<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-K

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

              Annual Report Pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2001

                      Commission File Numbers: 333-57285-01
                                               333-57285

                                  Mediacom LLC
                          Mediacom Capital Corporation*
           (Exact names of Registrants as specified in their charters)

           New York                                           06-1433421
           New York                                           06-1513997
 (State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                          Identification Numbers)

                              100 Crystal Run Road
                           Middletown, New York 10941
                    (Address of principal executive offices)

                                 (845) 695-2600
                         (Registrants' telephone number)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                                      None

     Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have 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 the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: Not Applicable

     State the aggregate market value of the common equity held by
non-affiliates of the Registrants: Not Applicable

     Indicate the number of shares outstanding of the Registrants' common stock:
Not Applicable

*Mediacom Capital Corporation meets the conditions set forth in General
Instruction I (1) (a) and (b) of Form 10-K and is therefore filing this form
with the reduced disclosure format.

<PAGE>


                                  MEDIACOM LLC
                          2001 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I
                                     ------

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>        <C>                                                                                        <C>
Item 1.    Business..............................................................................      4
Item 2.    Properties............................................................................     27
Item 3.    Legal Proceedings.....................................................................     27
Item 4.    Submission of Matters to a Vote of Security Holders...................................     27

                                     PART II
                                     -------

Item 5.    Market for Registrants' Common Equity and Related Stockholder Matters.................     28
Item 6.    Selected Financial Data...............................................................     29
Item 7.    Management's Discussion and Analysis of Financial Condition and
             Results of Operations...............................................................     32
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk............................     47
Item 8.    Financial Statements and Supplementary Data...........................................     48
Item 9.    Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure................................................................     67

                                    PART III
                                    --------

Item 10.   Directors and Executive Officers of the Registrants...................................     68
Item 11.   Executive Compensation................................................................     71
Item 12.   Security Ownership of Certain Beneficial Owners and Management........................     71
Item 13.   Certain Relationships and Related Transactions........................................     72

                                     PART IV
                                     -------

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................     73
</TABLE>

                                       2

<PAGE>

     Mediacom LLC was organized as a New York limited liability company in 1995
and is a wholly-owned subsidiary of Mediacom Communications Corporation, a
Delaware Corporation. Mediacom Capital Corporation was organized as a New York
corporation in 1998 and is a wholly-owned subsidiary of Mediacom LLC. Mediacom
Capital was formed for the sole purpose of acting as co-issuer with Mediacom LLC
of debt securities and does not conduct operations of its own.

     References in this Annual Report to "we," "us," or "our" are to Mediacom
LLC and its direct and indirect subsidiaries, unless the context specifies or
requires otherwise. References in this Annual Report to "MCC" are to Mediacom
Communications Corporation.

Cautionary Statement Regarding Forward-Looking Statements

     You should carefully review the information contained in this Annual Report
and in other reports or documents that we file from time to time with the
Securities and Exchange Commission (the "SEC"). In this Annual Report, we state
our beliefs of future events and of our future financial performance. In some
cases, you can identify those so-called "forward-looking statements" by words
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of those
words and other comparable words. You should be aware that those statements are
only our predictions. Actual events or results may differ materially. In
evaluating those statements, you should specifically consider various factors,
including the risks discussed in this Annual Report for the year ended December
31, 2001 and other reports or documents that we file from time to time with the
SEC. Those factors may cause our actual results to differ materially from any of
our forward-looking statements. All forward-looking statements attributable to
us or a person acting on our behalf are expressly qualified in their entirety by
this cautionary statement.

                                       3

<PAGE>

                                     PART I
                                     ------

ITEM 1. BUSINESS

Our Manager

     Mediacom Communications Corporation, our parent and manager, is currently
the nation's eighth largest cable television company based on customers served
and the leading cable operator focused on serving the smaller cities and towns
in the United States. Mediacom Communications provides its customers with a wide
array of broadband products and services, including traditional video services,
digital television and high-speed Internet access. As of December 31, 2001, our
manager's cable systems, which are owned and operated through the operating
subsidiaries of Mediacom LLC and Mediacom Broadband LLC, passed approximately
2.6 million homes and served approximately 1.6 million basic subscribers in 23
states. A basic subscriber is a customer that subscribes to a package of basic
cable television services. Our manager was founded in July 1995 by Rocco B.
Commisso, its Chairman and Chief Executive Officer, and its Class A common stock
is traded on The Nasdaq National Market under the symbol MCCC.

Mediacom LLC

     We are a wholly-owned subsidiary of our manager. As of December 31, 2001,
our cable systems passed approximately 1.2 million homes and served
approximately 771,000 basic subscribers in 22 states. Since commencement of our
operations in March 1996, we have experienced significant growth by deploying a
disciplined strategy of acquiring underperforming cable systems and improving
their operating and financial performance. As of December 31, 2001, we had
completed 20 acquisitions of cable systems for an aggregate purchase price of
approximately $1.3 billion. Many of our cable systems are located in markets
that are contiguous with, or in close proximity to, cable systems owned and
operated by Mediacom Broadband LLC, a wholly-owned subsidiary of our manager.

     We believe that our high-speed, interactive broadband network is the
superior platform for the delivery of video, voice and data services to the
homes and businesses in the communities we serve. We now have underway an
aggressive network upgrade program that we expect to substantially complete by
June 30, 2003. As of December 31, 2001, approximately 90% of our cable network
was upgraded with 550MHz to 870MHz bandwidth capacity and about 80% of our homes
passed were activated with two-way communications capability.

     As a result of our network upgrade program, we have seen a significant
increase in our cable systems' network capacity, quality and reliability,
facilitating the widespread introduction of additional programming and other
services such as digital video and high-speed Internet access, and providing the
network capability for additional services such as video-on-demand and
telephony. As of December 31, 2001, our digital cable service was available to
about 600,000 basic subscribers, or 78% of our total basic subscribers, and our
high-speed Internet access, or cable modem service, was marketed to
approximately 610,000 homes passed by our cable systems, or 51% of our total
homes passed.

     Our manager's principal executive offices are located at 100 Crystal Run
Road, Middletown, New York 10941, and our manager's telephone number at that
address is (845) 695-2600. Our manager's website is located at
www.mediacomcc.com. The information on our manager's website is not part of this
Annual Report.

                                       4

<PAGE>

General Business Developments

   2001 Events

     On January 24, 2001, we completed an offering of $500.0 million of 9 1/2%
senior notes due January 2013. Approximately $467.5 million of the net proceeds
were used to repay a substantial portion of the indebtedness outstanding under
our subsidiary credit facilities and related accrued interest. The balance of
the net proceeds was used for general corporate purposes.

     On July 17, 2001, we paid a $125.0 million cash dividend to our manager
that was funded with borrowings under our subsidiary credit facilities.

     On July 18, 2001, we made a $150.0 million preferred equity investment in
Mediacom Broadband LLC that was funded with borrowings under our subsidiary
credit facilities. The preferred equity investment has a 12% annual dividend,
payable quarterly in cash. The proceeds of the preferred equity investment and,
indirectly, the $125.0 million cash dividend paid to our manager, partially
funded the aggregate purchase price of $2.07 billion for Mediacom Broadband
LLC's acquisitions of cable systems from AT&T Broadband, LLC completed in June
and July 2001.

   2002 Events

     On February 4, 2002, we and our manager filed a registration statement with
the SEC under which we may sell debt securities unconditionally guaranteed by
our manager for a maximum amount of $1.5 billion. The SEC declared this
registration statement effective on February 13, 2002.

     During February 2002, we completed the transition of our cable modem
customers, which totaled over 35,000, to our manager's new, proprietary Mediacom
Online(SM) high-speed Internet service, from the third-party provider
Excite@Home.

Business Strategy

     Our objective is to be the dominant provider of entertainment, information
and telecommunications services in the smaller cities and towns in the United
States we serve. The key elements of our business strategy are to:

   Improve the Operating and Financial Performance of Our Cable Systems

     We seek to rapidly integrate acquired cable systems and improve their
operating and financial performance by implementing our manager's operating
practices and capital investment program. Prior to the completion of an
acquisition, our manager formulates plans for customer care and billing
improvements, network upgrades, headend consolidation, new product and service
launches, competitive positioning and human resource requirements of our cable
systems. After completing an acquisition, our manager implements managerial,
operating, purchasing, personnel and engineering changes designed to effect
these plans. Our manager also expects to generate cost savings by eliminating
significant amounts of overhead expenses historically incurred by the owners of
the cable systems we acquire.

   Develop Efficient Operating Clusters

     Our manager's cable systems are currently organized in three operating
divisions based on their geographic location. Our cable systems are included in
these divisional clusters. By operating geographically clustered cable systems,
our manager expects to generate operating efficiencies through the consolidation
of many managerial, customer service, marketing, administrative and technical
functions. The clustering of cable systems also enables our manager to
consolidate signal processing and distribution facilities, or headend
facilities, which lowers the fixed capital costs required on a per home basis to
introduce new products and services. Many of our cable systems are located in
markets which are contiguous with, or in close proximity to, Mediacom Broadband
LLC's cable systems. We believe this will enable us to generate additional
operating efficiencies as our manager further consolidates its operations.

                                       5

<PAGE>

   Rapidly Upgrade Our Cable Network

     We are rapidly upgrading our cable network to provide new broadband
products and services, improve our competitive position and increase overall
customer satisfaction. By December 2002, we anticipate that about 96% of our
cable network will be upgraded with 550MHz to 870MHz bandwidth capacity and
approximately 90% of our homes passed will have two-way communications
capability. In addition, we expect to eliminate up to 190 of our 273 headend
facilities by June 2003. As part of our headend consolidation program, we plan
to deploy about 5,500 route miles of fiber optic cable to create large regional
fiber optic networks with the potential to provide advanced telecommunications
services.

Our upgrade plans will allow us to:

     .    offer digital cable television, high-speed Internet access and
          interactive video services;

     .    increase channel capacity to a minimum of 82 channels, and
          significantly more with digital video technology;

     .    activate the two-way communications capability of our systems, which
          gives our customers the ability to send and receive signals over our
          cable network;

     .    increase the average number of customers served by our master headend
          facilities, which lowers the fixed capital costs required on a per
          home basis to introduce new products and services, increases the speed
          and effectiveness of our deployment of these new products and services
          and improves our ability to sell advertising on our cable systems; and

     .    utilize our regional fiber optic networks to offer advanced
          telecommunications services.

   Introduce New and Advanced Broadband Products and Services

     We believe that significant opportunities exist to increase our revenues by
expanding the array of products and services we offer. We have used and will
continue to use the expanded channel capacity of our upgraded systems to
introduce several new basic programming services, additional premium services
and numerous pay-per-view channels.

     Utilizing digital video technology, we offer multiple packages of premium
services, several pay-per-view channels on a near video-on-demand basis, digital
music services and interactive program guides. As of December 31, 2001, our
digital cable service was available to about 600,000 basic subscribers. In March
2002, we launched video-on-demand service in our Mobile, Alabama cable system.

     We also offer high-speed Internet access at speeds up to 100 times faster
than a conventional telephone modem. As of December 31, 2001, our cable modem
service was marketed to about 610,000 homes passed by our cable systems. During
February 2002, we completed the transition of our cable modem customers, which
numbered over 35,000, to our manager's new, proprietary Mediacom Online(SM)
high-speed Internet service, from the third-party provider Excite@Home. In
addition, we are currently exploring other opportunities in interactive video
and telecommunications services.

   Maximize Customer Satisfaction to Build Customer Loyalty

     As a result of our strong regional and local management presence, we are
responsive to customer needs and preferences and better positioned to strengthen
relations with the local government authorities and the communities we serve. We
seek a higher level of customer satisfaction by providing effective customer
service and attractively priced product and service offerings. We believe our
investments in our cable network are increasing customer satisfaction as a
result of a wide array of new product and service introductions, greater
technical reliability and improved quality of service. We have regional calling
centers that are staffed with dedicated personnel who provide service 24 hours a
day, seven days a week to approximately 94% of our customers. We believe that
our focus on customer service has enhanced our reputation in the communities we
serve, which has increased customer loyalty and the potential demand for our new
and enhanced products and services.

                                       6

<PAGE>

   Acquire Underperforming Cable Systems Principally in Smaller Cities and Towns

     Our disciplined acquisition strategy targets underperforming cable systems
serving primarily smaller cities and towns. These cable systems are typically
located within the top 50 to 100 television markets where customers generally
require cable to clearly receive a full complement of off-air television
signals. We believe that there are advantages in acquiring and operating cable
systems in small and medium-sized markets, including:

     .    less direct wireline competition given the lower housing densities and
          the resulting higher costs per customer of constructing a cable
          network;

     .    higher penetration levels of our services and lower customer turnover
          as a result of fewer competing entertainment alternatives; and

     .    generally lower overhead and operating costs than those incurred by
          cable operators serving larger markets.

     In addition, we seek to acquire or trade for cable systems in close
proximity to our existing operations because it is more cost effective to
provide cable television and advanced telecommunications services over an
expanded subscriber base within a concentrated geographic area. We have been
able to purchase fill-in acquisitions at favorable prices in geographic regions
where we are the dominant provider of cable television services. Our acquisition
strategy will continue to focus on cable systems that have a complementary
geographic fit with our existing operations, but we will also continue to
consider opportunities to enter new market territories if they are of sufficient
size to provide the clustering benefits noted above.

   Implement a Flexible Financing Structure

     To support our business strategy and enhance our financial flexibility, we
have developed a financing strategy utilizing a blend of equity and debt capital
to complement our acquisition and operating activities. We have diversified our
sources of debt capital by raising long-term debt while utilizing our operating
subsidiaries to access debt in the commercial bank market through separate
borrowing groups.

     We believe our financing strategy is beneficial because it broadens our
access to various equity and debt markets, enhances our flexibility in managing
our capital structure, reduces our overall cost of debt capital and permits us
to maintain a substantial liquidity position in the form of unused and available
subsidiary credit facilities. As of December 31, 2001, the unused credit
commitments under our subsidiary credit facilities were approximately $495.9
million, of which over $450.0 million could be borrowed and used for general
corporate purposes under the most restrictive covenants in our debt
arrangements, and our annualized cost of debt capital was approximately 7.2%.

Products and Services

     We provide our customers with the ability to select a full array of core
cable television service packages. In addition, we offer most of our customers
advanced broadband products and services such as digital cable television and
high-speed Internet access. These products and services have been introduced to
a significant portion of our customer base. In 2002, we plan to further
introduce digital cable and high-speed Internet access across our cable systems
and to aggressively market these services to our customer base. We launched
video-on-demand service in our Mobile, Alabama cable system in March 2002 and
are exploring other opportunities in interactive video, Internet protocol
telephony, or IP telephony, and other telecommunications services.

   Core Cable Television Services

     We design both our basic channel line-up and our additional channel
offerings for each system according to demographics, programming preferences,
channel capacity, competition, price sensitivity and local regulation. Our core
cable television service offerings generally include the following:

     Limited Basic Service. Our limited basic service includes, for a monthly
fee, local broadcast channels, network and independent stations, limited
satellite-delivered programming, and local public, government, home-shopping and
leased access channels.

                                       7

<PAGE>

     Expanded Basic Service. Our expanded basic service includes, for an
additional monthly fee, various satellite-delivered channels such as CNN, MTV,
USA Network, ESPN, Lifetime, Nickelodeon and TNT.

     Premium Service. Our premium services are satellite-delivered channels
consisting principally of feature films, original programming, live sports
events, concerts and other special entertainment features, usually presented
without commercial interruption. HBO, Cinemax, Showtime, The Movie Channel and
Starz are typical examples. Such premium programming services are offered by the
systems both on a per-channel basis and as part of premium service packages
designed to enhance customer value and to enable us to take advantage of
programming agreements offering cost incentives based on premium service unit
growth.

     Pay-Per-View Service. Our pay-per-view services allow customers to pay to
view a single showing of a feature film, live sporting event, concert and other
special event, on an unedited, commercial-free basis. Such pay-per-view services
are offered by us on a per-viewing basis, with subscribers only paying for
programs which they select for viewing.

   Digital Cable Services

     Digital video technology offers significant advantages. Most importantly,
this technology allows us to greatly increase our channel offerings through the
use of compression, which converts one analog channel into eight to 12 digital
channels. The implementation of digital technology has significantly enhanced
and expanded the video and other service offerings we provide to our customers.

     We currently offer our customers several digital cable programming packages
that include:

     .    up to 64 multichannel premium services;

     .    up to 39 pay-per-view movie and sports channels;

     .    up to 45 channels of digital music; and

     .    an interactive on-screen program guide to help them navigate the new
          digital choices.

     We first introduced digital cable services in our cable systems in June
1999. As of December 31, 2001, our digital service was available to about
600,000 basic subscribers, or approximately 78% of our total subscriber base,
and we served approximately 88,000 digital customers.

   High-Speed Internet Access

     Our broadband cable network enables data to be transmitted up to 100 times
faster than traditional telephone modem technologies. This high-speed capability
allows our cable modem customer to receive and transmit large files from the
Internet in a fraction of the time required when using the traditional telephone
modem. It also allows much quicker response times when surfing the Internet,
providing a richer experience for the customer. In addition, cable modem service
eliminates the need for using a telephone line to access the Internet. It is
also always activated and as a result, the customer does not need to dial into
an Internet service provider and await authorization.

     We first introduced two-way, high-speed Internet access service in our
cable systems in November 1999. As of December 31, 2001, our cable modem service
was marketed to approximately 610,000 homes passed by our cable systems, or 51%
of our total homes passed, and we served about 35,300 cable modem customers. We
also provided dial-up telephone Internet access to 2,700 customers. During
February 2002, we completed the transition of our cable modem customers to our
manager's new, proprietary Mediacom OnlineSM high-speed Internet service, from
the third-party provider Excite@Home. As part of the launch of Mediacom Online,
our manager signed a multi-year agreement with AT&T Corp. under which AT&T
provides the Internet protocol network backbone and certain core Internet
support functions for our manager's new service. Also, our regional calling
centers now provide technical customer support for our cable modem customers.

                                       8

<PAGE>

   Video-On-Demand

     Video-on-demand is an interactive television service that provides access
to hundreds of movies or special events on demand with video cassette recorder
functionality, or the ability to fast forward, pause and rewind a program at
will. Customers can also watch a selected feature repeatedly during the viewing
window, which typically runs up to 24 hours, or stop the selection before it is
completed and return to it at a later time during the viewing window. Fees are
typically charged on a per-selection basis, although certain individual
categories of programming are also available for a flat monthly fee. The
provision of video-on-demand services requires the use of servers at the headend
facility of a cable system. We introduced video-on-demand service in our Mobile,
Alabama system in March 2002.

   Future Services

     Interactive Services. Our upgraded cable network has the capacity to
deliver various additional interactive television services. These services can
be divided among two general service categories: enhanced television and
Internet access over the television. These services enable the customer to
interact over the television set, generally by using a conventional remote
television control or a computer keyboard, to either buy a product or service or
request information on a product or service.

     Enhanced television includes such services as ancillary programming
information, interactive advertising and impulse sales and purchases. Internet
access and e-mail over the television are delivered using a set-top box with the
customer using a wireless keyboard. We continue to evaluate opportunities to
trial and/or launch additional interactive products and services in our cable
systems.

     Telecommunications Services. We are exploring technologies using IP
telephony as well as traditional switching technologies that are currently
available to transmit telephony signals over our cable network. Our headend
consolidation plans include the installation of about 5,500 route miles of fiber
optic cable resulting in the creation of large, high-capacity regional networks.
We are constructing our networks with excess fiber optic capacity, thereby
affording us the flexibility to pursue new data and telecommunications
opportunities. We are in discussions with several telecommunications service
providers.

                                       9

<PAGE>

Description of Our Cable Systems

   Overview

     The table below provides an overview of selected operating and technical
statistics for our cable systems for the years ended:

<TABLE>
<CAPTION>
                                          1997       1998         1999          2000          2001
                                         -------   --------    ----------    ----------    ----------
<S>                                      <C>       <C>         <C>           <C>           <C>
Operating Data:
Homes passed/(1)/ ....................    87,750    520,000     1,071,500     1,173,000     1,200,000
Basic subscribers/(2)/ ...............    64,350    354,000       719,000       779,000       771,000
Basic penetration/(3)/ ...............      73.3%      68.1%         67.1%         66.4%         64.3%
Average monthly revenues
   per basic subscriber/(4)/ .........   $ 32.11   $  32.88    $    35.52    $    38.45    $    41.39

Digital Cable:
Digital-ready basic subscribers/(5)/ .        --         --       168,000       400,000       600,000
Digital customers ....................        --         --         5,300        40,000        88,000
Digital penetration/(6)/ .............        --         --           3.2%         10.0%         14.7%

Data:
Data-ready homes passed/(7)/ .........        --         --       120,000       550,000       965,000
Data-ready homes marketed/(8)/ .......        --         --       105,500       486,000       610,000
   Dial-up customers/(9)/ ............     2,518      4,729         4,600         3,600         2,700
   Cable modem customers .............        --         --           500        12,000        35,300
                                         -------   --------    ----------    ----------    ----------
Total data customers .................     2,518      4,729         5,100        15,600        38,000
Data penetration/(10)/ ...............        --         --           4.8%          3.2%          6.2%

Cable Network Data:
Miles of plant .......................     1,697     11,950        22,444        24,500        25,000
Density/(11)/ ........................        52         44            48            48            48
Percentage of cable network at
   550MHz to 870MHz ..................        25%        45%           57%           74%           90%
</TABLE>

----------
/(1)/   Represents the number of single residence homes, apartments and
        condominium units passed by the cable distribution network in a cable
        system's service area.
/(2)/   Represents subscribers of a cable system who receive a package of
        over-the-air broadcast stations, local access channels or certain
        satellite-delivered cable television services.
/(3)/   Represents basic subscribers as a percentage of homes passed.
/(4)/   Represents average monthly revenues for the last three months of the
        period divided by average basic subscribers for such period. Includes
        the revenues from cable systems acquired during the last three months
        of the period as if such acquisitions were completed at the beginning
        of the three month period.
/(5)/   A subscriber is digital-ready if the subscriber is in a cable system
        where digital cable services are available.
/(6)/   Represents digital customers as a percentage of digital-ready basic
        subscribers.
/(7)/   A home passed is data-ready if it is in a cable system with two-way
        communications capability.
/(8)/   Represents data-ready homes passed where cable modem service is
        available.
/(9)/   A customer that accesses the Internet through a conventional modem and
        telephone line connection.
/(10)/  Represents the number of total data customers as a percentage of
        data-ready homes marketed.
/(11)/  Represents homes passed divided by miles of plant.

                                       10

<PAGE>

   Selected Operating Region Data

     Our manager currently organizes its cable systems into three operating
divisions. Our cable systems are included in this organizational structure. The
following table sets forth the principal states served by such divisions, and
their respective basic subscribers, digital customers and data customers as of
December 31, 2001:

<TABLE>
<CAPTION>
                                                              Basic        Digital       Data
Division                          States                   Subscribers    Customers    Customers
-------------                  -----------                 -----------    ---------    ---------
<S>              <C>                                         <C>            <C>         <C>
Midwest          Illinois, Indiana, Kentucky, Missouri       277,700        21,900       7,400

North Central    Iowa, Minnesota, South Dakota               195,300        19,100       8,200

Southern         Alabama, California, Delaware, Florida
                 North Carolina                              298,000        47,000      22,400
                                                             -------        ------      -------
                                    Total                    771,000        88,000      38,000
                                                             =======        ======      =======
</TABLE>

Technology Overview

     As part of our commitment to maximize customer satisfaction, to improve our
competitive position and to introduce new and enhanced products and services to
our customers, we continue to make significant investments to upgrade our cable
network. The current objectives of our upgrade program are to:

     .    increase the bandwidth capacity to 870MHz;

     .    activate two-way communications capability;

     .    consolidate our headend facilities, through the extensive deployment
          of fiber optic networks; and

     .    allow us to provide digital cable television, high-speed Internet
          access, interactive video and other telecommunications services.

     We expect to substantially complete our cable network upgrade program by
June 30, 2003. The following table describes the technological state of our
cable network as of December 31, 2001 and the projected state of our cable
network through June 30, 2003, based on our current upgrade plans:

                                           Percentage of Cable Network
                                        -------------------------------
                                        Less than    550MHz-    Two-Way
                                          550MHz     870MHz     Capable
                                        ---------    -------    -------
December 31, 2001...................       10%         90%        80%
December 31, 2002...................        4%         96%        90%
June 30, 2003.......................        2%         98%        95%

                                       11

<PAGE>

     A central feature of our upgrade program is the deployment of high
capacity, hybrid fiber-optic coaxial architecture. The hybrid fiber-optic
coaxial architecture combines the use of fiber optic cable, which can carry
hundreds of video, data and voice channels over extended distances, with coaxial
cable, which requires a more extensive signal amplification in order to obtain
the desired levels for delivering channels. We design our network to connect
fiber optic cable to individual nodes serving an average of 350 homes or
commercial buildings. A node is a single connection to a cable system's main,
high-capacity fiber optic cable that is shared by a number of customers. Coaxial
cable is then connected from each node to the individual homes or buildings. Our
network design generally provides for six strands of fiber to each node, with
two strands active and four strands reserved for future services. We believe
hybrid fiber-optic coaxial architecture provides higher capacity, superior
signal quality, greater network reliability, reduced operating costs and more
reserve capacity for the addition of future services than traditional coaxial
network design.

     Two-way communications capability permits our customers to send and receive
signals over the cable network so that interactive services, such as
video-on-demand, are accessible and high-speed Internet access does not require
a separate telephone line. This capability will also positions us to offer cable
telephony, using either IP telephony as it becomes commercially feasible, or the
traditional switching technologies that are currently available. We believe our
plans for two-way communications capability, together with hybrid fiber-optic
coaxial architecture, enhances our cable network's ability to provide advanced
telecommunications services.

     As of December 31, 2001, our cable systems were operated from 273 headend
facilities. We believe that fiber optics and advanced transmission technologies
make it cost effective to consolidate our headend facilities, allowing us to
realize operating efficiencies and resulting in lower fixed capital costs on a
per home basis as we introduce new products and services. We plan to eliminate
up to 190 headend facilities by June 2003.

     As part of our headend consolidation program, we plan to deploy about 5,500
route miles of fiber optic cable to create large regional fiber optic networks
with the potential to provide advanced telecommunications services. We are
constructing our regional networks with excess fiber optic capacity to
accommodate new and expanded products and services in the future.

Sales and Marketing

     We seek to be the premier provider of entertainment, information and
telecommunications services in the markets we serve. Our marketing programs and
campaigns offer a variety of cable services creatively packaged and tailored to
appeal to each of our local markets and to segments within each market. We
routinely survey our customers to ensure that we are meeting their demands and
our customer surveys keep us abreast of our competition so that we can
effectively counter competitors' service offerings and promotional campaigns.

     We use a coordinated array of marketing techniques to attract and retain
customers and to increase premium service penetration, including door-to-door
and direct mail solicitation, telemarketing, media advertising, local
promotional events, typically sponsored by programming services and
cross-channel promotion of new services and pay-per-view.

     We build awareness of our brand through a variety of promotional campaigns.
As a result of our branding efforts, our emphasis on customer service and our
investments in the cable network, we believe we have developed a reputation for
quality, reliability and timely introduction of new products and services.

     We invest a significant amount of time, effort and financial resources in
the training and evaluation of our marketing professionals and customer sales
representatives. Our customer sales representatives customize their sales
presentation to fit each of our customers' specific needs by conducting focused
consumer research and are given the incentive to use their frequent contact with
our customers as opportunities to sell our new products and services. As a
result, as we accelerate the introduction of new products and services to our
customers, we believe we can achieve higher success rates in attracting and
retaining customers.

                                       12

<PAGE>

Programming Supply

     We have various contracts to obtain basic and premium programming for our
systems from program suppliers whose compensation is typically based on a fixed
fee per customer. Our programming contracts are generally for a fixed period of
time and are subject to negotiated renewal. Some program suppliers provide
volume discount pricing structures or offer marketing support to us. Our
successful marketing of multiple premium service packages emphasizing customer
value enables us to take advantage of such cost incentives.

     We are a member of the National Cable Television Cooperative, Inc., a
programming cooperative consisting of small to medium-sized multiple system
operators serving, in the aggregate, over 12 million cable subscribers. The
cooperative may help create efficiencies in the areas of obtaining and
administering programming contracts, as well as securing, in some cases, more
favorable programming rates and contract terms for small to medium-sized cable
operators. We negotiate programming contract renewals both directly and through
the cooperative.

     Our programming costs are expected to increase in the future due to
additional programming being provided to our customers, increased costs to
purchase programming, inflationary increases and other factors affecting the
cable television industry. Although we will legally be able to pass through
expected increases in our programming costs to customers, there can be no
assurance that competitive conditions or other factors in the marketplace will
allow us to do so.

     We also have various retransmission consent arrangements with commercial
broadcast stations, which generally expire in December 2002. None of these
consents require payment of fees for carriage. However, in some cases
retransmission consents have been contingent upon our carriage of
satellite-delivered cable programming offered by companies with the stations'
owners or the broadcast network carried by such stations.

     Currently, there are over 200 cable programming networks carried or seeking
to be carried on our cable systems. We use the analog and digital channel
capacity resulting from our capital improvement program to negotiate more
favorable long-term contracts with our programming suppliers.

Customer Service and Community Relations

     System reliability and customer satisfaction represent a cornerstone of our
business strategy. We expect that ongoing investments in our cable network and
our regional calling centers will significantly strengthen customer service,
enhancing the reliability of our cable network and allowing us to introduce new
products and services to our customers. We maintain regional calling centers
which service approximately 94% of our customers. They are staffed with
dedicated personnel who provide service to our customers 24 hours a day, seven
days a week, on a toll-free basis. We believe our regional calling centers allow
us to coordinate more effectively installation appointments and reduce response
time to customer inquiries. We continue to invest in both personnel and
equipment of our regional calling centers to ensure that these operating units
are professionally managed and employ state-of-the-art technology.

     In addition, we are dedicated to fostering strong community relations in
the communities served by our cable systems. We support local charities and
community causes in various ways, including staged events and promotional
campaigns to raise funds and supplies for persons in need and in-kind donations
that include production services and free airtime on cable networks. We
participate in the "Cable in the Classroom" program, which is a national effort
by cable companies to provide schools with free cable television service and,
where available, Internet access. We also install and provide free cable
television service to government buildings and not-for-profit hospitals in our
franchise areas. We believe that our relations with the communities in which our
cable systems operate are generally good.

Franchises

     Cable systems are generally operated under non-exclusive franchises granted
by local governmental authorities. These franchises typically contain many
conditions, such as: time limitations on commencement and completion of
construction; conditions of service, including number of channels, types of
programming and the provision of free service to schools and other public
institutions; and the maintenance or posting of insurance or indemnity bonds by
the cable operator. Many of the provisions of local franchises are subject to
federal regulation under the Communications Act of 1934, as amended.

                                       13

<PAGE>

     As of December 31, 2001, our cable systems were subject to approximately
1,018 franchises. These franchises, which are non-exclusive, provide for the
payment of fees to the issuing authority. In most of the cable systems, such
franchise fees are passed through directly to the customers. The Cable
Communications Policy Act of 1984, or the 1984 Cable Act, prohibits franchising
authorities from imposing franchise fees in excess of 5% of gross revenues from
cable services and also permits the cable operator to seek renegotiation and
modification of franchise requirements if warranted by changed circumstances.

     Substantially all of the basic subscribers of our cable systems are in
service areas that require a franchise. The table below groups the franchises of
our cable systems by year of expiration and presents the approximate number and
percentage of basic subscribers for each group as of December 31, 2001.

<TABLE>
<CAPTION>
                                                             Percentage of     Number of     Percentage of
                                               Number of         Total           Basic        Total Basic
Year of Franchise Expiration                   Franchises      Franchises     Subscribers     Subscribers
----------------------------                   ----------    -------------    -----------    -------------
<S>                                              <C>              <C>           <C>             <C>
2002 through 2005..........................        298             29.3%        277,207          36.0%
2006 and thereafter........................        720             70.7         493,793          64.0
                                                 -----            -----         -------         -----
     Total.................................      1,018            100.0%        771,000         100.0%
                                                 =====            =====         =======         =====
</TABLE>

     The 1984 Cable Act provides, among other things, for an orderly franchise
renewal process in which franchise renewal will not be unreasonably withheld or,
if renewal is denied and the franchising authority acquires ownership of the
cable system or effects a transfer of the cable system to another person, the
cable operator generally is entitled to the fair market value for the cable
system covered by such franchise. In addition, the 1984 Cable Act established
comprehensive renewal procedures, which require that an incumbent franchisee's
renewal application be assessed on its own merits and not as part of a
comparative process with competing applications.

     We believe that we generally have good relationships with our franchising
communities. We have never had a franchise revoked or failed to have a franchise
renewed. In addition, substantially all of our franchises eligible for renewal
have been renewed or extended prior to their stated expirations, and no
franchise community has refused to consent to a franchise transfer to us.

Competition

     We, like most cable systems, compete on the basis of several factors,
including price and the quality and variety of products and services offered. We
face competition from various communications and entertainment providers, the
number and type of which we expect to increase as we expand the products and
services offered over our broadband network. In recent years, the Federal
Communications Commission (the "FCC") has adopted policies authorizing new
technologies and a more favorable operating environment for certain existing
technologies that provide, or may provide, substantial additional competition
for cable systems. The extent to which a cable television service is competitive
depends in significant part upon the cable system's ability to provide a greater
variety of programming, superior technical performance and superior customer
service than are available over the air or through competitive alternative
delivery sources. We believe our ability to package multiple services, such as
digital television and two-way, high-speed Internet access, is an advantage in
our competitive business environment.

   Providers of Broadcast Television and Other Entertainment

     The extent to which a cable system competes with over-the-air broadcasting,
which provides signals that a viewer is able to receive directly, depends upon
the quality and quantity of the broadcast signals available by direct antenna
reception compared to the quality and quantity of such signals and alternative
services offered by a cable system. Cable systems also face competition from
alternative methods of distributing and receiving television signals and from
other sources of entertainment such as live sporting events, movie theaters and
home video products, including videotape recorders and videodisc players.

                                       14

<PAGE>

   Direct Broadcast Satellite Providers

     Individuals can purchase home satellite dishes, which allow them to receive
satellite-delivered broadcast and non-broadcast program services, commonly known
as DBS, that formerly were available only to cable television subscribers.
According to recent government and industry reports, DBS providers currently
sell video programming services to approximately 17.5 million individual
households, condominiums, apartments and office complexes in the United States.

     DBS service can be received virtually anywhere in the continental United
States through the installation of a small rooftop or side-mounted antenna. DBS
providers use video compression technology to increase channel capacity and
digital technology to improve the quality of the signals transmitted to their
customers. In addition to the non-broadcast programming services we offer in our
cable systems, under legislation enacted in 1999, DBS providers also deliver
local broadcast signals in certain markets that we serve. This change in law
eliminated a significant competitive advantage which cable system operators had
over DBS providers, as previously DBS providers were not permitted to retransmit
local broadcast signals. DBS service is being heavily marketed on a nationwide
basis by several service operators. We believe our digital cable service is
competitive with the services delivered to customers by DBS systems.

     DBS providers are also developing ways to bring advanced communications
services to their customers. They are currently offering satellite-delivered
high-speed Internet access services with a telephone return path and are
beginning to provide true two-way interactivity. We believe that our Internet
access service is superior to the service currently offered by DBS providers
because our service does not rely on a telephone line. In order for DBS
providers to offer true two-way high-speed Internet access services, additional
equipment is required and their service is typically offered at higher prices
for equivalent services.

     Two major companies, DirecTV and Echostar, are currently providing
nationwide high-power DBS services, which typically offer to their customers
more than 300 channels of programming, including programming similar to that
provided by cable systems. A proposed merger between these two entities is
presently undergoing regulatory scrutiny. If the merger is consummated, the
combined entity would serve over 16.0 million subscribers. DirecTV and Echostar
now deliver local broadcast signals in a number of the largest markets and we
believe they plan to expand such carriage to many more markets. The FCC has
adopted rules effective January 2002 which place a must-carry requirement on DBS
providers in any market where they retransmit one or more local signals. The
current capacity limitations of satellite technology may limit the DBS
providers' ability to comply with these must-carry requirements. A judicial
challenge to the January 2002 requirement on the grounds that it is
unconstitutional is pending. These developments could result in greater
competitive challenges for us and other cable system operators.

   Multichannel Multipoint Distribution Systems

     Multichannel multipoint distribution systems deliver programming services
over microwave channels licensed by the FCC and received by subscribers with
special antennas. These wireless cable systems are less capital intensive and
subject to fewer regulatory requirements than cable television systems, and are
not required to obtain local franchises or pay franchise fees. To date, the
ability of wireless cable services to compete with cable systems has been
limited by a channel capacity of up to 35 channels and the need for unobstructed
line-of-sight over-the-air transmission. Although relatively few wireless cable
systems in the United States are currently in operation or under construction,
virtually all markets have been licensed or tentatively licensed. The use of
digital compression technology, and the FCC's recent amendment to its rules to
permit reverse path or two-way transmission over wireless facilities, may enable
multichannel multipoint distribution systems to deliver more channels and
additional services, including Internet related services. Digital compression
technology refers to the conversion of the standard video signal into a digital
signal and the compression of that signal to facilitate multiple channel
transmissions through a single channel's signal.

   Private Cable Television Systems

     Private cable television systems compete with conventional cable television
systems for the right to service condominiums, apartment complexes and other
multiple unit residential developments. The operators of these private systems,
known as satellite master antenna television (SMATV) systems, provide improved
reception of local television stations and several of the same
satellite-delivered programming services offered by franchised cable systems.
SMATV system operators often enter into exclusive agreements with apartment
building owners or

                                       15

<PAGE>

homeowners' associations that preclude franchised cable television operators
from serving residents of such private complexes and typically are not subject
to regulation like local franchised cable operators. However, the 1984 Cable Act
gives franchised cable operators the right to use existing compatible easements
within their franchise areas on nondiscriminatory terms and conditions.
Accordingly, where there are preexisting compatible easements, cable operators
may not be unfairly denied access or discriminated against with respect to
access to the premises served by those easements. Conflicting judicial decisions
have been issued interpreting the scope of the access right granted by the 1984
Cable Act, particularly with respect to easements located entirely on private
property. Under the Telecommunications Act of 1996, satellite master antenna
television systems can interconnect non-commonly owned buildings without having
to comply with local, state and federal regulatory requirements that are imposed
upon cable systems providing similar services, as long as they do not use public
rights of way. The FCC has held that the latter provision is not violated so
long as interconnection across public rights of way is provided by a third
party.

   Traditional Overbuilds

     Cable television systems are operated under non-exclusive franchises
granted by local authorities. More than one cable system may legally be built in
the same area. Franchising authorities have from time to time granted additional
franchises to other companies, including other cable operators or telephone
companies, and these additional franchises might contain terms and conditions
more favorable than those afforded to the incumbent cable operator. In addition,
entities willing to establish an open video system, under which they offer
unaffiliated programmers non-discriminatory access to a portion of the system's
cable system, may be able to avoid significant local franchising requirements.
Well financed businesses from outside the cable industry, such as public
utilities which already possess or are developing fiber optic and other
transmission facilities in the areas they serve, may over time become
competitors. We believe that various entities are currently offering cable
service to an estimated 5.6% of the homes passed in the service areas of our
franchises.

   Internet Access

     We offer high-speed Internet access in many of our cable systems. This kind
of service is sometimes called "cable modem service." Our cable systems compete
with a number of other companies, many of which have substantial resources, such
as existing Internet service providers, commonly known as ISPs, DBS providers
and local and long distance telephone companies.

     The deployment of digital subscriber line technology, known as DSL, allows
Internet access to subscribers at data transmission speeds equal to or greater
than that of modems over conventional telephone lines, putting it in direct
competition with cable modem service. Numerous companies, including telephone
companies, have introduced DSL service and certain telecommunications companies
are seeking to provide high-speed broadband services, including interactive
online services, without regard to present service boundaries and other
regulatory restrictions. Congress is currently considering legislation, that if
enacted into law, will dominate or reduce significantly many of the regulatory
restrictions on the offering of high-speed broadband services by local telephone
companies. DBS providers currently offer satellite-delivered high-speed Internet
access services with a telephone return path and are beginning to provide true
two-way interactivity.

     A number of ISP's have asked local authorities and the FCC to give them
rights of access to cable systems' broadband infrastructure so that they can
deliver their services directly to cable systems' customers. This kind of access
is often called "open access." Many local franchising authorities have been
examining the issue of open access and a few have required cable operators to
provide such access. On March 14, 2002, the FCC announced that there is no
current legal requirement for cable operators to grant open access now that
cable modem service is classified as an information service. The FCC, however,
stated that it is considering whether it has the authority to impose open access
requirements and, if so, whether it should do so. If we were required to provide
open access to ISP's as a result of FCC action or court decisions, other
companies could use our cable system infrastructure to offer Internet services
competitive with our own.

   Other Competition

     Advances in communications technology, as well as changes in the
marketplace and the regulatory and legislative environment, are constantly
occurring. The FCC has authorized a new interactive television service which
permits non-video transmission of information between an individual's home and
entertainment and information service providers. This service, which can be used
by direct broadcast satellite systems, television stations and other video
programming distributors, including cable television systems, is an alternative
technology for the delivery of

                                       16

<PAGE>

interactive video services. It does not appear at the present time that this
service will have a material impact on the operations of cable television
systems.

     The FCC has allocated spectrum in the 28GHz range for a new multichannel
wireless service that can be used to provide video and telecommunications
services. The FCC completed the process of awarding licenses to use this
spectrum via a market-by-market auction. We do not know whether such a service
would have a material impact on the operations of cable television systems.

     The 1996 Telecom Act directed the FCC to establish, and the FCC has
adopted, regulations and policies for the issuance of licenses for digital
television to incumbent television broadcast licensees. Digital television can
deliver high definition television pictures and multiple digital-quality program
streams, as well as CD-quality audio programming and advanced digital services,
such as data transfer or subscription video. The FCC also has authorized
television broadcast stations to transmit text and graphic information that may
be useful to both consumers and businesses. The FCC also permits commercial and
noncommercial FM stations to use their subcarrier frequencies to provide
non-broadcast services, including data transmission.

Employees

     As of December 31, 2001, we employed 1,439 full-time employees and 141
part-time employees. None of our employees are represented by a labor union. We
consider our relations with our employees to be generally good.

                                       17

<PAGE>

                           Legislation and Regulation

General

     A federal law known as the Communications Act of 1934, as amended (the
"Communications Act"), establishes a national policy to guide the regulation,
development and operation of cable communications systems.

     The Communications Act allocates principal responsibility for enforcing the
federal policies among the FCC, and state and local governmental authorities.
The FCC and state regulatory agencies regularly conduct administrative
proceedings to adopt or amend regulations implementing the statutory mandate of
the Communications Act. At various times, interested parties to these
administrative proceedings challenge the new or amended regulations and policies
in the courts with varying levels of success. We expect that further court
actions and regulatory proceedings will occur and will refine the rights and
obligations of various parties, including the government, under the
Communications Act. The results of these judicial and administrative proceedings
may materially affect the cable industry and our business and operations. In the
following paragraphs, we summarize the federal laws and regulations materially
affecting the growth and operation of the cable industry. We also provide a
brief description of certain state and local laws.

Federal Regulation

     The Communications Act and the regulations and policies of the FCC affect
significant aspects of our cable system operations, including:

     .    subscriber rates;

     .    the content of the programming we offer to subscribers, as well as the
          way we sell our program packages to subscribers;

     .    the use of our cable systems by the local franchising authorities, the
          public and other unrelated companies;

     .    our franchise agreements with local governmental authorities;

     .    cable system ownership limitations and prohibitions; and

     .    our use of utility poles and conduit.

   Subscriber Rates

     The Communications Act and the FCC's regulations and policies limit the
ability of cable systems to raise rates for basic services and equipment. No
other rates can be regulated. Federal law exempts cable systems from rate
regulation of cable services and customer equipment only in communities that are
subject to effective competition, as defined by federal law.

     Where there is no effective competition to the cable operator's services,
federal law gives local franchising authorities the responsibility to regulate
the rates charged by the operator for:

     .    the lowest level of programming service offered by cable operator,
          typically called basic service, which includes the local broadcast
          channels and any public access or governmental channels that are
          required by the operator's franchise;

     .    the installation of cable service and related service calls; and

     .    the installation, sale and lease of equipment used by subscribers to
          receive basic service, such as converter boxes and remote control
          units.

     Local franchising authorities who wish to regulate basic service rates and
related equipment rates must first obtain FCC certification to regulate by
following a simplified FCC certification process and agreeing to follow
established FCC rules and policies when regulating the cable operator's rates.

                                       18

<PAGE>

     Several years ago, the FCC adopted detailed rate regulations, guidelines
and rate forms that a cable operator and the local franchising authority must
use in connection with the regulation of basic service and equipment rates. The
FCC adopted a benchmark methodology as the principal method of regulating rates.
However, if this methodology produces unacceptable rates, the operator may also
justify rates using a detailed cost-of-service methodology. The FCC's rules also
require franchising authorities to regulate equipment rates on the basis of
actual cost plus a reasonable profit, as defined by the FCC.

     If the local franchising authority concludes that a cable operator's rates
are too high under the FCC's rate rules, the local franchising authority may
require the cable operator to reduce rates and to refund overcharges to
subscribers, with interest. The cable operator may appeal adverse local rate
decisions to the FCC.

     The FCC's regulations allow a cable operator to modify regulated rates on a
quarterly or annual basis to account for changes in:

     .    the number of regulated channels;

     .    inflation; and

     .    certain external costs, such as franchise and other governmental fees,
          copyright and retransmission consent fees, taxes, programming fees and
          franchise-related obligations.

     The Communications Act and the FCC's regulations also:

     .    require cable operators to charge uniform rates throughout each
          franchise area that is not subject to effective competition;

     .    prohibit regulation of non-predatory bulk discount rates offered by
          cable operators to subscribers in commercial and residential
          developments; and

     .    permit regulated equipment rates to be computed by aggregating costs
          of broad categories of equipment at the franchise, system, regional or
          company level.

   Content Requirements

     The Communications Act and the FCC's regulations contain broadcast signal
carriage requirements that allow local commercial television broadcast stations:

     .    to elect once every three years to require a cable system to carry the
          station, subject to certain exceptions; or

     .    to negotiate with us on the terms by which we carry the station on our
          cable system, commonly called retransmission consent.

     The Communications Act requires a cable operator to devote up to one-third
of its activated channel capacity for the mandatory carriage of local commercial
television stations. The Communications Act also gives local non-commercial
television stations mandatory carriage rights; however, such stations are not
given the option to negotiate retransmission consent for the carriage of their
signals by cable systems. Additionally, cable operators must obtain
retransmission consent for:

     .    all distant commercial television stations, except for commercial
          satellite-delivered independent superstations such as WGN;

     .    commercial radio stations; and

     .    certain low-power television stations.

     The FCC has recently adopted regulations for mandatory carriage of digital
television signals offered by local television broadcasters. Under these
regulations, local television broadcast stations transmitting solely in a
digital format are entitled to request carriage in their choice of digital or
converted analog format. Stations transmitting in both digital and analog
formats, which is permitted during the current several-year transition period,
have no carriage

                                       19

<PAGE>

rights for the digital format during the transition unless and until they turn
in their analog channel. We are unable to predict the impact of these new
carriage requirements on the operations of our cable systems.

     The Communications Act requires our cable systems, other than those systems
which are subject to effective competition to permit subscribers to purchase
video programming we offer on a per channel or a per program basis without the
necessity of subscribing to any tier of service other than the basic cable
service tier. However, we are not required to comply with this requirement until
October 2002 for any of our cable systems that do not have addressable converter
boxes or that have other substantial technological limitations. Many of our
cable systems do not have the technological capability to offer programming in
the manner required by the statute and thus currently are exempt from complying
with the requirement. We are unable to predict whether the full implementation
of this statutory provision will have a material impact on the operation of our
cable systems.

     To increase competition between cable operators and other video program
distributors, the Communications Act and the FCC's regulations:

     .    preclude any satellite video programmer affiliated with a cable
          company, or with a common carrier providing video programming directly
          to its subscribers, from favoring an affiliated company over
          competitors;

     .    require such programmers to sell their programming to other
          unaffiliated video program distributors; and

     .    limit the ability of such programmers to offer exclusive programming
          arrangements to their related parties.

     The FCC actively regulates other aspects of our programming, involving such
areas as:

     .    our use of syndicated and network programs and local sports broadcast
          programming;

     .    advertising in children's programming;

     .    political advertising;

     .    origination cablecasting;

     .    adults programming;

     .    sponsorship identification; and

     .    closed captioning of video programming.

   Use of Our Cable Systems by the Government and Unrelated Third Parties

     The Communications Act allows local franchising authorities and unrelated
third parties to have access to our cable systems' channel capacity for their
own use. For example, it:

     .    permits franchising authorities to require cable operators to set
          aside channels for public, educational and governmental access
          programming; and

     .    requires a cable system with 36 or more activated channels to
          designate a significant portion of its channel capacity for commercial
          leased access by third parties to provide programming that may compete
          with services offered by the cable operator.

     The FCC regulates various aspects of third party commercial use of channel
capacity on our cable systems, including:

     .    the maximum reasonable rate a cable operator may charge for third
          party commercial use of the designated channel capacity;

     .    the terms and conditions for commercial use of such channels; and

                                       20

<PAGE>

     .    the procedures for the expedited resolution of disputes concerning
          rates or commercial use of the designated channel capacity.

   Franchise Matters

     We have non-exclusive franchises in virtually every community in which we
operate that authorize us to construct, operate and maintain our cable systems.
Although franchising matters are normally regulated at the local level through a
franchise agreement or a local ordinance, the Communications Act provides
oversight and guidelines to govern our relationship with local franchising
authorities.

     For example, the Communications Act:

     .    affirms the right of franchising authorities, which may be state or
          local, depending on the practice in individual states, to award one or
          more franchises within their jurisdictions;

     .    generally prohibits us from operating in communities without a
          franchise;

     .    encourages competition with existing cable systems by:

          .    allowing municipalities to operate their own cable systems
               without franchises, and

          .    preventing franchising authorities from granting exclusive
               franchises or from unreasonably refusing to award additional
               franchises covering an existing cable system's service area;

     .    permits local authorities, when granting or renewing our franchises,
          to establish requirements for cable-related facilities and equipment,
          but prohibits franchising authorities from establishing requirements
          for specific video programming or information services other than in
          broad categories;

     .    permits us to obtain modification of our franchise requirements from
          the franchise authority or by judicial action if warranted by
          commercial impracticability; and

     .    generally prohibits franchising authorities from:

          .    imposing requirements during the initial cable franchising
               process or during franchise renewal that require, prohibit or
               restrict us from providing telecommunications services,

          .    imposing franchise fees on revenues we derive from providing
               telecommunications services over our cable systems,

          .    restricting our use of any type of subscriber equipment or
               transmission technology, and

     .    limits our payment of franchise fees to the local franchising
          authority to 5.0% of our gross revenues derived from providing cable
          services over our cable system.

     The Communications Act contains renewal procedures designed to protect us
against arbitrary denials of renewal of our franchises although, under certain
circumstances, the franchising authority could deny us a franchise renewal.
Moreover, even if our franchise is renewed, the franchising authority may seek
to impose upon us new and more onerous requirements, such as significant
upgrades in facilities and services or increased franchise fees as a condition
of renewal to the extent permitted by law. Similarly, if a franchising
authority's consent is required for the purchase or sale of our cable system or
franchise, the franchising authority may attempt to impose more burdensome or
onerous franchise requirements on the purchaser in connection with a request for
such consent. Historically, cable operators providing satisfactory services to
their subscribers and complying with the terms of their franchises have almost
always obtained franchise renewals. We believe that we have generally met the
terms of our franchises and have provided quality levels of service. We
anticipate that our future franchise renewal prospects generally will be
favorable.

                                       21

<PAGE>

     Various courts have considered whether franchising authorities have the
legal right to limit the number of franchises awarded within a community and to
impose substantive franchise requirements. These decisions have been
inconsistent and, until the U.S. Supreme Court rules definitively on the scope
of cable operators' First Amendment protections, the legality of the franchising
process generally and of various specific franchise requirements is likely to be
in a state of flux.

   Ownership Limitations

     The Communications Act generally prohibits us from owning or operating a
satellite master antenna television system or multichannel multipoint
distribution system in any area where we provide franchised cable service and do
not have effective competition, as defined by federal law. We may, however,
acquire and operate a satellite master antenna television system in our existing
franchise service areas if the programming and other services provided to the
satellite master antenna television system subscribers are offered according to
the terms and conditions of our local franchise agreement.

     The Communications Act also authorizes the FCC to adopt nationwide limits
on the number of subscribers under the control of a cable operator. The U.S.
Court of Appeals for the District of Columbia Circuit recently vacated the FCC's
current limit of 30% of subscribers to all multi-channel video programming
distributors nationwide. We currently account for significantly fewer
subscribers than that limit or any revised limit now under consideration and,
therefore, the limit does not currently affect us and we do not expect it to
affect any future acquisitions we may undertake in the foreseeable future.

     The Communications Act and FCC regulations also impose limits on the number
of channels that can be occupied on a cable system by a video programmer in
which a cable operator has an interest. A federal district court declared this
provision unconstitutional. An appeal of the district court's decision was
consolidated with an appeal challenging the FCC's subscriber ownership
limitation regulations. The appellate court overturned the FCC's revised 30%
subscriber ownership limitation and the rule regarding the number of channels on
a cable system which can be occupied by programming affiliated with the cable
operator on the basis that they do not pass constitutional muster. These matters
were sent back to the FCC for further proceedings.

     The 1996 amendments to the Communications Act eliminated the statutory
prohibition on the common ownership, operation or control of a cable system and
a television broadcast station in the same service area. The identical FCC
regulation has been invalidated by a federal appellate court. The FCC has
eliminated its regulatory restriction on cross-ownership of cable systems and
national broadcasting networks.

     The 1996 amendments to the Communications Act also made far-reaching
changes in the relationship between local telephone companies and cable service
providers. These amendments:

     .    eliminated federal legal barriers to competition in the local
          telephone and cable communications businesses, including allowing
          local telephone companies to offer video services in their local
          telephone service areas;

     .    preempted legal barriers to telecommunications competition that
          previously existed in state and local laws and regulations;

     .    set basic standards for relationships between telecommunications
          providers; and

     .    generally limited acquisitions and prohibited joint ventures between
          local telephone companies and cable operators in the same market.

     Local telephone companies may provide service as traditional cable
operators with local franchises or they may opt to provide their programming
over open video systems, subject to certain conditions, including, but not
limited to, setting aside a portion of their channel capacity for use by
unaffiliated program distributors on a non-discriminatory basis. The decision as
whether an operator of an open video system must obtain a local franchise is
left to each community.

                                       22

<PAGE>

   Pole Attachment Regulation

     The Communications Act requires the FCC to regulate the rates, terms and
conditions imposed by public utilities, other than municipally or
cooperatively-owned utilities, for cable systems' use of utility pole and
conduit space unless state authorities have demonstrated to the FCC that they
adequately regulate pole attachment rates, as is the case in certain states in
which we operate. In the absence of state regulation, the FCC administers pole
attachment rates on a formula basis. The FCC adopted a new rate formula that
became effective in 2001 which governs the maximum rate certain utilities may
charge for attachments to their poles and conduit by companies providing
telecommunications services, including cable operators. A federal appellate
court is currently evaluating whether the FCC's rate formulas, as applied in a
specific case, provide "just compensation" under Federal Constitution.

     Increases in attachment rates due to the FCC's new rate formula are phased
in over a five-year period in equal annual increments, beginning in February
2001. A federal appellate court found that the provision of Internet access by a
cable system was neither a cable service or a telecommunications service, thus
the FCC lacked authority to regulate pole attachment rates for cable systems
which offer Internet access. The Supreme Court recently reversed the federal
appellate court decision and upheld the FCC's authority to regulate pole
attachment rates. We are unable to predict the ultimate impact of any revised
FCC rate formula or of any new pole attachment rate regulations on our business
and operations.

   Other Regulatory Requirements of the Communications Act and the FCC

     The FCC has adopted cable inside wiring rules to provide a more specific
procedure for the disposition of residential home wiring and internal building
wiring that belongs to an incumbent cable operator that is forced by the
building owner to terminate its cable services in a building with multiple
dwelling units. The FCC is also considering additional rules relating to inside
wiring that, if adopted, may disadvantage incumbent cable operators.

     The Communications Act includes provisions, among others, regulating and
the FCC actively regulates other parts of our cable operations, involving such
areas as:

     .    equal employment opportunity;

     .    consumer protection and customer service;

     .    technical standards and testing of cable facilities;

     .    consumer electronics equipment compatibility;

     .    registration of cable systems;

     .    maintenance of various records and public inspection files;

     .    microwave frequency usage; and

     .    antenna structure notification, marking and lighting.

     The FCC may enforce its regulations through the imposition of fines, the
issuance of cease and desist orders or the imposition of other administrative
sanctions, such as the revocation of FCC licenses needed to operate transmission
facilities often used in connection with cable operations. The FCC has ongoing
rulemaking proceedings that may change its existing rules or lead to new
regulations. We are unable to predict the impact that any further FCC rule
changes may have on our business and operations.

     Other bills and administrative proposals pertaining to cable communications
have previously been introduced in Congress or considered by other governmental
bodies over the past several years. It is probable that Congress and other
governmental bodies will continue to analyze the regulation of cable
communications services.

                                       23

<PAGE>

   Copyright

     Our cable systems typically include in their channel line-ups local and
distant television and radio broadcast signals, which are protected by the
copyright laws. We generally do not obtain a license to use this programming
directly from the owners of the programming, but instead comply with an
alternative federal compulsory copyright licensing process. In exchange for
filing certain reports and contributing a percentage of our revenues to a
federal copyright royalty pool, we obtain blanket permission to retransmit the
copyrighted material carried on these broadcast signals. The nature and amount
of future copyright payments for broadcast signal carriage cannot be predicted
at this time.

     In a report to Congress, the U.S. Copyright Office recommended that
Congress make major revisions to both the cable television and satellite
compulsory licenses. Congress recently modified the satellite compulsory license
in a manner that permits DBS providers to become more competitive with cable
operators. The possible simplification, modification or elimination of the cable
communications compulsory copyright license is the subject of continuing
legislative review. The elimination or substantial modification of the cable
compulsory license could adversely affect our ability to obtain suitable
programming and could substantially increase the cost of programming that
remains available for distribution to our subscribers. We are unable to predict
the outcome of this legislative activity.

     Copyrighted music performed in programming supplied to cable television
systems by pay cable networks and basic cable networks is licensed by the
networks through private agreements with the major performing rights
organizations in the United States. These organizations offer
through-to-the-viewer licenses to the cable networks that cover the
retransmission of the cable networks' programming by cable television systems to
their customers.

     Our cable systems also utilize music in other programming and advertising
that we provide to subscribers. The rights to use this music are controlled by
various music performing rights organizations from which performance licenses
must be obtained. Cable industry representatives recently negotiated standard
license agreements with two remaining sizable music performing rights
organizations covering locally originated programming, including advertising
inserted by the cable operator in programming produced by other parties We
expect that these organizations will now seek to execute these standard
agreements with most cable operators, including us. Although each of these
agreements will require the payment of music license fees for earlier time
periods, we do not believe such license fees will have a significant impact on
our business and operations.

   Cable Modem Service

     There are currently few laws or regulations which specifically regulate
communications or commerce over the Internet. Section 230 of the Communications
Act declares it to be the policy of the United States to promote the continued
development of the Internet and other interactive computer services and
interactive media, and to preserve the vibrant and competitive free market that
presently exists for the Internet and other interactive computer services,
unfettered by federal or state regulation. One area in which Congress did
attempt to regulate content over the Internet involved the dissemination of
obscene or indecent materials.

     The Digital Millennium Copyright Act is intended to reduce the liability of
online service providers for listing or linking to third-party Websites that
include materials that infringe copyrights or other rights or if customers use
the service to publish or disseminate infringing materials. The Children's
Online Protection Act and the Children's Online Privacy Protection Act are
intended to restrict the distribution of certain materials deemed harmful to
children and impose additional restrictions on the ability of online services to
collect user information from minors. In addition, the Protection of Children
From Sexual Predators Act of 1998 requires online service providers to report
evidence of violations of federal child pornography laws under certain
circumstances.

     A number of ISP's have asked local authorities and the FCC to give them
rights of access to cable systems' broadband infrastructure so that they can
deliver their services directly to cable systems' customers. This kind of access
is often called "open access." Many local franchising authorities have been
examining the issue of open access and a few have required cable operators to
provide such access. Several Federal courts have ruled that localities are not
authorized to require open access. On March 14, 2002, the FCC announced that
there is no current legal requirement for cable operators to grant open access.
On the same date, however, the FCC announced that it is considering whether it
has the authority to impose open access requirements and, if so, whether it
should do so.

                                       24

<PAGE>

     There is uncertainty about whether Internet access service provided by
cable operators should be classified as an information service,
telecommunications service, or cable service under the Communications Act of
1934. The decision about the proper classification will affect our business and
operations, including, but not limited to, whether we will be required to pay
local government franchise fees on cable Internet revenues. On March 14, 2002,
the FCC announced that it was classifying Internet access service provided
through cable modems as an interstate information service. At the same time, the
FCC initiated a rulemaking proceeding designed to address a number of issues
resulting from this regulatory classification, including the following:

     .    The FCC confirmed that there is no current legal requirement for cable
          operators to grant open access now that cable modem service is
          classified as an information service. The FCC is considering, however,
          whether it has the authority to impose open access requirements and,
          if so, whether it should do so, or whether to permit local authorities
          to impose such a requirement.

     .    The FCC confirmed that because cable modem service is an information
          service, not a cable service, local franchise authorities may not
          collect franchise fees on cable modem service revenues under existing
          law and regulations.

     .    The FCC concluded that federal law does not permit local franchise
          authorities to impose additional franchise requirements on cable modem
          service. It is considering, however, whether local franchise
          authorities nonetheless have the authority to impose restrictions,
          requirements or fees because cable modem service is delivered over
          cable using public rights of way.

     .    The FCC is considering whether cable operators providing cable modem
          service should be required to contribute to a "universal service fund"
          designed to support making service available to all consumers,
          including those in low income, rural and high-cost areas at rates that
          are reasonably comparable to those charged in urban areas.

     .    The FCC is considering whether it should take steps to ensure that the
          regulatory burdens that cable systems providing cable modem service
          are comparable to those of other providers of Internet access service,
          such as telephone companies. One method of achieving comparability
          would be to make cable operators subject to some of the regulations
          that do not now apply to them, but are applicable to telephone
          companies.

     Challenges to the FCC's classification of cable Internet access service has
been filed in federal courts. In previous actions over the regulatory
classification of cable modem service, the courts issued conflicting decisions.
These conflicting rulings and the new court proceedings increase the possibility
that the classification of cable Internet service could be decided by the
Supreme Court.

State and Local Regulation

     Our cable systems use local streets and rights-of-way. Consequently, we
must comply with state and local regulation, which is typically imposed through
the franchising process. Our cable systems generally are operated in accordance
with non-exclusive franchises, permits or licenses granted by a municipality or
other state or local government entity. Our franchises generally are granted for
fixed terms and in many cases are terminable if we fail to comply with material
provisions. The terms and conditions of our franchises vary materially from
jurisdiction to jurisdiction. Each franchise generally contains provisions
governing:

     .    franchise fees;

     .    franchise term;

     .    system construction and maintenance obligations;

     .    system channel capacity;

     .    design and technical performance;

     .    customer service standards;

                                       25

<PAGE>

     .    sale or transfer of the franchise;

     .    territory of the franchise;

     .    indemnification of the franchising authority;

     .    use and occupancy of public streets; and

     .    types of cable services provided.

     In the process of renewing franchises, a franchising authority may seek to
impose new and more onerous requirements, such as upgraded facilities, increased
channel capacity or enhanced services, although protections available under the
Communications Act require the municipality to take into account the cost of
meeting such requirements. The Communications Act also contains renewal
procedures and criteria designed to protect incumbent franchisees against
arbitrary denials of renewal.

     A number of states subject cable systems to the jurisdiction of centralized
state governmental agencies, some of which impose regulation of a character
similar to that of a public utility. Attempts in other states to regulate cable
systems are continuing and can be expected to increase. To date, other than
Delaware, no state in which we operate has enacted such state-level regulation.
State and local franchising jurisdiction is not unlimited; however, it must be
exercised consistently with federal law. The Communications Act immunizes
franchising authorities from monetary damage awards arising from regulation of
cable systems or decisions made on franchise grants, renewals, transfers and
amendments.

Other Regulation

     Existing federal, state and local laws and regulations and state and local
franchise requirements are currently the subject of judicial proceedings,
legislative hearings and administrative proposals which could change, in varying
degrees, the manner in which cable systems operate. Neither the outcome of these
proceedings nor their impact upon the cable industry or our business or
operations can be predicted at this time.

                                       26

<PAGE>

ITEM 2. PROPERTIES

     Our principal physical assets consist of cable television operating plant
and equipment, including signal receiving, encoding and decoding devices,
headend facilities and distribution systems and equipment at or near customers'
homes for each of the systems. The signal receiving apparatus typically includes
a tower, antenna, ancillary electronic equipment and earth stations for
reception of satellite signals. Headend facilities are located near the
receiving devices. Our distribution system consists primarily of coaxial and
fiber optic cables and related electronic equipment. Customer premise equipment
consists of decoding converters and cable modems.

     Our cable television plant and related equipment generally are attached to
utility poles under pole rental agreements with local public utilities, although
in some areas the distribution cable is buried in underground ducts or trenches.
The physical components of the cable systems require maintenance and periodic
upgrading to improve system performance and capacity.

     We own and lease the real property housing our regional call centers,
business offices and warehouses throughout our operating regions. Our headend
facilities, signal reception sites and microwave facilities are located on owned
and leased parcels of land, and we generally own the towers on which certain of
our equipment is located. We own most of our service vehicles. We believe that
our properties both owned and leased, are in good condition and are suitable and
adequate for our operations.

ITEM 3. LEGAL PROCEEDINGS

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

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 the fiscal year ended December 31, 2001.

                                       27

<PAGE>

                                     PART II
                                     -------

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no public trading market for our equity, all of which is held by
MCC.

                                       28

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

     In the table below, we provide you with selected historical consolidated
financial and operating data for the years ended December 31, 1997, 1998, 1999,
2000 and 2001 and balance sheet data as of December 31, 1997, 1998, 1999, 2000
and 2001, which are derived from our audited consolidated financial statements.

     Mediacom LLC was formed as a New York limited liability company in July
1995 and since that time our taxable income or loss has been included in the
federal and certain state income tax returns of our members.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                            ---------------------------------------------------------------
                                              1997         1998         1999          2000          2001
                                            --------    ---------    ----------    ----------    ----------
                                                    (dollars in thousands, except per share amounts)
<S>                                         <C>         <C>          <C>           <C>           <C>
Statement of Operations Data:
   Revenues                                 $ 17,634    $ 129,297    $  176,052    $  332,050    $  374,087
   Costs and expenses:
      Service costs(1)                         5,547       43,849        58,058       114,234       135,285
      Selling, general and
         administrative expenses               2,696       25,596        32,949        55,820        63,846
      Management fee expense(2)                  882        5,797         6,951         6,029         5,830
      Depreciation and amortization            7,636       65,793       101,065       177,928       221,645
      Non-cash stock charges relating to
         management fee expense(3)                --           --        15,445        28,254         2,904
                                            --------    ---------    ----------    ----------    ----------
Operating income (loss)                          873      (11,738)      (38,416)      (50,215)      (55,423)
Interest expense, net(4)                       4,829       23,994        37,817        68,973        93,823
Loss on derivative instruments, net(5)            --           --            --            --         8,441
Investment income from affiliate(6)               --           --            --            --        (8,120)
Other expenses (income)(7)                       640        4,058         5,087        30,036       (23,885)
                                            --------    ---------    ----------    ----------    ----------
Net loss before cumulative effect of
   accounting change                          (4,596)     (39,790)      (81,320)     (149,224)     (125,682)
Cumulative effect of accounting change(8)         --           --            --            --        (1,642)
                                            --------    ---------    ----------    ----------    ----------
Net loss                                    $ (4,596)   $ (39,790)   $  (81,320)   $ (149,224)   $ (127,324)
                                            ========    =========    ==========    ==========    ==========

Balance Sheet Data (end of period):
   Total assets                             $102,791    $ 451,152    $1,272,881    $1,375,772    $1,606,668
   Total debt                                 72,768      337,905     1,139,000       987,000     1,425,500
   Total member's equity                      24,441       78,651        54,615       262,997        13,991

Other Data:
   System cash flow(9)                      $  9,391    $  59,852    $   85,045    $  161,996    $  175,430
   System cash flow margin(10)                  53.3%        46.3%         48.3%         48.8%         46.9%
   Operating cash flow(11)                  $  8,509    $  54,055    $   78,094    $  155,967    $  169,600
   Operating cash flow margin(12)               48.3%        41.8%         44.4%         47.0%         45.3%
   Net cash flows provided by (used in):
      Operating activities                  $  7,007    $  53,556    $   54,216    $   93,218    $  102,191
      Investing activities                   (60,008)    (397,085)     (851,548)     (295,613)     (398,946)
      Financing activities                    53,632      344,714       799,593       202,015       300,040

Operating Data
(end of period, except average):
   Homes passed(13)                           87,750      520,000     1,071,500     1,173,000     1,200,000
   Basic subscribers(14)                      64,350      354,000       719,000       779,000       771,000
   Basic penetration(15)                        73.3%        68.1%         67.1%         66.4%         64.3%
   Digital customers(16)                          --           --         5,300        40,000        88,000
   Data customers(17)                          2,518        4,729         5,100        15,600        38,000
   Average monthly revenues per
      basic subscriber(18)                  $  32.11    $   32.88    $    35.52    $    38.45    $    41.39
</TABLE>

                                                       (notes on following page)

                                       29

<PAGE>

                        Notes to Selected Financial Data

(1)  Service costs for the year ended December 31, 2001 include $2.9 million of
     incremental expenses incurred during the fourth quarter related to the
     transition from Excite@Home to Mediacom Online(SM).

(2)  Represents fees paid to MCC subsequent to its initial public offering and
     to Mediacom Management Corporation, a Delaware corporation, prior to MCC's
     initial public offering, for management services rendered to our operating
     subsidiaries. The management agreements with Mediacom Management were
     terminated upon the completion of MCC's initial public offering and were
     replaced with new agreements between MCC and our operating subsidiaries.
     See Notes 7 and 14 of our consolidated financial statements.

(3)  Non-cash stock charges relating to management fee expense:

     .    for the year ended December 31, 2001 related to the vesting of equity
          grants made during 1999 to certain members of our management team;

     .    for the year ended December 31, 2000 consist of a one-time $24.5
          million charge resulting from the termination of the management
          agreements with Mediacom Management upon completion of MCC's initial
          public offering in February 2000 and a $3.8 million charge related to
          the vesting of equity grants made during 1999 to certain members of
          our management team;

     .    for the year ended December 31, 1999 consist of a $0.6 million charge
          relating to amendments to our management agreements with Mediacom
          Management and a $14.8 million charge related to the vesting of equity
          grants to certain members of our management team

     See Notes 7 and 13 of our consolidated financial statements.

(4)  Net of interest income. Interest income for the periods presented was not
     material.

(5)  Loss on derivative instruments, net, represents the change in fair value of
     our interest rate derivatives as a result of the decrease in market
     interest rates.

(6)  Investment income from affiliate represents the investment income on our
     $150.0 million preferred equity investment in Mediacom Broadband. See Note
     12 of our consolidated financial statements.

(7)  Includes $29.9 million of deferred revenue recognized during the year ended
     December 31, 2001 resulting from the termination of our relationship with
     SoftNet Systems, Inc. During the year ended December 31, 2000, a $28.5
     million non-cash charge was recorded relating to the decline in value of
     our investment in shares of SoftNet Systems common stock that was deemed
     other than temporary. See Note 10 of our consolidated financial statements.

(8)  Relates to our adoption of Statements of Financial Accounting Standards No.
     133, "Accounting for Derivative Instruments and Hedging Activities."

(9)  Represents operating cash flow, as defined in note 11 below, before
     management fee expense. System cash flow:

     .    is not intended to be a performance measure that should be regarded as
          an alternative either to operating income (loss) or net loss as an
          indicator of operating performance or to the statement of cash flows
          as a measure of liquidity;

     .    is not intended to represent funds available for debt service,
          dividends, reinvestment or other discretionary uses; and

     .    should not be considered in isolation or as a substitute for measures
          of performance prepared in accordance with generally accepted
          accounting principles.

     System cash flow is included in this report because our management believes
     that system cash flow is a meaningful measure of performance commonly used
     in the cable television industry and by the investment

                                       30

<PAGE>

     community to analyze and compare cable television companies. Our definition
     of system cash flow may not be identical to similarly titled measures
     reported by other companies.

(10) Represents system cash flow as a percentage of revenues. This measurement
     is used by us, and is commonly used in the cable television industry, to
     analyze and compare cable television companies on the basis of operating
     performance, for the reasons discussed in note 8 above.

(11) Represents operating income (loss) before depreciation and amortization and
     non-cash stock charges relating to management fee expense. Operating cash
     flow:

     .    is not intended to be a performance measure that should be regarded as
          an alternative either to operating income (loss) or net loss as an
          indicator of operating performance or to the statement of cash flows
          as a measure of liquidity;

     .    is not intended to represent funds available for debt service,
          dividends, reinvestment or other discretionary uses; and

     .    should not be considered in isolation or as a substitute for measures
          of performance prepared in accordance with generally accepted
          accounting principles.

     Operating cash flow is included in this report because our management
     believes that operating cash flow is a meaningful measure of performance
     commonly used in the cable television industry and by the investment
     community to analyze and compare cable television companies. Our definition
     of operating cash flow may not be identical to similarly titled measures
     reported by other companies.

(12) Represents operating cash flow as a percentage of revenues. This
     measurement is used by us, and is commonly used in the cable television
     industry, to analyze and compare cable television companies on the basis of
     operating performance, for the reasons discussed in note 11 above.

(13) Represents the number of single residence homes, apartments and condominium
     units passed by the cable distribution network in a cable system's service
     area.

(14) Represents subscribers of a cable television system who receive a package
     of over-the-air broadcast stations, local access channels or certain
     satellite-delivered cable television services.

(15) Represents basic subscribers as a percentage of homes passed.

(16) Represents customers that receive digital cable services.

(17) Represents customers that access the Internet through cable modem service
     or a conventional modem and telephone line connection.

(18) Represents average monthly revenues for the last three months of the period
     divided by average basic subscribers for such period. Average monthly
     revenues per basic subscriber includes the revenues of acquisitions of
     cable systems made during the last three months of the period as if such
     acquisitions were completed at the beginning of the three month period.
     This measurement is commonly used in the cable television industry to
     analyze and compare cable television companies on the basis of operating
     performance.

                                       31

<PAGE>

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

     Reference is made to the "Risk Factors" below for a discussion of important
factors that could cause actual results to differ from expectations and any of
our forward-looking statements contained herein. The following discussion should
be read in conjunction with our audited consolidated financial statements as of
and for the years ended December 31, 2001, 2000 and 1999.

Organization

     We were organized as a New York limited liability company in July 1995 and
serve as a holding company for our operating subsidiaries. Mediacom Capital
Corporation, our wholly-owned subsidiary, was organized as a New York
corporation in March 1998 for the sole purpose of acting as our co-issuer of
public debt securities and does not conduct operations of its own. Mediacom
Communications Corporation ("MCC") was organized as a Delaware corporation in
November 1999 and completed an initial public offering in February 2000.
Immediately prior to the completion of MCC's initial public offering, MCC issued
shares of its common stock in exchange for all of our outstanding membership
interests and became our sole member and manager.

     Until MCC's initial public offering in February 2000, Mediacom Management
Corporation, a Delaware corporation, provided management services to our
operating subsidiaries and received annual management fees. Such management
agreements were terminated upon the date of MCC's initial public offering and
were replaced with new agreements between MCC and our operating subsidiaries. At
that time, Mediacom Management's employees became MCC's employees. See Notes 7
and 14 of our consolidated financial statements.

Acquisitions

     We significantly expanded our business in 1999 and 2000 through
acquisitions. All acquisitions have been accounted for under the purchase method
of accounting and, therefore, our historical results of operations include the
results of operations for each acquired system subsequent to its respective
acquisition date. In 1999, we acquired cable systems serving a total of 358,000
basic subscribers as of their respective dates of acquisition, for an aggregate
purchase price of $759.6 million (the "1999 Acquisitions"). In 2000, we acquired
cable systems serving a total of 53,000 basic subscribers as of their respective
dates of acquisition, for an aggregate purchase price of $109.2 million (the
"2000 Acquisitions"). These acquisitions affect the comparability of our
historical results of operations.

General

     For the past three years, we have generated significant increases in
revenues principally as a result of our acquisition activities and increases in
monthly revenues per basic subscriber. Approximately 93.4% of our revenues for
the year ended December 31, 2001 are attributable to monthly subscription fees
charged to customers for our core cable television services, including basic,
expanded basic and premium programming, digital cable television programming
services, cable modem service, wire maintenance, equipment rental and services
to commercial establishments provided by our cable systems. The remaining 6.6%
of revenue represents pay-per-view charges, installation and reconnection fees,
late payment fees, advertising revenues and other ancillary revenues. Franchise
fees charged to customers are included in their corresponding revenue category.

     Our operating expenses consist of service costs and selling, general and
administrative expenses directly attributable to our cable systems. Service
costs include fees paid to programming suppliers, expenses related to copyright
fees, wages and salaries of technical personnel and plant operating costs.
Programming costs have historically increased at rates in excess of inflation
due to increases in the number of programming services we have offered and
significant increases in the rates charged for the programming services already
carried in our cable systems. Under the Federal Communication Commission's
existing cable rate regulations, we are allowed to increase our rates for cable
television services to more than cover any increases in the programming costs.
However, competitive conditions and other factors in the marketplace may limit
our ability to increase our rates. We benefit from our membership in a
cooperative of cable television companies which serves over 12 million basic
subscribers and which provides its members with volume discounts from
programming suppliers and cable equipment vendors.

                                       32

<PAGE>

Selling, general and administrative expenses directly attributable to our cable
systems include wages and salaries for customer service and administrative
personnel, franchise fees and expenses related to billing, marketing, bad debt,
advertising and office administration. Management fee expense reflects fees paid
to MCC for management services rendered to the Company's operating subsidiaries.

     The high level of depreciation and amortization associated with our
acquisition activities and capital investment program, as well as the interest
expense related to our financing activities, have caused us to report net losses
in our limited operating history. We believe that such net losses are common for
cable television companies and anticipate that we will continue to incur net
losses for the foreseeable future.

     Operating cash flow represents operating loss before depreciation and
amortization and non-cash stock charges relating to management fee expense.
Operating cash flow:

     .    is not intended to be a performance measure that should be regarded as
          an alternative either to operating income (loss) or net loss as an
          indicator of operating performance, or to the statement of cash flows
          as a measure of liquidity;

     .    is not intended to represent funds available for debt service,
          dividends, reinvestment or other discretionary uses; and

     .    should not be considered in isolation or as a substitute for measures
          of performance prepared in accordance with generally accepted
          accounting principles.

     Operating cash flow is included herein because our management believes that
operating cash flow is a meaningful measure of performance as it is commonly
used by the cable television industry and by the investment community to analyze
and compare cable television companies. Our definition of operating cash flow
may not be identical to similarly titled measures reported by other companies.

Critical Accounting Policies

     The following represent our critical accounting policies which reflect
significant judgements and uncertainties and could possibly result in materially
different results under different conditions or assumptions. For a detailed
description of our significant accounting policies, please see Note 2 of our
consolidated financial statements.

   Impairment of Long-Lived Assets

     We follow the provisions of Statement of Financial Accounting Standards No.
121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." SFAS 121 requires that long-lived assets
and certain identifiable intangibles to be held and used by any entity be
reviewed for impairment at each year end and whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Based on our review there has been no impairment of long-lived assets under SFAS
121.

   Property, Plant and Equipment

     We capitalize a portion of direct and indirect costs related to the
construction, replacement and installation of property, plant and equipment.
Capitalized costs are charged to property, plant and equipment and depreciated
over the life of the related assets. The Company performs periodic evaluations
of the estimates used to determine the amount of costs that are capitalized.

Actual Results of Operations

   Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     The following historical information includes the results of operations of
the 2000 Acquisitions, only for that portion of the respective period that such
cable systems were owned by us.

     Revenues. Revenues increased 12.7% to $374.1 million for the year ended
December 31, 2001 as compared to $332.1 million for the year ended December 31,
2000. Of the revenue increase of $42.0 million, $18.4 million was

                                       33

<PAGE>

attributable to the 2000 Acquisitions. Excluding the 2000 Acquisitions, revenues
increased primarily due to basic rate increases associated with new programming
introductions in our core cable television services and to customer growth in
our digital cable and high-speed Internet access services, partially offset by a
slight decline in basic subscribers.

     Service costs. Service costs increased 18.4% to $135.3 million for the year
ended December 31, 2001 as compared to $114.2 million for the year ended
December 31, 2000. Service costs for the year ended December 31, 2001 include
$2.9 million of incremental expenses related to the transition Excite@Home to
MCC's Mediacom Online(SM) high-speed Internet service. Of the increase in
service costs of $21.1 million, approximately $7.6 million was attributable to
the 2000 Acquisitions. Excluding the 2000 Acquisitions, these costs increased
primarily as a result of higher programming expenses, including rate increases
by programming suppliers and the cost of new channel additions. As a percentage
of revenues, service costs were 36.2% for the year ended December 31, 2001, as
compared with 34.4% for the year ended December 31, 2000.

     Selling, general and administrative expenses. Selling, general and
administrative expenses increased 14.4% to $63.8 million for the year ended
December 31, 2001 as compared to $55.8 million for the year ended December 31,
2000. Of the increase in selling, general and administrative expenses of $7.6
million, approximately $3.0 million was attributable to the 2000 Acquisitions.
Excluding the 2000 Acquisitions, these costs increased primarily as a result of
higher bad debt and customer service employee expenses, and increased marketing
costs associated with the promotion of our digital cable and high-speed Internet
access services. As a percentage of revenues, selling, general and
administrative expenses were 17.1% for the year ended December 31, 2001, as
compared with 16.8% for the year ended December 31, 2000.

     Management fee expense. Management fee expense decreased 3.3% to $5.8
million for the year ended December 31, 2001 as compared to $6.0 million for the
year ended December 31, 2000. The decrease was primarily due to the sharing of
MCC's overhead with Mediacom Broadband LLC, a Delaware limited liability company
and wholly-owned subsidiary of MCC that commenced operations in June 2001. As a
percentage of revenues, management fee expense was 1.6% for the year ended
December 31, 2001 as compared with 1.8% for the year ended December 31, 2000.

     Depreciation and amortization. Depreciation and amortization increased
24.6% to $221.6 million for the year ended December 31, 2001 as compared to
$177.9 million in the year ended December 31, 2000. This increase was primarily
due to capital expenditures associated with the upgrade of our cable systems and
our purchase of the 2000 Acquisitions.

     Non-cash stock charges relating to management fee expense. Non-cash stock
charges relating to management fee expense decreased 89.7% to $2.9 million for
the year ended December 31, 2001 as compared to $28.3 million in the year ended
December 31, 2000. This decrease is primarily due to a one-time $24.5 million
charge which occurred in February 2000, resulting from the termination of the
management agreements with Mediacom Management on the date of MCC's initial
public offering. See Notes 7 and 14 of our consolidated financial statements.

     Interest expense, net. Interest expense, net, increased 36.0% to $93.8
million for the year ended December 31, 2001 as compared to $69.0 million for
the year ended December 31, 2000. This increase was due primarily to a higher
interest rate associated with our 9 1/2% senior notes, which were issued in
January 2001, and borrowings under our operating subsidiary credit facilities to
fund a $125.0 million cash dividend to MCC and a $150.0 million preferred equity
investment in Mediacom Broadband LLC in July 2001. This cash dividend and
preferred equity investment funded a portion of the purchase price for Mediacom
Broadband LLC's acquisitions of cable systems from AT&T Broadband, LLC in June
and July 2001. See Notes 6, 11 and 12 to our consolidated financial statements.

     Loss on derivative instruments, net. Loss on derivative instruments, net,
was $8.4 million for the year ended December 31, 2001, due to the change in the
fair value of our interest rate derivatives as a result of the decrease in
market interest rates.

     Investment income from affiliate. Investment income from affiliate was $8.1
million for the year ended December 31, 2001. This amount represents the
investment income on our $150.0 million preferred equity investment in Mediacom
Broadband LLC. See Note 12 of our consolidated financial statements.

     Other (income) expenses. Other income of $23.9 million for the year ended
December 31, 2001 was principally due to the recognition of the remaining $30.0
million of deferred revenue resulting from the termination of our contract with
SoftNet Systems, offset in part by other expenses. Other expenses of $30.0
million for the year ended December 31, 2000 were principally due to non-cash
loss of $28.5 million resulting from the decline in the value of our

                                       34

<PAGE>

investment in shares of SoftNet Systems common stock that was seemed other than
temporary. See Note 10 of our consolidated financial statements.

     Net loss. Despite increases in depreciation and amortization expense and
interest expense, net, net loss declined to $127.3 million for the year ended
December 31, 2001 as compared to a net loss of $149.2 million for the year ended
December 31, 2000, primarily due to the change in other (income) expenses.

     Operating cash flow. Operating cash flow increased 8.4% to $169.1 million
for the year ended December 31, 2001 as compared to $156.0 million for the year
ended December 31, 2000. Of the operating cash flow increase of $13.1 million,
approximately $7.4 million was attributable to the 2000 Acquisitions. Excluding
the 2000 Acquisitions, operating cash flow increased primarily due to the
increase in revenues resulting from basic rate increases for our core cable
television services and customer growth in our digital cable and high-speed
Internet access services, offset primarily by increases in programming, bad debt
and employee expenses. As a percentage of revenues, operating cash flow was
45.2% for the year ended December 31, 2001, compared to 47.0% for the year ended
December 31, 2000.

   Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     The following historical information includes the results of operations of
the 1999 Acquisitions and the 2000 Acquisitions (together, the "1999-2000
Acquisitions"), only for that portion of the respective period that such cable
systems were owned by us.

     Revenues. Revenues increased 88.6% to $332.1 million for the year ended
December 31, 2000 as compared to $176.1 million for the year ended December 31,
1999. Of the revenue increase of $156.0 million, approximately $137.8 was
attributable to the 1999-2000 Acquisitions. Excluding the 1999-2000
Acquisitions, revenues increased primarily due to basic rate increases
associated with new programming introductions in our core cable television
services and to customer growth in our digital cable and high-speed Internet
access services.

     Service costs. Service costs increased 96.8% to $114.2 million for the year
ended December 31, 2000 as compared to $58.1 million for the year ended December
31, 1999. Of the increase in service costs of $56.1 million, approximately $48.2
million was attributable to the 1999-2000 Acquisitions. Excluding the 1999-2000
Acquisitions, these costs increased primarily as a result of higher programming
expenses, including rate increases by programming suppliers and the cost of
channel additions. As a percentage of revenues, service costs were 34.4% for the
year ended December 31, 2000, as compared with 33.0% for the year ended December
31, 1999.

     Selling, general and administrative expenses. Selling, general and
administrative expenses increased 69.4% to $55.8 million for the year ended
December 31, 2000 as compared to $32.9 million for the year ended December 31,
1999. Of the increase in selling, general and administrative expenses of $22.9
million, approximately $21.5 million was attributable to the 1999-2000
Acquisitions. Excluding the 1999-2000 Acquisitions, these costs increased
primarily as a result of higher marketing costs associated with the promotion of
our digital cable and high-speed Internet access services. As a percentage of
revenues, selling, general and administrative expenses were 16.8% for the year
ended December 31, 2000, as compared with 18.7% for the year ended December 31,
1999.

     Management fee expense. Management fee expense decreased 13.3% to $6.0
million for the year ended December 31, 2000 as compared to $7.0 million for the
year ended December 31, 1999. As a percentage of revenues, management fee
expense was 1.8% for the year ended December 31, 2000 as compared with 3.9% for
the year ended December 31, 1999. The decrease in management fee expense was
primarily due to higher amounts charged by Mediacom Management during the year
ended December 31, 1999 under management agreements between Mediacom Management
and our operating subsidiaries. Such management agreements were terminated on
the date of MCC's initial public offering in February 2000 and were replaced
with new agreements between MCC and our operating subsidiaries. See Notes 7 and
14 of our consolidated financial statements.

     Depreciation and amortization. Depreciation and amortization increased
76.1% to $177.9 million for the year ended December 31, 2000 as compared to
$101.1 million in the year ended December 31, 1999. This increase was due to our
purchase of the 1999-2000 Acquisitions and capital expenditures associated with
the upgrade of our cable systems.

     Non-cash stock charges relating to management fee expense. Non-cash stock
charges relating to management fee expense increased 82.9% to $28.3 million for
the year ended December 31, 2000 as compared to $15.4 million in the year ended
December 31, 1999. The increase in 2000 was the result of a one-time $24.5
million charge resulting from

                                       35

<PAGE>

the termination of management agreements and a $3.8 million charge related to
the vesting of equity grants made to certain members of our management team, as
compared with, in 1999, a $0.6 million charge resulting from amendments to the
management agreements and a $14.8 million charge related to the vesting of
equity grants to certain members of our management team. See Notes 7 and 13 of
our consolidated financial statements.

     Interest expense, net. Interest expense, net, increased 82.4% to $69.0
million for the year ended December 31, 2000 as compared to $37.8 million for
the year ended December 31, 1999. This increase was primarily due to higher
average debt outstanding during the year ended December 31, 2000 as a result of
the indebtedness incurred in connection with the purchase of the 1999-2000
Acquisitions and to fund capital expenditures.

     Other expenses. Other expenses increased to $30.0 million for the year
ended December 31, 2000 as compared to $5.1 million for the year ended December
31, 1999. This change was principally due to a non-cash loss of $28.5 million
resulting from, the decline in value of our investment in shares of SoftNet
Systems common stock that was deemed other than temporary. See Note 10 of our
consolidated financial statements.

     Net loss. Due primarily to the increases in depreciation and amortization
expense, interest expense, net, and other expenses, net loss was $149.2 million
for the year ended December 31, 2000 as compared to a net loss of $81.3 million
for the year ended December 31, 1999.

     Operating cash flow. Operating cash flow increased 99.7% to $156.0 million
for the year ended December 31, 2000 as compared to $78.1 million for the year
ended December 31, 1999. Of the operating cash flow increase of $77.9 million,
approximately $65.8 was attributable to the 1999-2000 Acquisitions. Excluding
the 1999-2000 Acquisitions, operating cash flow increased primarily due to the
increase in revenues resulting from basic rate increases associated in our core
cable television services and to customer growth in our digital cable and
high-speed Internet access services, offset primarily by increases in
programming expenses and marketing costs. As a percentage of revenues, operating
cash flow increased to 47.0% for the year ended December 31, 2000, compared to
44.4% for the year ended December 31, 1999.

Liquidity and Capital Resources

     Our business requires substantial capital for the upgrade, expansion and
maintenance of our cable network. In addition, we have pursued, and will
continue to pursue, a business strategy that includes selective acquisitions. We
have funded and will continue to fund our working capital requirements, capital
expenditures and acquisitions through a combination of internally generated
funds, long-term borrowings and equity financings.

   Investing Activities

     Our capital expenditures were $244.9 million, $182.6 million and $86.7
million for the years ended December 31, 2001, 2000 and 1999, respectively. The
higher capital expenditures in 2001 reflect the significant investments we are
making as a result of our accelerated network upgrade program. As of December
31, 2001, as a result of our cumulative capital investment in our network
upgrade program, approximately 90% of our cable network was upgraded with 550MHz
to 870MHz bandwidth capacity and approximately 80% of our homes passed were
activated with two-way communications capability. At year end 2001, our digital
cable service was available to approximately 600,000 basic subscribers, and our
cable modem service was marketed to about 610,000 homes passed by our cable
systems.

     We plan to continue our aggressive network upgrade program and expect that
approximately 96% of our cable network will be upgraded with 550MHz to 870MHz
bandwidth capacity and approximately 90% of our homes passed will have two-way
communications capability by year end 2002. To achieve these targets and to fund
other requirements, including cable modems, digital converters, new plant
construction, headend eliminations, regional fiber interconnections and network
repair and maintenance, we expect to invest between $180.0 million and $190.0
million in capital expenditures in 2002.

     In 1999, we acquired cable systems that served approximately 358,000 basic
subscribers as of their respective dates of acquisition, for an aggregate
purchase price of $759.6 million. In 2000, we acquired cable systems that served
approximately 53,000 basic subscribers as of their respective dates of
acquisition, for an aggregate purchase price of $109.2 million.

                                       36

<PAGE>

     On July 18, 2001 we made a $150.0 million preferred equity investment in
Mediacom Broadband that was funded with borrowings under our subsidiary credit
facilities. The preferred equity investment has a 12% annual dividend, payable
quarterly in cash. The proceeds from the preferred equity investment were used
by Mediacom Broadband to fund a portion of the purchase price for its
acquisitions of cable systems from AT&T Broadband. See Note 12 to our
consolidated financial statements.

   Financing Activities

     To finance our prior acquisitions, investments and network upgrade program,
and to provide liquidity for future capital needs, during the years ended
December 31, 2000 and 2001 we completed the undernoted financing arrangements.

     In February 2000, we received $354.5 million of equity capital from MCC,
the source of which was the net proceeds of MCC's initial public offering.

     On January 24, 2001, we completed an offering of $500.0 million of 9 1/2%
senior notes due January 2013. Interest on the 9 1/2% senior notes will be
payable semi-annually on January 15 and July 15 of each year, which commenced on
July 15, 2001. Approximately $467.5 million of the net proceeds were used to
repay a substantial portion of the indebtedness outstanding under our subsidiary
credit facilities and related accrued interest. The balance of the net proceeds
was used for general corporate purposes.

     On July 17, 2001 we paid a $125.0 million cash dividend to MCC. This
dividend indirectly funded a portion of the purchase price for Mediacom
Broadband's acquisitions of cable systems from AT&T Broadband. See Note 11 to
our consolidated financial statements.

     We have two subsidiary credit facilities, each in the amount of $550.0
million. These credit facilities expire in September 2008 and December 2008. The
final maturities of our subsidiary credit facilities are subject to earlier
repayment on dates ranging from June 2007 to December 2007 if we do not
refinance our $200.0 million 8 1/2% senior notes due April 2008 prior to March
31, 2007. As of December 31, 2001, we entered into interest rate swap
agreements, which expire from 2002 through 2004, to hedge $170.0 million of
floating rate debt under our subsidiary credit facilities. Under the terms of
the interest rate swap agreements, we are exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap agreements.
However, we do not anticipate nonperformance by the counterparties.

     As of December 31, 2001, we had total debt of approximately $1.43 billion
and about $495.9 million of unused credit commitments under our subsidiary
credit facilities, of which over $450.0 million could be borrowed and used for
general corporate purposes under the most restrictive covenants in our debt
arrangements. On such date, about 70% of our outstanding indebtedness was at
fixed interest rates or subject to interest rate protection and our weighted
average cost of indebtedness, including our interest rate swap agreements, was
approximately 7.2%.

     As of December 31, 2001, we were in compliance with all covenants in our
subsidiary credit facilities and our public debt indentures.

     On February 4, 2002, we and MCC filed a registration statement with the SEC
under which we may sell debt securities unconditionally guaranteed by MCC for a
maximum amount of $1.5 billion. The SEC declared this registration statement
effective on February 13, 2002.

     Although we have not generated earnings sufficient to cover fixed charges,
we have generated cash and obtained financing sufficient to meet our debt
service, working capital, capital expenditure and acquisition requirements. We
expect that we will continue to be able to generate funds and obtain financing
sufficient to service our obligations and complete any future acquisitions.
There can be no assurance that we will be able to obtain sufficient financing,
or, if we were able to do so, that the terms would be favorable to us.

                                       37

<PAGE>

Contractual Obligations and Commercial Commitments

     The table below summarizes our contractual obligations and commercial
commitments for the five years subsequent to December 31, 2001 and thereafter.
The amounts represent the maximum future contractual obligations.

                                             Payments Due by Period
                                             ----------------------
                                              (dollars in millions)

<TABLE>
<CAPTION>
                                                          2003    2005
                                                           to      to     After
     Contractual Obligations         Total      2002      2004    2006     2006
----------------------------------   ------   ---------   -----   -----   -------
<S>                                  <C>         <C>       <C>     <C>   <C>
Long-term debt                       $1,426      $1        $4      $67     $1,354
Operating leases                         10       2         2        1          5
                                     ------      --        --      ---     ------
Total contractual cash obligations   $1,436      $3        $6      $68     $1,359
                                     ======      ==        ==      ===     ======
</TABLE>

<TABLE>
<CAPTION>
                                       Total                 2003    2005
                                      Amounts                 to      to     After
   Other Commercial Commitments      Committed     2002      2004    2006     2006
----------------------------------   ---------  ----------   -----   -----  -------
<S>                                     <C>         <C>       <C>     <C>      <C>
Standby letters of credit               $4          $--       $4      $--      $--
</TABLE>

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141, ("SFAS 141") "Business
Combinations" and No. 142, ("SFAS 142") "Goodwill and Other Intangible Assets".
SFAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Adoption of SFAS 141 on July 1, 2001
had no effect on our results of operations or financial position as we account
for all acquisitions under the purchase method. Under SFAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but reviewed
annually for impairment (or more frequently if impairment indicators arise).
Separable intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives. We adopted this standard
effective January 1, 2002 and are evaluating our goodwill and other specifically
identifiable intangibles for impairment in accordance with the standard's
guidance. We are also currently evaluating whether franchise licenses qualify as
indefinite life intangibles under the new standard. If we conclude that
franchise licenses are indefinite life intangible assets, they will no longer be
amortized. Amortization of goodwill and franchise licenses was approximately
$44.8 million for the year ended December 31, 2001. For the year ending December
31, 2002, if we conclude that goodwill and franchise licenses are indefinite
life intangible assets, our preliminary estimate is that the adoption of SFAS
142 will reduce amortization expense in our consolidated statements of
operations by approximately $45.0 million.

     In July 2001, the FASB issued SFAS No. 143 ("SFAS 143"), Accounting for
Asset Retirement Obligations, which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS 143 will become effective for fiscal
years beginning after June 15, 2002. We do not expect adoption of SFAS 143 will
have a material impact on our results of operations or financial position.

     In August 2001, the FASB issued Statements of Financial Accounting
Standards No. 144, ("SFAS 144") "Accounting for the Impairment or Disposal of
Long-Lived Assets". This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets, and provides guidance on
classification and accounting for such assets when held for sale or abandonment.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. We
adopted this standard effective January 1, 2002 and do not expect a material
impact on our results of operations or financial position.

Inflation and Changing Prices

     Our systems' costs and expenses are subject to inflation and price
fluctuations. Such changes in costs and expenses can generally be passed through
to subscribers. Programming costs have historically increased at rates in excess
of inflation and are expected to continue to do so. We believe we are allowed
under the Federal Communications Commission's existing cable rate regulations to
increase our rates for cable television services to

                                       38

<PAGE>

more than cover any increases in programming costs. However, competitive
conditions and other factors in the marketplace may limit our ability to
increase our rates.

Risk Factors

   We have a history of net losses and may not be profitable in the future.

     We have had a history of net losses and expect to continue to report net
losses for the foreseeable future, which could adversely affect our ability to
finance our business in the future. We reported net losses of $81.3 million,
$149.2 million and $127.3 million for the years ended December 31, 1999, 2000
and 2001, respectively. The principal reasons for our prior and anticipated net
losses include the depreciation and amortization expenses associated with our
acquisitions, the capital expenditures related to expanding and upgrading our
cable systems and interest costs on borrowed money.

   We are a holding company with no operations and we depend on our operating
subsidiaries for cash to fund our obligations.

     As a holding company, we do not have any operations or hold any assets
other than our investments in and our advances to our operating subsidiaries.
Consequently, our subsidiaries conduct all of our consolidated operations and
own substantially all of our consolidated assets. The only source of cash we
have to pay interest on, and repay the principal of, our indebtedness and to
meet our other obligations is the cash that our subsidiaries generate from their
operations and their borrowings. Our subsidiaries are not obligated to make
funds available to us. Our subsidiaries' ability to make payments to us will
depend upon their operating results and will be subject to applicable laws and
contractual restrictions, including the agreements governing our subsidiary
credit facilities and other indebtedness. Those agreements permit our
subsidiaries to distribute cash to us under certain circumstances, but only so
long as there is no default under any of such agreements.

   We have grown rapidly and have a limited history of operating our current
cable systems, which may make it difficult for you to evaluate our performance.

     We began operations in 1996 and have grown rapidly since then, principally
through acquisitions. In late 1999, we completed acquisitions that doubled the
number of subscribers served by our cable systems. As a result, you have limited
information upon which to evaluate our performance in managing our current cable
systems, and our historical financial information may not be indicative of the
future results we can achieve with our cable systems.

   If we are unable to successfully integrate our acquired cable systems, our
business and results of operations could be adversely affected.

     Since January 1, 1999, we have acquired of cable systems that account for
approximately 53% of our current basic subscribers. We may acquire more cable
systems in the future, through direct acquisitions, system swaps or otherwise.
These integration and management of the cable systems we have already acquired
or may acquire, involve the following principal risks that could adversely
affect our business and results of operations:

     .    our acquisitions may result in significant unexpected operating
          difficulties, liabilities or contingencies;

     .    the integration of acquired cable systems may place significant
          demands on our management, diverting their attention from, and making
          it more difficult for them to manage, our other cable systems;

     .    the integration of acquired cable systems may require significant
          financial resources that could otherwise be used for the ongoing
          development of our other cable systems, including our network upgrade
          program;

     .    we may be unable to recruit additional qualified personnel which may
          be required to integrate and manage acquired cable systems; and

     .    some of our existing operational, financial and management systems may
          be incompatible with or inadequate to effectively integrate and manage
          acquired cable systems and any steps taken to implement changes in our
          cable systems may not be sufficient.

                                       39

<PAGE>

   We have substantial existing debt and may incur substantial additional
debt, which could adversely affect our ability to obtain financing in the future
and require our operating subsidiaries to apply a substantial portion of their
cash flow to debt service.

     Our total debt as of December 31, 2001 was approximately $1.43 billion. Our
interest expense for the year ended December 31, 2001 was $93.8 million on a
historical basis and $100.9 million on a pro forma basis that includes the
$125.0 million dividend we paid to our manager and our $150.0 million preferred
equity investment in Mediacom Broadband LLC in July 2001. We cannot assure you
that our business will generate sufficient cash flows to permit us or our
subsidiaries to repay indebtedness or that refinancing of that indebtedness will
be possible on commercially reasonable terms or at all.

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

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

     .    we may need to use a large portion of our revenues to pay interest on
          borrowings under our subsidiary credit facilities and our senior
          notes, which will reduce the amount of money available to finance our
          operations, capital expenditures and other activities;

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

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

     .    we may be less flexible in responding to changing business and
          economic conditions, including increased competition and demand for
          new products and services;

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

     .    we may not be able to implement our strategy.

     We anticipate incurring additional debt to fund the expansion, maintenance
and upgrade of our cable systems. If new debt is added to our current debt
levels, the related risks that we now face could intensify.

   A default under our indentures or our subsidiary credit facilities could
result in an acceleration of our indebtedness and other material adverse
effects.

     The agreements and instruments governing our own and our subsidiaries'
indebtedness contain numerous financial and operating covenants. The breach of
any of these covenants could cause a default, which could result in the
indebtedness becoming immediately due and payable. If this were to occur, we
would be unable to adequately finance our operations. In addition, a default
could result in a default or acceleration of our other indebtedness subject to
cross-default provisions. If this occurs, we may not be able to pay our debts or
borrow sufficient funds to refinance them. Even if new financing is available,
it may not be on terms that are acceptable to us. The membership interests of
our operating subsidiaries are pledged as security under the respective
subsidiary credit facilities. A default under one of our subsidiary credit
facility could result in a foreclosure by the lenders on the membership
interests pledged under that facility. Because we are dependent upon our
operating subsidiaries for all of our revenues, a foreclosure would have a
material adverse effect on our business, financial condition and results of
operations.

   The terms of our indebtedness could materially limit our financial and
operating flexibility.

     Several of the covenants contained in agreements and instruments governing
our own and our subsidiaries' indebtedness could materially limit our financial
and operating flexibility by restricting, among other things, our ability and
the ability of our operating subsidiaries to:

     .    incur additional indebtedness;

     .    create liens and other encumbrances;

                                       40

<PAGE>

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

     .    enter into transactions with related parties;

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

     .    repurchase or redeem equity interests or debt;

     .    pledge assets; and

     .    issue equity interests.

     Complying with these covenants could cause us to take actions that we
otherwise would not take or cause us not to take actions that we otherwise would
take.

   We may not be able to obtain additional capital to continue the development
of our business.

     Our business requires substantial capital for the upgrade, expansion and
maintenance of our cable systems and the launch and expansion of new or
additional services. We cannot assure you that our anticipated levels of capital
expenditures will be sufficient to accomplish our planned system upgrades,
maintenance and expansion, or to roll out advanced services. If there is
accelerated growth in digital cable customers or in the delivery of other
advanced services or if costs increase, we may need to make unplanned additional
capital expenditures. We may not be able to obtain the funds necessary to
finance our capital improvement program or any additional capital requirements
through internally generated funds, additional borrowings or other sources. If
we are unable to obtain these funds, we would not be able to implement our
business strategy and our results of operations would be adversely affected.

   If we are unable to keep pace with technological change, our business and
results of operations could be adversely affected.

     The cable business is characterized by rapid technological change and the
introduction of new products and services. We cannot assure you that we will be
able to fund the capital expenditures necessary to keep pace with technological
developments, or that we will successfully anticipate the demand of our
customers for products and services requiring new technology. This type of rapid
technological change could adversely affect our plans to upgrade or expand our
cable systems and respond to competitive pressures. Our inability to upgrade,
maintain and expand our systems and provide advanced services in a timely
manner, or to anticipate the demands of the market place, could adversely affect
our ability to compete. Consequently, our business and results of operations
could suffer materially.

   If we are unable to successfully implement our business strategy, our
business, financial condition and results of operations could be adversely
affected.

     The implementation of our business strategy will place significant demands
on our and our manager's management and operational, financial and marketing
resources. We cannot assure you that our manager or we will be successful in
operating our cable systems. The successful implementation of our business
strategy involves the following principal risks that could materially adversely
affect our business, financial condition and results of operations:

     .    the operation of our cable systems places significant demands on our
          manager's management team and may result in significant unexpected
          operating difficulties, liabilities or contingencies;

     .    our manager may be unable to recruit additional qualified personnel
          which may be required to integrate and manage our cable systems; and

     .    some of our manager's operational, financial and management systems
          may be incompatible with or inadequate to effectively implement our
          business strategy.

     In addition, each of the above risks may apply to any future acquisition of
cable systems.

                                       41

<PAGE>

   If we are unsuccessful in expanding and introducing new and advanced
services, our business and results of operations could be adversely affected.

     We expect that a substantial portion of our future growth in revenues will
come from the expansion of relatively new services, such as high-speed Internet
access service and digital programming services, the launch of additional
services, such as video-on-demand or Internet telephony, and acquisitions of
additional cable systems. We may not be able to successfully expand or launch
these new or additional services, and it is possible that they will not generate
significant revenue growth. As of the date of this report, there are no material
pending acquisitions. We may not be successful in identifying attractive
acquisition targets or obtaining the financing necessary to complete future
acquisitions. Among other things, in recent years, the cable television industry
has undergone dramatic consolidation, which has reduced the number of future
acquisition prospects and may increase the purchase price for any acquisitions
we pursue.

   Our programming costs are increasing, and our business and results of
operations will be adversely affected if we cannot pass through a sufficient
part of the additional costs to subscribers.

     Our programming costs have been, and are expected to continue to be, one of
our largest single expense items. In recent years, the cable television industry
has experienced a rapid escalation in the cost of programming, particularly
sports programming. The escalation in programming costs is expected to continue,
and we may not be able to pass programming cost increases on to our customers.
In addition, as we add programming to our basic and expanded basic programming
tiers, we may not be able pass all of our costs of the additional programming on
to our customers. To the extent that we are unable to pass increased or
additional programming costs through to subscribers, our cash flow and operating
margins will be adversely affected.

   We may not be able to compete effectively in the highly competitive media
and telecommunications industries.

     The communications industry in which we operate is highly competitive and
is often subject to rapid and significant changes and developments in the
marketplace and in the regulatory and legislative environment. In some
instances, we compete against companies with fewer regulatory burdens, easier
access to financing, greater resources and operating capabilities, greater brand
name recognition and long-standing relationships with regulatory authorities.
Our traditional cable television business faces direct competition from other
cable companies, telephone companies, and, most significantly, from direct
broadcast satellite operators. Our high-speed Internet service is subject to
competition from telephone companies using digital subscriber line technology,
direct broadcast satellite operators and other Internet service providers. We
also face competition from over-the-air television and radio broadcasters and
from other communications and entertainment media such as movie theaters, live
entertainment and sports events, newspapers and home video products.

     We expect that future advances in communications technology could lead to
the introduction of new competitors, products and services that may compete with
our businesses. We cannot assure you that upgrading our cable systems will allow
us to compete effectively. Additionally, if we expand and introduce new and
enhanced telecommunications services, we will be subject to competition from new
and established telecommunications providers. We cannot predict the extent to
which competition may affect our business and operations in the future.

   Recent changes in the regulatory environment may introduce additional
competitors in our markets.

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

                                       42

<PAGE>

   Continued growth of direct broadcast satellite operators could adversely
affect our business and results of operations.

     Direct broadcast satellite operators have grown at a rate far exceeding the
cable television industry growth rate and have emerged as a significant
competitor to cable operators. Direct broadcast satellite service consists of
television programming transmitted via high-powered satellites to individual
homes, each served by a small satellite dish. The continued growth of direct
broadcast satellite operators may adversely affect our growth and profitability.
Legislation permitting direct broadcast satellite operators to transmit local
broadcast signals was enacted on November 29, 1999. This eliminated a
significant competitive advantage that cable system operators had over direct
broadcast satellite operators. Direct broadcast satellite operators deliver
local broadcast signals in many markets that we serve. These companies and
others are also developing ways to bring advanced communications services to
their customers. They are currently offering satellite-delivered high-speed
Internet access services with a telephone return path and are beginning to
provide true two-way interactivity. On October 28, 2001, EchoStar Communications
Corporation (which does business as DISH Network) announced that it has agreed
to acquire Hughes Electronics Corp. (which does business as DIRECTV). If
consummated, this combination would create a much stronger competitive challenge
for us and other cable system operators.

   We may not be able to obtain critical items at a reasonable cost or when
required, which could adversely affect our business, financial condition and
results of operations.

     We depend on third-party suppliers for equipment, software, services and
other items that are critical for the operation of our cable systems and the
provision of advanced services, including analog and digital set-top converter
boxes, servers and routers, fiber-optic cable, telephone circuits, software, the
"backbone" telecommunications network for our Internet access service and
construction services for expansion and upgrades of our cable systems. These
items are available from a limited number of suppliers. Demand for these items
has increased with the general growth in demand for Internet and
telecommunications services. In addition, some suppliers have commenced
bankruptcy proceedings or experienced other financial difficulties that may
affect the availability of these items. We typically do not carry significant
inventories of equipment. Moreover, if there are no suppliers that are able to
provide set-top converter boxes that comply with evolving Internet and
telecommunications standards or that are compatible with other equipment and
software that we use, our business, financial condition and results of
operations could be materially adversely affected. If we are unable to obtain
critical equipment, software, services or other items on a timely basis and at
an acceptable cost, our ability to offer our products and services and roll out
advanced services may be impaired, and our business, financial condition and
results of operations could be materially adversely affected.

     We also rely on AT&T Corp. to provide, under a multi-year contract with our
manager, the Internet protocol network backbone and certain core Internet
support functions for our cable modem service. If AT&T Corp. ceased to provide
these services during or after the term of the contract and we were unable to
secure alternative arrangements on acceptable terms, our high-speed Internet
access business could be materially and negatively impacted.

   We depend on our manager for the provision of essential management
functions.

     We do not have separate senior management and are dependent on our manager
for the operation of our business. Our manager also manages Mediacom Broadband's
operating subsidiaries. Following the completion of Mediacom Broadband's
acquisitions of cable systems from AT&T Broadband in June and July 2001, the
number of customers served by our manager's cable systems increased
significantly and our manager devotes a significant portion of its personnel and
other resources to the management of Mediacom Broadband's cable systems. As a
result, the attention of our manager's senior executive officers may be diverted
from the management of our cable systems and the allocation of resources between
our cable systems and Mediacom Broadband's cable systems could give rise to
conflicts of interest.

     The successful execution of our business strategy depends on the ability of
our manager to efficiently manage our cable systems. If our manager were to
experience any material adverse change in its business, the risks described in
this risk factor could intensify and our business, financial condition and
results of operations could be materially adversely affected. In addition, we
are also dependent on our manager to operate Mediacom Broadband's cable systems
effectively in order to enable us to achieve operating synergies, such as the
joint purchasing of programming. Mediacom Broadband's operating subsidiaries
have substantial indebtedness that, among other things, could make our manager
more vulnerable to economic downturns and to adverse developments in its
business. Although our manager charged management fees to our operating
subsidiaries in an amount equal to 1.6% of our subsidiaries' gross operating
revenues for the year ended December 31, 2001, we cannot assure you that it will
not exercise its right under its

                                       43

<PAGE>

management agreements with our operating subsidiaries to increase the management
fees, which under such agreements may not exceed 4.5% of each subsidiary's gross
operating revenues.

   If our manager were to lose key personnel, our business could be adversely
affected.

     If any of our manager's key personnel ceases to participate in our business
and operations, our profitability could suffer. Our success is substantially
dependent upon the retention of, and the continued performance by, our manager's
key personnel, including Rocco B. Commisso, the Chairman and Chief Executive
Officer of our manager. Our manager has not entered into an employment agreement
with Mr. Commisso. Neither our manager nor we currently maintains key man life
insurance on Mr. Commisso or other key personnel.

     In addition, our bank credit facilities provide that a default will result
if (i) Mr. Commisso ceases to be our Chairman and Chief Executive Officer for
any reason other than death or permanent disability, (ii) Mr. Commisso ceases to
be our Chairman and Chief Executive Officer by reason of death or disability and
a successor satisfactory to the lenders is not appointed within 120 days, (iii)
Mr. Commisso and certain of his affiliates cease to own at least 50.1% of the
combined voting power of our manager's common stock on a fully-diluted basis or
(iv) any person or group, other than Mr. Commisso and certain of his affiliates,
or certain other specified entities, becomes the beneficial owner of 25% or more
of the combined voting power of our manager's common stock on a fully-diluted
basis.

   The Chairman and Chief Executive Officer of our manager has the ability to
control all major decisions, which could inhibit or prevent a change of control
or change in management. A sale of his stock in our manager could result in a
change of control that could have unpredictable effects.

     Rocco B. Commisso, the Chairman and Chief Executive Officer of our manager,
beneficially owned common stock of our manager representing approximately 80.6%
of the combined voting power of all of its common stock as of December 31, 2001.
As a result, Mr. Commisso generally has the ability to control the outcome of
all matters requiring approval by stockholders of our manager, including the
election of its entire board of directors, and Mr. Commisso may be deemed to
control our company.

     We cannot assure you that Mr. Commisso will maintain all or any portion of
his ownership in our manager or that he would continue as an officer or director
of our manager if he sold a significant part of his stock. The disposition by
Mr. Commisso of a sufficient number of his shares of our manager's stock could
result in a change in control of our manager and of us, and we cannot assure you
that a change of control would not adversely affect our business, financial
condition and results of operations. As noted above, it could also result in a
default under our subsidiary credit agreements.

   Our cable television business is subject to extensive governmental
regulation.

     The cable television industry is subject to extensive legislation and
regulation at the federal and local levels, and, in some instances, at the state
level, and many aspects of such regulation are currently the subject of judicial
and administrative proceedings and legislative and administrative proposals. We
expect that court actions and regulatory proceedings will continue to refine our
rights and obligations under applicable federal, state and local laws. The
results of these judicial and administrative proceedings and legislative
activities may materially affect our business operations. We cannot predict
whether any of the markets in which we operate will expand the regulation of our
cable systems in the future or the impact that any such expanded regulation may
have upon our business.

     Similarly, due to the increasing popularity and use of commercial online
services and the Internet, it is possible that a number of laws and regulations
may be adopted with respect to commercial online services and the Internet,
including laws covering such issues as privacy, access to some types of content
by minors, pricing, bulk e-mail or "spam," encryption standards, consumer
protection, electronic commerce, taxation of e-commerce, copyright infringement
and other intellectual property matters. The adoption of such laws or
regulations in the future may decrease the growth of such services and the
Internet, which could in turn decrease the demand for our cable modem service,
increase our costs of providing such service or have other adverse effects on
our business, financial condition and results of operations.

                                       44

<PAGE>

   Our franchises are subject to non-renewal or termination by local
authorities, which could cause us to lose our right to operate some of our cable
systems.

     Historically, cable operators providing satisfactory services to their
subscribers and complying with the terms of their franchises have almost always
obtained franchise renewals. In addition, the Communications Act contains
renewal procedures and criteria designed to protect incumbent franchisees
against arbitrary denials of renewal. However, cable television companies
operate under non-exclusive franchises granted by local authorities that are
subject to renewal, renegotiation and termination from time to time. Our cable
systems are dependent upon the retention and renewal of their respective local
franchises. In the process of renewing franchises, a franchising authority may
seek to impose new and more onerous requirements, such as upgraded facilities,
increased channel capacity or enhanced services. Although the Communications Act
requires the municipality to take into account the cost of meeting such
requirements, there is no assurance that we will not be required to make
significant additional investments in its cable television systems as part of
the franchise renewal process. Historically, cable operators providing
satisfactory services to their subscribers and complying with the terms of their
franchises have almost always obtained franchise renewals. In addition, the
Communications Act contains renewal procedures and criteria designed to protect
incumbent franchisees against arbitrary denials of renewal. We have been
successful in the past in negotiating franchise agreements on acceptable terms
and we have never been denied a renewal. We believe that we have generally met
the terms of our franchises and have provided quality levels of service, and we
anticipate that our future franchise renewal prospects generally will be
favorable. Nonetheless, there can be no assurance that we will be continue to be
able to renew franchises in the future on acceptable terms. The non-renewal or
termination of franchises with respect to a significant portion of any of our
cable systems would have a material adverse effect on our business and results
of operations.

   Our franchises are non-exclusive and local franchising authorities may
grant competing franchises in our markets.

     Our cable systems are operated under non-exclusive franchises granted by
local franchising authorities. As a result, competing operators of cable systems
and other potential competitors, such as municipal utility providers, may be
granted franchises and may build cable systems in markets where we hold
franchises. Any such competition could adversely affect our business. The
existence of multiple cable systems in the same geographic area is generally
referred to as an "overbuild". As of December 31, 2001, approximately 5.6% of
the homes passed by our cable systems were overbuilt by other cable operators.
We cannot assure you that competition will not develop in other markets that we
now serve or that we will serve after any future acquisitions.

   Pending FCC and court proceedings could adversely affect our Internet
access service.

     The legal and regulatory status of providing high-speed Internet access
service by cable television companies is uncertain. The FCC is considering
whether it should adopt new rules regulating cable modem service, and federal
court actions raising various issues relating to that kind of service are
pending. The adoption of new rules by the FCC or rulings in court proceedings
could place additional costs and complicate the franchise renewal process,
result in greater competition or otherwise adversely affect our business.

   We may be subject to legal liability because of the acts of our Internet
service customers or because of our own negligence.

     Our cable modem service enables individuals to access the Internet and to
exchange information, generate content, conduct business and engage in various
online activities on an international basis. The law relating to the liability
of providers of these online services for activities of their users is currently
unsettled both within the United States and abroad. Potentially, third parties
could seek to hold us liable for the actions and omissions of our cable modem
service customers, such as defamation, negligence, copyright or trademark
infringement, fraud or other theories based on the nature and content of
information that our customers use our service to post, download or distribute.
We also could be subject to similar claims based on the content of other
Websites to which we provide links or third-party products, services or content
that we may offer through our Internet service. Due to the global nature of the
Web, it is possible that the governments of other states and foreign countries
might attempt to regulate its transmissions or prosecute us for violations of
their laws.

     It is also possible that, if any information provided directly by us will
contain errors or otherwise be negligently provided to users, resulting in third
parties making claims against us. For example, we offer Web-based email
services,

                                       45

<PAGE>

which expose us to potential risks, such as liabilities or claims resulting from
unsolicited email, lost or misdirected messages, illegal or fraudulent use of
email, or interruptions or delays in email service.

     To date, no one has filed a claim of any of these kinds against us, but
someone may file a claim of that type in the future in either domestic or
international jurisdictions, and may be successful in imposing liability on us.
Our defense of any such actions could be costly and involve significant
distraction of our management and other resources. If we are held or threatened
with significant liability, we may decide to take actions to reduce our exposure
to this type of liability. This may require us to spend significant amounts of
money for new equipment and may also require us to discontinue offering some
features or our cable modem service.

     Since our manager launched its proprietary Mediacom Online(SM) Internet
service in February 2002, we from time to time receive notices of claimed
infringements by our cable modem service users. The owners of copyrights and
trademarks have been increasing active in seeking to prevent use of the Internet
to violate their rights. In many cases, their claims of infringement are based
on the acts of customers of an Internet service provider--for example, a
customer's use of an Internet service or the resources it provides to post,
download or disseminate copyrighted music or other content without the consent
of the copyright owner or to seek to profit from the use of the goodwill
associated with another person's trademark. In some cases, copyright and
trademark owners have sought to recover damages from the Internet service
provider, as well as or instead of the customer. The law relating to the
potential liability of Internet service providers in these circumstances is
unsettled. In 1996, Congress adopted the Digital Millennium Copyright Act, which
is intended to grant ISPs protection against certain claims of copyright
infringement resulting from the actions of customers, provided that the ISP
complies with certain requirements. So far, Congress has not adopted similar
protections for trademark infringement claims.

   If we offer telecommunications services, we may become subject to
additional regulatory burdens.

     If we provide telecommunications services over our communications
facilities, we may be required to obtain additional federal, state and local
permits or other governmental authorizations to offer these services. This
process, together with accompanying regulation of these services, would place
additional costs and regulatory burdens on us.

                                       46

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In the normal course of business, we use interest rate swap agreements in
order to fix interest rates under debt contracts for the duration of the
contract as a hedge against interest rate volatility. As of December 31, 2001,
we had interest rate exchange agreements with various banks pursuant to which
the interest rate on $170.0 million is fixed at a weighted average swap rate of
approximately 6.7%, plus the average applicable margin over the Eurodollar Rate
option under our bank credit agreement. Under the terms of the interest rate
exchange agreements, which expire from 2002 through 2004, we are exposed to
credit loss in the event of nonperformance by the other parties to the interest
rate exchange agreements. However, we do not anticipate nonperformance by the
counterparties. We would have paid approximately $10.1 million at December 31,
2001 if the interest rate exchange agreements were terminated, inclusive of
accrued interest. The table below provides information on our long-term debt.
See Note 6 to our consolidated financial statements.

<TABLE>
<CAPTION>
                                   Expected Maturity
                   ------------------------------------------------------
                           (All dollar amounts in thousands)
                   2002    2003     2004     2005     2006     Thereafter     Total    Fair Value
                   ----   ------   ------   ------   -------   ----------   --------   ----------

<S>                <C>    <C>      <C>      <C>      <C>        <C>         <C>         <C>
Fixed rate         $ --   $   --   $   --   $   --   $    --    $200,000    $200,000    $206,000

Weighted average
  interest rate     8.5%     8.5%     8.5%     8.5%      8.5%        8.5%        8.5%

Fixed rate         $ --   $   --   $   --   $   --   $    --    $125,000    $125,000    $121,000
Weighted average
  interest rate     7.9%     7.9%     7.9%     7.9%      7.9%        7.9%        7.9%

Fixed rate         $ --   $   --   $   --   $   --   $    --    $500,000    $500,000    $523,000
Weighted average
  interest rate     9.5%     9.5%     9.5%     9.5%      9.5%        9.5%        9.5%

Variable rate      $750   $2,000   $2,000   $2,000   $65,000    $528,750    $600,500    $600,500
Weighted average
  interest rate     4.0%     4.0%     4.0%     4.0%      4.0%        4.0%        4.0%
</TABLE>

                                       47

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          MEDIACOM LLC AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                    Contents
                                    --------
                                                                                                Page
                                                                                                ----
<S>                                                                                              <C>
Report of Independent Public Accountants......................................................   52
Consolidated Balance Sheets as of December 31, 2001 and 2000..................................   53
Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000 and 1999....   54
Consolidated Statements of Changes in Member's Equity and Comprehensive Loss for the Years
   Ended December 31, 2001, 2000, and 1999....................................................   55
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999....   56
Notes to Consolidated Financial Statements....................................................   57
Schedule II-Valuation and Qualifying Accounts.................................................   69
</TABLE>

                                       48

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Member of Mediacom LLC:

We have audited the accompanying consolidated balance sheets of Mediacom LLC (a
New York limited liability company) and subsidiaries as of December 31, 2001 and
2000, and the related consolidated statements of operations, changes in member's
equity and comprehensive loss and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mediacom LLC and subsidiaries
as of December 31, 2001 and 2000, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States.

As explained in Note 2 to the consolidated financial statements, effective
January 1, 2001, the Company changed its method of accounting for derivative
instruments.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II--Valuation and
Qualifying Accounts is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.


                                                /S/ ARTHUR ANDERSEN LLP

Stamford, Connecticut
February 13, 2002

                                       49

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                          (All dollar amounts in 000's)

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                         -----------------------
                                                                             2001        2000
                                                                         ----------   ----------
                                         ASSETS
<S>                                                                      <C>          <C>
Cash and cash equivalents ............................................   $    7,378   $    4,093
Investments ..........................................................        4,070        3,985
Subscriber accounts receivable, net of allowance for doubtful accounts
   of $1,095 and $932, respectively ..................................       12,314       13,500
Prepaid expenses and other assets ....................................       54,917        7,023
Preferred investment in affiliated company ...........................      150,000           --
Investment in cable television systems:
   Inventory .........................................................       29,012       14,131
   Property, plant and equipment, at cost ............................    1,056,525      840,052
   Less: accumulated depreciation ....................................     (338,930)    (204,440)
                                                                         ----------   ----------

     Property, plant and equipment, net ..............................      717,595      635,612
   Intangible assets, net of accumulated amortization of $197,860 and
     $124,955, respectively ..........................................      605,053      680,420
                                                                         ----------   ----------
     Total investment in cable television systems ....................    1,351,660    1,330,163
Other assets, net of accumulated amortization of $9,733 and $5,749,
   respectively ......................................................       26,329       17,008
                                                                         ----------   ----------
     Total assets ....................................................   $1,606,668   $1,375,772
                                                                         ==========   ==========
                            LIABILITIES AND MEMBER'S EQUITY

LIABILITIES
   Debt ..............................................................   $1,425,500   $  987,000
   Accounts payable and accrued expenses .............................      145,162       80,143
   Subscriber advances ...............................................        1,885        3,886
   Management fees payable ...........................................        2,580        1,236
   Deferred revenue ..................................................        7,467       40,510
   Other liabilities .................................................       10,083           --
                                                                         ----------   ----------
     Total liabilities ...............................................    1,592,677    1,112,775
                                                                         ----------   ----------

   Commitments and Contingencies (Note 9)

MEMBER'S EQUITY
   Capital contributions .............................................      521,696      521,696
   Other equity ......................................................       21,502       18,598
   Accumulated comprehensive loss ....................................           --         (414)
   Accumulated deficit ...............................................     (529,207)    (276,883)
                                                                         ----------   ----------
     Total member's equity ...........................................       13,991      262,997
                                                                         ----------   ----------
     Total liabilities and member's equity ...........................   $1,606,668   $1,375,772
                                                                         ==========   ==========

</TABLE>

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

                                       50

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (All amounts in 000's)

<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                                    ----------------------------------
                                                                      2001          2000        1999
                                                                    ---------    ---------    --------
<S>                                                                 <C>          <C>          <C>
Revenues .......................................................    $ 374,087    $ 332,050    $176,052

Costs and expenses:
     Service costs .............................................      135,285      114,234      58,058
     Selling, general and administrative expenses ..............       63,846       55,820      32,949
     Management fee expense ....................................        5,830        6,029       6,951
     Depreciation and amortization .............................      221,645      177,928     101,065
     Non-cash stock charges relating to management fee expense..        2,904       28,254      15,445
                                                                    ---------    ---------    --------
Operating loss .................................................      (55,423)     (50,215)    (38,416)

Interest expense, net ..........................................       93,823       68,973      37,817
Loss on derivative instruments, net ............................        8,441           --          --
Investment income from affiliate ...............................       (8,120)          --          --
Other (income) expenses ........................................      (23,885)      30,036       5,087
                                                                    ---------    ---------    --------
Net loss before cumulative effect of accounting change .........     (125,682)    (149,224)    (81,320)
Cumulative effect of accounting change .........................       (1,642)          --          --
                                                                    ---------    ---------    --------
Net loss .......................................................    $(127,324)   $(149,224)   $(81,320)
                                                                    =========    =========    ========
</TABLE>

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

                                       51

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CHANGES IN
                     MEMBER'S EQUITY AND COMPREHENSIVE LOSS
                          (All dollar amounts in 000's)

<TABLE>
<CAPTION>
                                                                      Accumulated
                                             Capital        Other    Comprehensive   Accumulated
                                          Contributions    Equity        Loss          Deficit       Total
                                          -------------   --------   -------------   -----------   ---------
<S>                                         <C>           <C>           <C>          <C>           <C>
Balance, December 31, 1998                  $124,990      $     --      $  --        $ (46,339)    $  78,651
   Comprehensive loss:
     Net loss                                     --            --         --          (81,320)
     Unrealized gain on investments               --            --        261               --
     Comprehensive loss                                                                              (81,059)
   Members' contributions                     10,500            --         --               --        10,500
   Non-cash contributions                      6,606            --         --               --         6,606
   Non-cash contribution for the
     reduction of management fees                 --        25,100         --               --        25,100
   Equity issued to management                    --        27,016         --               --        27,016
   Non-vested portion of equity
     granted to management                        --       (12,199)        --               --       (12,199)
                                            --------      --------      -----        ---------     ---------
Balance, December 31, 1999                  $142,096      $ 39,917      $ 261        $(127,659)    $  54,615
   Comprehensive loss:
     Net loss                                     --            --         --         (149,224)
     Unrealized loss on investments               --            --       (675)              --
     Comprehensive loss                                                                             (149,899)
   Equity contribution from MCC              354,500            --         --               --       354,500
   Reclassification of vested equity to
     capital contributions                    25,100       (25,100)        --               --            --
   Vesting of equity granted to
     management, net of forfeiture                --         3,781         --               --         3,781
                                            --------      --------      -----        ---------     ---------
Balance, December 31, 2000                  $521,696      $ 18,598      $(414)       $(276,883)    $ 262,997
   Comprehensive loss:
     Net loss                                     --            --         --         (127,324)
     Unrealized gain on investments               --            --        414               --
     Comprehensive loss                           --            --         --               --      (126,910)
   Dividend payment to parent                     --            --         --         (125,000)     (125,000)
   Vesting of equity granted to
      management, net of forfeiture               --         2,904         --               --         2,904
                                            --------      --------      -----        ---------     ---------
Balance, December 31, 2001                  $521,696      $ 21,502      $  --        $(529,207)    $  13,991
                                            ========      ========      =====        =========     =========
</TABLE>

                                       52

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (All dollar amounts in 000's)

<TABLE>
<CAPTION>
                                                                                   Years Ended December 31,
                                                                            -----------------------------------
                                                                              2001         2000          1999
                                                                            ---------    ---------    ---------
<S>                                                                         <C>          <C>          <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
   Net loss .............................................................   $(127,324)   $(149,224)   $ (81,320)
   Adjustments to reconcile net loss to net cash flows from operating
     activities:
     Accretion of interest on seller note ...............................          --           --          225
     Depreciation and amortization ......................................     221,645      177,928      101,065
     Change in fair value of swaps ......................................      10,083           --           --
     Impairment of available-for-sale securities ........................         329       28,488           --
     Vesting of management stock ........................................       2,904        3,781       14,817
     Other non-cash stock charges relating to management fee expense ....          --       24,473        7,234
     Amortization of SoftNet revenue ....................................        (287)      (2,502)        (142)
     Termination of SoftNet agreement ...................................     (29,957)          --           --
     Changes in assets and liabilities, net of effects from acquisitions:
       Subscriber accounts receivable, net ..............................       1,186         (980)         429
       Prepaid expenses and other assets ................................     (47,894)      (2,276)      (2,211)
       Other assets .....................................................       3,984           --           --
       Accounts payable and accrued expenses ............................      70,978       13,172       13,120
       Subscriber advances ..............................................      (2,001)         320          480
       Management fees payable ..........................................       1,344          363          (89)
       Deferred revenue .................................................      (2,799)        (325)         608
                                                                            ---------    ---------    ---------
         Net cash flows provided by operating activities ................     102,191       93,218       54,216
                                                                            ---------    ---------    ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
   Capital expenditures .................................................    (244,890)    (182,552)     (86,669)
   Acquisitions of cable television systems .............................          --     (112,142)    (764,253)
   Preferred investment in affiliated company ...........................    (150,000)          --           --
   Other, net ...........................................................      (4,056)        (919)        (626)
                                                                            ---------    ---------    ---------
         Net cash flows used in investing activities ....................    (398,946)    (295,613)    (851,548)
                                                                            ---------    ---------    ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
   New borrowings .......................................................     941,500      318,000      995,700
   Repayment of debt ....................................................    (503,000)    (470,000)    (194,830)
   Dividend payment to parent ...........................................    (125,000)          --           --
   Capital contributions ................................................          --      354,500       10,500
   Financing costs ......................................................     (13,460)        (485)     (11,777)
                                                                            ---------    ---------    ---------
         Net cash flows provided by financing activities ................     300,040      202,015      799,593
                                                                            ---------    ---------    ---------
         Net increase (decrease) in cash and cash equivalents ...........       3,285         (380)       2,261

CASH AND CASH EQUIVALENTS, beginning of year ............................       4,093        4,473        2,212
                                                                            ---------    ---------    ---------
CASH AND CASH EQUIVALENTS, end of year ..................................   $   7,378    $   4,093    $   4,473
                                                                            =========    =========    =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for interest ...............................   $  78,751    $  74,811    $  28,639
                                                                            =========    =========    =========
   Cash paid during the year for taxes ..................................   $      --    $      50    $      --
                                                                            =========    =========    =========
</TABLE>

                                       53

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Limited Liability Company

   Organization

     Mediacom LLC ("Mediacom," and collectively with its subsidiaries, the
"Company"), a New York limited liability company wholly-owned by Mediacom
Communications Corporation ("MCC"), is involved in the acquisition and
development of cable television systems serving smaller cities and towns in the
United States. Through these cable systems, the Company provides entertainment,
information and telecommunications services to its subscribers. As of December
31, 2001, the Company had acquired and was operating cable television systems in
22 states, principally Alabama, California, Delaware, Florida, Illinois,
Indiana, Iowa, Kentucky, Minnesota, Missouri, North Carolina and South Dakota.

     On February 9, 2000, MCC, a Delaware corporation organized in November
1999, completed an initial public offering of its Class A common stock.
Immediately prior to the completion of its initial public offering, MCC issued
shares of its Class A and Class B common stock in exchange for all of the
outstanding membership interests in Mediacom and became the sole member and
manager of Mediacom.

     Prior to February 9, 2000, Mediacom conducted its affairs pursuant to an
amended and restated operating agreement among its members. Pursuant to this
amended and restated operating agreement, net losses were generally allocated
first to the Commisso Members (the "Primary Members"), as defined therein,
including the Chairman and Chief Executive Officer of MCC (the "Manager"), and
the balance of the net losses to the other members ratably in accordance with
their respective membership units.

     Mediacom serves as a holding company for the Company's operating
subsidiaries. Each operating subsidiary is wholly-owned by Mediacom, except for
a 1.0% ownership interest in a subsidiary, Mediacom California LLC, that is held
by Mediacom Management Corporation ("Mediacom Management"), a Delaware
corporation.

     Mediacom Capital Corporation ("Mediacom Capital"), a New York corporation
wholly-owned by Mediacom, was organized in March 1998 for the sole purpose of
acting as co-issuer with Mediacom of public debt securities. Mediacom Capital
has nominal assets and does not conduct operations of its own.

   Capitalization

     On February 9, 2000, Mediacom received an equity contribution from MCC of
$354.5 million. For the years ended December 31, 1999 and 1998, Mediacom
received equity contributions from its members of $10.5 million and $94.0
million, respectively.

(2)  Summary of Significant Accounting Policies

   Basis of Preparation of Consolidated Financial Statements

     The consolidated financial statements include the accounts of Mediacom and
its subsidiaries. All significant intercompany transactions and balances have
been eliminated. The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

                                       54

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Revenue Recognition

     Revenues include amounts billed to customers for services provided,
installations, advertising and other services. Revenues from basic, premium,
pay-per-view and data services are recognized when the services are provided to
the customers. Installation revenues are recognized to the extent of direct
selling costs incurred. Additional installation revenues collected, if any, are
deferred and amortized to income over the estimated average life of a
subscriber. Advertising sales are recognized in the period that the
advertisements are exhibited. Franchise fees are collected on a monthly basis
and are periodically remitted to local franchise authorities. Franchise fees
collected and paid are reported as revenues and expenses.

   Cash and Cash Equivalents

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

   Concentration of Credit Risk

     The Company's accounts receivable are comprised of amounts due from
subscribers in varying regions throughout the United States. Concentration of
credit risk with respect to these receivables is limited due to the large number
of customers comprising the Company's customer base and their geographic
dispersion.

   Investments

     Investments consist of equity securities. Management classifies these
securities as available-for-sale securities under the provisions defined in the
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Available-for-sale securities are
carried at market value, with unrealized gains and losses reported as a
component of accumulated comprehensive income (loss). If a decline in the fair
value of the security is judged to be other than temporary, a realized loss will
be recorded.

   Inventory

     Inventory consists primarily of fiber-optic cable, coaxial cable,
electronics, hardware and miscellaneous tools and is stated at the lower of cost
or market. Cost is determined using the average cost method.

   Property, Plant and Equipment

     Property, plant and equipment is recorded at time of purchase and
capitalized at cost. The Company capitalizes a portion of direct and indirect
costs related to the construction, replacement and installation of property,
plant and equipment. The Company capitalized interest in connection with cable
system construction of approximately $3.9 million and $5.3 million for the years
ended December 31, 2001 and 2000, respectively. Capitalized costs are charged to
property, plant and equipment and depreciated over the life of the related
assets. The Company performs periodic evaluations of the estimates used to
determine the amount of costs that are capitalized.

     Amounts incurred for repairs and maintenance are charged to operations in
the period incurred.

     Depreciation is calculated on a straight-line basis over the following
useful lives:

     Buildings.......................................   45 years
     Leasehold improvements..........................   Life of respective lease
     Cable systems and equipment.....................   5 to 10 years
     Subscriber devices..............................   5 years
     Vehicles........................................   5 years
     Furniture, fixtures and office equipment........   5 to 10 years

                                       55

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Intangible Assets

     Intangible assets include franchising costs, goodwill, subscriber lists and
covenants not to compete. Amortization of intangible assets is calculated on a
straight-line basis over the following lives:

     Franchising costs................................   15 years
     Goodwill.........................................   15 years
     Subscriber lists.................................   5 years
     Covenants not to compete.........................   3 to 7 years

   Impairment of Long-Lived Assets

     The Company follows the provisions of Statement of Financial Accounting
Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." SFAS 121 requires that
long-lived assets and certain identifiable intangibles to be held and used by
any entity be reviewed for impairment at each year end and whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. There has been no impairment of long-lived assets of the Company
under SFAS 121.

   Other Assets

     Other assets include debt financing costs of approximately $26.3 million
and $17.0 million as of December 31, 2001 and 2000, respectively. Financing
costs incurred to raise debt are deferred and amortized over the expected term
of such financings and are included in other (income) expense.

   Accounting for Derivative Instruments

     Effective January 1, 2001, the Company accounts for derivative instruments,
primarily interest rate swaps, in accordance with Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." Changes in fair
value of derivative instruments that do not qualify for hedge relationship
designation are recognized in earnings. Upon adoption of SFAS 133 the Company
recorded a cumulative adjustment to net loss of $1.6 million in 2001 due to
recognizing the fair value of interest rate swaps not designated as hedging
instruments.

   Comprehensive Loss

     The Company adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income," which establishes standards for
reporting and displaying comprehensive loss and its components in the
consolidated financial statements. In accordance with SFAS 130, the Company
records temporary unrealized gains and losses on investments as a component of
accumulated comprehensive loss.

   Segment Reporting

     In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information," segments
have been identified based upon management responsibility. Management has
identified cable services as the Company's one reportable segment.

   Reclassifications

     Certain reclassifications have been made to prior year's amounts to conform
to the current year's presentation.

                                       56

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Recent Accounting Pronouncements

     In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 141 ("SFAS 141"), "Business Combinations" and No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets". SFAS 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Adoption of SFAS 141 on July 1, 2001 had no effect on the
Company's results of operations or financial position as the Company accounts
for all acquisitions under the purchase method. Under SFAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but reviewed
annually for impairment (or more frequently if impairment indicators arise).
Separable intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives. The Company adopted this
standard effective January 1, 2002 and is evaluating its goodwill and other
specifically identifiable intangibles for impairment in accordance with the
standard's guidance. The Company is also currently evaluating whether franchise
licenses qualify as indefinite life intangibles under the new standard. If the
Company concludes that goodwill and franchise licenses are indefinite life
intangible assets, they will no be longer amortized. Amortization of goodwill
and franchise licenses was approximately $44.8 million for the year ended
December 31, 2001. For the year ending December 31, 2002, if the Company
concludes that franchise licenses are indefinite life intangible assets, the
Company's preliminary estimate is that the adoption of SFAS 142 will reduce
amortization expense in their consolidated statements of operations by
approximately $45.0 million.

     In July 2001, the FASB issued SFAS No. 143 ("SFAS 143"), Accounting for
Asset Retirement Obligations, which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS 143 will become effective for fiscal
years beginning after June 15, 2002. The Company does not expect adoption of
SFAS 143 will have a material impact on its results of operations or financial
position.

     In August 2001, the FASB issued Statements of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of
Long-Lived Assets". This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets and provides guidance on
classification and accounting for such assets when held for sale or abandonment.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. The
Company adopted this standard effective January 1, 2002 and does not expect a
material impact on the Company's results of operations or financial position.

(3)  Acquisitions

     The Company has completed the undernoted acquisitions (the "Acquired
Systems") in 2000 and 1999. These acquisitions were made to increase the cable
network of the Company. These acquisitions were accounted for using the purchase
method of accounting, and accordingly, the purchase price of these Acquired
Systems has been allocated to the assets acquired and liabilities assumed at
their estimated fair values at their respective date of acquisition. The results
of operations of the Acquired Systems have been included with those of the
Company since the dates of acquisition.

   2000

     During 2000, the Company completed nine acquisitions of cable systems
serving 53,000 basic subscribers for an aggregate purchase price of $109.2
million. The cable systems serve communities in the states of Alabama, Illinois,
Iowa, Kentucky, Minnesota and South Dakota. The aggregate purchase price has
been allocated as follows: approximately $49.4 million to property, plant and
equipment and approximately $59.8 million to intangible assets. These
acquisitions were financed with borrowings under the Company's credit facilities
(See Note 6).

                                       57

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   1999

     On October 15, 1999, the Company acquired the stock of Zylstra
Communications Corporation (the "Zylstra Systems"), for a purchase price of
approximately $19.5 million. Zylstra owned and operated cable systems serving
approximately 14,000 subscribers in Iowa, Minnesota and South Dakota. The
purchase price has been allocated as follows: $7.8 million to property, plant
and equipment and $11.7 million to intangible assets. The Zylstra acquisition
was financed with borrowings under the Company's credit facilities (See Note 6).

     On November 5, 1999, the Company acquired the assets of cable systems owned
by Triax Midwest Associates, L.P. (the "Triax Systems"), for a purchase price of
approximately $740.1 million. The Triax Systems served approximately 344,000
subscribers primarily in Illinois, Indiana, and Minnesota. The purchase price
has been allocated based on an independent appraisal as follows: $198.3 million
to property, plant and equipment and $541.8 million to intangible assets. The
Triax acquisition was financed with $10.5 million of additional equity
contributions from Mediacom LLC's members and borrowings under the Company's
credit facilities (See Notes 1 and 6).

     Summarized below are the pro forma unaudited results of operations for the
years ended December 31, 2000 and 1999, assuming the purchase of the Acquired
Systems had been consummated as of January 1, 1999. Adjustments have been made
to: (i) depreciation and amortization reflecting the fair value of the assets
acquired; and (ii) interest expense reflecting the debt incurred to finance the
acquisitions. The pro forma results may not be indicative of the results that
would have occurred if the acquisitions had been completed on the date indicated
or which may be obtained in the future.

                                                            2000         1999
                                                         ----------   ---------
                                                         (dollars in thousands)
                                                               (unaudited)
     Revenues ........................................   $  348,391   $ 318,086
     Operating loss ..................................      (50,520)    (39,013)
     Net loss ........................................     (150,483)   (139,005)

(4)  Property, Plant and Equipment

     As of December 31, 2001 and 2000, property, plant and equipment consisted
of:

                                                           2001          2000
                                                         ----------   ---------
                                                         (dollars in thousands)
     Land and land improvements.......................   $      931   $     578
     Buildings and leasehold improvements.............       12,736      11,973
     Cable systems, equipment and subscriber devices..    1,009,247     801,719
     Vehicles.........................................       24,142      17,865
     Furniture, fixtures and office equipment.........        9,469       7,917
                                                         ----------   ---------
                                                          1,056,525     840,052
     Accumulated depreciation.........................     (338,930)   (204,440)
                                                         ----------   ---------
     Property, plant and equipment, net...............   $  717,595   $ 635,612
                                                         ==========   =========

     Depreciation expense for the years ended December 31, 2001, 2000 and 1999
was approximately $148.3 million, $106.8 million and $59.2 million,
respectively.

                                       58

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5)  Intangible Assets

     The following table summarizes the net asset value for each intangible
asset category as of December 31, 2001 and 2000:

                                                           2001        2000
                                                        ---------    ---------
                                                        (dollars in thousands)

    Franchising costs................................   $ 649,364    $ 651,952
    Goodwill.........................................      13,699       13,699
    Subscriber lists.................................     134,150      134,024
    Covenants not to compete.........................       5,700        5,700
                                                        ---------    ---------
                                                          802,913      805,375
    Accumulated Amoritization........................    (197,860)    (124,955)
                                                        ---------    ---------
    Net Asset Value..................................   $ 605,053    $ 680,420
                                                        =========    =========

     Amortization expense for the years ended December 31, 2001, 2000 and 1999
was approximately $73.3 million, $71.1 million and $41.9 million, respectively.

(6)  Debt

     As of December 31, 2001 and 2000, debt consisted of:

                                                            2001        2000
                                                         ----------   --------
                                                         (dollars in thousands)
        Bank credit facilities.......................    $  600,500   $662,000
        8 1/2% senior notes..........................       200,000    200,000
        7 7/8% senior notes...........................      125,000    125,000
        9 1/2% senior notes..........................       500,000         --
                                                         ----------   --------
                                                         $1,425,500   $987,000
                                                         ==========   ========

   Bank Credit Facilities

     On September 30, 1999, operating subsidiaries of Mediacom entered into a
$550.0 million senior secured credit facility, consisting of a $450.0 million
reducing revolving credit facility and a $100.0 million term loan (the "Mediacom
USA Credit Agreement"). The revolving credit facility expires on March 31, 2008,
and is subject to earlier expiration on June 30, 2007 if Mediacom does not
refinance the 8 1/2% Senior Notes by March 31, 2007. The term loan is due and
payable on September 30, 2008, and is subject to repayment on September 30, 2007
if Mediacom does not refinance the 8 1/2% Senior Notes by March 31, 2007. The
revolving credit facility makes available a maximum commitment amount for a
period of up to eight and one-half years, which is subject to quarterly
reductions, beginning September 30, 2002, ranging from 1.25% to 17.50% of the
original commitment amount of the revolver. The Mediacom USA Credit Agreement
requires mandatory reductions of the revolving credit facility from excess cash
flow, as defined therein, beginning December 31, 2002. The Mediacom USA Credit
Agreement provides for interest at varying rates based upon various borrowing
options and the attainment of certain financial ratios, and for commitment fees
of 1/4% to 3/8% per annum on the unused portion of available credit under the
reducing revolver credit facility. Interest on outstanding revolver loans is
payable at either a eurodollar rate plus a floating percentage ranging from
0.75% to 2.25% or the base rate plus a floating percentage ranging from 0% to
1.25%. Interest on the term loans is payable at either the eurodollar rate plus
a floating percentage ranging from 2.50% to 2.75% or the base rate plus a
floating percentage ranging from 1.50% to 1.75%.

                                       59

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On November 5, 1999, operating subsidiaries of Mediacom entered into a
$550.0 million senior secured credit facility, consisting of a $450.0 million
reducing revolving credit facility and a $100.0 million term loan (the "Mediacom
Midwest Credit Agreement", together with the Mediacom USA Credit Agreement, the
"Bank Credit Agreements"). The revolving credit facility expires on June 30,
2008, and is subject to earlier expiration on September 30, 2007 if Mediacom
does not refinance the 8 1/2% Senior Notes by March 31, 2007. The term loan is
due and payable on December 31, 2008, and is subject to repayment on December
31, 2007 if Mediacom does not refinance the 8 1/2% Senior Notes by March 31,
2007. The revolving credit facility makes available a maximum commitment amount
for a period of up to eight and one-half years, which is subject to quarterly
reductions, beginning September 30, 2002, ranging from 1.25% to 8.75% of the
original commitment amount of the reducing revolver. The Mediacom Midwest Credit
Agreement requires mandatory reductions of the revolver facility from excess
cash flow, as defined therein, beginning December 31, 2002. The Midwest Credit
Agreement provides for interest at varying rates based upon various borrowing
options and the attainment of certain financial ratios, and for commitment fees
of 1/4% to 3/8% per annum on the unused portion of available credit under the
reducing revolver credit facility. Interest on the outstanding revolver loans is
payable at either a eurodollar rate plus a floating percentage ranging from
0.75% to 2.25% or the base rate plus a floating percentage ranging from 0% to
1.25%. Interest on the term loans is payable at either the eurodollar rate plus
a floating percentage ranging from 2.50% to 2.75% or the base rate plus a
floating percentage ranging from 1.50% to 1.75%.

     The Bank Credit Agreements require compliance with certain financial
covenants including, but not limited to, leverage, interest coverage and pro
forma debt service coverage ratios, as defined therein. The Bank Credit
Agreements also require compliance with other covenants including, but not
limited to, limitations on mergers and acquisitions, consolidations and sales of
certain assets, liens, the incurrence of additional indebtedness, certain
restrictive payments, and certain transactions with affiliates. The Company was
in compliance with all covenants of the Bank Credit Agreements as of December
31, 2001.

     The Bank Credit Agreements are secured by Mediacom's pledge of all its
ownership interests in its operating subsidiaries and is guaranteed by Mediacom
on a limited recourse basis to the extent of such ownership interests. At
December 31, 2001, the Company had $495.9 million of unused bank commitments
under the Bank Credit Agreements of which over $450.0 million could be borrowed
and used for general corporate purposes under the most restrictive covenants in
the Company's debt arrangements.

     The average interest rate on debt outstanding under the Bank Credit
Agreements was 4.0% and 8.3% for the three months ended December 31, 2001 and
December 31, 2000, respectively, before giving effect to the interest rate swap
agreements discussed below.

     The Company uses interest rate swap agreements in order to fix the interest
rate for the duration of the contract to hedge against interest rate volatility.
As of December 31, 2001, the Company had interest rate exchange agreements with
various banks pursuant to which the interest rate on $170.0 million is fixed at
a weighted average swap rate of approximately 6.7%, plus the average applicable
margin over the eurodollar rate option under the bank credit agreements. Under
the terms of the interest rate exchange agreements, which expire from 2002
through 2004, the Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate exchange agreements.
However, the Company does not anticipate nonperformance by the counterparties.

     The fair value of the swaps is the estimated amount that the Company would
receive or pay to terminate the swaps, taking into account current interest
rates and the current creditworthiness of the swap counterparties. At December
31, 2001, the Company would have paid approximately $10.1 million if the swaps
were terminated, inclusive of accrued interest.

                                       60

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   Senior Notes

     On April 1, 1998, Mediacom and Mediacom Capital, jointly issued $200.0
million aggregate principal amount of 8 1/2% senior notes due on April 2008 (the
"8 1/2% Senior Notes"). The 8 1/2% Senior Notes are unsecured obligations of
Mediacom, and the indenture for the 8 1/2% Senior Notes stipulates, among other
things, restrictions on incurrence of indebtedness, distributions, mergers and
asset sales and has cross-default provisions related to other debt of Mediacom.
Mediacom was in compliance with the indenture governing the 8 1/2% Senior Notes
as of December 31, 2001.

     On February 26, 1999, Mediacom and Mediacom Capital jointly issued $125.0
million aggregate principal amount of 7 7/8% senior notes due on February 2011
(the "7 7/8% Senior Notes"). The 7 7/8% Senior Notes are unsecured obligations
of Mediacom, and the indenture for the 7 7/8% Senior Notes stipulates, among
other things, restrictions on incurrence of indebtedness, distributions, mergers
and asset sales and has cross-default provisions related to other debt of
Mediacom. Mediacom was in compliance with the indenture governing the 7 7/8%
Senior Notes as of December 31, 2001.

     On January 24, 2001, Mediacom and Mediacom Capital jointly issued $500.0
million aggregate principal amount of 9 1/2% senior notes due January 2013 (the
"9 1/2% Senior Notes"). The 9 1/2% Senior Notes are unsecured obligations of
Mediacom, and the indenture for the 9 1/2% Senior Notes stipulates, among other
things, restrictions on incurrence of indebtedness, distributions, mergers and
asset sales and has cross-default provisions related to other debt of Mediacom.
Mediacom was in compliance with the indenture governing the 9 1/2% Senior Notes
as of December 31, 2001.

   Fair Value and Debt Maturities

     The fair value of the Company's debt is estimated based on the current
rates offered to the Company for debt of the same remaining maturities. The fair
value of the senior bank debt approximates the carrying value. The fair value at
December 31, 2001 of the 8 1/2% Senior Notes, the 7 7/8% Senior Notes and the 9
1/2% Senior Notes was approximately $206.0 million, $121.0 million and $523.0
million, respectively.

     The stated maturities of all debt outstanding as of December 31, 2001 are
as follows (dollars in thousands):

     2002.............................................   $      750
     2003.............................................        2,000
     2004.............................................        2,000
     2005.............................................        2,000
     2006.............................................       65,000
     Thereafter ......................................    1,353,750
                                                         ----------
                                                         $1,425,500
                                                         ==========

                                       61

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7)  Related Party Transactions

     Prior to MCC's initial public offering in February 2000, separate
management agreements between Mediacom Management Corporation ("Mediacom
Management"), a Delaware corporation and each of Mediacom's operating
subsidiaries provided for Mediacom Management to be paid compensation for
management services performed for the Company. In connection with an amendment
to Mediacom's operating agreement, Mediacom Management agreed to waive all
management fees incurred from July 1, 1999 through November 19, 1999 by
Mediacom's operating subsidiaries in the amount of approximately $2.8 million.
The amount waived is included in capital contributions in the consolidated
balance sheets. Upon MCC's initial public offering in February 2000, all
management agreements with Mediacom Management were terminated and replaced with
management agreements between MCC and the Company's operating subsidiaries. (See
Note 14). The Company incurred management fees under the agreements with
Mediacom Management of approximately $0, $0.6 million and $7.0 million
(including the $2.8 million waived) for the years ended December 31, 2001, 2000
and 1999, respectively.

     Also in connection with this amendment to the operating agreement, the
Company recorded a deferred stock expense in 1999 of approximately $25.1 million
for which additional membership units of Mediacom were issued to the Manager.
This deferred expense represented the future benefit of reduced management fees.
During 1999, the Company recorded a non-cash stock charge of approximately $0.6
million in its consolidated statements of operations for non-cash expense during
the year ended December 31, 2000 as a result of MCC's initial public offering
and the termination of all management agreements with Mediacom Management. (See
Note 14).

     Mediacom Management also agreed to waive its right to all future
acquisition fees, including the $3.8 million fee related to the acquisitions of
the Triax and Zylstra systems during 1999, as part of this amendment to the
operating agreement described above. For the year ended December 31, 1999, the
Company incurred acquisition fees of approximately $3.8 million. Acquisition
fees are included in other expenses in the consolidated statements of
operations. Mediacom Management is a wholly-owned subsidiary of the Chairman and
Chief Executive Officer of MCC.

(8)  Employee Benefit Plans

     Substantially all employees of the Company are eligible to participate in a
deferred arrangement pursuant to the Internal Revenue Code Section 401(k) (the
"Plan"). Under such arrangement, eligible employees may contribute up to 15% of
their current pre-tax compensation to the Plan. The Plan permits, but does not
require, matching contributions and non-matching (profit sharing) contributions
to be made by the Company up to a maximum dollar amount or maximum percentage of
participant contributions, as determined annually by the Company. The Company
presently matches 50% on the first 6% of employee contributions. The Company's
contributions under the Plan totaled approximately $0.6 million, $0.6 million
and $0.3 million for the years ended December 31, 2001, 2000 and 1999,
respectively.

                                       62

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9)  Commitments and Contingencies

     Under various lease and rental agreements for offices, warehouses and
computer terminals, the Company had rental expense of approximately $2.4
million, $2.5 million and $1.3 million for the years ended December 31, 2001,
2000 and 1999, respectively. Future minimum annual rental payments are as
follows (dollars in thousands):

     2002.............................................   $1,686
     2003.............................................    1,243
     2004.............................................      949
     2005.............................................      826
     2006.............................................      709

     In addition, the Company rents utility poles in its operations generally
under short-term arrangements, but the Company expects these arrangements to
recur. Total rental expense for utility poles was approximately $3.3 million,
$3.0 million and $1.8 million for the years ended December 31, 2001, 2000 and
1999, respectively.

     As of December 31, 2001, approximately $3.6 million of letters of credit
were issued in favor of various parties to secure the Company's performance
relating to insurance and franchise requirements and pole rentals.

   Legal Proceedings

     There are no material pending legal proceedings to which the Company is a
party or to which any of the company's properties are subject.

(10) SoftNet

     As of December 31, 2000, deferred revenue resulting from the Company's
receipt of shares of SoftNet Systems, Inc. common stock amounted to $30.2
million, net of amortization taken. The Company recognized revenue of
approximately $0.3 million, $2.5 million and $0.1 million for the years ended
December 2001, 2000 and 1999, respectively. As of January 31, 2001, the Company
formally terminated its relationship with SoftNet Systems in all material
respects. As a result of the termination of the SoftNet Systems relationship in
2001, the Company recognized the remaining deferred revenue of approximately
$29.9 million as other income in the consolidated statements of operations.

     For the years ended December 31, 2001 and 2000, relating to the decline in
value of the Company's investment in SoftNet System's common stock that was
deemed other than temporary, the Company recorded a non-cash charge of
approximately $0.3 million and $28.5 million as a realized loss in other
(income) expenses in its consolidated statements of operations.

(11) Equity

     On July 17, 2001, the Company paid a $125.0 million cash dividend to MCC
that was funded with borrowings under its subsidiary credit facilities. (See
Note 12).

                                       63

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12) Investments

     On July 18, 2001, the Company made a $150.0 million preferred equity
investment in Mediacom Broadband LLC, a Delaware limited liability company
wholly-owned by MCC, that was funded with borrowings under the Company's
subsidiary credit facilities. The preferred equity investment has a 12% annual
cash dividend, payable quarterly in cash. The proceeds from the preferred equity
investment and, indirectly, the $125.0 million dividend discussed in Note 11
were used by Mediacom Broadband LLC to fund a portion of the $2.07 billion
purchase price of its acquisitions of cable systems, serving approximately
800,000 basic subscribers in the states of Georgia, Illinois, Iowa and Missouri,
from AT&T Broadband, LLC.

(13) Employment Arrangements

     During 1999, the Company recorded a deferred non-cash stock expense of
approximately $27.0 million relating to the grant of membership units of
Mediacom to certain members of management for past and future services. These
units vest over five years and are subject to forfeiture penalties during the
three year period between the date the membership units become vested and the
date the employee leaves the Company. Upon MCC's initial public offering, all
outstanding membership units were redeemed and converted to common shares of
MCC. Forfeited shares will revert to the manager (as defined in Note 14). During
2000, forfeited shares valued at approximately $0.2 million were reverted to the
manager. For the years ended December 31, 2001, 2000 and 1999, Mediacom recorded
a non-cash stock charge of approximately $2.9 million, $3.8 million, and $14.8
million, respectively, in its consolidated statements of operations, relating to
the vested and non-forfeitable shares or membership units. As of December 31,
2001 and 2000, the balance of approximately $5.3 and $8.2 million, respectively,
relating to the non-vested and forfeitable shares, was recorded as additional
paid-in capital in the consolidated balance sheets and is being amortized as a
non-cash stock expense over a period of five to eight years (See Note 14).

(14) Events Relating to MCC's Initial Public Offering

     Prior to MCC's initial public offering on February 9, 2000, additional
membership interests were issued to all members of Mediacom in accordance with a
formula set forth in the amended and restated operating agreement, which was
based upon a valuation of Mediacom established at the time of the initial public
offering. A provision in the operating agreement eliminated a certain portion of
the special allocation of membership interests awarded to Primary Members based
upon a valuation of Mediacom. In connection with the removal of these specified
special allocation provisions and the amendments to Mediacom's management
agreements with Mediacom Management effective November 19, 1999 (see Note 7),
the Primary Members were issued new membership interests in Mediacom immediately
prior to the initial public offering representing 16.5% of the equity in
Mediacom. These newly issued membership interests were exchanged for shares of
MCC Class B common stock immediately prior to the completion of the initial
public offering.

     The management agreements between Mediacom Management and each of MCC's
operating subsidiaries were terminated at the time of MCC's initial public
offering and were replaced with new agreements between MCC and the Company's
operating subsidiaries. Under such agreements, MCC is entitled to receive annual
management fees in amounts not to exceed 4.5% of the Company's gross operating
revenues. Management fees for the years ended December 31, 2001 and 2000,
amounted to approximately $5.8 million and $5.5 million, respectively.

     As a result of the initial public offering and the termination of the
management agreements with Mediacom Management, a deferred non-cash stock
expense of $24.5 million was recorded, relating to future benefits associated
with a reduction of management fees under prior management agreements. This
charge was recorded for the year ended December 31, 2000 as a non-cash stock
charge relating to management fee expense in the consolidated statements of
operations. Mediacom Management is wholly-owned by the Chairman and Chief
Executive Officer of MCC who is defined as the manager.

                                       64

<PAGE>

                          MEDIACOM LLC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(15) Subsequent Events

     On February 4, 2002, the Company and MCC filed a registration statement
with the Securities and Exchange Commission under which the Company may sell
debt securities unconditionally guaranteed by MCC for a maximum amount of $1.5
billion. The Securities and Exchange Commission declared this registration
statement effective on February 13, 2002.

     During February 2002, the Company completed the transition of its
high-speed Internet customers, which numbered over 35,000, to MCC's new,
proprietary Mediacom Online/SM/ high-speed Internet service, from the
third-party provider Excite@Home. As part of the launch of Mediacom Online, MCC
signed a multi-year agreement with AT&T Corp. ("AT&T") under which AT&T provides
the Internet protocol network backbone and certain core Internet support
functions for MCC's new service.

                                       65

<PAGE>

                                                                     Schedule II
                          MEDIACOM LLC AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS
                          (All dollar amounts in 000's)

<TABLE>
<CAPTION>
                                                Balance at        Additions
                                               beginning of    charged to costs                    Balance at
                                                  period         and expenses      Deductions    end of period
                                               ------------    ----------------    ----------    -------------
<S>                                               <C>               <C>              <C>            <C>
December 31, 1999
     Allowance for doubtful accounts
         Current receivables ...............      $  298            $2,775           $2,301         $  772
     Acquisition reserves/(1)/
         Accrued expenses ..................      $4,120            $1,530           $   --         $5,650

December 31, 2000
     Allowance for doubtful accounts
         Current receivables ...............      $  772            $4,292           $4,132         $  932
     Acquisition reserves/(1)/
         Accrued expenses ..................      $5,650            $2,134           $2,402         $5,382

December 31, 2001
     Allowance for doubtful accounts
         Current receivables ...............      $  932            $6,349           $6,186         $1,095
     Acquisition reserves/(1)/
         Accrued expenses ..................      $5,382            $   --           $5,382         $   --

</TABLE>

----------
/(1)/ Additions were charged in connection with purchase accounting.

                                       66

<PAGE>

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

     None

                                       67

<PAGE>

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

     MCC is our sole member and manager. MCC serves as manager of our operating
subsidiaries. The executive officers of Mediacom LLC and the directors and
executive officers of MCC and Mediacom Capital are:

<TABLE>
<CAPTION>
Name                                    Age    Position
----                                    ---    --------
<S>                                      <C>   <C>
Rocco B. Commisso...................     52    Chairman and Chief Executive Officer
                                               of Mediacom LLC and MCC and President and
                                               Chief Executive Officer of Mediacom Capital
Mark E. Stephan.....................     45    Senior Vice President, Chief Financial
                                               Officer and Treasurer of Mediacom LLC and
                                               MCC, Director of MCC and Treasurer and
                                               Secretary of Mediacom Capital
James M. Carey......................     50    Senior Vice President, Operations of MCC
John G. Pascarelli..................     40    Senior Vice President, Marketing and
                                               Consumer Services of MCC
Joseph Van Loan.....................     60    Senior Vice President, Technology of MCC
Italia Commisso Weinand.............     48    Senior Vice President, Programming and
                                               Human Resources and Secretary of MCC
Charles J. Bartolotta...............     47    Senior Vice President, Customer Operations
                                               of MCC
Calvin G. Craib.....................     47    Senior Vice President, Business
                                               Development of MCC
William I. Lees, Jr. ...............     43    Senior Vice President, Corporate
                                               Controller of MCC
Joseph E. Young.....................     53    Senior Vice President, General Counsel of
                                               MCC
Craig S. Mitchell...................     43    Director of MCC

William S. Morris III...............     67    Director of MCC

Thomas V. Reifenheiser..............     66    Director of MCC

Natale S. Ricciardi.................     53    Director of MCC

Robert L. Winikoff..................     55    Director of MCC
</TABLE>

     Rocco B. Commisso has 24 years of experience with the cable television
industry and has served as our Chairman and Chief Executive Officer since
founding our predecessor company in July 1995. From 1986 to 1995, he served as
Executive Vice President, Chief Financial Officer and a director of Cablevision
Industries Corporation. Prior to that time, Mr. Commisso served as Senior Vice
President of Royal Bank of Canada's affiliate in the United States from 1981,
where he founded and directed a specialized lending group to media and
communications companies. Mr. Commisso began his association with the cable
industry in 1978 at The Chase Manhattan Bank, where he managed the bank's
lending activities to communications firms including the cable industry. He
serves on the board of directors of the National Cable Television Association,
Cable Television Laboratories, Inc. and C-SPAN. Mr. Commisso holds a Bachelor of
Science in Industrial Engineering and a Master of Business Administration from
Columbia University.

     Mark E. Stephan has 15 years of experience with the cable television
industry and has served as our Senior Vice President, Chief Financial Officer
and Treasurer since the commencement of our operations in March 1996. Before
joining us, Mr. Stephan served as Vice President, Finance for Cablevision
Industries from July 1993. Prior to that time, Mr. Stephan served as Manager of
the telecommunications and media lending group of Royal Bank of Canada.

                                       68

<PAGE>

     James M. Carey has 20 years of experience in the cable television industry.
Before joining our manager in September 1997, Mr. Carey was founder and
President of Infinet Results, a telecommunications consulting firm, from
December 1996. Mr. Carey served as Executive Vice President, Operations at
MediaOne Group from August 1995 to November 1996, where he was responsible for
MediaOne's Atlanta cable operations. Prior to that time, he served as Regional
Vice President of Cablevision Industries' Southern region. Mr. Carey is a member
of the board of directors of the American Cable Association.

     John G. Pascarelli has 21 years of experience in the cable television
industry. Before joining our manager in March 1998, Mr. Pascarelli served as
Vice President, Marketing for Helicon from January 1996 to February 1998 and as
Corporate Director of Marketing for Cablevision Industries from 1988 to 1995.
Prior to that time, Mr. Pascarelli served in various marketing and system
management capacities for Continental Cablevision, Cablevision Systems and
Storer Communications. Mr. Pascarelli is a member of the board of directors of
the Cable Television Administration and Marketing Association.

     Joseph Van Loan has 29 years of experience in the cable television
industry. Before joining our manager in November 1996, Mr. Van Loan served as
Senior Vice President, Engineering for Cablevision Industries from 1990. Prior
to that time, he managed a private telecommunications consulting practice
specializing in domestic and international cable television and broadcasting and
served as Vice President, Engineering for Viacom Cable. Mr. Van Loan received
the 1986 Vanguard Award for Science and Technology from the National Cable
Television Association.

     Italia Commisso Weinand has 25 years of experience in the cable television
industry. Before joining our manager in April 1996, Ms. Weinand served as
Regional Manager for Comcast Corporation from July 1985. Prior to that time, Ms.
Weinand held various management positions with Tele-Communications, Times Mirror
Cable and Time Warner. She serves on the board of directors of the National
Cable Television Cooperative, Inc., a programming cooperative consisting of
small to medium-sized multiple system operators. Ms. Weinand is the sister of
Mr. Commisso.

     Charles J. Bartolotta has 19 years of experience in the cable television
industry. Before joining our manager in October 2000, Mr. Bartolotta served as
Division President for AT&T Broadband, LLC from July 1998, where he was
responsible for managing an operating division serving nearly three million
customers. Prior to that time, he served as Regional Vice President of
Telecommunications, Inc. from January 1997 and as Vice President and General
Manager for TKR Cable Company from 1989. Prior to that time, Mr. Bartolotta held
various management positions with Cablevision Systems Corporation.

     Calvin G. Craib has 20 years of experience in the cable television
industry. Before joining our manager in April 1999 as Vice President, Business
Development, Mr. Craib served as Vice President, Finance and Administration for
Interactive Marketing Group from June 1997 to December 1998 and as Senior Vice
President, Operations, and Chief Financial Officer for Douglas Communications
from January 1990 to May 1997. Prior to that time, Mr. Craib served in various
financial management capacities at Warner Amex Cable and Tribune Cable.

     William I. Lees, Jr. joined our manager in October 2001 as Senior Vice
President, Corporate Controller. Previously, Mr. Lees served as Executive Vice
President and Chief Financial Officer for Regus Business Centre Corp., a
multinational real estate services company, from July 1999 to September 2001.
Prior to that time, he served as Corporate Controller and Director for Formica
Corporation from September 1998 to July 1999, and as Chief Financial Officer for
Imperial Schrade Corporation from September 1993 to September 1998. He was
previously employed for 13 years by Ernst & Young.

     Joseph E. Young has 17 years of experience with the cable television
industry. Before joining our manager in November 2001 as Senior Vice President
and General Counsel, Mr. Young served as Executive Vice President, Legal and
Business Affairs, for LinkShare Corporation, an Internet-based provider of
marketing services, from September 1999 to October 2001. Prior to that time, he
practiced corporate law with Baker & Botts, LLP from January 1995 to September
1999. Previously, Mr. Young was a partner with the Law Offices of Jerome H. Kern
and a partner with Shea & Gould.

                                       69

<PAGE>

     Craig S. Mitchell has held various management positions with Morris
Communications Corporation for more than the past five years. He currently
serves as its Vice President of Finance and Treasurer and is also a member of
its board of directors.

     William S. Morris III has served as the Chairman and Chief Executive
Officer of Morris Communications for more than the past five years. He was the
Chairman of the board of directors of the Newspapers Association of America for
1999-2000.

     Thomas V. Reifenheiser served for more than five years as a Managing
Director and Group Executive of the Global Media and Telecom Group of Chase
Securities Inc. until his retirement in September 2000. He joined Chase in 1963
and had been the Global Media and Telecom Group Executive since 1977. He also
had been a director of the Management Committee of The Chase Manhattan Bank. Mr.
Reifenheiser is a member of the board of directors of Lamar Advertising Company,
a leading owner and operator of outdoor advertising and logo sign displays.

     Natale S. Ricciardi has held various management positions with Pfizer Inc.
for more than the past five years. Mr. Ricciardi joined Pfizer in 1972 and
currently serves as its Vice President, U.S. Manufacturing, with responsibility
for all of Pfizer's U.S. manufacturing facilities.

     Robert L. Winikoff has been a partner of the law firm of Sonnenschein Nath
& Rosenthal since August 2000. Prior thereto, he was a partner of the law firm
of Cooperman Levitt Winikoff Lester & Newman, P.C. for more than five years.
Sonnenschein Nath & Rosenthal currently serves as MCC's outside general counsel
and prior to such representation Cooperman Levitt Winikoff Lester & Newman, P.C.
served as MCC's outside general counsel since 1995.

                                       70

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

     The executive officers and directors of MCC are compensated exclusively by
MCC and do not receive any separate compensation from Mediacom LLC or Mediacom
Capital. MCC acts as our manager and in return receives a management fee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Mediacom Capital is a wholly-owned subsidiary of Mediacom LLC. MCC is the
sole member of Mediacom LLC. The address of MCC is 100 Crystal Run Road,
Middletown, New York 10941.

                                       71

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Management Agreements

     Pursuant to management agreements between MCC and our operating
subsidiaries, MCC is entitled to receive annual management fees in amounts not
to exceed 4.5% of our gross operating revenues. For the years ended December 31,
2001 and 2000, MCC received $5.4 million and $5.2 million, respectively, of such
management fees.

Other Relationships

     J.P. Morgan Securities Inc., Credit Suisse First Boston Corporation,
Salomon Smith Barney Inc., BNY Capital Markets, Inc. and other investment
banking firms or their affiliates have in the past engaged in transactions with
and performed services for us and our affiliates in the ordinary course of
business, including commercial banking, financial advisory and investment
banking services. Furthermore, these companies or their affiliates may perform
similar services for us and our affiliates in the future. Affiliates of certain
of these companies are agents and lenders under our subsidiary credit
facilities. The Bank of New York, an affiliate of BNY Capital Markets, Inc.,
acts as trustee for our senior notes.

     On July 17, 2001, we paid a $125.0 million cash dividend to our manager
that was funded with borrowings under our subsidiary credit facilities.

     On July 18, 2001, we made a $150.0 million preferred equity investment in
Mediacom Broadband LLC that was funded with borrowings under our subsidiary
credit facilities. The preferred equity investment has a 12% annual dividend,
payable quarterly in cash. The proceeds of the preferred equity investment and,
indirectly, the $125.0 million cash dividend paid to our manager, partially
funded the aggregate purchase price of $2.07 billion for Mediacom Broadband
LLC's acquisitions of cable systems from AT&T Broadband, LLC completed in June
and July 2001.

                                       72

<PAGE>

                                     PART IV
                                     -------

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

(a)  Financial Statements

     Our financial statements as set forth in the Index to Consolidated
Financial Statements under Part II, Item 8 of this Form 10-K are hereby
incorporated by reference.

(b)  Exhibits

     The following exhibits, which are numbered in accordance with Item 601 of
Regulation S-K, are filed herewith or, as noted, incorporated by reference
herein:

<TABLE>
<CAPTION>
Exhibit
Number                                              Exhibit Description
-------                                             -------------------

<S>        <C>
 2.1       Asset Purchase Agreement, dated April 29, 1999 between Mediacom LLC and Triax Midwest Associates,
           L.P.(1)

 2.2       Stock Purchase Agreement, dated May 25, 1999 among Mediacom LLC, Charles D. Zylstra, Kara M. Zylstra
           and Trusts created under the Will dated June 3, 1982 of Roger E. Zylstra, deceased, for the benefit of
           Charles D. Zylstra and Kara M. Zylstra (2)

 4.1       Indenture relating to 8 1/2% senior notes due 2008 of Mediacom LLC and Mediacom Capital
           Corporation (3)

 4.2       Indenture relating to 7 7/8% senior notes due 2011 of Mediacom LLC and Mediacom Capital
           Corporation (4)

 4.3       Indenture relating to 9 1/2% senior notes due 2013 of Mediacom LLC and Mediacom Capital
           Corporation (5)

10.1(a)    Credit Agreement dated as of September 30, 1999 for the Mediacom USA Credit Facility (6)

10.1(b)    Amendment No. 1 dated December 17, 1999 between Mediacom Southeast LLC, Mediacom California LLC,
           Mediacom Delaware LLC, Mediacom Arizona LLC and The Chase Manhattan Bank, as administrative agent for
           the lenders. (5)

10.1(c)    Amendment No. 2 dated February 4, 2000 between Mediacom Southeast LLC, Mediacom California LLC,
           Mediacom Delaware LLC, Mediacom Arizona LLC and The Chase Manhattan Bank, as administrative agent for
           the lenders. (5)

10.2(a)    Credit Agreement dated as of November 5, 1999 for the Mediacom Midwest Credit Facility (6)

10.2(b)    Amendment No. 2 dated December 17, 1999 between Mediacom Illinois LLC, Mediacom Indiana LLC, Mediacom
           Iowa LLC, Mediacom Minnesota LLC, Mediacom Wisconsin LLC, Zylstra Communications Corporation and The
           Chase Manhattan Bank, as administrative agent for the lenders. (5)

10.2(c)    Amendment No. 2 dated February 4, 2000 between Mediacom Illinois LLC, Mediacom Indiana LLC, Mediacom
           Iowa LLC, Mediacom Minnesota LLC, Mediacom Wisconsin LLC, Zylstra Communications Corporation and The
           Chase Manhattan Bank, as administrative agent for the lenders. (5)

</TABLE>

                                       73

<PAGE>

<TABLE>
<S>        <C>

10.3       Form of Amended and Restated Registration Rights Agreement by and among Mediacom Communications
           Corporation, Rocco B. Commisso, BMO Financial, Inc., CB Capital Investors, L.P., Chase Manhattan
           Capital, L.P., Morris Communications Corporation, Private Market Fund, L.P. and U.S. Investor, Inc. /(6)/

10.4       Fifth Amended and Restated Operating Agreement of Mediacom LLC /(7)/

21.1       Subsidiaries of Mediacom LLC /(5)/

23.1       Consent of Arthur Andersen LLP
</TABLE>


(c)  Financial Statement Schedule

     None.

(d)  Reports on Form 8-K

     None.

----------

/(1)/ Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly
     period ended March 31, 1999 of Mediacom LLC and Mediacom Capital
     Corporation and incorporated herein by reference.

/(2)/ Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly
     period ended June 30, 1999 of Mediacom LLC and Mediacom Capital Corporation
     and incorporated herein by reference.

/(3)/ Filed as an exhibit to the Registration Statement on Form S-4 (File No.
     333-57285) of Mediacom LLC and Mediacom Capital Corporation and
     incorporated herein by reference.

/(4)/ Filed as an exhibit to the Registration Statement on Form S-4 (File No.
     333-85893) of Mediacom LLC and Mediacom Capital Corporation and
     incorporated herein by reference.

/(5)/ Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
     ended December 31, 2000 of Mediacom Communications Corporation and
     incorporated herein by reference.

/(6)/ Filed as an exhibit to the Registration Statement on Form S-1 (File No.
     333-90879) of Mediacom Communications Corporation and incorporated herein
     by reference.

/(7)/ Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
     ended December 31, 1999 of Mediacom LLC and incorporated herein by
     reference.

                                       74

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                            MEDIACOM LLC


March 29, 2002                        BY:          /S/ ROCCO B. COMMISSO
                                             ----------------------------------
                                             Rocco B. Commisso
                                               Manager, Chairman and
                                               Chief Executive Officer

     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
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       Signature                                     Title                           Date
      ----------                                     -----                           ----


<S>                               <C>                                             <C>
 /S/ ROCCO B. COMMISSO            Manager, Chairman and                           March 29, 2002
------------------------------      Chief Executive Officer (principal
   Rocco B. Commisso                executive officer)


  /S/ MARK E. STEPHAN             Senior Vice President,                          March 29, 2002
------------------------------      Chief Financial Officer and Treasurer
    Mark E. Stephan                 (principal financial officer and principal
                                    accounting officer)
</TABLE>

                                       75

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                            MEDIACOM CAPITAL CORPORATION

March 29, 2002                        By:          /S/ ROCCO B. COMMISSO
                                             ----------------------------------
                                             Rocco B. Commisso
                                               President, Chief Executive
                                               Officer and Director

     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
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       Signature                                     Title                            Date
       ---------                                     -----                            ----
<S>                               <C>                                             <C>


 /S/ ROCCO B. COMMISSO            President, Chief Executive Officer              March 29, 2002
------------------------------      and Director (principal executive officer)
     Rocco B. Commisso


  /S/ MARK E. STEPHAN             Treasurer and Secretary                         March 29, 2002
------------------------------      (principal financial officer
      Mark E. Stephan                 and principal accounting officer)
</TABLE>

                                       76