<PAGE>   1

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

           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR
        [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM _________ TO _________

                         Commission file number 0-14093

                         ______________________________
                       CENCOM CABLE INCOME PARTNERS, L.P.
             (Exact Name of Registrant as Specified in its Charter)


                   Delaware                        43-1415278
         (State or Other Jurisdiction of           (I.R.S. Employer
         Incorporation or Organization)            Identification No.)

         12444 Powerscourt Drive #400
         St. Louis, Missouri                       63131
         (Address of Principal Executive Offices)  (Zip Code)


      Registrant's telephone number, including area code:  (314) 965-0555

                         ______________________________

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

                         ______________________________

          Securities registered pursuant to Section 12(g) of the Act:
             Units of Limited Partnership Interests $1,000 per unit
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                           Yes:  __X__ No:  _____

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

                      DOCUMENTS INCORPORATED BY REFERENCE

 The following documents are incorporated into this Report by reference:  None




<PAGE>   2


ITEM 1.  BUSINESS

GENERAL

Cencom Cable Income Partners, L.P., (the "Partnership" or the "Registrant") was
formed as a Delaware limited partnership in July 1986, and its sole business
activity was the ownership and operation of cable television systems (the
"Systems").  The General Partner, Cencom Properties, Inc., is a Delaware
corporation that was incorporated in July 1986.  The sole business activities
engaged in by the General Partner are its service as the general partner of the
Partnership and as the Management Company (the "Management Company") which
managed the Systems (see "Management Agreement").  See "The Sale Transaction"
for discussion of the sale of the Systems.  The principal executive offices of
the General Partner and the Partnership are located at 12444 Powerscourt Drive,
Suite 400, St. Louis, Missouri 63131 and their telephone number is (314)
965-0555.

THE SALE TRANSACTION

The Partnership Agreement provides for the expiration of the Partnership term
on September 30, 1994 and for the liquidation of the Partnership's assets
thereafter.  To that end, the General Partner entered into an Asset Purchase
Agreement dated as of July 1, 1995 providing for sale of all of the Systems to
certain affiliates (the "Purchasing Affiliates") of the General Partner (the
"Sale Transaction").  On March 29, 1996, the Partnership consummated the Sale
Transaction.  The sale was approved by a majority of the Limited Partners,
following the distribution of a Disclosure Statement dated October 3, 1995, as
supplemented on November 1, 1995, and on December 18, 1995 (collectively
referred to as the "Disclosure Statement").  The purchase price, as outlined in
the Disclosure Statement, was $211,050,000 less working capital items through
July 1, 1995 and liquidation costs paid by the Partnership through the date of
closing, and increased for interest paid by the Purchasing Affiliates to the
Partnership.  The interest paid by the Purchasing Affiliates was computed on
the purchase price less the outstanding long-term debt on June 30, 1995, at an
annual rate of 5.25 %, from July 1, 1995, to March 29, 1996.  Net proceeds from
the sale of the cable television systems were approximately $211.3 million.
The purchase price exceeds by five percent (5%) the $201,000,000 fair market
value of the Systems determined pursuant to appraisals made as of February 28,
1995 by two independent appraisal firms selected in accordance with the terms
of the Partnership Agreement, and also exceeds the value of the Systems
calculated in accordance with an appraisal conducted by an independent third
party.

Through the consummation of the Sale Transaction, the Partnership has disposed
of substantially all of its assets (other than cash and certain other rights),
and will wind up and terminate.  On April 15, 1996 and December 15, 1996, the
General Partner made distributions of approximately $122.5 million ($120.1
million to the Limited Partners and $2.4 million to the General Partner) and
$7.6 million ($7.5 million to the Limited Partners and $.1 million to the
General Partner), respectively. With respect to the 8,159 Limited Partner Units
owned by the General Partner, the General Partner was entitled to distributions
on the same basis as other Limited Partners.  The net assets of approximately
$4.9 million remaining after these partial distributions of sale proceeds
represents a holdback reserve, as provided for in the Partnership Agreement,
from which the Partnership will pay any remaining obligations and
contingencies.  The Partnership intends to release all funds which have not
been applied for contingencies and obligations upon final resolution of such
contingencies including the settlement of all litigation (see Legal
Proceedings), provided, however that amounts deemed by the General Partner to
be sufficient to fund liabilities and claims against the Partnership and to
cover the Partnership's administrative costs and expenses through the
termination of the Partnership shall be retained in reserve pursuant to a
liquidating trust or similar instrument.  Any successful claims or expenses
incurred by the Partnership after closing of the Sale Transaction will be paid
out of the reserve and will reduce the final amount of Partnership cash to be
distributed upon liquidation.

Upon completion of the "winding-up" of the Partnership, the General Partner
will file such certificates and documents as may be required to effectuate and
evidence the dissolution of the Partnership, and the Partnership Agreement will
be formally terminated.  The General Partner expects to terminate the
Partnership upon final resolution of all contingencies.

Upon its termination, the Partnership will cease to be a public entity and will
no longer be subject to the informational reporting requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").

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DESCRIPTION OF SYSTEMS

SYSTEMS

The Systems were comprised of and served communities located in and around (i)
Granite City, Collinsville, Edwardsville, Glen Carbon, Maryville and Troy,
Illinois (the "Illinois Systems"), (ii) Clarksville and Ashland City, Tennessee
(the "Tennessee Systems"), (iii) Hopkinsville, Kentucky (the "Kentucky
System"), (iv) military facilities at Fort Gordon, Georgia; Camp LeJeune, North
Carolina; Fort Carson, Colorado; Fort Hood, Texas; and Fort Riley, Kansas (the
"Base Systems"), and (v) Tryon, North Carolina (the "Tryon System").

The following table sets forth a summary of subscriber data of the
Partnership's Systems as of the dates indicated:

<TABLE>
<CAPTION>
                                                                  AS OF MARCH 28,       AS OF DECEMBER 31,
                                                                       1996          1995     1994       1993
<S>                                                                  <C>          <C>       <C>         <C>

Basic Subscribers:
Illinois Systems.........................................              44,300       43,600   41,400      39,000
Base Systems.............................................              22,700       22,500   22,400      22,700
Tennessee Systems........................................              30,800       30,100   28,200      26,300
Kentucky System..........................................              10,800       10,700   10,400      10,200
Tryon System.............................................               2,100        2,100    2,000       1,900
                                                                      -------      -------  -------     -------
                                                                      110,700      109,000  104,400     100,100
                                                                      =======      =======  =======     =======
Premium Subscriptions:
Illinois Systems.........................................              25,000       26,200   24,600      22,300
Base Systems.............................................              19,700       20,200   19,100      21,000
Tennessee Systems.......................................               19,500       17,000   15,600      13,500
Kentucky System..........................................               4,700        4,800    4,200       3,700
Tryon System.............................................                 700          700      700         600
                                                                      -------      -------  -------     -------
                                                                       69,600       68,900   64,200      61,100
                                                                      =======      =======  =======     =======
</TABLE>

A brief description of the Systems as of March 28, 1996 follows:

The Illinois Systems.  The Illinois Systems provided cable television service
to various communities located in and around Granite City, Collinsville,
Edwardsville, Glen Carbon, Maryville and Troy, Illinois.  As of  March 28,
1996, the Illinois Systems consisted of ten headend sites and approximately
1,100 miles of activated distribution plant passing approximately 75,000 homes.

The Tennessee Systems.  The Tennessee Systems served communities in and around
Clarksville and Ashland City, Tennessee.  As of March 28, 1996, the Tennessee
Systems consisted of two headend sites and approximately 800 miles of activated
distribution plant passing approximately 39,800 homes.

The Kentucky System.  The Kentucky System served communities in and around
Hopkinsville, Kentucky.  At March 28, 1996, the Kentucky System consisted of
one headend site and approximately 200 miles of activated distribution plant
passing approximately 14,000 homes.

The Base Systems.  The Base Systems served the military facilities at Fort
Gordon, Georgia; Camp LeJeune, North Carolina; Fort Carson, Colorado; Fort
Hood, Texas; and Fort Riley, Kansas.  As of March 28, 1996, the Base Systems
consisted of five headend sites and approximately 400 miles of activated
distribution plant passing approximately 40,800 homes.

The Tryon System.  The Tryon System served communities in and around Tryon,
North Carolina.  At March 28, 1996, the Tryon System consisted of one headend
site and approximately 100 miles of activated distribution plant passing
approximately 3,000 homes.

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MARKETING, PROGRAMMING AND RATES

The Partnership's marketing program was based upon offering various packages of
cable services designed to appeal to different market segments.  The General
Partner performed and utilized market research on selected systems, compared
the data to national research and tailored a marketing program for each
individual market.  The General Partner utilized a coordinated array of
marketing techniques to attract and retain subscribers, including door-to-door
solicitation, telemarketing, media advertising and direct mail solicitations.
The Registrant implemented in the Partnership Systems the marketing efforts
instituted by the General Partner to gain new subscribers and increase basic
and premium penetration in the communities served by the Systems.

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

Rates to subscribers varied from market to market and in accordance with the
type of service selected.  At March 28, 1996, the Systems' monthly basic fees
ranged from $6.31 to $18.55 for the basic service tier and $13.55 to $18.10 for
the expanded basic tier. A one-time installation fee, which may be partially
waived during certain promotional periods, was charged to new subscribers.  The
practices of the Partnership regarding rates were consistent with the practices
in the industry.

MANAGEMENT AGREEMENT

Since July 15, 1994, the Systems have been managed by the General Partner,
which assumed the rights and obligations of the former manager of the Systems
under the Management Agreement dated December 4, 1986 (the "Management
Agreement").  Consequently, the General Partner had the exclusive right,
authorization, and responsibility to manage the Systems.  Under the Management
Agreement, the General Partner was to receive a management fee equal to five
percent (5%) of the gross operating revenues of the Partnership for its
services.  Such fee was to be paid quarterly in arrears after the Partnership
paid or provided for quarterly distributions to the Limited Partners.  Unpaid
management fees accrue without interest.  The Partnership has incurred
management fee expense of approximately $594,268 with respect to the period
from January 1 to March 28, 1996 in accordance with the Management Agreement.
These management fees were paid in connection with the Sales Transaction.

Pursuant to its terms, the Management Agreement was to expire on the earlier of
September 30, 1994, or upon the dissolution of the Partnership.  The General
Partner has agreed to extend the term of the Management Agreement through the
"winding-up" of the Partnership's business and affairs.  Upon completion of the
Sale Transaction, the

                                    -  4  -


<PAGE>   5


     General Partner ceased to manage the operations of the Systems and has no
further rights to receive management fees and reimbursement of its expenses for
management services.

FRANCHISES

The Systems operated pursuant to an aggregate of 44 non-exclusive franchises,
permits or similar authorizations issued by governmental authorities.
Franchises or permits were awarded by a governmental authority and generally
are not transferable absent the consent of the authority.  At March 28, 1996,
27 of the Partnership's 44 franchises, serving approximately 49% of the
Partnership's subscribers in the aggregate, were within a three-year window
period for renewal.  Under the terms of most of the franchises, a franchise fee
of up to five percent (5%) of the gross revenues derived by a cable system from
the provision of cable television services (the maximum amount that may be
charged by a franchising authority under the 1984 Cable Act, as herein defined)
is payable to the franchising authority.


THE CABLE TELEVISION INDUSTRY

Cable television was introduced in the early 1950's to provide television
signals to small or rural towns with little or no available off-air television
signals and to communities with reception difficulties caused by terrain
problems.  The cable television industry has since added nonbroadcast
programming and increased channel capacity to these "classic system"
subscribers and has also expanded service to more densely populated areas and
to those communities in which off-air reception is not a problem.  In addition,
most cable television systems offer a variety of channels and programming.  See
"Marketing, Programming and Rates."

In recent years, cable operators have been building more sophisticated systems
with greater channel capacity, thereby increasing the potential number of
programming offerings available to the subscriber and, consequently, increasing
the potential revenue available per subscriber.  Present day state-of-the-art
cable television systems are capable of providing 36 to 108 channels of
programming.

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

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


CERTAIN REGULATORY AND LEGISLATIVE DEVELOPMENTS

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

                                    -  5  -


<PAGE>   6


systems were required to set their rates so that regulated revenues per
subscriber did not exceed September 30, 1992 levels, reduced by 17% (taking
into account the previous 10% reduction).

On June 15, 1995, the FCC released new rules to reduce the substantive and
procedural burdens of rate regulation applicable to small cable systems (i.e.,
cable systems servicing 15,000 or fewer subscribers that are owned by a cable
company which served, in the aggregate, 400,000 or fewer subscribers at the
time such rules went into effect).  Cable companies falling outside of this
definition may petition the FCC for small company treatment if they can
demonstrate similar circumstances.  The FCC's new small cable systems rules
amended the FCC's previous definitions of small cable entities to encompass a
broader range of cable systems that are eligible for special rate and
administrative treatment.  Specifically, the new rules create a new
cost-of-service approach for the purpose of determining the rate applicable to
a small cable system.  The new approach involves a five-element calculation
based on a system's costs.  The Partnership both applied regulatory authorities
for small cable system rate relief with regard to all of their systems.  Such
systems' status as "small cable systems" could be challenged by other parties
and could be denied by the FCC.

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


Certain provisions of the Telecommunications Act could materially affect the
growth and operation of the cable television industry.  Although the new
legislation is expected to substantially lessen regulatory burdens, the cable
television industry may be subject to additional competition as a result
thereof.  There are numerous rulemakings which have been, and which will be
undertaken by the FCC which will interpret and implement the Telecommunications
Act's provisions.  In addition, certain provisions of the Telecommunications
Act (such as the deregulation of cable programming rates)  are not immediately
effective.  In addition, the legality of certain of the Telecommunications
Act's provisions have been and are likely to continue to be, judicially
challenged, and the FCC's regulations implementing the Telecommunications Act
may be appealed for reconsideration by the FCC.


REGULATION AND LEGISLATION

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


Cable Acts and FCC Regulation

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

The 1992 Cable Act and the FCC's rules implementing the 1992 Cable Act
generally have increased the administrative and operational expenses of cable
television systems and have resulted in additional regulatory oversight by the
FCC and local franchise authorities.


                                    -  6  -


<PAGE>   7



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

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

Under the 1992 Cable Act, rates for cable programming services not carried on
the basic service tier ("non-basic services") could be regulated by the FCC
upon the filing of a complaint by franchise authorities or subscribers that
indicates the cable operator's rates for these services are unreasonable.  The
Telecommunications Act eliminates regulation of the cable programming service
tier (non-basic programming) as of March 31, 1999.  In the interim, rate
regulation of the cable programming tier can only be triggered by a franchising
authority complaint to the FCC.  A franchising authority complaint must be
based on more than one subscriber complaint, which must be filed within 90 days
after a rate increase.

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

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

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<PAGE>   8



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

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

In November 1995, the FCC proposed to provide cable operators with the option
of establishing uniform rates for similar service packages offered in multiple
franchise areas located in the same region.  Under the FCC's current rules,
cable operators subject to rate regulation must establish rates on a
franchise-specific basis.  The proposed rules could lower cable operators'
marketing costs and may also allow operators to better respond to competition
from alternative providers.

In July 1996, the FCC proposed to give operators more flexibility with respect
to the relative pricing of different tiers of service.  Under this proposal,
once an operator has set rates in accordance with existing regulations, the
operator could decrease its basic service tier  ("BST") rate and then take a
corresponding increase in its cable programming service tier ("CPST") rate to
offset the lost revenue on the BST.  In this proceeding, the FCC has also asked
parties to comment on whether it should place a limit on the amount of any CPST
rate increase or otherwise limit the amount by which the BST and CPST rate may
be adjusted.


The FCC expects that this proposal would give operators rate the structure
flexibility enjoyed by alternative providers of video service who are, or soon
will be, attempting to compete with cable operators but who are not subject to
the rate regulation imposed by statute on cable operators.

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

"Anti-Buy Through" Provisions.  The 1992 Cable Act and corresponding FCC
regulations have established requirements for customers to be able to purchase
video programming on a per channel or per program basis without having to
subscribe to any tier of service (other than the basic service tier), subject
to available technology.  The available technology exception sunsets on October
5, 2002.

"Must Carry" Requirements/Retransmission Consents."   Under the 1992  Cable
Act, cable television operators are subject to mandatory broadcast signal
carriage requirements that allow local commercial and non-commercial
educational television broadcast stations to elect to require a cable system to
carry the station, subject to certain exceptions, or, in the case of commercial
stations, to negotiate for "retransmission consent" to carry the station.  In
addition, there are requirements for cable systems to obtain retransmission
consent for all "distant" commercial television stations (except for
commercial/satellite-delivered independent "superstations" such as WTBS),
commercial radio stations and certain low power television stations carried by
such systems after October 6, 1993.  The validity of

                                    -  8  -


<PAGE>   9


mandatory signal carriage requirements is being litigated in the United States
Supreme Court, which heard arguments on the must carry rule in October 1996;
however, the carriage requirements will remain in effect pending the outcome of
such proceedings.  As a result of the mandatory carriage rules, the Partnership
Systems have been required to carry television broadcast stations that
otherwise would not have been carried, thereby causing displacement of possible
more attractive programming.  The retransmission consent rules have resulted in
the deletion of certain local and distant television broadcast stations which
the Partnership Systems were carrying.  To the extent retransmission consent
fees were paid for the continued carriage of certain television stations, such
costs were not recoverable.


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


Other FCC Regulations. The Partnership was subject to a variety of other FCC
rules.  covering such diverse areas as equal employment opportunity,
programming, maintenance of records and public inspection of files, technical
standards, leased access and customer service.  The FCC has authority to
enforce its regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses needed to
operate certain transmission facilities often used in connection with cable
operations.


Small Cable Systems. The FCC has implemented rules to reduce the substantive
and procedural burdens of rate regulation applicable to small cable systems
(i.e., cable systems serving 15,000 or fewer subscribers that are owned by or
affiliated with a cable company which served, in the aggregate, 400,000 or
fewer subscribers at the time such rules went into effect).  Cable companies
falling outside of this definition may petition the FCC for small company
treatment if they can demonstrate similar circumstances.  The FCC's small cable
systems rules amended the FCC's  previous definitions of small cable entities
to encompass a broader range of cable systems that are eligible for special
rate and administrative treatment.  In addition, these new rules made available
to this expanded category a new regulatory scheme which the FCC expects to
provide both rate relief and reduced administrative burdens.  Specifically, the
new rules created a new cost-of-service approach involving a five-element
calculation based on a system's costs.  The calculation will produce a per
channel rate for regulated services that will be presumed reasonable if it is
no higher than $1.24 per channel.  If the formula generates a higher rate, the
operator may still charge that rate if not challenged by the franchise
authority, or if, upon being challenged, it meets its burden of proving that
the rate is reasonable.  Under these new rules, the regulatory benefits
accruing to such small cable systems remain effective even if such small cable
systems are later acquired by cable companies which serve in excess of 400,000
subscribers.


Recent Telecommunications Legislation

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

                                    -  9  -


<PAGE>   10


amendments previously discussed in this section, the legislation also allows
additional competition in video programming by telephone companies, and makes
other revisions to the Communications Act and the 1984 and 1992 Cable Acts.

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

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

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

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


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


                                    -  10  -


<PAGE>   11



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


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

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


Pole Attachments. The Telecommunications Act also alters the scheme pertaining
to pole attachment rates (rates charged by telephone and utility companies for
delivery of cable services).  The current method for determining rates will
continue for five years.  The FCC recently adopted an Order to implement the
Telecommunications Act's pole attachment provisions.  Any increases pursuant to
this new formula may not begin for five years, and will be phased in over five
through ten in equal increments.  However, this new FCC formula does not apply
in states which certify that they regulate pole rates.


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

Although the new legislation may substantially lessen regulatory burdens, the
cable television industry may be subject to additional competition as a result
thereof.  There are numerous rulemakings which have been, and which will be
undertaken by the FCC which will interpret and implement the provisions of the
Telecommunications Act.  In addition, certain provisions of the Act (such as
the deregulation of cable programming rates) are not immediately effective.
Further, certain provisions of the Telecommunications Act have been, and are
likely to continue to be subject to legal challenges.


FCC Implementation. The FCC is presently, and will be, engaged in numerous
proceedings to implement various provisions of the Telecommunications Act.
Recently, the FCC adopted cable television equipment cost aggregation

                                    -  11  -


<PAGE>   12


rules and adopted open video system rules.  In addition to the proceedings
previously discussed herein, the FCC has recently initiated a proceeding to
implement most of the Cable Act reform provisions of the Telecommunications
Act.

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

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

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

In addition to the interim rules discussed above and other miscellaneous
interim rules, the FCC is also engaged in a rule-making proceeding to create
and implement final rules relating to the cable reform provisions of the
Telecommunications Act.  Among other issues, the FCC is considering whether to
establish a LEC market share that must be satisfied before a LEC will be deemed
to constitute "effective competition" to an incumbent cable operator (which
would free the cable operator from rate regulation).


Copyright

Cable television systems are subject to federal copyright licensing covering
carriage of television and radio broadcast signals.  In exchange for filing
certain reports and contributing a percentage of their revenues to a federal
copyright royalty pool, cable operators can obtain blanket permission to
retransmit broadcast signals.  The nature and amount of future copyright
payments for broadcast signal carriage cannot be predicted.  The possible
simplification, modification or elimination of the compulsory copyright license
is the subject of continuing legislative review.   See "--Regulation and
Legislation."



State and Local Regulation

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

                                    -  12  -


<PAGE>   13

awards arising from regulation of cable television systems or decisions made on
franchise grants, renewals, transfers and amendments.


COMPETITION IN THE CABLE TELEVISION BUSINESS

Cable television companies generally operate under non-exclusive franchises
granted by local authorities that are subject to renewal and renegotiation from
time to time.  The 1992 Cable Act prohibits franchising authorities from
granting exclusive cable television franchises and from unreasonably refusing
to award additional competitive franchises.  Cable system operators may
therefore experience competition from other operators building a system in an
existing franchise area (i.e., an "overbuild").  The 1992 Cable Act also
permits municipal authorities to operate cable television systems in their
communities without franchises.  Cable system operators also compete for the
right to construct systems in new housing developments adjoining or otherwise
located in proximity to such operator's existing systems.

Cable television systems also face competition from alternative methods of
receiving and distributing television signals and from other sources of home
entertainment.  Within the home video programming market, the Partnership
competes primarily with other cable franchise holders and with home satellite
and wireless cable providers, and when existing franchises become available for
renewal (or new franchises become available in the southeastern region of the
United States), with other cable franchise holders.  The Partnership believes
that direct broadcast satellite (DBS), a service by which packages of
television programming are transmitted to individual homes which are serviced
by a single satellite dish, was the most significant competitive threat to the
Partnership Systems.  However, there are certain disadvantages associated with
DBS technology (e.g., high upfront capital costs, lack of local programming and
topographical limitations which limit reception in hilly areas).  In some
instances the prices that consumers pay to obtain a DBS satellite dish have
been reduced substantially.  Nevertheless, the product is still in its early
stages of implementation and it is difficult to assess the ultimate magnitude
of the impact that DBS will have on the cable industry or upon the
Partnership's operations and revenues.

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

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


                                    -  13  -


<PAGE>   14


A federal statutory cross-ownership restriction had historically limited entry
into the cable television business by local telephone companies, which are
potentially strong competitors to cable operators.  The Telecommunications Act
repealed the cross-ownership restriction and authorizes LECs to provide a wide
variety of  video services competitive with services provided by cable systems
and to provide cable services directly to customers in the telephone companies'
service areas, with some regulatory safeguards.  See "--Regulation and
Legislation."  Some video programming services provided by telephone companies
(e.g., "open video systems") do not require local franchises.  Further, certain
of the RBOCs have already entered the cable television business outside their
service areas.

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

EMPLOYEES

As of December 31, 1995, the Partnership employed a total of approximately 192
full-time equivalent persons in the operation of the Systems.  Following
consummation of the Sale Transaction on March 28, 1996, the Partnership had no
employees.

OTHER MATTERS

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

ITEM 2.   PROPERTIES

Principal physical assets of the Partnership were, among other things, the
components of each of the Systems, which include a central receiving apparatus,
distribution cables and a local business office.  The receiving apparatus is
comprised of a tower and antennas for reception of over-the-air broadcast
television signals and one or more earth stations for reception of satellite
signals.  Located near these receiving devices is a building that houses
associated electronic gear and processing equipment.  The Partnership owned the
receiving and distribution equipment of each System and owned or leased small
parcels of real property for the receiving sites.

Cable is either buried in trenches or is attached to utility poles pursuant to
license agreements with the owners of the poles.  As is typical in the
industry, the Partnership maintained insurance on its above-ground plant, but
not for its underground plant.  The percentage of underground distribution
plant was a percentage of total miles was less than 25% as of  March 28, 1996.
The Partnership owned or leased the local business office of each system from
which it dispatched serviced employees, monitored the technical quality of the
system, handled customer service and billing inquiries and administered
marketing programs.  The office facilities of some systems included studios for
local access program production, as required under the Partnership's
franchises.

The General Partner believes that the Partnership's properties were generally
in good condition and fully utilized.  The Systems operated at between 300 and
450 megahertz, whereas the General Partner believes the standard in the cable
television industry to be 450 megahertz.  The physical components of the
Systems also required maintenance and periodic upgrades to keep pace with
technological advances and to comply with the requirements of certain
franchising authorities.  For a discussion of capital expenditures, see Item 7
hereof.


                                    -  14  -


<PAGE>   15


ITEM 3.  LEGAL PROCEEDINGS

Certain Limited Partners have instituted litigation in the Chancery Court of
New Castle County, Delaware, which has been consolidated under the name and
style, In re:  Cencom Cable Income Partners, L.P. Litigation Civil Action No.
14634 (the "Action").  This purported class action litigation was purportedly
filed by the plaintiff on his own behalf and on behalf of the Limited Partners.
The Action names as defendants the General Partner, Purchasing Affiliates
identified in the Disclosure Statement distributed to Limited Partners in
connection with the solicitation of consents to the Sale Transaction (the
"Disclosure Statement"), Charter Communications, Inc. and certain individuals,
including the directors and executive officers of the General Partner.

The Action alleges, among other things, that the Disclosure Statement is false
and misleading, wrongfully seeks to induce the consent of the Limited Partners
to the Sale Transaction in breach of the defendants' fiduciary duties, and is
the product and culmination of a course of wrongful conduct designed to enrich
the defendants at the expense of the Limited Partners in breach of the
Partnership Agreement and the defendants' fiduciary duties.  On February 15,
1996, the court refused to issue an injunction precluding the Sale Transaction
and granted Defendant's motion to dismiss all claims for injunctive relief,
including claims seeking to require the Partnership to attempt to market the
systems to other parties.  The remaining causes of action seek compensation for
plaintiff and other Limited Partners for damages related to the alleged
wrongdoing.

In October 1996, the plaintiff filed a Consolidated Amended Class Action
Complaint (the "Amended Complaint").  In connection with the filing of the
Amended Complaint, the defendants informed the court that portions of the
Amended Complaint were legally inadequate.  The defendants filed an Answer to
the Amended Complaint in December 1996.  In January 1997, the defendants filed
a Motion for Summary Judgment to dismiss all remaining claims as to all parties
in the Action.  The General Partner believes that portions of the Amended
Complaint are legally inadequate and intends to file a dispositive motion as to
all remaining claims in the Action.  There can be no assurance, however, that
the plaintiff will not be awarded damages in connection with the Action.

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

On October 3, 1995, the Partnership distributed the Disclosure Statement to
Limited Partners seeking approval of the Limited Partners for the Sale
Transaction.  The Disclosure Statement was supplemented on November 1, 1995 to
provide disclosure regarding the commencement of the Action, and supplemented
again on December 18, 1995, to provide disclosure on corrected calculations
concerning the amount of sale proceeds due to the General Partner and to extend
the voting period and offer Limited Partners the opportunity to withdraw a
prior favorable vote for the Sale Transaction.  As of 10:00 a.m. on January 8,
1996, the end of the extended voting period, of the 149,204 outstanding LP
Units, 87,367 LP Units (83.6% of the LP Units voted and 58.6% of all LP Units
outstanding) voted in favor of the Sale Transaction, 17,079 LP Units (16.4% of
the LP Units voted) voted against or abstained from voting for the Sale
Transaction.

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

As of December 31, 1996, there were 10,407 holders of 149,204 Units of the
Registrant.  The Units of the Registrant are not publicly traded and are
subject to substantial restrictions on transfer.

Pursuant to the terms of the Partnership Agreement, the Registrant is required
to make cash distributions to the Limited Partners within 60 days after the end
of each calendar quarter and, with respect to certain available refinancing
proceeds and certain available sales proceeds, as soon as possible following
completion of the relevant transaction.  Limited Partners received cash
distributions during 1994, 1995 and 1996 in the amount of $14,920,400,
$11,190,300 and $127,602,245,  respectively.  The distributions made in 1995
were based on the operating results of the fourth quarter of 1994 and the first
two quarters of 1995.  Because the Sale Transaction agreement was entered into
as of July 1, 1995, no quarterly distributions were paid for quarters ending
after June 30, 1995.  However, the Limited Partners received a distributable
share of the net proceeds of the Sale Transaction during 1996


                                    -  15  -


<PAGE>   16


During January 1995, Charter Communications, Inc. ("Charter"), an affiliate of
the General Partner, acquired 8,159 Units of the Registrant as part of a
negotiated transaction for a sale of securities and assets.  As of December 31,
1996, Charter held 8,159 Units of the Registrant.


                                    -  16  -


<PAGE>   17


ITEM 6.  SELECTED FINANCIAL DATA

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





<TABLE>
<CAPTION>
                                FOR THE PERIOD FROM                AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                   JANUARY 1 TO
                                  MARCH 28, 1996       1995                 1994                  1993                  1992
<S>                               <C>             <C>                  <C>                   <C>                   <C>
STATEMENT OF OPERATIONS DATA:
Service Revenues................     $11,878,555      $45,235,407        $41,982,678           $40,295,939           $37,462,152
Net income (loss)...............       1,057,294        3,453,270          3,811,203             3,367,720            (3,133,903)
Net income (loss) per LP Unit...            7.09            23.14              25.54                 22.57                (20.79)
Cash distributions per LP Unit..               -            75.00             100.00                100.00                100.00
BALANCE SHEET DATA:
Total assets....................               -       49,472,011         52,282,658            52,132,595            57,022,306
Long-term obligations,
including current maturities....               -       76,500,000         72,300,000            62,000,000            56,006,716
Partners' (deficit) capital.....               -      (32,908,763)       (25,171,733)          (14,062,536)           (2,509,856)
MISCELLANEOUS DATA:
-------------------
Ratio of earnings to fixed
charges1/.......................             1.8              1.6                1.9                   1.9               --
Book value per LP Unit..........               -         ($220.56)          ($168.71)              ($94.25)              ($16.82)
</TABLE>

1/ Ratio of earnings to fixed charges is calculated using income from
operations including interest income; fixed charges include interest expense
and amortization expense for debt issuance costs.  Earnings for the year ended
December 31, 1992 were insufficient to cover the fixed charges by $3,133,903.
As a result of such insufficiency, this ratio is not presented above.

As of December 31, 1996, the net assets in liquidation were $4,883,719.  The
assets are recorded at estimated realizable values and the liabilities are
recorded at estimated settlement value.


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

INTRODUCTION

The Partnership is in the process of liquidation and consummated the Sale
Transaction on March 29, 1996, for a cash purchase price of $211,050,000, plus
5.25% simple interest accrued from July 1, 1995 through the closing date of
March 29, 1996.  (See "Item 1.  Business - The Sale Transaction.")


                                    -  17  -


<PAGE>   18


RESULTS OF OPERATIONS

GENERAL INFORMATION

The following table sets forth the amounts (in thousands) and the percentage of
total revenues for certain items for the periods indicated:



<TABLE>
<CAPTION>
                          FOR THE PERIOD FROM
                              JANUARY 1 TO         FOR THE YEAR ENDED DECEMBER 31
                          MARCH 28, 1996            1995               1994
                             Amt.          %    Amt.      %      Amt.          %
<S>                         <C>           <C>  <C>      <C>     <C>           <C>
Service Revenues:
Basic Service                $7,806      65.7  $29,568    65.4  $27,436      65.4
Premium Service               1,747      14.7    6,865    15.2    6,771      16.1
Other Services                2,326      19.6    8,802    19.4    7,776      18.5
                             ------     -----   ------   -----   ------     -----
                             11,879     100.0   45,235   100.0   41,983     100.0
Operating Expenses:
Operation, General and
Administrative                6,756      56.9   25,180    55.7   22,766      54.2
Depreciation and
Amortization                  2,817      23.7   11,375    25.1   11,628      27.7
                             ------     -----   ------   -----   ------     -----
Income from Operations        2,306      19.4    8,680    19.2    7,589      18.1
                             ------     -----   ------   -----   ------     -----
Interest Income (Expense):
Interest Income                  42        .4      176      .4       64        .2
Interest Expense             (1,291)    (10.9)  (5,403)  (12.0)  (3,842)     (9.2)
                             ------     -----   ------   -----   ------     -----
                             (1,249)    (10.5)  (5,227)  (11.6)  (3,778)     (9.0)
                             ------     -----   ------   -----   ------     -----
Net Income                   $1,057      8.9%   $3,453    7.6%   $3,811      9.1%
                             ======     =====   ======   =====   ======     =====
</TABLE>

The Registrant had no results of operations for the period subsequent to March
28, 1996, as a result of the sale of all of its cable television systems.
Results of operations for the period ended March 28, 1996 have been compared to
the quarter ended March 31, 1995 (see the March 31, 1996 Form 10-Q for
comparative information).  No discussion of operating results for the year
ended December 31, 1996 versus the year ended December 31, 1995 has been
provided as such analysis is not meaningful.


CHANGES IN ASSETS AND LIABILITIES IN LIQUIDATION

Net assets in liquidation at March 31, 1996 were approximately $136.4 million,
consisting of cash and cash equivalents of approximately $140.1 million reduced
by liabilities to the Purchasing Affiliates of approximately $2.8 million and
accrued liquidation costs of $0.9 million.  During the nine months ended
December 31, 1996, the Partnership made disbursements to the Limited Partners
and General Partner of $130.1 million, paid $2.8 million to reduce the
liability to Purchasing Affiliates, paid approximately $.9 million of accrued
liquidation costs, and earned interest income of approximately $1.1 million.
The Partnership increased the accrual for liquidation costs by $1.8 million
during the nine month period ending December 31, 1996, which included an
accrual of $800,000 for a Partnership income tax liability to the state of
Illinois.  This tax liability is based upon the apportionment to Illinois for
the Partnership's gain on the sale of the cable systems.


                                    -  18  -


<PAGE>   19


At December 31, 1996, the Partnership had approximately $7.0 million in cash
and cash equivalents, consisting primarily of repurchase agreements and
commercial paper with original maturities of 90 days or less.  These
investments are carried at cost, which approximates market value.

Net assets in liquidation at December 31, 1996, were approximately $4.9
million, net of state income tax withholdings of approximately $1.1 million,
which will be available for distribution to the General Partner and Limited
Partners upon final dissolution of the Partnership.  The Partnership is
required to withhold this amount under the income tax regulations of certain
states.  On April 15 and December 15, 1996, the General Partner made partial
distributions of proceeds to the partners of $122.5 million and $7.6 million,
respectively.  The General Partner anticipates the final dissolution of the
Partnership to occur during 1997, pending final resolution of all liquidation
issues, including all pending litigation.

OPERATIONS PRIOR TO SALE OF CABLE SYSTEMS ON MARCH 29, 1996

Service Revenues

The Partnership earns substantially all of its revenues from monthly
subscription fees for basic tier, expanded tier, premium channels, equipment
rental and ancillary services provided by its cable television systems (the
"Systems").  Service revenues increased by 8.8% to $11,879,000 for the period
from January 1, 1996, to March 28, 1996, when compared to the three months
ended March 31, 1995.  These increases in 1996 are primarily due to an increase
in subscribers for the basic tier of cable service offered by the Systems.  In
addition, revenue increases between the comparative periods reflect certain
allowable retail and ancillary rate increases implemented in certain franchise
areas.  Rate increases have been limited because federal rate regulation
implemented in 1993 and 1994 rolled back cable rates and authorized only
limited rate increases for the pass-through of certain external costs for those
systems which rolled back rates to the full extent required by law (up to 17%).

Basic subscribers at March 28, 1996 increased by 3.9% over March 31, 1995.
This reflects management's marketing efforts to add new customers and retain
existing customers, as well as improved customer service.  It also reflects an
industry-wide increase in cable subscribers as a result of increased
advertising during 1995 by wireless cable television and direct broadcast
service providers; these broad-based marketing campaigns appear to have
enhanced overall consumer awareness and desire for alternative programming
options, with a "spill-over" benefit for cable providers.  In addition, a
limited amount of new-build construction increased the coverage of the Systems.

Premium service subscriptions increased 8.4% from March 31, 1995 to March 28,
1996.  The ratio of premium service subscriptions per basic subscriber
increased from 60.3% at March 31, 1995 to 62.9% at March 28, 1996.  This
increase was the result of the Partnership offering premium services to
subscribers in a packaged format, providing subscribers with a discount from
the combined retail rates of these packaged services in an effort to maintain
premium subscription levels and attract additional subscriptions.

Operating Expenses

Operating, general and administrative expenses increased by $665,000 or 12.5%
during the period from January 1, 1996 to March 28, 1996, when compared to the
first quarter of 1995.  The majority of this increase, approximately $478,000,
related to increases in the license fees paid for programming.  In addition,
there were increases in wages, bad debts, marketing and advertising.

Liquidation costs in the amount of approximately $157,000 were incurred by the
Partnership during the period from January 1, 1996, to March 28, 1996, related
to the process of selling the assets of the Partnership.  Such sale of the
assets occurred on March 29, 1996.

Depreciation and amortization decreased by 7.3% from $3,039,000 for the three
months ended March 31, 1995, to $2,817,000 for the period from January 1, 1996,
to March 28, 1996.  Although the Partnership had increased depreciation as a
result of capital expenditures made to the Systems, this was offset by a
decrease in amortization due to the completion of amortization periods for
certain franchises.


                                    -  19  -


<PAGE>   20



Interest Income and Expenses

Interest expense decreased by 4.1% from $1,346,000 during the first quarter of
1995 to $1,291,000 for the period from January 1, 1996, to March 28, 1996.
This decrease was primarily due to the decrease in the effective weighted
average interest rates between the periods.


Net Income

Net income increased by 55.8% from $679,000 during the first quarter of 1995 to
$1,057,000 for the period from January 1, 1996, to March 28, 1996.  In 1996,
the increase in income from operations and the decrease in interest expense
were significant factors versus the prior year.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenues.  In September 1993, when federal rate regulation affecting the basic
and expanded basic tiers was implemented, rates were rolled back 10% throughout
the Systems, which offset rate increases implemented earlier in 1993.  In 1994,
additional rate reductions of up to 7% were required for some local franchises.
These rate reductions significantly impacted the Systems' actual revenues as
well as the potential to increase revenues.  Limited rate increases are
permitted to pass-through to subscribers certain external costs (such as
copyright, programming and franchise fees), and only as to subscribers in those
franchises where rates had been rolled back the full 17% mandated by the FCC.
Notwithstanding that the average revenue per subscriber was reduced for basic
services during the 1992 to 1994 period, the Systems were able to increase
revenues on an overall basis by increasing the subscriber base, as well as by
increasing revenues from unregulated services such as premium cable services,
advertising and other ancillary revenues.

Partnership revenues increased 7.7% from $41,982,678 in 1994 to $45,235,407 in
1995.  During this period, the Partnership increased revenues by increasing the
number of its basic subscribers by 4.4% from  December 31, 1994 to  December
31, 1995; subscribers increased as a result of new-build and re-build
construction and enhanced marketing efforts. Other revenue consists primarily
of guide revenue, installation revenue, advertising, home shopping and
franchise fees.

The ratio of premium service subscriptions per basic subscriber increased from
0.61 at December 31, 1994 to 0.63 as of December 31, 1995.  The Partnership
anticipates that the ratio of subscriptions for premium services to
subscriptions for basic services may not increase substantially over the next
few years.  However, premium subscription services will still remain an
important revenue source of the Partnership.  The increase in the ratio during
1995 is due to the Partnership offering premium services to subscribers in a
packaged format, providing subscribers with a discount from the combined retail
rates of these packaged services.

Operating Expenses.  Operating, general and administrative expenses increased
by 10.6% from $22,766,000 in 1994, to  $25,180,000 in 1995.  As a percentage of
annual revenue, these expenses increased during 1995.  The Partnership was able
to control certain other operating costs to offset the larger increases in
certain other categories, as discussed below.  In addition, operating expenses
included liquidation costs of approximately $1,106,000 and $311,000 in 1995 and
1994, respectively, related to the pending liquidation of the assets of the
Partnership.

The Partnership's operating expenses were affected by substantial industry-wide
increases in programming expenses.  Programming expenses were approximately
$8,117,000 in 1994 increasing 10.1% to approximately $8,933,000 in 1995.  The
Partnership's increased subscriber base also contributed to the overall
increase in programming expenses, since programming costs are determined on a
per subscriber basis.

The Systems' copyright fees for the carriage of distant signals increased
during the subject periods.  Applicable FCC regulations required the Systems to
add local channels on the basic cable tier, which resulted in certain channels

                                    -  20  -


<PAGE>   21


regularly carried by the Systems on the basic cable tier being moved to the
expanded basic cable tier.  Inclusion of additional revenues associated with
the expanded basic cable tier resulted in increased copyright fee payments.

The Systems also launched additional channels during the subject period, with
related programming costs and channel line-up changes, as the Systems sought to
improve their basic product line as well as increase their subscriber base.
Channel line-up changes, whether resulting from FCC mandated local "must carry"
regulations (as discussed above) or voluntary changes, also involve indirect
costs such as marketing and customer mailings.  Increased compliance costs
related to the 1992 Cable Act were reflected in operating expenses.

Depreciation and amortization, both in terms of actual amounts and as a percent
of revenues, decreased during the past three years.  The decrease is primarily
the result of the completion of amortization for certain franchises and
deferred costs.

Other Income and Expenses.  Interest expense increased in 1995 primarily as a
result of higher effective interest rates and increased borrowings under the
Partnership's credit facility.  The weighted average interest rate and
outstanding borrowings for 1995 and 1994 were 7.3% and 5.7% and $73,993,000 and
$66,358,000, respectively.


                                    -  21  -


<PAGE>   22


LIQUIDITY AND CAPITAL RESOURCES

On March 29, 1996, the Partnership consummated the sale of all of its cable
television systems to the Purchasing Affiliates.  The sale was approved by a
majority of the Limited Partners, following the distribution of the Disclosure
Statement.  The net proceeds from the sale of approximately $211.3 million were
comprised of the purchase price plus interest, as defined in the Asset Purchase
Agreement, dated as of July 1, 1995, entered into by the General Partner and
the Purchasing Affiliates.  The purchase price, as outlined in the Disclosure
Statement, was approximately $211 million less working capital items through
July 1, 1995, and liquidation costs paid by the Partnership through the date of
closing.  The interest paid by the Purchasing Affiliates was computed on the
purchase price less the outstanding long-term debt on June 30, 1995, at an
annual rate of 5.25%, from July 1, 1995, to March 29, 1996.

On April 15, 1996 and December 15, 1996, the Partnership made a partial
distribution of approximately $122.5 million and $7.6 million, respectively to
the Limited Partners and the General Partner.  The amount remaining after this
partial distribution represents a holdback reserve from which the Partnership
will pay any remaining obligations and contingencies.  At December 31, 1996,
such estimated amounts are reported as accrued costs of liquidation.  All
amounts held back but not applied to pay Partnership liabilities will be
distributed to the Partners, including interest earned thereon.

The Partnership had an outstanding credit facility with a consortium of banks,
for which The Toronto-Dominion Bank was the agent bank.  Such credit facility
bore interest at a rate selected by the Partnership equal to Eurodollar, or
Toronto Dominion's prime rate, or certificate of deposit rate, as the case may
be, plus a spread (1%).  This credit facility allowed for borrowings up to $80
million.  Outstanding indebtedness of the Partnership at December 31, 1995, was
$76,500,000 borrowed under the credit facility.  The net decrease to long-term
obligations during the period from January 1, 1996 to March 28, 1996 was
$2,500,000.  At March 29, 1996, the outstanding balance under the Partnership's
credit facility was $74,000,000, which was repaid on March 29, 1996 from the
proceeds of the sale of assets.  The Partnership's credit facility was
terminated March 29, 1996.

The Partnership made capital expenditures of approximately $1,402,000 during
the period from January 1, 1996, to March 28, 1996, in connection with the
improvement and upgrading of its cable television systems.  The Partnership has
incurred no capital expenditures subsequent to March 28, 1996.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

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


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership has no officers or directors.  The General Partner manages and
controls substantially all of the Partnership's affairs and has general
responsibility and ultimate authority in all matters affecting the
Partnership's business.  In addition, the General Partner is responsible for
operating and managing the Partnership's cable television systems.

Set forth below is the present principal occupation or employment and
employment history of the executive officers and directors of the General
Partner:


                                    -  22  -


<PAGE>   23


       NAME                           AGE               POSITION
       Howard L. Wood                 57                President, Chief
                                                        Executive Officer
                                                        and Director
       Barry L. Babcock               50                Executive Vice
                                                        President, Chief
                                                        Operating Officer
                                                        and Director
       Jerald L. Kent                 40                Executive Vice
                                                        President, Chief
                                                        Financial Officer
                                                        and Director

Mr. Wood has been affiliated with Charter since 1993, now holding the position
of Chairman of the Management Committee of Charter, and has served as President
of the General Partner since 1994.  Mr. Wood also co-founded Charter
Communications Group ("CCG") in 1992.  Prior to that time, he was associated
with Cencom Cable Associates, Inc. ("CCA"), which he joined in July 1987 as
Director; at CCA he held the position of President, Chief Executive Officer and
Director from January 1, 1989 to November 1992.

Mr. Babcock has been affiliated with Charter since 1993 and now holds the
position of Chairman, and has served as Executive Vice President of the General
Partner since 1994.  Mr. Babcock also co-founded CCG in 1992.  Prior to that
time, he was associated with CCA as the Executive Vice President of CCA from
February 1986 to November 1992, and as Chief Operating Officer of CCA from May
1986 to November 1992.

Mr. Kent has been affiliated with Charter since 1993 and now holds the position
of President, and has served as Executive Vice President of the General Partner
since 1994.  Mr. Kent also co-founded CCG in 1992.  Prior to that time, he was
associated with CCA as Executive Vice President and Chief Financial Officer of
CCA from 1987 through November 1992.

ITEM 11.   EXECUTIVE COMPENSATION

The Registrant is not required to pay and has not paid the officers or
directors of the General Partner any remuneration.  The General Partner does
not currently pay any remuneration to any of its officers or directors,
although it does pay management fees to the General Partner.  See "Item
13-Certain Relationships and Related Transactions."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 1996, Charter was the sole Limited Partner known to the
General Partner to be the beneficial owner of more than five percent (5%) of
the outstanding LP Units issued by the Partnership.  Charter owns 8,159 LP
Units, constituting approximately 5.5% of the LP Units.  Charter has no right
to acquire additional LP Units.

The following table sets forth as of December 31, 1996, certain information
regarding the ownership of LP Units by (i) each of the directors and executive
officers of the General Partner and (ii) all directors and executive officers
of the General Partner as a group.  Each of the named persons and each member
of the group shares voting and dispositive power with respect to LP Units held
thereby.  None of these Limited Partners currently has any right to acquire
additional LP Units.


                                    -  23  -


<PAGE>   24




<TABLE>
<CAPTION>
   NAME OF BENEFICIAL            AMOUNT AND NATURE         PERCENT OF
        OWNER                      OF BENEFICIAL             CLASS
                                     OWNERSHIP
<S>                                  <C>                   <C>

Jerald L. Kent                        59 LP Units             .04%
Barry L. Babcock                      30 LP Units             .02%
All directors and executive
officers of the General Partner
as a group                            89 LP Units             .06%
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See  Item 1.  Business - Sale Transaction.

See Item 1.  Business - Management Agreement.

All 8,159 LP Units held by Charter were acquired on January 18, 1995 from HC
Crown Corp. in accordance with the terms of the Stock Purchase Agreement for
approximately $6,900,000.  Charter's acquisition of the LP Units was financed
by Boatmen's Bank in the ordinary course of business.  A copy of each of the
documents evidencing such financing arrangements has been filed separately with
the Commission.

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

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

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

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

(b)  Reports on Form 8-K:

           No reports on Form 8-K were filed during the fourth quarter of 1996.


                                    -  24  -


<PAGE>   25


                                   SIGNATURES


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

                                             CENCOM CABLE INCOME PARTNERS, L.P.

                                             By:  Cencom Properties, Inc.
                                                  General Partner



                                             By: /s/   Howard L. Wood
                                                 Howard L. Wood, President


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


              Signature and Title                               Date
-----------------------------------------------            --------------
By: /s/    Howard L. Wood
    Howard L. Wood
    President, Chief Executive Officer and Director
    (Principal Executive Officer)                          March 26, 1997

By: /s/    Barry L. Babcock
    Barry L. Babcock
    Executive Vice President, Chief Operating
    Officer and Director
    (Principal Operating Officer)                          March 26, 1997

By: /s /    Jerald L. Kent
    Jerald L. Kent
    Executive Vice President, Chief Financial
    Officer and Director
    (Principal Financial Officer)                          March 26, 1997


                                      S-1

<PAGE>   26



                       CENCOM CABLE INCOME PARTNERS, L.P.

                    INDEX TO FINANCIAL STATEMENTS SCHEDULES


                                                             Page
FINANCIAL STATEMENTS:
  Report of Independent Public Accountants                    F-2
  Statement of Net Assets in Liquidation                      F-3
  Statement of Changes in Net Assets in Liquidation           F-4
  Balance Sheet as of December 31, 1995                       F-5
  Statements of Operations for the period from
    January 1 to March 28, 1996 and for the                   F-6
    years ended December 31, 1995 and 1994
  Statements of Partners' Capital (Deficit) for the
    period from January 1 to March 28, 1996 and for the       F-7
    years ended December 31, 1995 and 1994
  Statements of Cash Flows for the period from
    January 1 to March 28, 1996 and for the                   F-8
    years ended December 31, 1995 and 1994
  Notes to Financial Statements                               F-9

FINANCIAL STATEMENT SCHEDULES:
  None required                                               N/A





                                      F-1

<PAGE>   27

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Cencom Cable Income Partners, L.P.:


We have audited the accompanying balance sheet of Cencom Cable Income Partners,
L.P. (a Delaware limited partnership) as of December 31, 1995, the related
statements of operations, partners' capital (deficit) and cash flows for the
years ended December 31, 1994 and 1995, and for the period from January 1,
1996, through March 28, 1996.  In addition, we have audited the statement of
net assets in liquidation as of December 31, 1996, and the related statement of
changes in net assets in liquidation for the period from March 29, 1996,
through December 31, 1996.  These financial statements are the responsibility
of the Partnership's management.  Our responsibility is to express an opinion
on these financial statements based on our audits.

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

As described in Note 2 to the financial statements, the General Partner of
Cencom Cable Income Partners, L.P. finalized a plan for liquidation of the
Partnership on March 28, 1996, through the sale of its operating systems.  As a
result, the Partnership has changed its basis of accounting for the period
subsequent to March 28, 1996, from the going-concern basis to the liquidation
basis.  Accordingly, the carrying value of the remaining assets as of December
31, 1996, are presented at estimated realizable values and all liabilities are
presented at estimated settlement amounts.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cencom Cable Income Partners,
L.P. as of December 31, 1995, the results of its operations and its cash flows
for the years ended December 31, 1994 and 1995, and for the period from January
1, 1996, through March 28, 1996, its net assets in liquidation as of December
31, 1996, and the changes in its net assets in liquidation for the period from
March 29, 1996, through December 31, 1996, in conformity with generally
accepted accounting principles applied on the basis described in the preceding
paragraph.



ARTHUR ANDERSEN LLP



St. Louis, Missouri,
     March 3, 1997


                                      F-2
<PAGE>   28


                       CENCOM CABLE INCOME PARTNERS, L.P.


                     STATEMENT OF NET ASSETS IN LIQUIDATION

                            AS OF DECEMBER 31, 1996




<TABLE>
<S>                                                  <C>
ASSETS, at estimated realizable values:
Cash and cash equivalents                                $7,049,771
Insurance receivable                                        428,000
                                                     --------------
                                                          7,477,771
                                                     --------------
LIABILITIES, at estimated settlement amounts:
Accrued costs of liquidation                              1,453,388
Income taxes withheld on behalf of Limited Partners       1,140,664
                                                     --------------
                                                          2,594,052
                                                     --------------
NET ASSETS IN LIQUIDATION                                $4,883,719
                                                     ==============
</TABLE>

         The accompanying notes are an integral part of this statement.

                                      F-3
<PAGE>   29

                       CENCOM CABLE INCOME PARTNERS, L.P.


               STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

         FOR THE PERIOD FROM MARCH 29, 1996, THROUGH DECEMBER 31, 1996



<TABLE>
<S>                                                                     <C>
NET PROCEEDS FROM SALES TO PURCHASING AFFILIATES                              $211,321,760
                                                                        ------------------
LESS-  Portion of proceeds representing interest to partners                   (5,202,207)
                                                                        ------------------
ASSETS SOLD TO AND LIABILITIES ASSUMED BY THE PURCHASING AFFILIATES
AS OF THE CLOSING DATE:
Cash and cash equivalents                                                      (3,504,678)
Accounts receivable, net of allowance for doubtful accounts of $83,159           (795,144)
Prepaid expenses and other                                                       (161,771)
Note receivable from General Partner                                             (753,556)
Property, plant and equipment, net                                            (39,506,499)
Franchise costs, net                                                           (2,983,401)
Accounts payable and accrued expenses                                            3,052,296
Payables to General Partner and affiliate                                          727,882
Subscriber deposits                                                                281,779
Deferred revenue                                                                   183,044
                                                                        ------------------
Net assets sold                                                               (43,460,048)
                                                                        ------------------
Gain on sale of net assets                                                     162,659,505
                                                                        ------------------
INTEREST PAID BY THE PURCHASING AFFILIATES                                       5,202,207
                                                                        ------------------
CHANGE IN ASSETS AND LIABILITIES IN LIQUIDATION:
Decrease in long-term debt                                                      74,000,000
Distributions to Limited Partners                                            (127,602,245)
Distributions to General Partner                                               (2,502,894)
Interest income generated from investments                                       1,140,452
Increase in accrued costs of liquidation                                       (1,774,729)
Income taxes withheld on behalf of Limited Partners                            (1,140,664)
                                                                        ------------------
                                                                              (57,880,080)
                                                                        ------------------
REPAYMENT OF LONG-TERM DEBT                                                   (74,000,000)
                                                                        ------------------
Net change in assets and liabilities between March 29, 1996, and
December 31, 1996                                                               35,981,632
PARTNERS' CAPITAL (DEFICIT) AS OF MARCH 28, 1996:
General Partner                                                                    905,039
Limited Partners                                                              (32,002,952)
                                                                        ------------------
NET ASSETS IN LIQUIDATION AS OF DECEMBER 31, 1996                               $4,883,719
                                                                        ==================
</TABLE>

         The accompanying notes are an integral part of this statement.



                                      F-4
<PAGE>   30

                       CENCOM CABLE INCOME PARTNERS, L.P.


                       BALANCE SHEET - DECEMBER 31, 1995



<TABLE>
<CAPTION>
                                                                                                     1995
                                                                                   ----------------------
<S>                                                                                <C>
                                                 ASSETS
---------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents                                                                      $4,461,218
Accounts receivable, net of allowance for doubtful accounts of $95,346                            918,107
Prepaid expenses and other                                                                        187,914
                                                                                   ----------------------
Total current assets                                                                            5,567,239
PROPERTY, PLANT AND EQUIPMENT                                                                  40,588,953
FRANCHISE COSTS, net of accumulated amortization of $51,270,890                                 3,315,819
                                                                                   ----------------------
                                                                                              $49,472,011
                                                                                   ======================
                               LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
---------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt                                                          $76,500,000
Accounts payable and accrued expenses                                                           4,673,476
Payables to General Partner and affiliate                                                         718,507
Subscriber deposits                                                                               300,834
                                                                                   ----------------------
Total current liabilities                                                                      82,192,817
                                                                                   ----------------------
DEFERRED REVENUE                                                                                  187,957
                                                                                   ----------------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
General Partner                                                                                   905,039
Limited Partners (150,000 units authorized; 149,204 units issued and outstanding)            (33,060,246)
Note receivable from General Partner                                                            (753,556)
                                                                                   ----------------------
Total Partners' capital (deficit)                                                            (32,908,763)
                                                                                   ----------------------
                                                                                              $49,472,011
                                                                                   ======================
</TABLE>

       The accompanying notes are an integral part of this balance sheet.





                                      F-5
<PAGE>   31


                       CENCOM CABLE INCOME PARTNERS, L.P.


                            STATEMENTS OF OPERATIONS

        FOR THE PERIOD FROM JANUARY 1, 1996, THROUGH MARCH 28, 1996, AND

                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994



<TABLE>
<CAPTION>
                                                      1996*              1995              1994
                                          -----------------  ----------------  ----------------
<S>                                       <C>                <C>               <C>
SERVICE REVENUES:
Basic service                                    $7,805,466       $29,567,936       $27,436,154
Premium service                                   1,746,690         6,865,145         6,770,511
Other                                             2,326,399         8,802,326         7,776,013
                                          -----------------  ----------------  ----------------
                                                 11,878,555        45,235,407        41,982,678
OPERATING EXPENSES:
Operating costs                                   5,146,841        18,463,285        17,254,488
General and administrative                          857,623         3,349,345         3,100,671
Liquidation costs                                   157,147         1,105,556           311,344
Depreciation and amortization                     2,816,999        11,375,090        11,628,080
Management fees - related party                     594,268         2,261,775         2,099,133
                                          -----------------  ----------------  ----------------
                                                  9,572,878        36,555,051        34,393,716
                                          -----------------  ----------------  ----------------
Income from operations                            2,305,677         8,680,356         7,588,962
                                          -----------------  ----------------  ----------------
INTEREST INCOME (EXPENSE):
Interest income                                      42,351           176,126            64,171
Interest expense                                (1,290,734)       (5,403,212)       (3,841,930)
                                          -----------------  ----------------  ----------------
                                                (1,248,383)       (5,227,086)       (3,777,759)
                                          -----------------  ----------------  ----------------
Net income                                       $1,057,294        $3,453,270        $3,811,203
                                          =================  ================  ================
NET INCOME  PER LIMITED PARTNERSHIP UNIT              $7.09            $23.14            $25.54
                                          =================  ================  ================
</TABLE>

*Operating activity for the period from January 1, 1996, through March 28,
     1996, is prior to liquidation basis adjustments.



        The accompanying notes are an integral part of these statements.



                                      F-6
<PAGE>   32







                       CENCOM CABLE INCOME PARTNERS, L.P.


                   STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)

        FOR THE PERIOD FROM JANUARY 1, 1996, THROUGH MARCH 28, 1996, AND

                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994



<TABLE>
<CAPTION>
                                                                   Note
                                                                 Receivable
                                                                   From
                                 General         Limited         General
                                    Partner          Partners       Partner             Total
                               ------------  ----------------  ------------  ----------------
<S>                            <C>           <C>               <C>           <C>
BALANCE, December 31, 1993         $905,039     $(14,214,019)    $(753,556)     $(14,062,536)
Distributions ($100 per unit)             -      (14,920,400)             -      (14,920,400)
Net income                                -         3,811,203             -         3,811,203
                               ------------  ----------------  ------------  ----------------
BALANCE, December 31, 1994          905,039      (25,323,216)     (753,556)      (25,171,733)
Distributions ($75 per unit)              -      (11,190,300)             -      (11,190,300)
Net income                                -         3,453,270             -         3,453,270
                               ------------  ----------------  ------------  ----------------
BALANCE, December 31, 1995          905,039      (33,060,246)     (753,556)      (32,908,763)
Net income                                -         1,057,294             -         1,057,294
                               ------------  ----------------  ------------  ----------------
BALANCE, March 28, 1996*           $905,039     $(32,002,952)    $(753,556)     $(31,851,469)
                               ============  ================  ============  ================
</TABLE>

*Operating activity for the period from January 1, 1996, through March 28,
     1996, is prior to liquidation basis adjustments.



        The accompanying notes are an integral part of these statements.

                                      F-7
<PAGE>   33


                       CENCOM CABLE INCOME PARTNERS, L.P.


                            STATEMENTS OF CASH FLOWS

        FOR THE PERIOD FROM JANUARY 1, 1996, THROUGH MARCH 28, 1996, AND

                 FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994



<TABLE>
<CAPTION>
                                                         1996*              1995              1994
                                                --------------  ----------------  ----------------
<S>                                             <C>             <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                          $1,057,294        $3,453,270        $3,811,203
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization                        2,816,999        11,375,090        11,628,080
Changes in assets and liabilities-
Accounts receivable, net                               122,963            34,888         (274,147)
Prepaid expenses and other                              26,143           225,707         (235,187)
Accounts payable and accrued expenses              (1,063,219)           422,092           931,608
Payables to General Partner and affiliate                9,375           187,911            27,608
Subscriber deposits and prepayments                   (19,055)          (71,577)                44
Deferred revenue                                       (4,913)           187,957                 -
                                                --------------  ----------------  ----------------
Net cash provided by operating activities            2,945,587        15,815,338        15,889,209
                                                --------------  ----------------  ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment         (1,402,127)       (8,851,048)       (8,055,569)
Other                                                        -          (55,526)                 -
                                                --------------  ----------------  ----------------
Net cash used in investing activities              (1,402,127)       (8,906,574)       (8,055,569)
                                                --------------  ----------------  ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt                                   -         4,700,000        10,300,000
Payment of long-term debt                          (2,500,000)         (500,000)                 -
Distributions to partners                                    -      (11,190,300)      (14,920,400)
Debt issuance costs                                          -                 -         (216,674)
                                                --------------  ----------------  ----------------
Net cash used in financing activities              (2,500,000)       (6,990,300)       (4,837,074)
                                                --------------  ----------------  ----------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS                                          (956,540)          (81,536)         2,996,566
CASH AND CASH EQUIVALENTS, beginning of period       4,461,218         4,542,754         1,546,188
                                                --------------  ----------------  ----------------
CASH AND CASH EQUIVALENTS, end of period            $3,504,678        $4,461,218        $4,542,754
                                                ==============  ================  ================
CASH PAID FOR INTEREST                              $1,628,515        $5,283,549        $3,930,257
                                                ==============  ================  ================
</TABLE>

*Operating activity for the period from January 1, 1996, through March 28,
     1996, is prior to liquidation basis adjustments.


        The accompanying notes are an integral part of these statements.




                                      F-8
<PAGE>   34


                       CENCOM CABLE INCOME PARTNERS, L.P.


                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization

Cencom Cable Income Partners, L.P., a Delaware limited partnership (the
"Partnership"), was formed for the purpose of acquiring and operating existing
cable television systems.  CC I Holdings, Inc. (CC I Holdings) acquired the
common stock of Cencom Properties, Inc. (Cencom Properties or the "General
Partner") from Cencom Cable Associates, Inc. (presently doing business as
Cencom Cable Entertainment, Inc. and referred to as "Cencom Cable Associates"
herein) in September 1994.  CC I Holdings is a wholly owned subsidiary of
Charter Communications, Inc. (Charter).  The partnership agreement (the
"Partnership Agreement") provides for the dissolution of the Partnership on or
before September 30, 1994.  (See Note 2.)

Prior to March 28, 1996, the Partnership provided cable television service to
approximately 44 franchises serving approximately 111,000 basic subscribers in
Illinois and the southern and southeastern United States including military
bases in Colorado, Georgia, Kansas, North Carolina and Texas.

Basis of Presentation

The accompanying statements of operations, partners' capital (deficit) and cash
flows for the years ended December 31, 1994 and 1995, and the period from
January 1, 1996, through March 28, 1996, report the Partnership's financial
position and results of operations using accounting principles applicable to an
entity under the "going concern" basis of accounting prior to the adoption of
the liquidation basis of accounting.  The financial statements for the period
subsequent to March 28, 1996, are reported on the liquidation basis of
accounting.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of commercial paper, money market
accounts and repurchase agreements with original maturities of 90 days or less.
These investments are carried at cost, which approximates market value.

Revenue Recognition

Service revenues were recognized when the related services were provided.

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

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



                                      F-9
<PAGE>   35

                                    -  2  -


Depreciation and Amortization

The Partnership provided depreciation using the composite method on a
straight-line basis over the estimated useful lives of the related property and
equipment as follows:


<TABLE>
                   <S>                             <C>
                   Trunk and distribution systems    10 years
                   Subscriber installations          10 years
                   Converters                       3-5 years
                   Buildings and headends          9-20 years
                   Vehicles and equipment           4-8 years
                   Office equipment                5-10 years
</TABLE>


Franchise costs were amortized using the straight-line method over the term of
the individual franchises.   Debt issuance costs were amortized over the term
of the debt.

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

Income Taxes

Income taxes are the responsibility of the partners and as such are not
provided for in the accompanying financial statements, except for the state of
Illinois liability required of the Partnership.

Net Income Per Limited Partnership Unit

The net income per Limited Partnership unit was calculated based on 149,204
Limited Partnership units outstanding at the end of each period presented.

Reclassifications

Certain reclassifications are reflected in the statement of changes in net
assets in liquidation, compared to such financial information previously
reported in the quarterly reports filed on Form 10-Q for the periods ended
March 31, 1996, June 30, 1996 and September 30, 1996.

Use of Estimates

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

                                      F-10
<PAGE>   36
                                    -  3  -


2. ALLOCATIONS, DISTRIBUTIONS AND LIQUIDATION:

Allocations and Distributions

Prior to the sale of the cable television systems, profit and losses were
generally allocated in proportion to the partners' capital contributions.  The
Partnership was required to distribute all cash available for distribution, as
defined in the Partnership Agreement, within 60 days after the end of each
calendar quarter.  The Limited Partners were to receive 100% of all cash
available for distribution until they received a cumulative 11% per annum
preferred return on their adjusted capital contributions.  If the Limited
Partners would have received their 11% preferred return, the General Partner
was to receive 11% per annum on its original capital contribution.  Thereafter,
the Limited Partners were to receive 99% and the General Partner was to receive
1% of all additional cash available for distribution.  No additional quarterly
distributions were made after July 1, 1995, the effective sale date of the
cable television systems (other than the distribution with respect to the
second quarter of 1995).

Liquidation

In accordance with the Partnership Agreement, the General Partners began a
dissolution of the Partnership during 1994.  Upon dissolution, the General
Partner or other authorized liquidating agent is required to distribute all
available proceeds as soon as practicable after their receipt by the
Partnership.

Two independent appraisals were conducted during 1995, and bids to purchase the
cable television systems of the Partnership were made by several entities
affiliated with the General Partner.  On March 28, 1996, the Partnership
consummated the sale of all of its cable television systems to the affiliated
entities.  The sale was approved by a vote of a majority of the Limited
Partners.  The purchase price was $211.1 million less working capital
adjustments through July 1, 1995, and liquidation costs paid by the Partnership
through the date of closing, and increased for interest paid by the purchasing
affiliates.  Net proceeds from the sale of the cable television systems were
approximately $211.3 million.

As a result of this transaction, the Partnership changed its basis of
accounting to the liquidation basis effective March 29, 1996.  Accordingly, the
assets in the accompanying statement of net assets in liquidation as of
December 31, 1996, have been stated at estimated realizable values and the
liabilities have been reflected at estimated settlement amounts.  Net assets in
liquidation as of December 31, 1996, represent the estimated remaining
distribution to be made to the Limited Partners and the General Partner.

On April 15, 1996, and December 15, 1996, the Partnership made pro rata
distributions (in accordance with that set forth in the Partnership Agreement)
of approximately $122.5 million and $7.6 million, respectively, to the Limited
Partners and the General Partner.  The amount remaining after these partial
distributions of sale proceeds represents a holdback reserve, as provided for
in the Partnership Agreement, from which the Partnership will pay any remaining
obligations and contingencies.  At December 31, 1996, such estimated amounts
are reported as Accrued costs of liquidation in the accompanying Statement of
net assets in liquidation.  All amounts held back but not applied to pay
Partnership liabilities will be distributed to the partners, net of required
income tax withholdings.  Proceeds ultimately received upon liquidation could
differ from the amounts recorded in the accompanying financial statements.



                                      F-11
<PAGE>   37
                                    -  4  -


3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment was stated at cost and consisted of the following
at December 31, 1995:


<TABLE>
<S>                                         <C>
Trunk and distribution systems               $50,543,603
Subscriber installations                      23,434,089
Converters                                    18,743,920
Land, buildings and headends                   8,539,954
Vehicles and equipment                         4,061,417
Office equipment                               2,836,477
                                      ------------------
                                             108,159,460
Less-  Accumulated depreciation             (67,570,507)
                                      ------------------
                                             $40,588,953
                                      ==================
</TABLE>

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consisted of the following at December
31, 1995:


<TABLE>
<S>                            <C>
Accounts payable                 $251,897
Programming expenses              955,633
Franchise fees                    570,528
Professional fees                 720,352
Capital expenditures              400,710
Other                           1,774,356
                           --------------
                               $4,673,476
                           ==============
</TABLE>

Accrued costs of liquidation at December 31, 1996, is primarily comprised of an
$800,000 payable to the state of Illinois for income taxes, as well as other
miscellaneous costs anticipated to complete the liquidation of the Partnership.

5. LONG-TERM DEBT:

The Partnership maintained a loan agreement with a bank for borrowings up to
$80,000,000 (the "Debt Agreement"), secured by all the Partnership's assets.
The maturity date of the loan agreement was June 30, 1996.  Loans under the
Debt Agreement bear interest at a rate based upon a certain spread plus a base
rate, with the base rate being, at the Partnership's election, the Toronto
Dominion's (the agent bank) prime rate of interest, Eurodollar or certificates
of deposit rate.  The applicable spreads are based on the ratio of debt to
annualized operating cash flow.  The weighted average interest rates and
borrowings for the period from January 1, 1996, through March 28, 1996, and for
the years ended December 31, 1995 and 1994, were 7.1%, 7.3% and 5.7% and
approximately $74,871,000, $73,993,000 and $66,358,000, respectively.  On March
28, 1996, in connection with the Partnership's sale of its cable television
systems (as discussed in Note 2), the Partnership repaid all of its outstanding
borrowings.



                                      F-12

<PAGE>   38

                                    -  5  -


6. LITIGATION:

In November 1995, a class action lawsuit (the "Action") was filed on behalf of
the Limited Partners which sought, among other things, to permanently enjoin
the sale of the Partnership's systems to certain affiliates (the "Sale
Transaction").  On February 15, 1996, all of the plaintiff's claims for
injunctive relief (including that which sought to prevent the consummation of
the Sale Transaction) were dismissed;  the plaintiff's claims for money damages
which might result from the sale by the Partnership of its assets (including
the Sale Transaction) remain pending.  Each of the defendants to such action
believes the Action, which remains pending, to be without merit and is
contesting the Action vigorously.  In October 1996, the plaintiff filed a
Consolidated Amended Class Action Complaint (the "Amended Complaint").  The
General Partner believes that portions of the Amended Complaint are legally
inadequate and filed a dispositive motion as to all remaining claims with the
Action.  There can be no assurance, however, that the plaintiff will not be
awarded damages, some or all of which may be payable by the Partnership or the
General Partner, in connection with the Action.

As of December 31, 1996, the Partnership has recorded a receivable (net of the
deductible) from its insurance company for reimbursement of litigation costs
through December 31, 1996, incurred in connection with the Action.  The
receivable of $428,000 represents all litigation costs less the deductible of
$100,000.

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

7. RELATED-PARTY TRANSACTIONS:

During 1994, Cencom Cable Associates assigned management services under
contract with the Partnership to the General Partner.  The management service
contract provided for the payment of fees equal to 5% of the Partnership's
gross annual operating revenues.  Expenses recognized by the Partnership under
this contract were $594,268, $2,261,775 and $2,099,133 during the period from
January 1, 1996, through March 28, 1996, and for the years ended December 31,
1995 and 1994, respectively.  Prior to approval of the Sale Transaction,
management fees were paid after cumulative quarterly cash distributions to
Limited Partners equaled certain preferred distributions as specified in the
Partnership Agreement (see Note 2).  Management fees payable of $584,629 were
included in Payables to General Partner and affiliate at December 31, 1995.  In
addition to the management fees, the Partnership reimbursed the General Partner
for expenses incurred on behalf of the Partnership for performance of services
under the contract.

During the period from January 1, 1996, through March 28, 1996, in connection
with the sale of the cable television systems (see Note 2) the General Partner
paid the Partnership $753,556 related to the Partnership's noninterest-bearing
promissory note receivable, which represented one half of the General Partner's
original capital contribution.

The Partnership and all entities affiliated with Charter collectively utilized
a combination of insurance coverage and self-insurance programs for medical,
dental and workers' compensation claims.  The Partnership was allocated charges
monthly based upon its total number of employees, historical claims and medical
cost trend rates.  Management considered this allocation to be reasonable for
the operations of the Partnership.  During the period from January 1, 1996,
through March 28, 1996, and for the year ended December 31, 1995, the
Partnership expensed approximately $120,000 and $474,000, respectively,
relating to insurance allocations.

Affiliated entities maintain several regional offices.  The regional offices
performed certain operational services on behalf of the Partnership and other
affiliated entities.  The cost of these services was allocated to the
Partnership based on its number of subscribers.  Management considered this
allocation to be reasonable for the operations of the Partnership.  During the
period from January 1, 1996, through March 28, 1996, and for the years ended
December 31, 1995 and 1994,  the Partnership expensed approximately $149,000,
$370,000 and $263,000, respectively, relating to this allocation.



                                      F-13
<PAGE>   39
                                    -  6  -


8. COMMITMENTS AND CONTINGENCIES:

Leases

The Partnership leased certain facilities and equipment under noncancelable
operating leases.  Rent expense incurred under leases during the period from
January 1, 1996, through March 28, 1996, and for the years ended December 31,
1995 and 1994, was approximately $41,000, $145,000 and $139,000, respectively.
There are no future minimum lease payments.

The Partnership rented utility poles in its operations.  Generally, pole rental
agreements were short term.  Rent expense incurred for pole attachments during
the period from January 1, 1996, through March 28, 1996, and for the years
ended December 31, 1995 and 1994, was approximately $132,000, $503,000 and
$482,000, respectively.

9. 401(k) PLAN:

In 1994, the Partnership adopted the Charter Communications, Inc. 401(k) Plan
(the "Plan") for the benefit of its employees.  All employees who have
completed one year of employment are eligible to participate in the Plan.  The
Plan is a tax-qualified retirement savings plan to which employees may elect to
make pretax contributions up to the lesser of 10% of their compensation or
dollar thresholds established under the Internal Revenue Code.  The Partnership
contributed an amount equal to 50% of the first 5% contributed by each
employee.  During the period from January 1, 1996, through March 28, 1996, and
for the years ended December 31, 1995 and 1994, the Partnership contributed
approximately $65,000, $61,000 and $82,400, respectively.

10. NET INCOME FOR INCOME TAX PURPOSES:

The following summarizes the differences between the Partnership's net income
for financial reporting and federal income tax purposes:


<TABLE>
<CAPTION>
                                                                            Year Ended
                                                         -------------------------------------------------------
                                                          1996                 1995                 1994
                                                   -------------------  -------------------  -------------------
<S>                                                       <C>                   <C>                  <C>

Net income for financial reporting purposes:
"Going concern" basis of accounting (see
Notes 1 and 2)                                              $1,057,294           $3,453,270           $3,811,203
Gain on sale of net assets                                 162,659,505                    -                    -
Interest paid by purchasing affiliates                       5,202,207                    -                    -
Liquidation basis of accounting (see Notes
1 and 2)                                                     (634,277)                    -                    -
                                                   -------------------  -------------------  -------------------
                                                           168,284,729            3,453,270            3,811,203
Depreciation differences between financial
reporting and tax reporting                                  (609,806)            1,804,940            (301,487)
Difference in gain on sale of net assets
recorded for financial reporting and tax
reporting                                                 (17,091,185)                    -                    -
Amortization differences between financial
reporting and tax reporting                                          -               57,969               80,844
Differences in expenses recorded for
financial reporting and tax reporting                        (971,261)              844,798               85,052
Differences in revenue reported for
financial reporting and tax reporting                        (175,301)              187,957                    -
Other                                                            1,928               31,946                7,768
                                                   -------------------  -------------------  -------------------
Net income for federal income tax purposes                $149,439,104           $6,380,880           $3,683,380
                                                   ===================  ===================  ===================
Net income per Limited Partnership unit for
federal income tax purposes                                    $991.57               $42.77               $24.69
                                                   ===================  ===================  ===================
</TABLE>




                                      F-14
<PAGE>   40
                                    -  7  -


The following summarizes the significant cumulative temporary differences
between the Partnership's financial reporting basis and federal income tax
reporting basis as of December 31:


<TABLE>
<CAPTION>
                                                 1996              1995
                                             --------------  ----------------
<S>                                          <C>             <C>
Assets:
Accounts receivable                           $           -           $95,346
Franchise costs                                           -        37,384,139
Accrued expenses                                  1,453,388         2,520,653
Deferred revenue                                          -           187,957
                                             --------------  ----------------
                                                 $1,453,388       $40,188,095
                                             ==============  ================
Liabilities-  Property, plant and equipment   $           -     $(19,682,850)
                                             ==============  ================
</TABLE>






                                      F-15
<PAGE>   41


                       CENCOM CABLE INCOME PARTNERS, L.P.

                                 EXHIBIT INDEX



Exhibit
Number                          Description                              Page
-------                    --------------------                          ----
   3     Amended and Restated Agreement of Limited Partnership,           N/A
         filed as Exhibit 3(c) to the Registrant's Registration
         Statement on Form S-1 (Registration No. 33-7843),
         incorporated herein by this reference.


 10(f)   Management Agreement, dated as of December 7, 1986,              N/A
         between the Registrant and the General Partner,
         filed as Exhibit 10(f) to the Registrant's Form 10-K
         for the year ended December 31, 1988, incorporated
         by this reference.

 10(i)   Loan Agreement dated October 15, 1990, between the               N/A
         Registrant and The Toronto-Dominion Bank, filed
         as Exhibit 10(j) to the Registrant's Form 10-K for
         the year ended December 31, 1990, incorporated herein
         by this reference (the "1990 Loan Agreement").  *

 10(k)   First Amendment dated May 10, 1993, to the 1990 Loan             N/A
         Agreement, filed as Exhibit 10(k) to the Registrant's
         Form 10-K for the year ended December 31, 1993,
         incorporated herein by reference.  *

 10(o)   Second Amendment, dated June 30, 1994, to the 1990 Loan          N/A
         Agreement, filed as Exhibit 10(o) to the Registrant's
         Form 10-K for the year ended December 31, 1994,
         incorporated herein by this reference.  *



                                     - E-1-

<PAGE>   42




Exhibit
Number                       Description                                 Page
-------  ---------------------------------------------------             ----
 10(p)   Third Amendment, dated July 15, 1994, to the 1990                N/A
         Loan Agreement, filed as Exhibit 10(p) to the
         Registrant's Form 10-K for the year ended December
         31, 1994, incorporated herein by this reference.
         *
 10(q)   Assignment of shares of common stock of the                      N/A
         General Partner, dated July 15, 1994, filed as
         Exhibit 10(q) to the Registrant's Form 10-K for
         the year ended December 31, 1994, incorporated
         herein by this reference.
 10(r)   Assignment of the Management Agreement, dated July               N/A
         15, 1994, between the General Partner and Cencom
         Cable Associates, Inc., filed as Exhibit 10(r) to
         the Registrant's Form 10-K for the year ended
         December 31, 1994, incorporated herein by this
         reference.
 10(s)   Transfer of Limited Partnership Interest, dated                  N/A
         January 18, 1995, filed as Exhibit 10(s) to the
         Registrant's Form 10-K for the year ended December
         31, 1994, incorporated herein by this reference.
 10(t)   Fourth Amendment, dated September 29, 1995, to the               N/A
         1990 Loan Agreement, filed as Exhibit 10(t) to the
         Registrant's Form 10-K for the year ended December
         31, 1995, incorporated herein by this reference.
         *
 10(u)   Asset Purchase Agreement among Registrant, Charter               N/A
         Communications Properties, Inc., Charter
         Communications II, L.P. and Charter Communications
         Entertainment I, L.P., dated as of July 1, 1995,
         filed as Exhibit  10(u) to the Registrant's Form
         10-K for the year ended December 31, 1995,
         incorporated herein by this reference.
  12     Ratio of Earnings to Fixed Changes, filed herewith.              E-3

*  The 1990 Loan Agreement was repaid in full on March 29, 1996





                                     - E-2-