions at December 31, 1995 included
approximately 24,000 Flix and American Movie Classic premium units, carriage of
which was discontinued by certain systems in the Northern Alabama Cluster in
early 1996.  In addition, the decrease in the premium ratio, determined by
dividing the number of premium subscriptions by the number of basic
subscribers, may also reflect the fact that there is an increasing variety of
quality programming on the basic tier.  As such, the Partnership anticipates
that premium services may continue to decline relative to basic services over
the next few years.  As a result, the Partnership offers premium services to
subscribers in a packaged format, providing subscribers with a discount from
the combined retail rates of these packaged services in an effort to maintain
premium subscription levels and attract additional subscriptions.


Operating Expense

Operating and general and administrative expenses increased by 234.0% from
$11.2 million in 1994 to $37.2 million in 1995, and increased by 61.9% to $60.3
million in 1996.  These increases are primarily due to the increase in the
number of subscribers served by the Partnership as a result of the acquisitions
of cable television systems during 1995 and 1996.  As a percentage of service
revenues, operating and general and administrative expenses have declined from
51.7% to 51.2% to 50.1% for the years ended December 31, 1994, 1995 and 1996,
respectively.  The Partnership has been able to achieve certain operating cost
efficiencies as a result of increasing the subscriber base in each of the
operating clusters.  However, offsetting these cost savings, the Partnership
continues to experience increases in programming costs, which are expected to
continue to be an on-going issue for the next few years.

Management fee expense relates to the cost associated with the certain
management agreements between the Partnership and Charter.  Management fee
expense of the Partnership is based on 5.0% of service revenues, with 40% of
the management fee expense deferred until repayment in full of the CC-I and
CC-II credit facilities,  the Debentures and the Senior Notes.  The remaining
60% of the management fee expense is calculated and settled on a quarterly
basis, paid in arrears.  See "Item 13 - Certain Relationships and Related
Transactions" for a discussion of the management agreements.

Depreciation and amortization expense increased by 180.4% from $14.3 million in
1994 to $40.1 million in 1995, and increased 32.3% to $53.1 million in 1996.
The increase is related to the increased base of property, plant and equipment
and franchise costs primarily as a result of the acquisitions of cable
television systems during 1995 and 1996.  In addition, the Partnership
continues to incur capital expenditures for property, plant and equipment costs
related to the upgrade and extension of the cable television systems.



                                       22

<PAGE>   23


Other Income (Expense)

Interest expense increased by 302.2% from $4.7 million in 1994 to $18.7 million
in 1995, and increased by 119.1% to $41.0 million in 1996.  The increased
interest expense is a result of the increase in the average outstanding debt
balances between years, including bank debt, the Debentures and the Senior
Notes, as a result of the acquisitions of cable television systems during 1995
and 1996.

Loss from hurricanes relates to the insurance deductible costs expensed by the
Partnership for Hurricane Opal in 1995 and Hurricane Fran in 1996.  The
Partnership maintains property and casualty insurance on its aerial plant,
headends and offices, but does not maintain property and casualty insurance
coverage on its underground distribution plant.


Net Loss

Net loss increased 187.1% from $9.6 million in 1994 to $27.6 million in 1995,
and increased 46.5% from $27.6 million in 1995 to $40.4 million in 1996.
Although the Partnership's loss from operations went from a loss of $8.2
million in 1995 to income from operations of $0.8 million in 1996, the
Partnership's increased interest expense continues to be a significant factor
to the Partnership's annual net loss.


Liquidity and Capital Resources

The Partnership's growth by acquisition in 1995 and 1996 has been funded
primarily by borrowings, either through the credit facilities of CC-I and CC-II
or with the proceeds of the Debentures and the Senior Notes.  Cash flows
provided by operating activities together with third party borrowings have been
sufficient to fund the Partnership's debt service, capital expenditures and
working capital requirements.  In addition, the Partnership has funded portions
of certain acquisitions through the issuance of equity securities.  Future cash
flows provided by operating activities and availability for borrowings under
the existing credit facilities are anticipated to be sufficient during the next
12 months for the Partnership's ongoing debt service, capital expenditures and
working capital needs.  The Partnership anticipates that pending acquisitions
or other potential future acquisitions could be financed through borrowings,
either presently available under the existing credit facilities, or as a result
of amending the existing credit facilities to allow for expanded borrowing
capacity, combined with additional equity contributions.  Although to date the
Partnership has been able to obtain financing on satisfactory terms, there can
be no assurance that this will continue to be the case in the future and
inability to obtain financing on satisfactory terms could negatively impact the
Partnership's ability to pursue a strategy that includes growth through
acquisitions.

In March 1996, the Partnership engaged in a corporate restructuring and
refinancing plan.  As a result, Southeast Holdings and Holdings Capital issued
$146.8 million principal amount of Debentures due 2007, from which the net
proceeds of $72.4 million were invested in its subsidiary, Southeast, for use
in operations. Simultaneously with this offering by Charter Holdings and
Holdings Capital, Southeast and Southeast Capital issued $125.0 million
aggregate principal amount of Senior Notes due 2006, from which the proceeds to
the issuers were $121.3 million.  The net proceeds of these concurrent
offerings were ultimately used, among other things, as follows:  $18.1 million
to repay outstanding credit facilities, $16.1 million to repay other
indebtedness, $43.2 million to redeem the Special Limited Partner units of
CC-I, and $114.9 million to consummate the CCIP Acquisition and related
transaction costs by CC-II.  In connection with the offerings of the Debentures
and the Senior Notes, each of CC-I and CC-II amended and restated its bank
credit facility to increase the total borrowing availability, lengthen the
maturity, and improve the terms and interest rates under the prior credit
facilities.  As a result of these amendments, availability under the CC-I
facility was adjusted from $110.0 to $105.0 million, and for the CC-II
facility, was increased from $135.0 to $205.0 million.

Both of these credit facilities were again amended in connection with
subsequent acquisitions.  In November 1996, CC-I increased its facility to
$150.0 million to complete the acquisition of systems in Alabama and Tennessee
(with a purchase price of $21.9 million, after adjustments), and cover
anticipated borrowings for the proposed CCIP-II/CPLP Acquisition (with a
purchase price of $20.8 million).  In February 1997, CC-II increased its
facility to $365.0 million to complete the

                                       23


<PAGE>   24

acquisition of the Hickory, North Carolina system (with a purchase price of
$68.0 million) and cover anticipated borrowings for the CCIP-II/CPLP
Acquisition (with a purchase price of $68.4 million).

At December 31, 1996, the Partnership's long-term debt of $493.6 million
consisted of $106.7 million outstanding under the revolving credit and term
loan facility of CC-I, $178.6 million outstanding under the revolving credit
and term loan facility of CC-II, $125 million of indebtedness from the sale of
the Senior Notes by Southeast, and $83.3 million of indebtedness from the sale
of the Debentures by Charter Holdings.  The Partnership had unused and
available borrowing capacity of $43.3 million and $26.4 million under the
credit facilities of CC-I and CC-II, respectively, at December 31, 1996.

Under the CC-I and CC-II credit facilities, cash interest is payable on a
monthly and quarterly basis for borrowings outstanding.  With respect to the
CC-I credit facility, the outstanding balance of $106.7 at December 31, 1996
had interest rates ranging between 7.50% and 9.13%, based upon its existing
LIBOR contracts or base rate balances.  The weighted average interest rates and
weighted average borrowings were approximately 7.93%, 8.72% and 7.42%, and
$84,693,500, $93,622,900 and $94,125,000 during the years ended December 31,
1996, 1995 and 1994, respectively.  With respect to the CC-II credit facility,
the outstanding balance of $178.6 at December 31, 1996 had interest rates
ranging between 7.25% and 8.13%, based upon its existing LIBOR contracts or
base rate balances.  The weighted average interest rate and weighted average
borrowings were 7.86% and 8.46% and approximately $174,512,000 and
$121,092,000, during 1996 and 1995, respectively.

For the Senior Notes, cash interest is payable semi-annually, in March and
September, and the first interest payment was paid in September 1996.  For the
Debentures, no interest is currently payable.  The discount related to the
original sale of the Debentures is amortized through March 2001, thereafter,
cash interest is payable on a semi-annual basis in March and September until
March 2007.  The Partnership manages risk arising from fluctuations in interest
rates through the use of interest rate swap and cap agreements required under
the terms of the existing credit facilities.  Interest rate swap and cap
agreements are accounted for by the Partnership as a hedge of the debt
obligation.  As a result, the net settlement amount of any such swap or cap is
recorded as an adjustment to interest expense in the period incurred.  The
effects of the Partnership's hedging practices on its weighted average
borrowing rate and on reported interest expense were not material during 1994,
1995 or 1996.  At December 31, 1996, the Partnership had eleven interest swap
and cap agreements with an aggregate notional amount of $250.0 million.  The
estimated fair value/redemption price for these contracts as of December 31,
1996 was net deficit of approximately $54,000.

On February 28, 1997, Charter Holdings received a contribution of $30 million
of additional equity as well as a contribution of the assets and related
liabilities for the cable television system located in Stockbridge, Georgia.
The Stockbridge system, which had an appraised value of approximately $3.67
million, was contributed by Charter Holdings to Charter Southeast which in turn
contributed such system to CC-II, and the additional capital was contributed by
Charter Holdings to Charter Southeast which in turn contributed such capital to
CC-I and CC-II to be ultimately used toward the proposed CCIP-II/CPLP
Acquisition.  Pending consummation of the CCIP-II/CPLP Acquisition, the equity
contribution was used to pay down outstanding indebtedness of $5.0 million and
$25.0 million under the credit facilities of CC-I and CC-II, respectively.  See
"Item 13.  Certain Relationships and Related Transactions."

The Partnership incurred capital expenditures of approximately $48.3 million
during 1996 in connection with the improvement and upgrading of the Systems.
The Partnership anticipates that capital expenditures for such purposes will be
approximately $55.0 million to $60.0 million during 1997 for the Systems it
owned at December 31, 1996 and for the Hickory, North Carolina system.  In
addition, the Partnership anticipates that capital expenditures for the systems
to be acquired in the CCIP-II/CPLP Acquisition to be approximately $10.0
million to $13.0 million during 1997.  However, the Partnership is continually
reevaluating its capital expenditure budget based on economic, technological,
competitive and other factors.  In addition, the actual closing date of the
purchase of the CCIP-II/CPLP Acquisition will affect the timing and ultimately
the amount of capital expenditures incurred for these systems during 1997.  The
Partnership anticipates to fund its capital expenditures through availability
under its existing CC-I and CC-II credit facilities and from cash generated by
operations.  As of December 31, 1996, the Partnership did not have any
significant contractual obligations for capital expenditures.


                                       24



<PAGE>   25

During October 1996, the Partnership became aware that the local power
commission affiliated with the City of Newnan, Georgia, announced its intention
to construct a fiber optic system for the delivery of video and data services to
the city.  The power commission's construction would be completed during 1997
and would pass the approximately 6,000 homes inside the city limits, from which
there are currently approximately 3,500 homes that subscribe to cable television
services offered by the Partnership. In addition, the City of Newnan recently
received a franchise for the unincorporated area surrounding the city.  The
Partnership completed the upgrade of its existing cable plant to 750 MHz during
December 1996, and began an aggressive marketing effort during the first quarter
of 1997 to promote its new channel offerings and other services.  The
Partnership cannot determine the impact, if any, this project by the City of
Newnan will have on long-term results or strategies of the Partnership.

The Partnership has had discussions with several municipalities, counties and
utility companies in Georgia to explore the possibility of sale and lease-back
venture whereby the Partnership would sell the cable television distribution
plant and then enter into a long-term capital lease and continue to operate the
cable system.  Pursuant to the proposals currently under discussion, the
Partnership and its venture partner would upgrade the plant to 860 Mhz,
allocating a portion of the spectrum to the venture partner for its purposes.
The Partnership would expect to benefit by gaining access to upgraded plant,
obtaining lower cost financing through the venture partner, and realizing
certain operating costs.  There is no assurance that a final agreement will be
reached with respect to any such proposals.

The Partnership has insurance covering risks incurred in the ordinary course of
business, including general liability, property and business interruption
coverage.  As is typical in the cable television industry, the Partnership does
not maintain insurance covering its underground plant, the cost of which
management believes is currently prohibitive.  Management believes that the
Partnership's insurance coverage is adequate, and intends to monitor the
insurance markets to attempt to obtain coverage for the Partnerships
underground plants at reasonable and cost-effective rates.

The Partnership believes that it has generally complied with the provisions of
the 1992 Act regarding cable programming service rates.  However, some systems
may be charging rates which are in excess of allowable rates and, accordingly,
may be subject to challenge by regulatory authorities, such challenge may
result in the Partnership being required to make refunds to subscribers.  The
amount of refunds, if any, which could be payable by the Partnership in the
event such systems' rates are successfully challenged by regulatory authorities
is not currently estimable.  The Partnership has not reserved any amounts for
payment of such refunds as the General Partner does not believe that the
amounts of any such refunds would have  material adverse effect on the
financial position or results of the Partnership.



                                       25



<PAGE>   26


SUPPLEMENTAL ANALYSIS OF OPERATING RESULTS FOR 1996 AND 1995 - UNAUDITED

The following table sets forth certain operating results and statistics for the
year ended December 31, 1996 compared to the year ended December 31, 1995.  The
following dollar amounts are in thousands, except for per subscriber amounts:


<TABLE>
<CAPTION>
                                       For the Year                                For the Year
                                 Ended December 31, 1996                     Ended December 31, 1995
                                 -----------------------                     -----------------------
                                        (Unaudited)                                  (Unaudited)
                             --------------------------------              --------------------------------
                             SYSTEMS                                       SYSTEM
                             ACQUIRED     Systems                          ACQUIRED      Systems
                               ON OR      Acquired                          ON OR       Acquired
                              BEFORE       After                            BEFORE       After
                             01/01/95     01/02/95    Actual               01/01/95     01/02/95    Total
                             --------     --------   --------              --------     --------   --------
<S>                        <C>            <C>        <C>                   <C>          <C>        <C>
Service Revenues             $ 66,916     $ 53,364   $120,280              $ 60,116     $ 12,715   $ 72,831
                             --------     --------   --------              --------     --------   --------
Operating Expenses:
 Operating Costs               28,890       22,081     50,971                25,805        5,251     31,056
 General & Administrative       5,317        4,009      9,326                 5,031        1,161      6,192
                             --------     --------   --------              --------     --------   --------
                             $ 34,207       26,090     60,297              $ 30,836     $  6,412   $ 37,248
                             --------     --------   --------              --------     --------   --------
EBITDA (a)                   $ 32,709     $ 27,274   $ 59,983              $ 29,280     $  6,303   $ 35,583
                             ========     ========   ========              ========     ========   ========
EBITDA Margin                   48.9%        51.1%      49.9%                 48.7%        49.6%      48.9%
                             ========     ========   ========              ========     ========   ========
 Operating Statistical
 Data, at end of Period

 Revenue per sub             $  32.18     $  34.22   $  34.05              $  29.91     $  30.13   $  30.10
 Homes passed                 250,500      246,300    496,800               245,100      133,800    378,900
 Basic subscribers            173,300      157,300    330,600               167,500       81,600    249,100
 Basic penetration              69.2%        63.9%      66.5%                 68.3%        61.0%      65.7%
 Premium subscriptions         73,600       77,500    151,100                78,900       63,300    142,200
</TABLE>

(a)  EBITDA represents income before interest expense, income taxes,
     depreciation and amortization, management fees and other income (expense).
     EBITDA is calculated before payment of management fees so as to be
     consistent with certain financial terms contained in the revolving credit
     and term loan facilities.  Management believes that EBITDA is a meaningful
     measure of performance because it is commonly used in the cable television
     industry to analyze and compare cable television companies on the basis of
     operating performance, leverage and liquidity.  EBITDA is not presented in
     accordance with generally accepted accounting principles and should not be
     considered an alternative to, or more meaningful than, operating income or
     operating cash flows as an indicator of the Partnership's operating
     performance.  EBITDA does not include the Partnership's debt obligations
     or other significant commitments.



                                       26


<PAGE>   27

Results of Operations -  Year Ended December 31, 1995 Versus the Year Ended
                         December 31, 1996 for Systems Acquired On or Before
                         January 1, 1995

The following discussion is provided to show the results of operations on a
comparable basis for those systems owned by the Partnership during the year
ended December 31, 1996 versus the year ended December 31, 1995.  Specifically,
the comparable analysis includes the results of operations for these systems
acquired on or before January 1, 1995, which the Partnership operated for the
entire fiscal years of 1996 and 1995.  See "Item 7 - Significant Asset
Acquisitions" for a complete listing of all acquisitions by the Partnership.

Service revenues increased by $6,800,000 or 11.3% when comparing the revenues
for the year ended December 31, 1995 to the results for the comparable systems
for the year ended December 31, 1996.  This increase is due to a net gain of
approximately 5,800 basic subscribers between years and, also, to retail rate
increases implemented in certain of the Partnership's systems.

Operating expenses increased approximately $3,371,000 or 10.9% when comparing
the operating expenses for the year ended December 31, 1995 to the results for
the comparable systems for the year ended December 31, 1996.  This increase is
primarily due to increases in license fees paid for programming as a result of
additional subscribers, new channels launched and increases in the rates paid
to the programming services.   The growth in programming expense is consistent
with industry-wide increases.

The Partnership experienced growth in operating cash flow (EBITDA) of
approximately $3,429,000 or 11.7% when comparing the operating cash flow for
the year ended December 31, 1995 to the results for the comparable systems for
the year ended December 31, 1996,  EBITDA margin increased from 48.7% to 48.9%
when comparing the similar periods, primarily due to realizing certain
operating efficiencies associated with the expanded clusters, offset by
increases in license fees paid for programming.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Index to Financial Statements and Schedules" on Page F-1.


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

During the fiscal year ended December 31, 1996, the Registrants were not
involved in any disagreements with its independent certified public accountants
on accounting principles or practices or on financial disclosure.


                                       27


<PAGE>   28


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Charter Holdings has no officers or directors.  Holdings Properties, the
general partner of  Charter Holdings, manages the business and affairs of, and
has general responsibility and ultimate authority in all matters affecting
business for, Charter  Holdings.

The following table sets for certain information, as of  March 15, 1997, with
respect to the executive officers and directors of Holdings  Properties and
Holdings Capital.

                  NAME         AGE               POSITION

             Barry L. Babcock  50   Chairman and Director  of  Holdings
                                       Properties and Holdings Capital

             Thomas C. Dircks  39   Director of Holdings Properties

              Jerald L. Kent   40   President, Chief Financial Officer and
                                       Director of Holdings Properties
                                       and Holdings Capital

             Howard L. Wood    57   Chairman of the Management
                                       Committee and Director  of
                                       Holdings Properties and Holdings
                                       Capital

BUSINESS EXPERIENCE

Mr. Babcock has been affiliated with Charter since 1993 and now holds the
position of Chairman.  Mr. Babcock also co-founded CCG in 1992.  Prior to that
time, he was associated with CCA as the Executive Vice President of CCA from
February 1986 to November 1992, and as Chief Operating Officer of CCA from May
1986 to November 1992.

Mr. Dircks has been a Vice President of Charterhouse Group International, Inc.
since 1988 and is also a certified public accountant.

Mr. Kent has been affiliated with Charter since 1993 and now holds the position
of President.  Mr. Kent also co-founded CCG in 1992.  Prior to that time, he
was associated with CCA as Executive Vice President and Chief Financial Officer
of CCA from 1987 through November 1992.

Mr. Wood has been affiliated with Charter since 1993, now holding the position
of Chairman of the Management Committee of Charter.  Mr. Wood also co-founded
Charter Communications Group ("CCG") in 1992.  Prior to that time, he was
associated with Cencom Cable Associates, Inc. ("CCA"), which he joined in July
1987 as Director; at CCA he held the position of President, Chief Executive
Officer and Director from January 1, 1989 to November 1992.


ITEM 11. EXECUTIVE COMPENSATION

During 1996, Charter Holdings had no officers or directors, and neither Charter
Holdings nor its general partner, Holdings Properties, had any employees.
Furthermore, during 1996, none of the executive officers of Holdings
Properties, the general partner of Charter Holdings, received any compensation
in his capacity as an officer or director of Holdings Properties.  Charter
performed management services for the Partnership pursuant to the terms of the
Old Management Agreements (as defined in Item 13) through March 28, 1996, and
thereafter, pursuant to the terms of the Charter Management Agreement (see
"Item 13.  Certain Relationships and Related Transactions").



                                       28



<PAGE>   29



Holdings Capital does not have any employees nor does it pay any compensation
to its executive officers or directors.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Charter Holdings is beneficially owned by CharterComm Holdings, L.P.
("CharterComm Holdings"), which directly owns all of the limited partnership
interests in Charter Holdings, and indirectly owns all of the general
partnership interests (through its wholly-owned subsidiary, Charter
Communications Holdings Properties, Inc. ["Holdings Properties"], which is the
sole general partner of Charter Holdings).  CharterComm Holdings, in turn, has
two general partners, CharterComm, Inc. and CharterComm II, L.L.C. (both
general partners together being the "CharterComm Entities").  The CharterComm
Entities are directly and /or indirectly owned by Charterhouse Group
International, Inc. and its affiliates ("Charterhouse") and Charter, with  93%
and 7% interests, respectively.  As a result of its investment, Charterhouse
can exercise effective control over the management and affairs of CharterComm
and CharterComm II, and therefore of Charter Holdings, Holdings Properties,
Holdings Capital, and Charter Southeast.

The following table sets forth information on the beneficial ownership of
interests in Charter Holdings as of March 15, 1997.


<TABLE>
<CAPTION>

Name and Address of Beneficial Owners               Type of Interest                % of Units
-------------------------------------               ----------------                -----------
<S>                                            <C>                                 <C>
CHARTER HOLDINGS
CharterComm Holdings ........................  Limited Partnership Units               99.0%
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri   63131

Holdings Properties .........................  General Partnership Units                1.0%
12444 Powerscourt Drive, Suite 400
St. Louis, Missouri   63131

CHARTERCOMM HOLDINGS

CharterComm II, L.L.C.(a) ...................  General Partnership Units               51.1%
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, New York   10036

CharterComm, Inc.(b) ........................  General Partnership Units               29.9%
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, New York   10036
Certain institutional investors .............  Preferred Limited Partnership Units     99.3%
                                               Common Limited Partnership Units        18.9%

Directors and Executive Officers ............  Preferred Limited Partnership Units      0.7%
of  Holdings Properties and  Holdings Capital  Common Limited Partnership Units      Less than 1%
as a group - 4 persons
</TABLE>



(a)   Charter, which beneficially owns 7% of the issued and outstanding
interests of CharterComm, Inc. and CharterComm II, LLC may be deemed to
beneficially own general partnership units of CharterComm Holdings.

(b)   Charterhouse, which beneficially owns 93% of the issued and outstanding
stock of CharterComm, Inc. and CharterComm II, LLC may be deemed to
beneficially own general partnership units of CharterComm Holdings.

                                       29


<PAGE>   30



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MANAGEMENT AGREEMENTS

During the period from January 1, 1996 to March 28, 1996, pursuant to certain
management agreements entered into between each of the Partnership's operating
subsidiaries, on the one hand, and Charter, on the other hand (the "Old
Management Agreements").  In connection with the Offerings of Notes and
Debentures, the Old Management Agreements were replaced.  Charter Holdings
entered into a Management Agreement dated March 28, 1996 (the "Charter
Management Agreement") with Charter, pursuant to which Charter Holdings
assigned and delegated to Charter its management rights and obligations under
the Subsidiary Management Agreements (as defined below).  Charter Holdings
entered into a management agreement dated March 28, 1996 with Charter Southeast
pursuant to which Charter Southeast assigned and delegated to Charter Holdings
its management rights and obligations under the Subsidiary Management
Agreements.  Charter Southeast entered into separate management agreements,
dated as of the closing date of the Offerings, with each of CC-I and CC-II
(collectively, the "Subsidiary Management Agreements").  Pursuant to the
Subsidiary Management Agreements, Charter Southeast has the exclusive right,
authorization and responsibility to manage the day-to-day business and affairs
of the cable systems owned by CC-I and CC-II, and is entitled to receive
consulting/management fees equal to an aggregate of five percent of the gross
subscriber revenues of such systems for its services.

Management fees payable to Charter pursuant to the Charter Management Agreement
are based on 5.0% of the Partnership's annual revenues.  The Indenture
prohibits the payment of 40.0% of such management fee until repayment in full
of the Debentures.  Unpaid management fees accrue without interest.  Pursuant
to the Old Management Agreements and the Charter Management Agreement, during
1996, management fees recognized and expensed by the Partnership were
$6,013,900, and management fees currently payable at December 31, 1996 were
$1,002,400.


CCIP ACQUISITION

The Partnership, through CC-II, acquired certain cable television systems from
CCIP on March 29, 1996 for an aggregate purchase price of approximately $115.0
million, including related acquisition fees and expenses.  In connection with
the CCIP Acquisition, each of Charter and Charterhouse received a transaction
fee (see "Transaction Fees" below).  The lawsuit related to the CCIP
acquisition remains pending and there can be no assurance that the plaintiffs
in the Action will not be awarded money damages, some or all of which may be
payable by CC-II (see "Item 1.  Business - Major Transactions in 1996" and
"Item 3.  Legal Proceedings."


PENDING CCIP-II/CPLP ACQUISITION

CC-I and CC-II have entered into agreements to purchase certain cable
television systems from two partnerships currently in the process of
dissolution  (CPLP and CCIP-II), each of which has a general partner that is an
affiliate of Charter.  Due to provisions in  the Indentures for the Senior
Notes and Debentures concerning affiliate transactions having a fair market
value exceeding $10.0 million, an independent fairness opinion will be obtained
as to the fairness of the acquisitions from a financial point of view.  As a
result of certain rights available to the partners of CharterComm Holdings, the
holders of outstanding preferred limited partnership interests of CharterComm
Holdings have consented to these acquisitions (see "Rights of Preferred Limited
Partners of CharterComm Holdings" below).   In connection with these
acquisitions, each of Charter and Charterhouse will be eligible to receive an
acquisition fee. See "Transaction Fees" below.,  and "Item 1.  Business -
Pending Acquisitions".

TRANSACTION FEES

In connection with acquisitions and financing transactions by Charter Holdings,
Charter Southeast and its subsidiaries, Charter and Charterhouse are typically
each paid financial advisory and investment banking fees.  Such fees are
calculated as a percentage of the transaction, based upon the size of the
transaction; the smaller the transaction, the higher the

                                       30


<PAGE>   31

percentage (up to a maximum of approximately 1.5% for each, respectively).
Typically, the fee is approximately 1.0% of the transaction.  In connection
with acquisitions into which Charter and Charterhouse are contributing equity,
such fees may be taken in the form of equity interests in the purchasing
entity. In 1996, Charter Holdings and its subsidiaries paid $1,737,500 in
transaction fees to Charter (including $1,500,000 payable with respect to the
CCIP Acquisition) and $2,687,500 to Charterhouse (including $950,000 as
transaction and consulting fees in connection with the issuance of the
Charterhouse Bridge Notes (as defined) and $1,500,000 as a transaction fee in
connection with the CCIP acquisition).  In addition, during the first quarter of
1997, each of Charter and Charterhouse received a transaction fee of $425,000 in
connection with an acquisition, and transaction fees are expected to be paid to
each in connection with the CCIP-II/CPLP Acquisition.  The Indenture for each of
the Debentures and the Senior Notes limits the payment of such transaction fees,
in the aggregate, to 1.25% of the purchase price of the transaction.


BENEFICIAL OWNERSHIP BY CHARTERHOUSE AND CHARTER

CharterComm Holdings holds a 99.0% limited partnership interest in, and,
through a wholly-owned subsidiary, a 1.0% general partnership interest in
Charter Holdings.  CharterComm Holdings is capitalized with three classes of
partnership interests:  preferred limited partner interests, common limited
partner interests, and general partner interests.  Because Charterhouse
indirectly controls both general partners of CharterComm Holdings, Charterhouse
can, subject to applicable law, exercise effective control over the management
and affairs of the Charter Holdings.  Charter has a non-controlling direct
and/or indirect interest in both general partners of CharterComm Holdings.  See
"Item 12.  Security Ownership of Certain Beneficial Owners and Management."


RIGHTS OF PREFERRED LIMITED PARTNERS OF CHARTERCOMM HOLDINGS

The prior consent of  the preferred limited partners of CharterComm Holdings is
required for certain significant corporate transactions, including, among
others, the dissolution of CharterComm Holdings, certain sales or transfers of
the assets of CharterComm Holdings or its subsidiaries, certain acquisitions of
assets by CharterComm Holdings or its subsidiaries and contributions of
property by any partner.  In accordance with these provisions, the prior
consent of the preferred limited partners, and where required, the waiver by
the common limited partners, was obtained in connection with the contribution
of $30 million of capital and the Stockbridge system in February 1997 to
Charter Holdings and the immediate downstreaming thereof, the valuation for the
Stockbridge system, and the proposed CCIP-II/CPLP Acquisition.  (See "Item 1.
Business - Recent Developments".)  In addition, each of the limited partners of
CharterComm Holdings has certain rights to require CharterComm Holdings to
purchase all or any portion of its limited partnership interests upon the
earlier to occur of (x) January 18, 2000 or (y) the occurrence of a Change of
Control (as defined in the CharterComm Holdings L.P. Agreement), at a
redemption price calculated in accordance with the CharterComm Holdings L.P.
Agreement.  The redemption price for CharterComm Holdings' (i) preferred
interests equals the accreted value of such interests at the time of redemption
and (ii) common interests equals the fair market value of such interests at the
time of redemption.  Under the terms of the CharterComm Holdings L.P.
Agreement, a "Change of Control" is deemed to occur in the event of, among
other things, the voluntary departure of all of Messrs. Babcock, Kent and Wood
from active engagement in the management of CharterComm Holdings.

The CharterComm Holdings L.P. Agreement includes customary events of default
("Events of Default"), including, without limitation, events relating to the
bankruptcy of either general partner of CharterComm Holdings or CharterComm
Holdings itself, the failure of CharterComm Holdings to comply with material
provisions of the CharterComm Holdings L.P. Agreement and certain other
agreements, including the failure to redeem partnership interests of
CharterComm Holdings when required.  Upon the occurrence of an Event of Default
and subject to the prior consent of a majority of the preferred limited
partners, each of the preferred limited partners of CharterComm Holdings has
the right to (i) replace the management of CharterComm Holdings, (ii) require
the liquidation of CharterComm Holdings (with the consent of the common limited
partners), or (iii) require CharterComm Holdings to purchase all or any portion
of its partnership units.  An Event of Default under the terms of the
CharterComm Holdings L.P. Agreement could therefore result in a change of
management of CharterComm Holdings, and, as result thereof, Charter Southeast.
Any of such events may constitute a Change of Control under the Indenture and
the credit facilities for CC-I and CC-II.



                                       31


<PAGE>   32


REDEMPTION OF SPECIAL LIMITED PARTNERSHIP INTERESTS

Approximately $43.2 million of the net proceeds from the Offerings were used to
redeem outstanding special limited partnership interests in CC-I, which were
outstanding to certain persons who sold systems to CC-I in 1994.  As a result
of the redemption of such special limited partnership interests, Charter
Holdings beneficially owns all of the outstanding partnership interests in
CC-I.


CHARTERHOUSE BRIDGE NOTES

Charter Holdings and Charterhouse Equity Partners II, L.P. ("CEP"), a Delaware
limited partnership controlled by Charterhouse, executed a Note Purchase
Agreement dated as of November 30, 1995 (the "Note Purchase Agreement").  By
the terms of the Note Purchase Agreement, Charter Holdings issued bridge notes
(the "Charterhouse Bridge Notes") due November 29, 1996 in the aggregate
principal amount of $15.0 million in favor of CEP.  In connection with its
organization, Charter Southeast assumed the Charterhouse Bridge Notes from
Charter Holdings.  The proceeds from the Charterhouse Bridge Notes were used by
Charter Southeast to acquire certain cable systems and the principal amount of
$15.0 million plus $571,146 of accrued interest was repaid on March 28, 1996
using proceeds of the Offerings.


SHORT-TERM INTERCOMPANY NOTES

In February 1996, CharterComm, now a general partner of CharterComm Holdings,
exercised an option to acquire the balance (60.0%) of the outstanding shares of
CCP One, Inc. (formerly known as LEB Communications, Inc.) which it did not
otherwise own for a purchase price of $1.1 million.  To exercise this option,
CharterComm borrowed such amount from CC-I.  Upon the closing of the Offerings,
CCP One, Inc. became an indirect wholly-owned subsidiary of Charter Holdings.
Charter Holdings indirectly assumed from CharterComm the liability for the
short-term intercompany note from CC-I and caused Charter Southeast to repay it
in full, without interest, from the proceeds of the Offerings.


1997 CONTRIBUTION OF  STOCKBRIDGE SYSTEM

On February 28, 1997, Charter and Charterhouse, through CharterComm II, LLC,
together contributed a 100% interest in the assets and liabilities of the
Stockbridge system, which had previously been owned and operated by Charter
Communications IV, L.P., as to which the general partner was an affiliate of
Charter (see "--Rights of Preferred Limited Partners of CharterComm Holdings").
This contribution was valued at $3.67 million, based on an independent
valuation.


                                       32



<PAGE>   33


                                    PART IV



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

(a)   1.    Financial Statements:
            See Index to Financial Statements and Schedules on page F-1 of
            this Report.

      2.    Financial Statement Schedules:
            See Index to Financial Statements and Schedules on page F-1 of this
            Report.

      3.   Exhibits:
           See Index on Page E-1 of this Report.

(b)  Reports on Form 8-K:

     No   reports on Form 8-K were filed during the fourth quarter of 1996.
          During the first quarter of 1997, the Registrants filed a Form 8-K
          dated February 7, 1997 covering Item 2 with respect to the acquisition
          of cable television systems in Hickory, North Carolina.  No financial
          statements were required to  be filed.




                                       33


<PAGE>   34


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned, thereto duly authorized.


CHARTER COMMUNICATIONS SOUTHEAST                CHARTER COMMUNICATIONS SOUTHEAST
  HOLDINGS, L.P.                                  HOLDINGS CAPITAL CORPORATION

By:  Charter Communications Holdings
       Properties, Inc.
     General Partner



By:   /s/ Jerald L. Kent                        By:   /s/ Jerald L. Kent
   --------------------------------                ----------------------------
   Name:  Jerald L. Kent                           Name:  Jerald L. Kent
   Title: President                                Title: President




Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrants and in the capacities (as to the General Partner) and on the date
indicated.


<TABLE>
<CAPTION>
    Signature                          Title
    ---------                          -----
<S>                          <C>
/s/ Barry L. Babcock         Chairman and Director of Holdings Capital and
------------------------         Holdings Properties
    Barry L. Babcock

/s/ Thomas C. Dircks
------------------------     Director of Holdings Properties
    Thomas C. Dircks

/s/ Jerald L. Kent           President, Chief Financial Officer and
------------------------          Director of Holdings Capital and Holdings
    Jerald L. Kent                Properties (Principal Financial Officer)

/s/ Howard L. Wood           Chairman of the Management Committee and
------------------------          Director of Holdings Capital and Holdings
    Howard L. Wood                Properties

/s/ Ralph G. Kelly           Sr. Vice President and Treasurer of Holdings
------------------------          Capital and Holdings Properties (Principal
 Ralph G. Kelly                   Accounting Officer)

</TABLE>


                                      S-1

<PAGE>   35


                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES



<TABLE>
<CAPTION>
                                                                                                                          Page
                                                                                                                          ----
<S>                                                                                                                      <C>
CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P. FINANCIAL STATEMENTS:
     Report of Independent Public Accountants                                                                              F-2
     Consolidated Balance Sheets as of December 31, 1996 and 1995                                                          F-3
     Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994                            F-5
     Consolidated Statement of Partners' Capital (Deficit) for the years ended December 31, 1996, 1995 and 1994            F-6
     Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994                            F-7
     Notes to Consolidated Financial Statements                                                                            F-9

CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P. FINANCIAL STATEMENT SCHEDULES:

     None required.
</TABLE>


Separate financial statements of Charter Communications Southeast Holdings
Capital Corporation have not been presented as this entity had no operations
and substantially no assets or equity.




                                      F-1
<PAGE>   36

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Charter Communications Southeast Holdings, L.P.:


We have audited the accompanying consolidated balance sheets of Charter
Communications Southeast Holdings, L.P. (a Delaware limited partnership) and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, partners' capital and cash flows for each of the
three years in the period ending December 31, 1996.  These consolidated
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 generally accepted auditing
standards.  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 Charter Communications
Southeast Holdings, L.P. and its subsidiaries as of December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ending December 31, 1996, in conformity with generally
accepted accounting principles.



ARTHUR ANDERSEN LLP



St. Louis, Missouri,
     February 21, 1997


                                      F-2
<PAGE>   37

                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                                AND SUBSIDIARIES

           CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                 1996                1995
                                                                              ------------        -------------
<S>                                                                         <C>                 <C>
                                                   ASSETS
                                                   ------
CURRENT ASSETS:
  Cash and cash equivalents                                                   $  3,360,507        $  6,547,438
  Accounts receivable, net of allowance for doubtful accounts of
    $300,378 and $288,128, respectively                                          2,123,324           1,314,179
  Insurance receivable                                                             414,000                   -
  Prepaid expenses and other                                                       299,071             454,175
  Receivables from affiliates                                                      500,000             796,179
                                                                              ------------        ------------
      Total current assets                                                       6,696,902           9,111,971
                                                                              ------------        ------------
INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment                                                163,998,045         107,029,408
  Franchise costs, net of accumulated amortization of $75,221,372 and
    $40,899,887, respectively                                                  389,065,380         303,827,917
  Covenant not to compete, net of accumulated amortization of $240,000             960,000                   -
                                                                              ------------        ------------
                                                                               554,023,425         410,857,325
                                                                              ------------        ------------
RESTRICTED FUNDS HELD IN ESCROW                                                  1,782,537                   -

OTHER ASSETS                                                                    14,513,068           5,592,429
                                                                              ------------        ------------
                                                                              $577,015,932        $425,561,725
                                                                              ============        ============
</TABLE>

                         (Continued on following page)


                                      F-3
<PAGE>   38
<TABLE>
<CAPTION>
                                                             1996                1995
                                                       ------------        ------------
                          LIABILITIES AND PARTNERS' CAPITAL
<S>                                                   <C>                 <C>
CURRENT LIABILITIES:
  Note payable - related party                         $          -        $ 15,000,000
  Accounts payable and accrued expenses                  23,958,762          12,330,848
  Subscriber deposits                                       260,244             243,277
  Payables to affiliates                                  2,143,899           1,060,451
                                                       ------------        ------------
                                                         26,362,905          28,634,576
                                                       ------------        ------------
DEFERRED REVENUE                                          1,661,503           1,114,699
                                                       ------------        ------------
LONG-TERM DEBT                                          493,571,442         259,125,000
                                                       ------------        ------------
DEFERRED MANAGEMENT FEES PAYABLE TO AFFILIATE             4,293,532           1,898,004
                                                       ------------        ------------
DEFERRED INCOME TAXES                                     5,111,308           5,111,308
                                                       ------------        ------------
REDEEMABLE PREFERRED LIMITED UNITS-- 393.5
  Class A units and 100 Class B units, issued
  and outstanding in 1995.  No Class A and
  Class B units issued and outstanding in 1996                    -          53,107,175
                                                       ------------        ------------
SPECIAL LIMITED PARTNER UNITS-- 345.8526
  Class A and 54.1163 Class B units, issued
  and outstanding in 1995.  No Class A and
  Class B units issued and outstanding in 1996                    -          44,972,506
                                                       ------------        ------------
PARTNERS' CAPITAL:
  General Partner                                           460,152             315,985
  Preferred Limited Partners-- 291.26 Class B
    units, issued and outstanding in 1995.  No
    Class B units issued and outstanding in 1996                  -                   -
  Common Limited Partners--1,513.36 and 477.19
    units, issued and outstanding, respectively          45,555,090          31,282,472
                                                       ------------        ------------
      Total partners' capital                            46,015,242          31,598,457
                                                       ------------        ------------
                                                       $577,015,932        $425,561,725
                                                       ============        ============
</TABLE>

   The accompanying notes are an integral part of these consolidated balance
                                    sheets.


                                     F-4
<PAGE>   39


                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



<TABLE>
<CAPTION>
                                                                     1996              1995              1994
                                                               ------------      ------------      ------------
<S>                                                           <C>               <C>               <C>
SERVICE REVENUES:
  Basic service                                                $ 87,056,898      $ 53,237,594      $ 16,314,348
  Premium service                                                14,648,591         9,635,049         2,786,478
  Other                                                          18,574,066         9,958,270         2,460,290
                                                               ------------      ------------      ------------
                                                                120,279,555        72,830,913        21,561,116
                                                               ------------      ------------      ------------
OPERATING EXPENSES:
  Operating costs                                                50,971,147        31,056,034         9,228,422
  General and administrative                                      9,326,390         6,191,949         1,924,182
  Depreciation and amortization                                  53,132,739        40,147,664        14,319,589
  Management fees - related party                                 6,013,899         3,642,012         1,078,000
                                                               ------------      ------------      ------------
                                                                119,444,175        81,037,659        26,550,193
                                                               ------------      ------------      ------------
      Income (loss) from operations                                 835,380        (8,206,746)       (4,989,077)
                                                               ------------      ------------      ------------
OTHER INCOME (EXPENSE):
  Interest income                                                   233,479           198,400            34,564
  Interest expense                                              (41,020,677)      (18,721,628)       (4,654,539)
  Loss from hurricanes                                             (367,000)         (744,800)               -
  Other                                                            (101,131)          (40,183)               -
                                                               ------------      ------------      ------------
                                                                (41,255,329)      (19,308,211)       (4,619,975)
                                                               ------------      ------------      ------------
      Loss before income tax benefit and extraordinary item     (40,419,949)      (27,514,957)       (9,609,052)

INCOME TAX BENEFIT                                                        -         1,888,692                 -
                                                               ------------      ------------      ------------
      Loss before extraordinary item                            (40,419,949)      (25,626,265)       (9,609,052)

EXTRAORDINARY ITEM-  Loss on early retirement of debt                     -        (1,959,438)                -
                                                               ------------      ------------      ------------
      Net loss                                                  (40,419,949)      (27,585,703)       (9,609,052)

                                                               ------------      ------------      ------------

REDEMPTION PREFERENCE ALLOCATION:
  Special Limited Partner units                                    (828,616)       (3,051,040)       (1,924,573)
  Redeemable Preferred Limited units                             (1,452,343)       (5,539,799)       (1,626,333)

NET LOSS ALLOCATED TO REDEEMABLE PREFERRED LIMITED
  UNITS                                                           4,063,274         3,408,957                 -
                                                               ------------      ------------      ------------
      Net loss applicable to partners' capital account         $(38,637,634)     $(32,767,585)     $(13,159,958)
                                                               ============      ============      ============
NET LOSS ALLOCATION TO PARTNERS' CAPITAL ACCOUNTS
  General Partner                                              $   (386,376)     $(12,483,543)         (210,000)
  Class B Preferred Limited Partners                                      -       (16,966,042)      (12,159,958)
  Common Limited Partners                                       (38,251,258)       (3,318,000)         (790,000)
                                                               ------------      ------------      ------------
                                                               $(38,637,634)     $(32,767,585)     $(13,159,958)
                                                               ============      ============      ============

</TABLE>

 The accompanying notes are an integral part of these consolidated statements.



                                     F-5
<PAGE>   40

                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                                AND SUBSIDIARIES


                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                   Class B
                                                  Preferred           Common
                                   General         Limited           Limited
                                   Partner         Partners         Partners            Total
                                 ---------      ------------      ------------      ------------
<S>                             <C>            <C>               <C>               <C>
BALANCE, December 31, 1993       $       -      $          -      $          -      $          -

  Capital contributions            210,000        29,126,000           790,000        30,126,000
  Allocation of net loss          (210,000)      (12,159,958)         (790,000)      (13,159,958)
                                 ---------      ------------      ------------      ------------
BALANCE, December 31, 1994               -        16,966,042                 -        16,966,042

  Capital contributions            474,000                 -        46,926,000        47,400,000
  Allocation of net loss          (158,015)      (16,966,042)      (15,643,528)      (32,767,585)
                                 ---------      ------------      ------------      ------------
BALANCE, December 31, 1995         315,985                 -        31,282,472        31,598,457

  Capital contributions            530,543                 -        52,523,876        53,054,419
  Allocation of net loss          (386,376)                -       (38,251,258)      (38,637,634)
                                 ---------      ------------      ------------      ------------
BALANCE, December 31, 1996       $ 460,152      $          -      $ 45,555,090      $ 46,015,242
                                 =========      ============      ============      ============
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.


                                     F-6
<PAGE>   41

                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                                AND SUBSIDIARIES


                     CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                       1996                1995                1994
                                                                  -------------        ------------       -------------
<S>                                                               <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                         $(40,419,949)       $(27,585,703)        $(9,609,052)
  Adjustments to reconcile net loss to net cash
    provided by operating activities-
      Extraordinary item-  Loss on early retirement of debt                   -           1,959,438                   -
      Depreciation and amortization                                  53,132,739          40,147,664          14,319,589
      Amortization of debt issuance costs                             1,129,147                   -                   -
      Amortization of interest rate cap agreements                      163,833             116,992                   -
      Forgiveness of note receivable - related party                    100,000                   -                   -
      Amortization on discount of debentures                          8,271,381                   -                   -
      Losses from hurricanes                                            367,000             744,800                   -
      Deferred income taxes                                                   -          (1,888,692)                  -
      Changes in assets and liabilities, net of effects
        from acquisitions-
          Accounts receivable, net                                     (303,340)            101,411            (114,188)
          Insurance receivable                                         (414,000)                  -                   -
          Prepaid expenses and other                                    262,855              27,795             (76,104)
          Receivables from affiliates                                   296,179            (796,179)                  -
          Accounts payable and accrued expenses                       9,907,625           5,655,755           3,516,308
          Subscriber deposits                                             2,767              34,632              (2,098)
          Payables to affiliates, including deferred
            management fees                                           3,478,976          (1,577,521)            679,643
          Deferred revenue                                              452,127           1,114,699                   -
                                                                  -------------        ------------       -------------
          Net cash provided by operating activities                  36,427,340          18,055,091           8,714,098
                                                                  -------------        ------------       -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                        (48,324,063)        (19,890,910)         (4,995,661)
  Payments for acquisitions, net of cash acquired                  (145,366,096)       (251,309,527)       (176,387,357)
  Payments of organizational expenses                                  (120,551)         (1,386,627)           (827,976)
  Payments for franchise costs                                         (186,145)                  -                   -
  Restricted funds held in escrow                                    (1,782,537)            463,414            (463,414)
  Proceeds from insurance settlement                                          -             500,000                   -
                                                                  -------------        ------------       -------------
          Net cash used in investing activities                    (195,779,392)       (271,623,650)       (182,674,408)
                                                                  -------------        ------------       -------------
</TABLE>

                         (Continued on following page)

                                     F-7
<PAGE>   42
                                     -2-

<TABLE>
<CAPTION>
                                                             1996                1995                1994
                                                       ------------        ------------        ------------
<S>                                                   <C>                 <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Long-term borrowings                                 $200,000,061        $          -        $          -
  Payment of debt issuance costs                        (11,731,992)         (4,393,266)         (2,036,820)
  Payments for interest rate cap agreements                 (35,000)                  -            (391,500)
  Borrowings under revolving credit agreement            60,576,000         247,425,000          96,500,000
  Payments under revolving credit agreement             (34,401,000)        (81,800,000)         (3,000,000)
  Proceeds from note payable - related party                      -          15,000,000                   -
  Payment of note payable - related party               (15,000,000)                  -                   -
  Partners' capital contributions                                 -          47,400,000           1,000,000
  Preferred Limited Partners' contributions                       -          35,000,000          43,476,000
  Issuance of Special Limited Partnership units                   -                   -          39,996,893
  Payment of Special Limited Partnership units          (43,242,948)                  -                   -
  Issuance of note receivable - related party                     -                   -            (100,000)
                                                       ------------        ------------        ------------
      Net cash provided by financing activities         156,165,121         258,631,734         175,444,573
                                                       ------------        ------------        ------------
NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                            (3,186,931)          5,063,175           1,484,263

CASH AND CASH EQUIVALENTS, beginning of year              6,547,438           1,484,263                   -
                                                       ------------        ------------        ------------
CASH AND CASH EQUIVALENTS, end of year                 $  3,360,507        $  6,547,438        $  1,484,263
                                                       ============        ============        ============
CASH PAID FOR INTEREST                                 $ 28,859,818        $ 16,910,470        $  4,058,098
                                                       ============        ============        ============
CASH PAID FOR TAXES                                    $          -        $          -        $          -
                                                       ============        ============        ============
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.


                                     F-8
<PAGE>   43
                CHARTER COMMUNICATIONS SOUTHEAST HOLDINGS, L.P.

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization and Basis of Presentation

Charter Communications Southeast Holdings, L.P. (Southeast Holdings), a Delaware
limited partnership, was formed in January 1995.  Southeast Holdings will
terminate no later than December 31, 2014, as provided in the partnership
agreement (the "Partnership Agreement").  CharterComm Holdings, L.P.
(CharterComm Holdings), the parent of Southeast Holdings is indirectly owned
approximately 85.5% by affiliates of Charterhouse Group International, Inc., a
privately owned investment firm (collectively referred to herein as
"Charterhouse"), indirectly owned approximately 6.5% by Charter Communications,
Inc. (Charter), manager of the Partnership's operating cable television systems,
and 7.0% primarily by other institutional investors.

In February 1996, CharterComm, Inc. (CharterComm) exercised an option to
acquire the remaining balance of the outstanding shares (60%) of CCP One, Inc.
(CCP I) (formerly known as LEB Communications, Inc., General Partner of Charter
Communications, L.P. (CC-I), which it did not otherwise own, for a purchase
price of $1.1 million.  CharterComm borrowed the amount of the purchase price
from CC-I to exercise this option.  Charter Communications Southeast, L.P.
(Southeast), assumed the liability for the short-term intercompany note from
CharterComm.  In addition, the Partnership forgave approximately $100,000 of
debt outstanding under a promissory note (see Note 15) with the original
shareholder.

On March 28, 1996, the net assets of CC-I were transferred from CharterComm to
Southeast in exchange for a 36.3% General Partnership interest in CharterComm
Holdings, the parent of Southeast Holdings.  This transfer was accounted for as
a reorganization under common control and, accordingly, the consolidated
financial statements and notes have been restated to include the results and
financial position of CC-I for all periods presented.  Thus, the accompanying
consolidated financial statements include the accounts of Southeast Holdings
and its direct and indirect wholly owned subsidiaries, Charter Communications
Southeast Properties, Inc. (Southeast Properties), Charter Communications
Southeast Holdings Capital Corporation (Holdings Capital), Charter
Communications Southeast Capital Corporation (Southeast Capital), CCP II, Inc.
(CCP II), CCP I, Charter Communications II, L.P. (CC-II) and CC-I, collectively
referred to as the "Partnership" herein.  All significant intercompany balances
and transactions have been eliminated in consolidation.

On March 28, 1996, the Preferred Limited Partners exchanged their interests in
the Partnership for interests in CharterComm Holdings (see Notes 3 and 4).

CC-I commenced operations effective April 1994, through the acquisition of
certain cable television systems.  CC-II commenced operations effective January
1995 through the acquisition of certain cable television systems.

As of December 31, 1996, the Partnership provided cable television service to
approximately 240 franchises serving approximately 330,600 basic subscribers in
Alabama, Georgia, Kentucky, Louisiana, North Carolina, South Carolina and
Tennessee.

                                     F-9
<PAGE>   44
Cash Equivalents

Cash equivalents at December 31, 1996 and 1995, consist primarily of repurchase
agreements with original maturities of 90 days or less.  These investments are
carried at cost, which approximates market value.  The Partnership is subject
to loss for amounts invested in repurchase agreements in the event of
nonperformance by the financial institution which acts as the counterparty
under such agreements; however, such noncompliance is not anticipated.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost, including all direct and
certain indirect costs associated with the construction of cable transmission
and distribution facilities, and the cost of new customer installation.  The
costs of disconnecting a customer are charged to expense in the period
incurred.  Expenditures for repairs and maintenance are charged to expense as
incurred, and equipment replacement and betterments are capitalized.

Depreciation is provided using the composite method on a straight-line basis
over the estimated useful lives of the related assets as follows:


Trunk and distribution systems                    10 years
Subscriber installations                          10 years
Buildings, headends and leasehold improvements  5-20 years
Converters                                         5 years
Vehicles and equipment                          4-10 years
Office equipment                                5-10 years

Franchise Costs

Costs incurred in obtaining and renewing cable franchises are initially
deferred and amortized over the legal lives of the franchises.  Costs relating
to unsuccessful franchise applications are charged to expense when it is
determined that the efforts to obtain the franchise will not be successful.
Franchise rights acquired through the purchase of cable television systems
represent the excess of the cost of properties acquired over the amounts
assigned to the net tangible assets at date of acquisition.  Acquired franchise
rights are amortized using the straight-line method over a period of up to 15
years.

Covenant Not to Compete

Covenant not to compete is amortized over the term of the agreement (five
years).

Other Assets

Organizational expenses are being amortized using the straight-line method over
five years.  Debt issuance costs are being amortized over the term of the debt.
The interest rate cap costs are being amortized over the terms of the
agreement, which approximates three years.

During 1995, the Partnership adopted Statement of Financial Accounting
Standards (SFAS) No. 121 entitled, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."  In accordance with SFAS
No. 121, the Partnership periodically reviews the carrying value of its
long-lived assets, identifiable intangibles and franchise costs in relation to
historical financial results, current business conditions and trends (including
the impact of existing legislation and regulation) to identify potential
situations in which the carrying value of such assets may not be recoverable.
If a review indicates that the carrying value of such assets may not be
recoverable, the carrying value of such assets in excess of their fair value
will be recorded as a reduction of the assets' cost as if a permanent
impairment has occurred.  No impairments have occurred and accordingly, no
adjustments to the consolidated financial statements of the Partnership have
been recorded relating to SFAS No. 121.


                                     F-10
<PAGE>   45

                                    -  3  -


Revenues

Cable service revenues are recognized when the related services are provided.

Installation revenues are recognized to the extent of direct selling costs
incurred.  The remainder, if any, is deferred and amortized to income over the
average estimated period that customers are expected to remain connected to the
cable television system.

Franchise fees collected from cable subscribers and paid to local franchises
are reported as revenues.

Derivative Financial Instruments

The Company manages risk arising from fluctuations in interest rates by using
interest rate swap and cap agreements, as required by its credit agreements.
These agreements are treated as off-balance sheet financial instruments.  The
interest rate swap and cap agreements are being accounted for as a hedge of the
debt obligation, and accordingly, the net settlement amount is recorded as an
adjustment to interest expense in the period incurred.

Income Taxes

Income taxes are the responsibility of the partners and are not provided for in
the accompanying financial statements except for CC-II's indirect wholly owned
subsidiary, Peachtree Cable TV, Inc. (Peachtree).  Peachtree is a C
corporation, and taxes have been provided for in the accompanying financial
statements in accordance with that described in SFAS No. 109, "Accounting for
Income Taxes."  SFAS No. 109 requires accounting for income taxes based on the
liability method, and deferred taxes are determined based on the estimated
future tax effects of differences between the financial reporting and tax bases
of assets and liabilities given the provisions of the enacted tax laws.

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 reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

2. DISTRIBUTIONS AND ALLOCATIONS:

For financial reporting purposes, redemption preference allocations, profits
and losses are allocated in accordance with the liquidation provisions of the
applicable partnership agreements.

Currently, under terms of the Partnership Agreement, allocation of partnership
profits of Southeast Holdings for income tax reporting purposes is based upon
capital contributions, as set forth in the Partnership Agreement.

Currently, partnership losses for income tax reporting purposes are allocated
as follows for Southeast Holdings:  (i) 99% to the limited partners and 1% to
the General Partner until the capital account of any such partner is reduced to
zero, (ii) 100% to the General Partner until the capital account of any such
partner is reduced to zero and (iii) to the partners in proportion to the
positive balances of their capital accounts until such balances are reduced to
zero.



                                     F-11
<PAGE>   46
                                    -  4  -


Prior to the reorganization under common control, the Partnership profits of
CC-I were allocated for income tax reporting purposes as follows:  (i) to
partners which deficit capital balances, in proportion to such deficits, until
such deficits are reduced to zero; (ii) to the Special Limited Partners, as
discussed in Note 5; (iii) to the Class A Preferred Limited Partners until each
such Limited Partner's capital account equals its unrecovered capital plus its
unrecovered preference amount (preference amount is equal to 17% of the
unrecovered capital and preference amount per annum); (iv) to the Class B
Preferred Limited Partners until each such Limited Partner's capital account
equals its unrecovered capital plus its unrecovered preference amount
(preference amount is equal to 19% of the unrecovered capital and preference
amount per annum); (v) to the Common Limited Partners and the General Partner
until each of such Partner's capital account equals its unrecovered capital;
and (vi) the remaining balance, 79% to the Common Limited Partners and 21% to
the General Partner.

Prior to the reorganization under common control, partnership losses of CC-I
were allocated for income tax reporting purposes as follows:  (i) to the Class
A Preferred Limited Partners until the capital accounts of such partners are
reduced to zero; (ii) to the Class B Preferred Limited Partners until the
capital accounts of such partners are reduced to zero; (iii) 79% to the Common
Limited Partners, and 21% to the General Partner until the capital account of
any such partner is reduced to zero; and (iv) to the partners in proportion to
the positive balances of their capital accounts until such balances are reduced
to zero; provided, however, any item of loss or deduction which would cause or
increase a deficit balance in a limited partner's capital account shall be
allocated to the General Partner.

As stated in the Partnership Agreement, the Partnership may make distributions
to the partners out of all available funds at such times and in such amounts as
the General Partner may determine in its sole discretion.

For financial reporting purposes, redemption preference allocations, profits
and losses are allocated in accordance with the liquidation provisions of the
Agreement.

3. REDEEMABLE PREFERRED LIMITED UNITS (CC-II):

Prior to the reorganization under common control, CC-II could, at its option,
redeem all or any portion of the outstanding Preferred Limited Partner units
for an amount equal to the Optional Redemption Price, as defined in CC-II's
Partnership Agreement, on three separate occasions, on or after January 18,
2000; provided, however, CC-II had funds available to pay in cash the Optional
Redemption Price for all the Preferred Limited Partner units to be redeemed.
In the case of any redemption of less than all of the then outstanding
Preferred Limited Partner units, such redemption was to be made pro rata among
all the holders of the Preferred Limited Partner units according to the number
of Preferred Limited Partner units held.  In addition, CC-II would have
redeemed all of the outstanding Preferred Limited Partner units at the
Mandatory Redemption Price, as defined in CC-II's Partnership Agreement, on
January 18, 2005.

The Class A and B Preferred Limited Partners' preference return has been
reflected as an addition to the Redeemable Preferred Limited Partner units, and
the decrease has been allocated to the General Partner and Common Limited
Partner consistent with the liquidation and distribution provisions in CC-II's
Partnership Agreement.


                                     F-12
<PAGE>   47

                                    -  5  -


At March 28, 1996, the balance related to the Preferred Limited Partner units
was determined as follows:


Initial contributions                                $35,000,000
1995 redemption preference allocation                  3,729,149
                                                     -----------
        Balance, December 31, 1995                    38,729,149
1996 redemption performance allocation                 1,452,343
                                                     -----------
        March 28, 1996                               $40,181,492
                                                     ===========

On March 28, 1996, in connection with the reorganization under common control,
the Preferred Limited Partners of CC-II exchanged their preferred interests in
CC-II for preferred and common limited partnership interests in CharterComm
Holdings.  The Preferred Limited Partners of CC-II's balance at March 28, 1996,
was transferred to CharterComm Holdings and then contributed to the
Partnership.

4. REDEEMABLE PREFERRED LIMITED UNITS (CC-I):

Prior to the reorganization under common control, CC-I could redeem the Class A
Preferred Limited Partner units for an amount equal to the unrecovered capital
plus any unrecovered preference amount on or after April 30, 1996; provided,
however, that CC-I had not redeemed any Class A Preferred Limited Partner units
prior to the redemption of all the Special Limited Partner units.  In addition,
the holders of the Class A Preferred Limited Partner units had the right to
cause CC-I to purchase all of the units held by such holders at any time after
April 30, 1998, subject to certain conditions, including approval by the
Special Limited Partner, as stated in CC-I's Partnership Agreement, at a price
equal to the unrecovered capital and the unrecovered preference amount.

The obligation to purchase the Class A Preferred Limited Partner units was
conditioned upon the purchase not causing default under any Senior
Indebtedness, as defined in CC-I's Partnership Agreement, which would afford
the holder thereof the right to accelerate the maturity date of such Senior
Indebtedness.  Based on these redemption clauses, the Class A Preferred Limited
Partners' preference return has been reflected as an addition to the Redeemable
Preferred Limited units, and the decrease has been allocated to the General
Partner, Class B Preferred Limited Partners and Common Limited Partners
consistent with the liquidation and distribution provisions of CC-I's
Partnership  Agreement.

At March 28, 1996, the balance related to CC-I Class A Preferred Limited
Partner units was determined as follows:


<TABLE>
<S>                                                <C>
Initial contributions                                         $14,350,000
1994 redemption preference allocation                           1,626,333
                                                              -----------
      Balance, December 31, 1994                               15,976,333

1995 redemption preference allocation                           1,810,650
Allocation of 1995 net loss                                    (3,408,957)
                                                              -----------
      Balance, December 31, 1995                               14,378,026

1996 redemption preference allocation                                   -
Allocation of net loss                                         (4,063,274)
Return of capital - Special Limited Partner units               2,558,173
                                                              -----------
      Balance, March 28, 1996                                 $12,872,925
                                                              ===========
</TABLE>


                                     F-13
<PAGE>   48
                                    -  6  -


On March 28, 1996, in connection with the reorganization under common control
and pursuant to a Co-Sale Agreement, Subscription Agreement and Contribution
Agreement, the Preferred Limited Partners of CC-I exchanged their preferred
interests in CC-I for preferred and common limited partnership interests in
CharterComm Holdings.  The Preferred Limited Partners of CC-I's balance at
March 28, 1996, was transferred to CharterComm Holdings and then contributed to
the Partnership.

5. SPECIAL LIMITED PARTNER UNITS (CC-I):

Prior to the reorganization under common control, CC-I's partnership profits
were allocated to the Special Limited Partners until the allocation profits
equal the unrecovered preference amount (preference amounts range from 6% to
17.5% of the unrecovered initial cost of the partnership units and unrecovered
preference amounts per annum).  When there was no profit to allocate, the
preference return was reflected as a decrease in Partners' Capital.

Prior to the reorganization under common control, CC-I could redeem the Special
Limited Partner units at any time for an amount equal to the unrecovered
initial cost of the partnership units plus any unrecovered preference amount
with respect to the units.  In addition, the Special Limited Partner had the
option to cause CC-I to redeem the units any time after April 30, 2001.  Based
on these redemption clauses, the Special Limited Partner units have been
excluded from Partners' Capital and the decrease in Partners' Capital
attributed to the Special Limited Partners' preference return has been
allocated to the other partners in a manner consistent with the liquidation and
distributions provisions of CC-I's Partnership Agreement.  In accordance with
CC-I's Partnership Agreement, distributions would be allocated to the Special
Limited Partner equal to the unrecovered preference allocation and the
unrecovered initial cost of the partnership units prior to distributions to any
other partnership unit.

At December 31, 1995, the balance of $44,972,506 related to the Special Limited
Partner units consisted of $39,996,893 of initial cost of the partnership units
and $4,975,613 of preference allocation.  For the period from January 1, 1996,
to March 28, 1996, the Special Limited Partners earned an additional $828,616
of preference allocation resulting in a balance of $45,801,122.  In accordance
with a purchase agreement and through the use of the capital contribution from
Southeast resulting from the proceeds of the Notes (see Note 12), CC-I paid the
Special Limited Partners $43,242,948 as full consideration for their
partnership interests on March 28, 1996.  The difference in the payment amount
and the March 28, 1996, Special Limited Partner balance of $2,558,174 was
reflected as a return of capital to the Preferred Limited Partner units (see
Note 4).

6. ACQUISITIONS:

In April 1994, CC-I acquired certain assets from Citation Cablevision, Inc.,
Subscriber Cablevision, Inc., LaGrange Cablevision, Inc., and The Jefferson
Trust Partnership (collectively referred to as "McDonald") for approximately
$176.4 million which included cable television systems in Alabama, Georgia and
Louisiana.

In January 1995, CC-II completed the acquisition of systems from Crown Media,
Inc. (Crown), a subsidiary of Hallmark Cards, Incorporated for an aggregate
purchase price of approximately $112.8 million.  The acquisition of the Crown
systems was part of a series of larger transactions in which Crown sold its
cable television systems to a group of investors, including Charter, CC-II,
certain affiliates of Charter, and third parties, for a total purchase price of
approximately $900.0 million.

In April 1995, Charter Communications III, L.P. (CC-III), a wholly owned
subsidiary of CC-II, acquired the stock of Peachtree, including cable
television systems located in Georgia, for an aggregate purchase price of
approximately $22.3 million.  In connection with the completion of the
acquisition, the Partnership recorded approximately $7.0 million of additional
franchise costs and deferred income taxes, resulting from differences between
the financial reporting and tax bases of certain assets acquired.


                                     F-14
<PAGE>   49
                                    -  7  -


In May 1995, CC-III acquired the net assets of certain systems from CableSouth,
Inc. (CableSouth), which include cable television systems in Alabama, for an
aggregate purchase price of approximately $49.2 million.

In July 1995, CC-II acquired the net assets of certain systems from Masada
Cable Partners, L.P. (Masada), which include certain cable television systems
in Georgia, for an aggregate purchase price of approximately $35.2 million.

In November 1995, CC-II acquired the net assets of certain systems from Masada
Cable Partners II, L.P. (Masada II), which include cable television systems in
South Carolina, for an aggregate purchase price of approximately $35.5 million.

In January 1996, CC-II acquired the net assets of Genesis Cable of Carolina,
L.P. (Genesis), which include cable television systems in South Carolina, for
approximately $8.7 million.

In March 1996, CC-II purchased certain systems from Cencom Cable Income
Partners, L.P. (the "CCIP"), an affiliated entity, which include cable
television systems in Georgia, Kentucky, North Carolina and Tennessee, for an
aggregate purchase price of approximately $115.1 million (the "CCIP
Acquisition").

In November, 1996, CC-I acquired the nets assets of certain systems from
Masada Cable Partners, L.P. (Masada III) which included cable television
systems in Alabama and Tennessee, for approximately $22.3 million.

All of the above acquisitions were accounted for using the purchase method of
accounting, and accordingly, results of operations of the acquired assets have
been included in the financial statements from the date of acquisition.  The
following shows the purchase price and allocation of purchase price to assets
acquired and liabilities assumed:


<TABLE>
<CAPTION>
                                 McDonald               Crown         Peachtree        CableSouth
                               ------------        ------------       -----------       -----------
<S>                            <C>                 <C>                <C>               <C>
Purchase price:
  Cash paid to seller          $134,390,464        $109,639,897       $21,969,670       $48,475,475
  Special Limited
    Partner units issued
    to seller                    39,996,893                   -                 -                 -
  Assumed liabilities               500,000             337,725            75,000           150,000
  Transaction costs               1,500,000           2,822,449           300,000           600,000
                               ------------        ------------       -----------       -----------
                               $176,387,357        $112,800,071       $22,344,670       $49,225,475
                               ============        ============       ===========       ===========
Allocation of
  purchase price to
  assets acquired:
    Cash                                  -        $  3,743,826       $     9,121       $         -
    Accounts receivable        $    703,968             345,444            64,640           134,532
    Prepaid expenses and
      other assets                        -             150,455           158,293            38,903
    Property, plant and
      equipment                  28,187,217          51,836,684         5,293,554         4,575,134
    Franchise costs             148,291,381          62,473,490        24,131,446        44,586,571
    Accounts payable and
      accrued expenses             (690,893)         (5,749,828)         (312,384)         (109,665)
    Subscriber deposits            (104,316)                  -                 -                 -
    Deferred income taxes                 -                   -        (7,000,000)                -
                               ------------        ------------       -----------       -----------
                               $176,387,357        $112,800,071       $22,344,670       $49,225,475
                               ============        ============       ===========       ===========
</TABLE>


                                     F-15
<PAGE>   50


                                    -  8  -



<TABLE>
<CAPTION>
                                Masada         Masada II         Genesis        CCIP Systems        Masada III
                             -----------       -----------      ----------        ------------       -----------
<S>                         <C>               <C>              <C>              <C>                 <C>
Purchase price:
  Cash paid to seller        $34,547,135       $34,955,123      $8,462,535        $112,144,218       $21,939,353
  Assumed liabilities            115,000           125,000          30,000                   -            77,000
  Transaction costs              500,000           450,000         200,000           3,000,000           275,000
                             -----------       -----------      ----------        ------------       -----------
                             $35,162,135       $35,530,123      $8,692,535        $115,144,218       $22,291,353
                             ===========       ===========      ==========        ============       ===========
Allocation of
  purchase price to
  assets acquired:
    Cash                     $         -       $         -      $        -        $  1,888,011       $         -
    Accounts receivable           20,264            32,554          50,035             455,770                 -
    Prepaid expenses
      and other assets            36,733            21,482               -              97,805             9,946
    Property, plant and
      equipment                3,530,312         2,541,886       2,885,645          22,040,675         1,082,583
    Franchise costs           31,734,688        33,033,114       4,556,855          92,378,171        21,311,776
    Noncompete agreement               -                 -       1,200,000                   -                 -
    Accounts payable
      and accrued
      expenses                  (159,862)          (98,913)              -          (1,621,537)          (98,752)
    Subscriber deposits                -                 -               -                   -           (14,200)
    Deferred revenue                   -                 -               -             (94,677)                -
                             -----------       -----------      ----------        ------------       -----------
                             $35,162,135       $35,530,123      $8,692,535        $115,144,218       $22,291,353
                             ===========       ===========      ==========        ============       ===========
</TABLE>

During May 1996, CC-I and CC-II entered into four separate purchase agreements
to acquire certain cable systems in North Carolina and South Carolina for an
aggregate purchase price of approximately $89.15 million from entities
affiliated with the Partnership.  The purchase is contingent upon majority
approval of the Limited Partners of the sellers and is expected to be
consummated during 1997.

The following are unaudited pro forma operating results for the 1996 and 1995
acquisitions as though the acquisitions had been made on January 1 of the
respective year prior to such acquisitions.


                                            For the Years Ended
                                                December 31
                                     --------------------------------
                                         1996                1995
                                     ------------        ------------
                                               (Unaudited)
Service revenues                     $131,226,648        $118,213,920
Income (loss) from operations        $  2,650,634        $ (4,023,316)
Net loss                             $(42,434,786)       $(45,501,970)



                                     F-16
<PAGE>   51

                                    -  9  -


7. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following:


<TABLE>
<CAPTION>
                                                                1996                1995
                                                            ------------         -----------
<S>                                                         <C>                 <C>
Trunk and distribution systems                              $114,470,064         $76,418,698
Subscriber installations                                      33,053,373          17,361,287
Land, buildings, headends and leasehold improvements          21,270,738          13,229,975
Converters                                                    13,365,896           6,446,647
Vehicles and equipment                                         6,746,741           3,725,059
Office equipment                                               4,349,814           2,138,248
                                                            ------------        ------------
                                                             193,256,626         119,319,914
Less-  Accumulated depreciation                              (29,258,581)        (12,290,506)
                                                            ------------        ------------
                                                            $163,998,045        $107,029,408
                                                            ============        ============
</TABLE>

8. RESTRICTED FUNDS HELD IN ESCROW:

In connection with the acquisition discussed in Note 21, the Partnership agreed
to deposit a portion of the purchase price into an escrow account to be
transferred to the seller upon consummation of the acquisition.  These funds
were transferred to the seller in February 1997.

9. OTHER ASSETS:

Other assets consist of the following at December 31:


<TABLE>
<CAPTION>
                                           1996            1995
                                       -----------      ----------
<S>                                   <C>               <C>
Debt issuance costs, net of
  accumulated amortization of
  $1,733,038 and $561,661              $13,058,961      $3,548,345
Organizational expenses, net
  of accumulated amortization
  of $968,838 and $487,144               1,366,316       1,727,459
Interest rate cap agreements,
  net of accumulated
  amortization of $338,708 and
  $174,875                                  87,792         216,625
Note receivable--related party                   -         100,000
                                       -----------      ----------
                                       $14,513,069      $5,592,429
                                       ===========      ==========
</TABLE>


10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December 31:


<TABLE>
<CAPTION>
                                        1996              1995
                                    -----------       -----------
<S>                                <C>               <C>
Property taxes                      $   942,894       $   454,716
Salaries and related benefits         1,171,032           593,720
Accounts payable                      1,682,636           318,694
Franchise fees                        2,217,571         1,451,629
Programming expenses                  2,344,725         1,953,199
Accrued interest                      5,004,096         2,407,599
Capital expenditures                  7,590,284         2,197,808
Other                                 3,005,524         2,953,483
                                    -----------       -----------
                                    $23,958,762       $12,330,848
                                    ===========       ===========
</TABLE>


                                     F-17
<PAGE>   52


                                    -  10  -

11. NOTE PAYABLE:

On November 30, 1995, Southeast Holdings entered into a Convertible Senior Note
(the "Convertible Senior Note") with Charterhouse for $15,000,000. Interest on
the Convertible Senior Note accrued on the unpaid principal amount and payable
quarterly in arrears beginning March 31, 1996; the interest rate was the rate
publicly announced by Chemical Bank in New York as its reference rate plus 3%
per annum.  During the year ended December 31, 1995, Southeast Holdings incurred
costs of $100,000 relating to the Convertible Senior Note.

In March 1996, the Convertible Senior Note was repaid using a portion of the
proceeds from the Notes discussed in Note 12.  In addition, the Partnership
paid Charterhouse a nonrefundable bridge loan fee of $400,000.

12. LONG-TERM DEBT:

Long-term debt consists of the following at December 31:


<TABLE>
<CAPTION>
                                                  1996                1995
<S>                                 <C>                 <C>
Senior Secured Discount Debentures          $ 83,271,442        $          -
11-1/4% Senior Notes                         125,000,000                   -
Credit Agreements:
  CC-I                                       106,700,000          92,825,000
  CC-II                                      178,600,000         166,300,000
                                            ------------        ------------
                                             493,571,442         259,125,000
Less-  Current maturities                              -                   -
                                            ------------        ------------
                                            $493,571,442        $259,125,000
                                            ============        ============
</TABLE>

Senior Secured Discount Debentures

On March 28, 1996, Southeast Holdings and Holdings Capital (collectively the
"Debentures Issuers") issued $146,820,000 of Senior Secured Discount Debentures
(the "Debentures") for proceeds of approximately $75,000,000.  The Debentures
are secured by all of Southeast Holdings' ownership interest in Southeast and
rank pari passu in right and priority of payment to all other existing and
future indebtedness of the Debentures Issuers.  The Debentures are effectively
subordinated to the claims of creditors of Southeast Holdings' subsidiaries,
including the CC-I and CC-II Credit Agreements (as defined herein).  The
Debentures are redeemable at the Debentures Issuers' option at amounts
decreasing from 107% to 100% of principal, plus accrued and unpaid interest to
the redemption date, beginning on March 15, 2001.  The Debentures Issuers are
required to make an offer to purchase all of the Debentures, at a purchase
price equal to 101% of the principal amount, together with accrued and unpaid
interest, upon a Change in Control, as defined in the Debentures Indenture.  No
interest is payable on the Debentures prior to March 15, 2001.  Thereafter,
interest on the Debentures is payable semiannually in arrears beginning
September 15, 2001, until maturity on March 15, 2007.  The discount on the
Debentures is being accreted using the effective interest method at an interest
rate of 14% from the date of issuance to March 15, 2001.  The unamortized
discount was $63,548,558 at December 31, 1996.  At December 31, 1996, the
Debentures were trading at 59% of the principal amount at maturity or
approximately $86.6 million.  Proceeds from the Debentures were used to pay
fees and expenses related to the issuance of the Debentures and the balance of
$72,375,061 was contributed to Southeast as equity capital.


                                     F-18
<PAGE>   53
                                    -  11  -


11-1/4% Senior Notes

On March 28, 1996, Southeast and Southeast Capital (the "Notes Issuers") issued
$125,000,000 aggregate principal amount of 11-1/4% Senior Notes (the "Notes").
The Notes are senior unsecured obligations of the Issuers and rank pari passu
in right and priority of payment to all other existing and future indebtedness
of the Notes Issuers.  The Notes are effectively subordinated to the claims of
creditors of Southeast's subsidiaries, including the lenders under the CC-I and
CC-II Credit Agreements.  The Notes are redeemable at the Notes Issuers' option
at amounts decreasing from 105.625% to 100% of principal, plus accrued and
unpaid interest to the date of redemption, beginning on March 15, 2001.  The
Notes Issuers are required to make an offer to purchase all of the Notes, at a
purchase price equal to 101% of the principal amount, together with accrued and
unpaid interest, upon a Change in Control, as defined in the Notes Indenture.
Interest is payable semiannually on March 15 and September 15 until maturity on
March 15, 2006.  At December 31, 1996, the Notes were trading at 104.5% of the
initial price paid by the investors or approximately $130.6 million.  Proceeds
from the Notes together with capital contributions from Southeast Holdings were
used to repay the Convertible Senior Note, to pay fees and expenses related to
the issuance of the Notes, and to make capital contributions to CC-I and CC-II.

The Debentures and Notes require their respective issuers to comply with
various financial and nonfinancial covenants and restrictions, including
substantial limitations on additional indebtedness, restricted payments,
transactions with affiliates, liens, dividends and certain other items.

Southeast and Southeast Holdings are holding companies with no significant
assets other than their direct and indirect investments in CC-I and CC-II.
Southeast Capital and Holdings Capital were formed solely for the purpose of
serving as co-issuers and have no operations.  Accordingly, the Notes Issuers
and Debentures Issuers must rely upon distributions from CC-I and CC-II to
generate funds necessary to meet their obligations, including the payment of
principal and interest on the Notes and Debentures.

CC-I Credit Agreement

During April 1994, CC-I entered into a revolving credit agreement (the "CC-I
Credit Agreement") with a consortium of banks for borrowings up to
$110,000,000.  The unpaid principal balance under the CC-I Credit Agreement
converted to a term loan on July 31, 1995.  Effective December 31, 1995, the
CC-I Credit Agreement was amended to create a revolving credit facility with
maximum borrowings of $15,000,000.  A portion of the proceeds from the
revolving credit facility was used to reduce the principal amount of the term
loan outstanding to $90,000,000.  The CC-I Credit Agreement was amended on
March 28, 1996, and again on November 29, 1996, increasing the revolving credit
facility to $75,000,000 and reducing the term loan to $75,000,000.  Also, the
maturity date of the CC-I Credit Agreement was extended to September 30, 2005,
due dates on the term loan were extended, and certain financial covenants were
modified.

Principal payments on the term loan are due in quarterly installments beginning
March 31, 1999, and continuing through September 30, 2005.  Portions of the
debt bear interest, at CC-I's option, at rates based upon the Base Rate, as
defined in the CC-I Credit Agreement, LIBOR, or prevailing bid rates of
certificates of deposit.  The interest rates ranged from 7.5% to 9.125% at
December 31, 1996.  The weighted average interest rates and weighted average
borrowings were approximately 7.93%, 8.72% and 7.42%, and $84,693,500,
$93,622,900 and $94,125,000 during the years ended December 31, 1996, 1995 and
1994, respectively.  As this debt instrument bears interest at current market
rates, its carrying amount approximates fair market value at December 31, 1996.

Borrowings under the CC-I Credit Agreement are subject to certain financial and
nonfinancial covenants and restrictions, the most restrictive of which requires
maintenance of a ratio of debt to annualized operating cash flow, as defined,
not to exceed 5.25 to 1 at December 31, 1996.  Borrowings under the CC-I Credit
Agreement are collateralized by the assets of CC-I.  A quarterly commitment fee
of 0.375% per annum is payable on the unused revolving credit facility portion
of the CC-I Credit Agreement.



                                     F-19
<PAGE>   54
                                    -  12  -


Commencing March 31, 1999, and at the end of each calendar quarter thereafter,
the CC-I revolving credit facility commitment (available borrowings) shall be
reduced on an annual basis as set forth below:


<TABLE>
<CAPTION>
            Percentage of      Percentage Reduction
            Principal Due      of Revolving Credit
Year        on Term Loans      Facility Commitment
----        -------------      --------------------
<S>           <C>                  <C>
1997              -%                    -%
1998              -                     -
1999            8.8                   8.8
2000           11.6                  11.6
2001           11.6                  11.6
2002           14.4                  14.4
2003           16.6                  16.6
2004           20.0                  20.0
2005           17.0                  17.0
              -----                 -----
              100.0%                100.0%
              =====                 =====
</TABLE>

As a requirement of the CC-I Credit Agreement, CC-I has secured interest swap
and cap agreements with a certain lender bank.  The CC-I Credit Agreement
requires CC-I to enter into interest rate protection agreements for amounts not
less than 50% of the outstanding obligations.  In addition, the interest rate
protection agreements must provide interest rate protection for a weighted
average period of not less than two years.  The fair value of the interest rate
caps or swaps is the estimated amount CC-I would receive (pay) to eliminate the
cap or swap agreement at the reporting date, taking into account current
interest rates and the credit-worthiness of the counterparties.  The following
summarizes certain information pertaining to the interest rate protection
agreements as of December 31, 1996:


<TABLE>
<CAPTION>
                                       Contract          Fair Value/
          Notional          Fixed     Expiration         Redemption
            Amount  Type    Rate        Date                Price
       -----------  ----    ----  ------------------     -----------
<S>                 <C>    <C>    <C>                   <C>
       $15,000,000  Cap      7.0% July 21, 1997           $   -
        15,000,000  Cap      8.0  July 21, 1997               -
        15,000,000  Cap      8.0  July 21, 1997               (749)
        25,000,000  Swap     5.7  September 18, 1997       (22,750)
        10,000,000  Cap      8.5  November 2, 1997            (997)
        25,000,000  Swap     4.9  September 18, 1998          *
        55,000,000  Swap     5.9  October 21, 1998            *
      ------------                                        ---------
                                  Weighted Average
      $160,000,000          7.2%    Fixed Rate            $(24,496)
      ============                                        =========
</TABLE>

     *These contracts have not been marked to market since their effective dates
      are after the reporting date.

CC-II Credit Agreement

In January 1995, CC-II entered into a revolving credit agreement (the "Old
CC-II Credit Agreement") with a consortium of banks for borrowings up to
$80,000,000.  During May 1995, CC-II terminated the Old CC-II Credit Agreement
and entered into a new revolving credit agreement (the "CC-II Credit
Agreement") with a consortium of banks for borrowings up to $135,000,000.  On
July 31, 1995, November 29, 1995, and March 28, 1996, CC-II and the banks
amended the CC-II Credit Agreement again to provide for term loans


                                     F-20
<PAGE>   55
                                    -  13  -


in the aggregate amount of $40,000,000 and total borrowings of $205,000,000,
including a $165,000,000 revolving credit facility.  Principal payments are due
in quarterly installments beginning September 30, 1998, and continuing through
September 30, 2004.  Portions of the debt bear interest, at CC-II's option, at
rates based upon the Base Rate, as defined in the CC-II Credit Agreement,
LIBOR, or prevailing bid rates of certificates of deposit.  The interest rates
ranged from 7.25% to 8.125% at December 31, 1996.  The weighted average
interest rate and weighted average borrowings were 7.86% and 8.46% and
approximately $174,512,000 and $121,092,000, during 1996 and 1995,
respectively.  As this debt instrument bears interest at current market rates,
its carrying amount approximates fair market value at December 31, 1996.

Borrowings under the CC-II Credit Agreement are subject to certain financial
and nonfinancial covenants and restrictions, the most restrictive of which
requires maintenance of a ratio of debt to annualized operating cash flow, as
defined, not to exceed 4.5 to 1 at December 31, 1996.  Borrowings under the
CC-II Credit Agreement are collateralized by the assets of CC-II.  A quarterly
commitment fee of 0.375% per annum is payable on the unused revolving credit
facility portion of the CC-II Credit Agreement.

Commencing September 30, 1998, and at the end of each calendar quarter
thereafter available borrowings shall be reduced on an annual basis as set
forth below:


<TABLE>
<CAPTION>
           Percentage of      Percentage Reduction
           Principal Due      of Revolving Credit
Year       on Term Loans       Facility Commitment
----       -------------      --------------------
<S>          <C>                 <C>
1997              -%                    -%
1998             .5                  10.0
1999             .5                  11.8
2000            1.0                  18.2
2001            1.0                  18.0
2002            1.0                  18.5
2003           15.0                  20.3
2004           81.0                   3.2
             ------                ------
             100.0%                100.0%
             ======                ======
</TABLE>

As a requirement of the CC-II Credit Agreement, CC-II has secured interest rate
swap and cap agreements with a certain lender bank.  The CC-II Credit Agreement
requires CC-II to enter into interest rate protection agreements for amounts
not less than 50% of the outstanding obligations.  In addition, the interest
rate protection agreements must provide interest rate protection for a weighted
average period of not less than 18 months.  The fair value of the interest rate
caps or swaps is the estimated amount CC-II would receive (pay) to eliminate
the cap or swap agreement at the reporting date, taking into account current
interest rates and the creditworthiness of the counterparties.  The following
summarizes certain information pertaining to the interest rate protection
agreements as of December 31, 1996:


<TABLE>
<CAPTION>
                                     Contract         Fair Value/
       Notional          Fixed      Expiration        Redemption
        Amount    Type    Rate         Date             Value
     -----------  ----   -----  ------------------    -----------
<S>               <C>    <C>    <C>                   <C>
     $20,000,000  Cap     8.5%  March 30, 1998          $ (1,449)
      20,000,000  Cap     8.5%  April 14, 1998            (2,106)
      30,000,000  Cap     8.5%  September 23, 1999         56,369
      20,000,000  Swap    6.2%  October 12, 1999         (82,570)
     -----------                                        ---------
                                Weighted Average
     $90,000,000          8.0%    Fixed Rate            $(29,756)
     ===========                                        =========
</TABLE>


                                     F-21
<PAGE>   56
                                    -  14  -


Management believes that the sellers of the interest rate swap and cap
agreements will be able to meet their obligations under the agreements.  The
purpose of the Partnership's involvement in the interest rate swap and cap
agreements is to minimize the Partnership's exposure to interest rate
fluctuations on its floating rate debt.  Management believes that it has no
material concentration of credit or market risks with respect to its interest
rate protection agreements.

Based upon outstanding indebtedness at December 31, 1996, and the amortization
of term loans and scheduled reductions in available borrowings of the revolving
credit facilities depicted above, aggregate future principal payments on the
total borrowings under both agreements at December 31, 1996, are as follows:


<TABLE>
<CAPTION>
Year                    Amount
----               -----------
<S>              <C>
1997              $          -
1998                   200,000
1999                16,370,000
2000                39,130,000
2001                38,800,000
Thereafter         190,800,000
                  ------------
                  $285,300,000
                  ============
</TABLE>

13. DEBT ISSUANCE COSTS:

CC-II refinanced its debt agreement in May 1995.  Accordingly, the debt
issuance costs related to the initial debt were written off.  The effect of
this write-off was a $1,959,438 charge to expense and was recorded as an
extraordinary item.  Additional costs related to the new debt agreements and
related amendments were recorded as debt issuance costs during 1996 and 1995.

14. NET LOSS FOR INCOME TAX PURPOSES:

The following reconciliation summarizes the differences between the
Partnership's net loss (excluding Peachtree), for financial reporting purposes
and net loss for federal income tax purposes for the year ended December 31:


<TABLE>
<CAPTION>
                                                       1996              1995            1994
                                                    ------------      ------------     -----------
<S>                                                <C>               <C>               <C>
Net loss for financial reporting purposes           $(39,724,910)     $(24,602,647)    $(9,609,052)
Depreciation differences between
  financial reporting and tax reporting              (18,371,557)       (9,804,115)     (1,561,047)
Amortization differences between
  financial reporting and tax reporting                6,167,045         7,154,093       4,561,627
Differences in expenses recorded for
  financial reporting and reporting for
  tax purposes                                         4,393,484         1,780,599         775,943
Differences in revenue reported for
  financial reporting and tax reporting                  490,380         1,114,699               -
Other                                                     19,217            61,576               -
                                                    ------------      ------------     -----------
      Net loss for federal income tax purposes      $(47,026,341)     $(24,295,795)    $(5,832,529)
                                                    ============      ============     ===========
</TABLE>

Net loss for federal income tax purposes reflects the activity of CC-I prior to
the reorganization under common control as discussed in Note 1.


                                     F-22
<PAGE>   57

                                    -  15  -


The following summarizes the significant cumulative temporary difference
between the Partnership's (excluding Peachtree), financial reporting basis and
federal income tax reporting basis as of December 31:


<TABLE>
<CAPTION>
                                                         1996              1995
                                                      ----------        ---------
<S>                                                 <C>               <C>
Assets:
  Accounts receivable                               $    293,493      $    276,201
  Franchise costs                                     13,571,106         7,300,502
  Accrued expenses                                     3,092,673         2,357,832
  Deferred revenue                                     1,605,077         1,114,699
  Deferred management fees payable to affiliate        4,293,532                 -
                                                    ------------      ------------
                                                    $ 22,855,881      $ 11,049,234
                                                    ============      ============
Liabilities:
  Property, plant and equipment                     $(29,687,881)     $(11,385,768)
  Other assets                                           (29,670)          (47,111)
                                                    ------------      ------------
                                                    $(29,717,551)     $(11,432,879)
                                                    ============      ============
</TABLE>

As previously stated, Peachtree is a C corporation.  The benefit for income
taxes is comprised solely of deferred income taxes for the year ended December
31, 1995.  The statutory and effective tax rates approximated 40%.

As of December 31, 1996 and 1995, temporary differences and carryforwards that
gave rise to deferred income tax assets and liabilities to Peachtree are as
follows:


<TABLE>
<CAPTION>
                                                   1996            1995
                                                ----------      ----------
<S>                                            <C>             <C>
Deferred income tax assets:
  Accounts receivable                          $     2,754     $     4,771
  Accrued expenses                                  72,306           7,401
  Deferred revenue                                  22,570               -
  Tax loss carryforwards                           502,552         548,100
  Tax credit carryforwards                         361,195         361,195
                                               -----------     -----------
      Total deferred income tax assets             961,377         921,467
                                               -----------     -----------
Deferred income tax liabilities:
  Property, plant and equipment                 (1,484,167)     (1,481,396)
  Franchise costs and other assets              (4,588,518)     (4,551,379)
                                               -----------     -----------
      Total deferred income tax liabilities     (6,072,685)     (6,032,775)
                                               -----------     -----------
      Net deferred income tax liability        $(5,111,308)    $(5,111,308)
                                               ===========     ===========
</TABLE>

At December 31, 1996, Peachtree had a net operating loss carryforward for
income tax purposes of approximately $1,276,000 which, if not utilized to
reduce taxable income in future periods, expires in the years 2003 through
2010.  All net operating losses have been recognized for financial statement
purposes as a reduction of deferred income taxes.  In addition, Peachtree has
an alternative minimum tax credit carryforward of approximately $486,000, which
may be carried forward indefinitely.


                                     F-23
<PAGE>   58
                                    -  16  -


15. RELATED-PARTY TRANSACTIONS:

Charter Communications, Inc. (Charter) provides management services to the
Partnership under the terms of contracts which provide for fees equal to 5% of
the Partnership's gross service revenues.  Through December 31, 1998 and 1997,
60% of CC-II's and CC-I's fees shall be paid quarterly with the balance being
deferred.  Thereafter, the entire fee may be deferred until termination of the
partnerships.  Expenses recognized under this contract during 1996, 1995 and
1994 were approximately $6,013,900, $3,642,000 and $1,078,000, respectively.
Management fees currently payable of approximately $1,002,400 and $630,852 are
included in Payables to Affiliates at December 31, 1996 and 1995, respectively.

The Partnership entered into a new management agreement with Charter as of
March 28, 1996.  In addition to the deferral of management fees discussed
above, payments due on the Notes and Debentures shall be paid before any
management fees are paid; provided that there exists no default on subordinated
debt.

Receivables from Affiliates includes a $500,000 refundable advance toward the
purchase of the Abbeville System from Cencom Partners, L.P., an affiliated
entity.  The amount will be refunded to the Partnership if the sale is not
consummated or applied to the Partnership's purchase of the Abbeville System.

The Partnership and all entities affiliated with Charter collectively utilize a
combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims.  The Partnership is allocated charges
monthly based upon its total number of employees, historical claims and medical
cost trend rates.  During 1996, 1995 and 1994, the Partnership expensed
approximately $1,135,900, $619,000 and $162,000, respectively, relating to
insurance allocations.

In 1996, the Partnership and other affiliated entities employed the services of
Charter's National Data Center (the "National Data Center").  The National Data
Center performs certain subscriber billing services and provides computer
network, hardware and software support for the Partnership and other affiliated
entities.  The cost of these services is allocated based on the number of
subscribers.  Management considers this allocation to be reasonable for the
operations of the Partnership.  During 1996, the Partnership expensed
approximately $344,500 relating to these services.

In 1996, certain of the Partnership's employees became participants in the 1996
Charter Communications/Charterhouse Group Appreciation Rights Plan (the
"Appreciation Rights Plan").  The Appreciation Rights Plan covers certain key
employees and consultants within the group of companies and partnerships
controlled by affiliated of Charterhouse and managed by Charter (collectively,
the "Investment Group").  The obligation and related expenses of the
Appreciation Rights Plan is the responsibility of and has been recorded at
CharterComm Holdings.

CC-I, CC-II and other affiliated entities maintain regional offices.  The
regional offices perform certain operational services on behalf of the
Partnership and other affiliated entities.  The cost of these services was
allocated to the Partnership and affiliated entities based on their number of
subscribers.  Management considers this allocation to be reasonable for the
operations of the Partnership.  During 1996, 1995 and 1994, the Partnership
expensed approximately $1,294,300, $1,006,000 and $315,000, respectively,
relating to these services.

The Partnership pays certain acquisition advisory fees to Charter and
Charterhouse which typically equal approximately 1% of the total purchase price
paid for cable television systems acquired.  Total acquisition fees paid to
Charter in 1996, 1995 and 1994 were $1,737,500, $450,000 and $1,500,000,
respectively.  Total acquisition fees paid to Charterhouse in 1996, 1995 and
1994 were $1,737,500, $100,000 and $0, respectively.  In addition, Charter
received $2,900,000 of partnership interests as consideration for certain
acquisitions during 1995.

At December 31, 1995, CC-I had an unsecured receivable included in other
assets, of $100,000 bearing interest at 6% from a related party.  During 1996,
CC-I forgave the amount outstanding under this note.




                                     F-24
<PAGE>   59
                                    -  17  -


In January 1996, CC-II entered into a Financial Service Agreement with
Charterhouse for consulting and financial services.  The Partnership received
services through December 31, 1996, for a nonrefundable fee of $550,000, which
was expensed during 1996.

16. COMMITMENTS AND CONTINGENCIES:

Leases

The Partnership leases certain facilities and equipment under noncancelable
operating leases.  Rent expense incurred under leases during 1996, 1995 and
1994 was approximately $522,000, $324,200 and $19,300, respectively.
Approximate future minimum lease payments are as follows:


              1997                               $373,300
              1998                                301,700
              1999                                207,200
              2000                                120,100
              2001                                107,200
              Thereafter                          364,300


The Partnership rents utility poles in its operations.  Generally, pole rental
agreements are short term, but the Partnership anticipates that such rentals
will recur.  Rent expense incurred for pole attachments during 1996, 1995 and
1994 was approximately $2,091,900, $1,213,200 and $430,900, respectively.

Insurance Coverage

The Partnership currently does not have, and does not in the near term
anticipate having, property and casualty insurance on its underground
distribution plant.  Due to large claims incurred by the property and casualty
insurance industry, the pricing of insurance coverage has become inflated to
the point where, in the judgment of the Partnership's management, the insurance
coverage is cost prohibitive.  Management believes its experience with such
insurance coverage is consistent with general industry practice.  Management
will continue to monitor the insurance markets to attempt to obtain coverage
for the Partnership's distribution plant at reasonable rates.

Litigation

A purported class action lawsuit on behalf of the CCIP limited partners was
filed in 1995 (the "Action"), which sought, among other things, to enjoin
permanently the CCIP Acquisition.  On February 15, 1996, all of the plaintiff's
claims for injunctive relief were dismissed (including that which sought to
prevent the consummation of the CCIP Acquisition); the plaintiff's claims for
money damages which may have resulted from the CCIP Acquisition remain pending.
Each of the defendants in the Action, including the Partnership, believes the
Action, which remains pending, to be without merit and is contesting it
vigorously.  In October 1996, the plaintiff filed a Consolidated Amended Class
Action Complaint (the "Amended Complaint").  The general partner of CCIP
believes that portions of the Amended Complaint are legally inadequate and
filed a dispositive motion as to all remaining claims in the Action.  There can
be no assurance, however, that the plaintiff will not be awarded damages, some
or all of which may be payable by the Partnership, in connection with the
Action.

The Partnership is a party to lawsuits which are generally incidental to its
business.  In the opinion of management, after consulting with legal counsel,
the outcome of these lawsuits will not have a material adverse effect on the
Partnership's consolidated financial position and results of operations.

17. REGULATION IN THE CABLE TELEVISION INDUSTRY:

The cable television industry is subject to extensive regulation at the
federal, local and, in some instances, state levels.  In addition, recent
legislative and regulatory changes and additional regulatory proposals under
consideration may materially affect the cable television industry.


                                     F-25
<PAGE>   60

                                    -  18  -


Congress enacted the Cable Television Consumer Protection and Competition Act
of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992.
The 1992 Cable Act generally allows for a greater degree of regulation of the
cable television industry.  Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States are subject to rate
regulation of basic cable services, provided the local franchising authority
becomes certified to regulate basic service rates.  The 1992 Cable Act and the
Federal Communications Commission's (FCC) rules implementing the 1992 Cable Act
have generally increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.

While management believes that the Partnership has complied in all material
respects with the rate provisions of the 1992 Cable Act, in jurisdictions that
have not yet chosen to certify, refunds covering a one-year period on basic
services may be ordered upon future certification if the Partnership is unable
to justify its rates through a benchmark or cost-of-service filing or small
system cost-of-service filing pursuant to FCC rules.  Management is unable to
estimate at this time the amount of refunds, if any, that may be payable by the
Partnership in the event certain of its rates are successfully challenged by
franchising authorities or found to be unreasonable by the FCC.  Management
does not believe that the amount of any such refunds would have a material
adverse effect on the consolidated financial position or results of operations
of the Partnership.

The 1992 Cable Act modified the franchise renewal process to make it easier for
a franchising authority to deny renewal.  Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of the franchise agreement.  Although management
believes that the Partnership has generally met the terms of its franchise
agreements and has provided quality levels of service, and anticipates the
Partnership's future franchise renewal prospects generally will be favorable,
there can be no assurance that any such franchises will be renewed or, if
renewed, that the franchising authorities will not impose more onerous
requirements on the Partnership than previously existed.

Recent Telecommunications Legislation

During 1996, Congress passed and the President signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act") which alters
federal, state, and local laws and regulations pertaining to cable television,
telecommunications and other services.  Under the Telecommunications Act,
telephone companies can compete directly with cable operators in the provision
of video programming.

Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry and the cable services
provided by the Partnership.  Although the new legislation may substantially
lessen regulatory burdens, the cable television industry may be subject to
additional competition as a result thereof.  There are numerous rule makings to
be undertaken by the FCC which will interpret and implement the
Telecommunications Act's provisions.  In addition, certain provisions of the
Telecommunications Act (such as the deregulation of cable programming rates)
are not immediately effective.  Further, certain of the Telecommunications
Act's provisions have been and are likely to be subject to judicial challenges.
Management is unable at this time to predict the outcome of such rule makings
or litigation or the substantive effect of the new legislation and the rule
makings on the consolidated financial position and results of operations of the
Partnership.

18. 401(k) PLAN:

In 1994, the Partnership adopted the Charter Communications, Inc. 401(k) Plan
(the "401(k) Plan") for the benefit of its employees.  All employees who have
completed one year of employment are eligible to participate in the 401(k)
Plan.  The 401(k) Plan is a tax-qualified retirement savings plan to which
employees may elect to make pretax contributions up to the lesser of 10% of
their compensation or dollar thresholds established under the Internal Revenue
Code.  The Partnership contributes an amount equal to 50% of the first 5%
contributed by each employee.  During 1996, 1995 and 1994, the Partnership
contributed approximately $149,200, $87,900 and $5,800, respectively.

                                     F-26
<PAGE>   61

                                    -  19  -


19. INSURANCE SETTLEMENTS:

In October 1995, Hurricane Opal caused damage to certain of the Partnership's
Alabama and Georgia systems.  The Partnership has received a $500,000 insurance
advance during 1995 which approximated the expenses in excess of the insurance
deductible.  In addition, the Partnership recorded a $744,800 nonoperating loss
in 1995 for its portion of the insurance deductible.

In September 1996, Hurricane Fran caused damage to certain of the Partnership's
North Carolina systems.  The estimated total damage to these systems was
approximately $930,000.  The Partnership received an insurance advance of
approximately $150,000 during 1996 and expects settlement in 1997.  In
addition, the Partnership recorded a $367,000 nonoperating loss in 1996 for its
portion of the insurance deductible.

20. SIGNIFICANT NONCASH TRANSACTIONS:

The Partnership engaged in the following significant noncash financing
transactions:


<TABLE>
<CAPTION>
                                                                   1996         1995         1994
                                                               -----------   ----------   ----------
<S>                                                           <C>           <C>          <C>
Redemption preference allocation--Special
  Limited Partner units (CC-I) (see Note 5)                    $   828,616   $3,051,040   $1,924,573
Redemption preference allocation--
  Redeemable Preferred Limited units (CC-I) (see Note 4)              -       2,715,977    1,626,333
Redemption preference allocation--
  Redeemable Preferred Limited units (CC-II) (see Note 3)        1,452,343    3,729,149         -
Recording of franchise costs and deferred income
  taxes in connection with the Peachtree
  acquisition (see Note 6)                                            -       7,000,000         -
Exchange of Redeemable Preferred Limited
  Units (CC-I) (see Note 4)                                     12,872,925         -            -
Exchange of Redeemable Preferred Limited
  Units (CC-II) (see Note 3)                                    40,181,492         -            -
Return of capital - Special Limited Partner Units
  (CC-I) (see Note 5)                                            2,558,173         -            -
</TABLE>

21. SUBSEQUENT EVENT:

In February 1997, CC-II acquired the net assets of certain cable television
systems serving approximately 38,000 basic subscribers in North Carolina for
approximately $68.1 million from Prime Cable of Hickory, L.P.  In order to
finance the transaction, CC-II amended the CC-II Credit Agreement to increase
available borrowings to approximately $365.0 million.



                                     F-28
<PAGE>   62



                                 EXHIBIT INDEX



                                                                   Sequentially
  Exhibit                                                            Numbered
    No.                     Description                                Pages
  -------                   -----------                            ------------

  3.1    Certificate of Limited Partnership of Charter Holdings,
         filed as Exhibit 3.1 to the Registration Statement on Form
         S-4 (Registration No. 333-3774), and incorporated herein by
         this reference.
  3.2    Amended and Restated Agreement of Limited Partnership of
         Charter Holdings, filed as Exhibit 3.2 to the Registration
         Statement on Form S-4 (Registration No. 333-3774), and
         incorporated herein by this reference.
 *3.2(a) First Amendment to Amended and Restated Agreement of
         Limited Partnership of  Charter Holdings, dated February 28,
         1997
  3.3    Certificate of Incorporation of Holdings Capital, filed
         as Exhibit 3.3 to the Registration Statement on Form S-4
         (Registration No. 333-3774), and incorporated herein by this
         reference.
  3.4    By-laws of Holdings Capital, filed as Exhibit 3.4 to the
         Registration Statement on Form S-4 (Registration No.
         333-3774), and incorporated herein by this reference.  .
  4.1    Indenture dated March 15, 1996 among the issuers and
         Boatmen's Trust Company, as Trustee, filed as Exhibit 4.1 to
         the Registration Statement on Form S-4 (Registration No.
         333-3774), and incorporated herein by this reference.
  4.5    Form of new Debenture (included in Exhibit 4.1).
 10.1    CCI Credit Facility:  Amended and Restated Loan Agreement
         dated as of March 28, 1996, among Charter Communications,
         L.P., the Banks, Toronto Dominion (Texas), Inc., PNC Bank,
         National Association and Credit Lyonnais Cayman Island
         Branch, as Co-Agents, Toronto Dominion (Texas), Inc., as
         Agent, and Toronto Dominion (Texas), Inc., as Administrative
         Agent, filed as Exhibit 10.1 to the Registration Statement on
         Form S-4 (Registration No. 333-3774), and incorporated herein
         by this reference.
*10.1(a) First Amendment dated as of November 29, 1996 to CCI Credit Facility.
*10.2(a) CC-II Credit Facility:  Second Amended and Restated Revolving Credit
         Agreement dated as of  February 7, 1997, among Charter Communications
         II, L.P., Charter Communications III, L.P., Peachtree Cable TV, Inc.,
         the Banks, Credit Lyonnais New York Branch and Toronto Dominion
         (Texas), Inc., as Arranging Agents, NationsBank of Texas, N.A. and
         CIBC Inc., as Managing Agents, Toronto Dominion (Texas), Inc., as
         Administrative agent and Credit Lyonnais New York Branch, as
         Documentation Agent.
 10.3    Management Agreement dated March 28, 1996, between Charter
         Holdings and Charter Communications, Inc., filed as Exhibit
         10.3 to the Registration Statement on Form S-4 (Registration
         No. 333-3774), and incorporated herein by this reference.
 10.4    Management Agreement dated March 28, 1996, between Charter
         Southeast and Charter Holdings, filed as Exhibit 10.4 to the
         Registration Statement on Form S-4 (Registration No.
         333-3774), and incorporated herein by this reference.
 10.5    Management Agreement dated March 28, 1996, between Charter
         Southeast and CC-I, filed as Exhibit 10.5 to the Registration
         Statement on Form S-4 (Registration No. 333-3774), and
         incorporated herein by this reference.
 10.6    Management Agreement dated March 28, 1996, between Charter
         Southeast and CC-II, filed as Exhibit 10.6 to the
         Registration Statement on Form S-4 (Registration No.
         333-3774), and incorporated herein by this reference.
 10.10   Asset Purchase Agreement dated as of July 1, 1995, among
         CCIP, Charter Communications Properties, Inc., CC-II and
         CC-I, filed as Exhibit 10.10 to the Registration Statement on
         Form S-4 (Registration No. 333-3774), and incorporated herein
         by this reference.
 10.11   Certificate of Limited Partnership of CC-I, filed as
         Exhibit 10.11 to the Registration Statement on Form S-4
         (Registration No. 333-3774), and incorporated herein by this
         reference.

                                      E-1

<PAGE>   63


 10.12    Amended and Restated Agreement of Limited Partnership of
          CC-I dated March 28, 1996, filed as Exhibit 10.12 to the
          Registration Statement on Form S-4 (Registration No.
          333-3774), and incorporated herein by this reference.
*10.12(a) First Amendment to Amended and Restated Agreement of
          Limited Partnership of  CC-I, dated February 28, 1997
 10.13    Certificate of Limited Partnership of CC-II, filed as
          Exhibit 10.13 to the Registration Statement on Form S-4
          (Registration No. 333-3774), and incorporated herein by this
          reference.
 10.14    Amended and Restated Agreement of Limited Partnership of
          CC-II dated March 28, 1996, filed as Exhibit 10.14 to the
          Registration Statement on Form S-4 (Registration No.
          333-3774), and incorporated herein by this reference.
*10.14(a) First Amendment to Amended and Restated Agreement of
          Limited Partnership of CC-II, dated February 28, 1997
 10.15    Certificate of Limited Partnership of CC-III, filed as
          Exhibit 10.15 to the Registration Statement on Form S-4
          (Registration No. 333-3774), and incorporated herein by this
          reference.
 10.16    Amended and Restated Agreement of Limited Partnership of
          CC-III dated March 28, 1996, filed as Exhibit 10.16 to the
          Registration Statement on Form S-4 (Registration No.
          333-3774), and incorporated herein by this reference.
 10.17    Articles of Organization of Peachtree, filed as Exhibit
          10.17 to the Registration Statement on Form S-4 (Registration
          No. 333-3774), and incorporated herein by this reference.
 10.18    By-laws of Peachtree, filed as Exhibit 10.18 to the
          Registration Statement on Form S-4 (Registration No.
          333-3774), and incorporated herein by this reference.
 10.19    Certificate of Limited Partnership of Charter Southeast,
          filed as Exhibit 3.1 to the Registration Statement on Form
          S-4 of Charter Communications Southeast, L.P. (Registration
          No. 333-3772), and incorporated herein by this reference.
 10.20    Amended and Restated Agreement of Limited Partnership of
          Charter Southeast dated March 28, 1996, filed as Exhibit 3.2
          to the Registration Statement on Form S-4 of Charter
          Communications Southeast, L.P. (Registration No. 333-3772),
          and incorporated herein by this reference.
 10.20(a) First Amendment to Amended and Restated Agreement of
          Limited Partnership of  Charter Holdings, dated February 28,
          1997, filed as Exhibit 3.2(a) to the Annual Report of Form
          10-K for the year ended December 31, 1996, of Charter
          Communications Southeast, L.P., and incorporated herein by
          this reference.
*10.21    Asset Sale Agreement by and between Prime Cable of Hickory, L.P.,
          as Seller, and Charter Communications II, L.P., as Buyer, dated
          August 6, 1996, filed herewith.
*10.22    Asset Purchase Agreement between Cencom Cable Income Partners II,
          L.P., as Seller, and Charter Communications II, L.P., as Purchaser,
          dated as of  May 30, 1996 (Anderson County, SC), filed herewith.
*10.23    Second Amended and Restated Asset Purchase Agreement between Cencom
          Partners, L.P., as Seller, and Charter Communications, L.P., as
          Purchaser, dated as of January 16, 1997 (Sanford, NC), filed herewith.
*10.24    Second Amended and Restated Asset Purchase Agreement between Cencom
          Partners, L.P., as Seller, and Charter Communications II, L.P., as
          Purchaser, dated as of January 16, 1997 (Abbeville, SC), filed
          herewith.
*10.25    Second Amended and Restated Asset Purchase Agreement between Cencom
          Partners, L.P., as Seller, and Charter Communications II, L.P., as
          Purchaser, dated as of January 16, 1997 (Lincolnton, NC), filed
          herewith.
*12.1     Ratio of Earnings to Fixed Charges Calculation - Charter
          Communications Southeast Holdings, L.P, filed herewith.
*21.1     List of Subsidiaries of Registrants.

_________________________________
*  Filed herewith.


                                      E-2